Pre-Effective Amendment 3
As filed with the Securities and Exchange Commission on
January 29, 1999
REGISTRATION NO. 333-52721
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MICRO INTERCONNECT TECHNOLOGY, INC.
(Name of Small Business issuer in its Charter)
Nevada 72-0497440
State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Classification Code Identification No.)
Incorporation or Number)
Organization)
70 Horizon Dr., Bedford, New Hampshire, 03110,(603) 472-7068
(Address and Telephone Number of Registrant's
Principal Place of Business)
N. Edward Berg, 70 Horizon Dr., Bedford,
New Hampshire,03110,(603) 472-7068
(Name, Address and Telephone Number of Agent for Service)
Copies to:
David Cundick, Esq., Bank One Tower, Suite 900, 50 West
Broadway, Salt Lake City, Utah 84101 (801) 328-5600
Approximate Date of Proposed Sale to the Public: As soon as practicable
from time to time after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering if any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the following box. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed Amount of
each Class Amount Maximum Maximum Registration
of Securities to be Offering Aggregate Fee
to be Registered Price Offering
Registered Per Unit
Units (each 150,000 $2.00 $300,000 $88.50
consisting of
one share of
Common Stock,
$.001 par value
and two Redeem-
able Common Stock
Purchase Warrants
Shares of Common 300,000 $2.50 $750,000 $221.25
Stock, $.001 par
value, underlying
the Redeemable
Common Stock
Purchase Warrants
Total Registration Fee $309.75
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act Of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a) may determine.
<PAGE>
Micro Interconnect Technology, Inc.
CROSS-REFERENCE SHEET
Pursuant to Rule 404(a)
Item Number and Heading Heading in Prospectus
1. Front of the Registration
Statement and Outside Front
Cover Page of Prospectus . . . . . Facing pages; Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus . . . . . Inside Front and Outside Back
Cover Pages of Prospectus
3. Summary Information and Risk
Factors . . . . . . . . . . . . . . Prospectus Summary; Risk Factors
4. Use of Proceeds . . . . . . . . . . Prospectus Summary; Use of Proceeds;
Description of Business
5. Determination of Offering Price . . Cover Page; Prospectus Summary; Risk
Factors; Determination of Offering
Price
6. Dilution . . . . . . . . . . . . . Dilution; Comparative Data
7. Selling Security Holders . . . . . Not applicable
8. Plan of Distribution . . . . . . Front Cover Page; Plan of
Distribution
9. Legal Proceedings . . . . . . . . . Legal Matters
10. Directors, Executive Officers,
Promoters and Control Persons . . Directors, Executive Officers,
Promoters and Control Persons
11. Security ownership of Certain
Beneficial owners and
Management . . . . . . . . . . . . Security Ownership of Certain
Beneficial Owners and Management
12. Description of the Securities . . Description of Securities
13. Interest of Named Experts and
Counsel . . . . . . . . . . . . . Not Applicable
14. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities . . Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities
15. Organization Within Last Five
Years . . . . . . . . . . . . Organization Within Last Five
Years
16. Description of Business . . . . . Description of Business
17. Management's Discussion and
Analysis or Plan of Operation. . . Plan of Operations
18. Description of Property . . . . . Management - Facilities
19. Certain Relationships and Related
Transactions . . . . . . . . . . . Not Applicable
20. Market for Common Equity and
Related Stockholder Matters . . . Front Cover Page; Risk Factors
Shares Eligible For Future Sale
21. Executive Compensation . . . . . . Executive Compensation
22. Financial Statements . . . . . . . Financial Statements
23. Changes In and Disagreements
with Accountants on Accounting
and Financial Disclosure . . . . . Not Applicable
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
Offering: $300,000
150,000 Units, Offering Price $2.00 per Unit
Consisting of 150,000 Shares of Common Stock, Par Value $.001 and 300,000
Redeemable Common Stock Purchase Warrants
Micro Interconnect Technology, Inc. (the "Company") is offering (the
"Offering") 150,000 Units of the Company's securities ("Unit(s)"), each
Unit consists of one (1) share of $.001 par value common stock (the "Common
Stock") and two (2) Redeemable Common Stock Purchase Warrants
(the"Warrants") at a purchase price of $2.00 per unit (the "Unit Price").
The Common Stock and the Warrants are separately transferable as of the
date of this prospectus. Each Warrant is exercisable to purchase one share
of Common Stock at $2.50 per share (125% of the Unit Price) with the
Warrants subject to adjustments in certain events and availability of
federal and state exemptions from registration, for a period of one (1)
year from the date hereof. The Company may redeem the Warrants at a price
of $.01 per Warrant, at any time beginning 6 months after the date hereof
upon not less than 30 days prior written notice if the closing bid price of
the Common Stock on the Nasdaq Bulletin Board is at least $3.00 per share
(150% of the Unit Price) for 20 consecutive trading days, ending not
earlier than five days before the Warrants are called for redemption. Prior
to this Offering there has been no public market for the Units, Common
Stock and Warrants, nor can there be any assurance that a trading market
will develop for any of these securities upon completion of this Offering
or, if a market should develop, that it will continue. The Unit Price and
the Warrant exercise prices have been arbitrarily determined by the Company
and bears no relationship to assets, shareholders' equity or any other
recognized criteria of value. The Offering will be conducted by the Company
through its president and director N. Edward Berg, who will rely on the
safe harbor from broker/dealer registration set out in rule 3a4-1 under the
Securities Exchange Act of 1934. The Offering is being conducted directly
by the Company without the use of a professional underwriter. A commission
will not be paid to the Company or its officers and directors for sales
effectuated by them. Officers and directors of the Company my purchase up
to 20% of the Units sold in the Offering under the same terms and
conditions as the public investors. Such purchases, if made, will be for
investment purposes only and not for redistribution. Such purchases may be
made for the purpose of closing the Offering. See "RISK FACTORS - Effect of
Purchases of Units in this Offering by Officers, Directors and Affiliates",
"No Commitment to Purchase Units", "Officers or Directors May Purchase up
to 20% of the Units in this Offering" and "PLAN OF DISTRIBUTION."
The Company will furnish annual reports to its stockholders which
will include audited financial statements. The Company may also furnish to
its stockholders quarterly financial statements and such other reports as
may be authorized by its Board of Directors. See "AVAILABLE INFORMATION."
THE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL AND IMMEDIATE
DILUTION AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD TO RISK
THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER SECURITIES REGULATORY AUTHORITY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER AUTHORITY HAS
PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THIS MEMORANDUM AND IT IS NOT INTENDED THAT ANY OF THEM WILL.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS MUST
RELY ON THEIR OWN EXAMINATION OF THE COMPANY, AND THE RISKS, MERITS AND
TERMS OF THIS OFFERING IN MAKING AN INVESTMENT DECISION.
Price to Underwriting Discounts Proceeds to
Public (1)(3) And Commissions (1)(3) Company(2)(3)
Per Unit $2.00 $.20 $1.80
Total $300,000 $30,000 $270,000
(1) The purchase price per Units is payable by check at the time an
investor executes the Subscription Agreement. It includes a maximum ten
percent (10%) selling commission payable to any selected Broker/Dealers in
connection with sales made through the efforts of such firms. The Company
intends to offer and sell the Units through its president and director N.
Edward Berg, who will rely on the safe harbor from broker/dealer
registration set out in rule 3a4-1 under the Securities Exchange Act of
1934, without the use of a professional underwriter. Presently the Company
has not identified any dealers and does not intend to select any
broker/dealers who are members of the National Association of Securities
Dealers, Inc. (N.A.S.D.), to offer or sell any of its securities, but may
elect to do so and will allow a maximum commission of 10% on sales made by
brokers. Prior to the involvement of any broker/dealer in the Offering, the
Company must obtain a no objection position from the NASD regarding any
contemplated compensation and arrangements. In view of the Commission's
Division of Corporation Finance any selected broker/dealer that sells
securities in this Offering will be deemed an underwriter as defined in
Section 2(11) of the Securities Act of 1933, as amended. The Company will
amend the registration statement by post-effective amendment to identify a
selected broker/dealer at such time as such broker/dealer sells 5% or more
of the Offering. No commissions will be paid for sales effected by officers
and directors, however these figures assume payment of commissions on the
sale of all Units. The Offering is being conducted directly by the Company
without the use of a professional underwriter. See "PLAN OF DISTRIBUTION."
(2) The proceeds to the Company are shown before deduction of offering
expenses payable by the Company estimated at $26,780, including legal, and
accounting fees and printing costs. See "USE OF PROCEEDS"
(3) The Offering is being conducted by the Company on a "best efforts, all
or none" basis. Proceeds will be deposited no later than noon of the next
business day after receipt into an escrow account with St Marys Bank, 200
Bedford Street, Manchester, NH 03105, pending receipt of subscriptions
totaling $300,000. If subscriptions for all 150,000 Units have not been
received within 150 days from the date hereof, subject to an extension at
the sole discretion of the Company for an additional period not to exceed
30 days in the aggregate, all funds received will be refunded to
subscribers without interest thereon nor deductions therefrom. Subscribers
will have no right to return or use of their funds during the offering
period, which may last up to 180 days.
The date of this Prospectus is January , 1999
<PAGE>
The Units are being offered by the Company subject to prior sale,
receipt and acceptance by the Company, approval of certain matters by
counsel, and certain other conditions. The Company reserves the right to
withdraw or cancel such offer and reject any order, in whole or in part.
The date of this Prospectus is January , 1999.
AVAILABLE INFORMATION
The Company has filed, with the United States Securities and Exchange
Commission (the "Commission"), a Registration Statement on Form SB-2, under
the Securities Act of 1933, as amended (the "Securities Act"), with respect
to the securities offered hereby. As permitted by the rules and regulations
of the Commission, this Prospectus does not contain all of the information
contained in the Registration Statement. For further information regarding
both the Company and the Securities offered hereby, reference is made to
the Registration Statement, including all exhibits and schedules thereto,
which may be inspected without charge at public reference facilities of the
Commission's Washington D.C. office, Room 1024, Judiciary Plaza, 450 Fifth
Street, N. W., Washington D.C. 20549. Copies of all or any portion of the
Registration Statement may be obtained from the Public Reference Section of
the Commission upon request and payment of the prescribed fee. As of the
date of this Prospectus, the Company became subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and, in accordance therewith, will file reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act will be
available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N. W., Washington D.C. 20549, and at the following regional offices
of the Commission located at 7 World Trade Center, New York, New York 10048
and at the Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may be obtained from the public
reference section of the Commission at 450 Fifth Street, N. W., Washington,
D.C. 20549, at prescribed rates. Copies of the Company's Annual, Quarterly
and other Reports which will be filed by the Company with Commission
commencing with the Quarterly Report for the first quarter ended after the
date of this Prospectus (due 45 days after the end of such quarter) will
also be available upon request, without charge, by writing Micro
Interconnect Technology, Inc., 70 Horizon Drive, Bedford, New Hampshire
03110.
LIMITED STATE REGISTRATION
THE SECURITIES HAVE BEEN REGISTERED IN COLORADO, NEW HAMPSHIRE, UTAH,
PENNSYLVANIA, MASSACHUSETTS AND NEW YORK, AND MAY ONLY BE OFFERED OR TRADED
IN SUCH OTHER STATES PURSUANT TO AN EXEMPTION FROM REGISTRATION. PURCHASERS
OF SUCH SECURITIES EITHER IN THIS OFFERING OR IN ANY SUBSEQUENT TRADING
MARKET WHICH MAY DEVELOP MUST BE RESIDENTS OF STATES IN WHICH THE SECURITIES
ARE REGISTERED OR EXEMPT FROM REGISTRATION." FOR THE OFFERING HEREUNDER, THE
COMPANY INTENDS TO RELY ON, BUT HAS NOT OBTAINED EXEMPTIONS FROM
REGISTRATION IN THE STATES OF CALIFORNIA, FLORIDA, GEORGIA, ILLINOIS, NEVADA
AND NEW JERSEY. SOME OF THE EXEMPTIONS ARE SELF-EXECUTING, THAT IS TO SAY
THAT THERE ARE NO NOTICE OR FILING REQUIREMENTS AND COMPLIANCE WITH THE
CONDITIONS OF THE EXEMPTION RENDER THE EXEMPTION APPLICABLE. THE COMPANY
WILL AMEND THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES,
IF ANY, IN WHICH THE COMPANY'S SECURITIES WILL HAVE BEEN REGISTERED OR AN
EXEMPTION IS AVAILABLE." See "RISK FACTORS - State Blue Sky Registration;
Restricted Resales of the Securities."
UNTIL , 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. THIS PROSPECTUS SHOULD BE READ IN
ITS ENTIRETY BY ANY PROSPECTIVE INVESTOR PRIOR TO HIS OR HER INVESTMENT.
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PROSPECTUS SUMMARY
Except for the historical information contained herein, the matters set
forth in this Prospectus include forward-looking statements within the
meaning of the "safe harbor"provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to risks
and uncertainties that may cause actual results to differ materially. These
risks and uncertainties are detailed throughout the Prospectus. The
forward-looking statements included in the Prospectus speak only as of the
date hereof. The following summary is qualified in its entirety by the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information
presented does not reflect exercise of the Warrants.
THE COMPANY
Micro Interconnect Technology ( the "Company") was recently incorporated
under the laws of the State of Nevada on February 11, 1998. The Company has
not commenced planned principal business operations and is considered a
development stage company. The Company has no significant assets (See
Financial Statements), no active business operations nor any results
therefrom. To date, activities have been limited to organizational matters,
research and due diligence for the corporate business plan and the
preparation and filing of the registration statement of which this
prospectus is a part. The purpose of the Company's formation is to
initially engage in the business of trying to reduce, to industrial
production, the proprietary technology contained in one of four patents
exclusively licensed to the Company and if successful to use this
proprietary technology to initially develop and manufacture an imaging
workstation that could be used to help make high density electronic
component interconnections which are utilized in the growing trend to make
electronics run at higher speeds, be smaller and lighter, less expensive
and more reliable. If the Company is unsuccessful in developing and
profitably marketing an imaging workstation, it will more than likely, be
unable to continue operations. The Company, only if successful in
developing and profitably marketing an imaging workstation and able to
obtain sufficient funding, would begin developing, one at a time, using the
company's three other licensed proprietary technology patents, a hole
drilling workstation, electroplating work station and chemical processing
workstation. Each workstation will take an estimated 3 to 12 months to
develop. All of these workstations would have to be successfully developed
before any effort could be expended for trying to incorporate these four
workstations together to fabricate a complete flexible manufacturing cell
(factory) for producing high density electronic interconnects which the
Company, itself, could sell to the manufacturers and suppliers of
electronic components and devices. There can be no guarantees that the
Company will be able to successfully fund, develop, manufacture and
profitably market these additional workstations or create the flexible
manufacturing cell (factory) for producing high density electronic
interconnects. There is high risk for failure because the Company may find
it more difficult than anticipated to reduce, to industrial production, the
basic concepts of the patents and in dealing with all the other problems
associated with the development of new technological products, such as,
design flaws, fabrication and delivery delays, testing and calibration
problems and the possible intervention of new technology. The technology
covered by the Company's patents does not cover all the phases of the
process of making high density electronic interconnect components and
therefore, there is a higher probability that the Company may not be able
to develop and manufacture these workstations. There can be no guarantees
that the market will financially support these products, when and if they
are developed and manufactured. The Company presently has no preliminary
agreements or understandings with respect to the sale of any type of
workstation or high density electronic interconnect components. See
"BUSINESS - The Base Product", "Development Opportunities" and
"Manufacturing."
The designing of the overall system will need to be addressed first.
Research and development activities of the project will consist primarily
of labor to reduce the concepts of the Company's patents to industrial
production. This will be proven in the proposed imaging workstation. The
Company will need to hire employees with skills and experience in these
areas to begin the process. Next would be the development of the exposing
system where the electro-mechanical and optical concepts would need to be
finalized a prototype produced and debugged. The photographic film coating
and processing to be used may use conventional techniques or could include
pad processing modeled after airborne photo reconnaissance systems widely
used in World War II. The run time and other software must be designed and
needs to be coded and debugged for implementation into the imaging
workstation. Some outside services will be required for some of the
electronic fabrication and testing and mechanical manufacturing. There will
be many risks associated with the development and production of the
imagining workstation including, existing product limitations, such as, the
ability to place solder (the melting of a tin alloy) into small places and
etc. See "RISK FACTORS - Risk of New Product Development" and "Risk of
Technological Development." There are no guarantees that any of these steps
can be successfully completed and a workable imaging workstation developed,
or if developed, that it would be received favorably by the industry it is
trying to gain a market share in. The Company will be totally dependent
upon the funding received upon completion of this offering for the
development and production of an imaging workstation and expect that from
the receipt of such funding it will take at least 12 months to accomplish
its development and production and may be longer if any unusual problems
are
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<PAGE>
encountered. The Company does not anticipate generating any revenues of any
kind before the Company is actually able to market and make sales of the
proposed imaging workstation. This could result in the Company needing to
seek additional funding of which there are no assurances that the Company
would be able to secure, on favorable terms, any such needed financing. See
"RISK FACTORS - Need for Additional Funding."
The hole drilling, electroplating and chemical processing workstations
will each require similar activities and timing for their development.
Those activities would primarily consist of labor to reduce, to industrial
production, the concepts of the patents to be proven in the workstations.
Again, the production of each of these workstations would be dependent upon
the successful development and completion of the various steps associated
with each type of workstation and the ability to overcome the technological
risks and limitations encountered. See "RISK FACTORS - Risks of
Technological Development", "Potential Product Development Delays" and
"Risk of New Product Development."
The development of each of these other workstations will need funding,
which the Company presently expects to generate from the sales of the
Company's workstations and/or from additional funding activities. Revenues
will be dependent upon the successful completion and sales of any of the
Company's workstations. There can be no guarantees that the Company will
ever be able to successfully develop, produce, market or sell any of its
proposed workstations or that, even if it does, that sales revenue would be
sufficient for funding the development of one of the undeveloped
workstations without the need for additional funding activities. The
Company believes that in the event this Offering is successfully completed,
that it will have sufficient funding for the following 12 months. See "RISK
FACTORS - Need for Additional Funding."
The development of the Company's flexible manufacturing cell will be
dependent upon the successful completion of all of these workstations of
which, there can be no assurances that any of them will ever be
successfully developed and manufactured. The flexible manufacturing cell
(factory) could commence development within four years from the successful
completion of this Offering and would take approximately 3-6 months for
development and if successfully completed, could then begin generating
revenues for the Company. Its development would be associated with the same
material risks involved in the development of any new technological
product. The inability of the Company to develop any one of its
workstations would have a very negative impact upon the Company's ability
to develop a flexible manufacturing cell (factory) for producing high
density electronic interconnects which the Company, itself, could sell to
the manufacturers and suppliers of electronic components and devices. The
failure to eventually develop a flexible manufacturing cell (factory) would
have a sustained material adverse effect on the Company's business,
financial condition and results of operations. See "RISK FACTORS - Risk of
New Product Development", "Risk of Technological Development" and
"Potential Product and Development Delays."
The Company presently has no office facilities but will use the home
office of N. Edward Berg, its president, on a rent-free basis until the
completion of this Offering, at which time the Company will enter into an
agreement for leasing approximately 1200 square feet of executive and
manufacturing space for a one year period with an option to extend it for
another year. The manufacturing space will have a computer and software
support system and manufacturing type tools needed for the fabrication
support of the Company's proposed imaging workstation. See "BUSINESS -
Facilities."
The Company's principal executive offices are located at 70 Horizon
Drive, Bedford, NH 03110, telephone (603)472-7068, facsimile (603) 472-
7043.
THE OFFERING
SECURITIES OFFERED . . . . . 150,000 Units (the "Units"), consisting of
150,000 shares of Micro Interconnect Technology, Inc. Common Stock with a
par value of $.001 per share, 300,000 redeemable Common Stock purchase
warrants (the "Warrants"). The Common Stock in the Units and underlying
Warrants will have equivalent voting rights, on a share for share basis,
with the current outstanding Common Stock of the Company. See "DESCRIPTION
OF THE SECURITIES."
OFFERING PRICE . . . . . . . $2.00 Per Unit.
WARRANTS . . . . . . . . . . Each Warrant allows the holder to purchase
one share of Common Stock for $2.50(125% of the Unit Price); the Warrants
are subject to adjustments in certain events and for a period of one (1)
year from the date of this Prospectus. The Warrants are separately
transferrable from the Common Stock as of the date of this Prospectus. The
Company may redeem the Warrants at a price of $.01 per
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Warrant, at any time beginning 6 months after the date of this Prospectus
upon not less than 30 days prior written notice if the closing bid price of
the Common Stock on the NASDAQ Bulletin Board is at least $3.00 per share
(150% of the Unit Price) for 20 consecutive trading days, ending not
earlier than five days before the Warrants are called for redemption. See
"DESCRIPTION OF SECURITIES - Warrants."
USE OF PROCEEDS. . . . . . . Management intends to use the net proceeds
from this Offering primarily to provide initial working capital for
engaging in the business of trying to reduce to industrial production the
proprietary technology contained in patents exclusively licensed to the
Company. The Company will try to use this proprietary technology to develop
and manufacture an imaging workstation that could be marketed by the
Company and could be used in the future for the development of a complete
manufacturing cell for producing high density electronic component
interconnections such as are utilized in the growing trend to make
electronics run at higher speeds, be smaller and lighter and more reliable.
See "USE OF PROCEEDS." The Company may find it more difficult than
anticipated to reduce, to industrial production, the basic concepts of the
patents. And, whereas the technology covered by these patents does not
cover all the phases of the process of making high density electronic
component interconnects there is a higher probability that the Company may
not be able to develop, manufacture and successfully market the imaging
workstation. Unless the Company is able to develop, manufacture and
successfully market the imaging workstation, it would not be able to begin
work on the development of other workstations that would be needed for
incorporation into a complete flexible manufacturing cell (factory) that
could produce high density electronic interconnects to be sold by the
Company to the manufactures and suppliers of electronic components and
devices.
Over 58% of the net proceeds are to be used for salaries for research
and development activities that will primarily consist of labor to reduce,
to industrial production, the basic concepts of the patents for development
of the imaging workstation. Approximately 35% will be used for further
research and manufacturing development expenses and the remaining 6% is to
be used for office, sales and travel expenses.
The Company intends to offer and sell the Units through its president
and director N. Edward Berg, who will rely on the safe harbor from
broker/dealer registration set out in rule 3a4-1 under the Securities
Exchange Act of 1934, without the use of a professional underwriter.
Presently the Company has not identified any dealers and does not intend to
select any broker/dealers who are members of the National Association of
Securities Dealers, Inc. (N.A.S.D.), to offer or sell any of its
securities. But it may elect to do so and will allow a maximum commission
of 10% on sales made by brokers. Prior to the involvement of any
broker/dealer in the Offering, the Company must obtain a "no objection"
position from the NASD regarding any contemplated compensation and
arrangements. In the view of the Commission's Division of Corporation
Finance, any selected broker/dealer that sells securities in this Offering
will be deemed an underwriter as defined in Section 2(11) of the Securities
Act of 1933, as amended. The Company will amend the registration statement
by post-effective amendment to identify a selected broker/dealer at such
time as such broker/dealer sells 5% or more of the Offering. No commissions
will be paid for sales effected by officers and directors, however these
figures assume payment of commissions on the sale of all Units. The
Offering is being conducted directly by the Company without the use of a
professional underwriter. Offering proceeds will be escrowed pending
completion or termination of the Offering. The Offering will terminate 150
days from the date hereof, subject to an extension at the sole discretion
of the Company for an additional period not to exceed 30 days in the
aggregate, and funds held in escrow will be promptly returned to
subscribers, without interest thereon or deduction therefrom, unless the
Offering is completed on or before that date upon receipt of subscriptions
for the entire offering amount. See "PLAN OF DISTRIBUTION."
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TRANSFER/WARRANT AGENT . . . Interwest Transfer Company, Inc., 1981 East
4800 South, Suite 100, Salt Lake City, Utah 84117, (801) 272-9294, has
agreed to serve as the transfer/warrant agent and registrar for the
Company's outstanding securities upon completion of the Offering.
SECURITIES OUTSTANDING . . . The Company is authorized to issue up to
50,000,000 shares of Common Stock and presently has 1,000,000 shares issued
and outstanding. Upon completion of this Offering, 1,150,000 shares will be
issued and outstanding. Exercise of the Warrants, all or in part, would
increase the issued and outstanding Common Stock of the Company
accordingly. In addition, the Company has adopted a Stock Option Plan
pursuant to which 1,000,000 shares of Common Stock may be issued upon the
exercise of options which the Board of Directors has the authority to grant
to officers, directors and employees. See "1998 STOCK OPTION PLAN."
RISK FACTORS . . . . . . . . The Company is a developmental stage company
with no operating history; accordingly, there can be no assurance that the
Company will generate revenues in the future; and there can be no assurance
that the Company will operate at a profitable level. An investment in the
Company is highly speculative. Investors will suffer substantial dilution
in the book value per share of the Common Stock compared to the Purchase
Price. The Company could incur substantial losses during its start up
phase. No person should invest in the Company who cannot afford to risk
loss of the entire investment.See "RISK FACTORS" and "DILUTION."
ADDITIONAL INFORMATION. . . .Persons desiring to ask questions regarding
the Company should contact the Company at the address set forth herein.
SUMMARY OF SELECTED
FINANCIAL DATA . . . . . . . The Company is a development stage company
and has no revenues or earnings from operations. As of December 31, 1998:
Total Assets . . . . . . . . . . . $11,642
Total Liabilities. . . . . . . . . .$2,798
Shareholders Equity. . . . . . . . .$8,844
Net Tangible Book Value. . . . . . .$8,844
Net Tangible Book Value per share.$.008844
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GLOSSARY OF INDUSTRIAL TERMS
ALIGNMENT: Placement of the circuit images relative to mechanical
holding pins (Tooling pins) to insure layers are properly positioned
horizontally relative to each other when they are stacked vertically in
multi-layered printed circuit boards.
ASSEMBLY: A collection of electro-mechanical and optical devices working
together to perform a function in a workstation.
BREADBOARD: An assembly of electronic and mechanical devices constructed
to test feasibility of a concept. First prototype.
CHIP(s): See semiconductors.
COMPUTER COMPENSATION OF MANUFACTURING DEFECTS: Correcting of repeatable
errors in the manufacturing process by changing the previous processes to
correct the defect (i.e. if the bonding operation in a multi-layer PCB
causes undesired elongation of the layers, the imaging for the layers can
be correspondingly shrunk, thereby correcting for the undesired
elongation).
DEVELOPMENT OF INTERCONNECT (CIRCUIT) IMAGE: Steps in the production of
interconnects which lead up to the etching or plating of the interconnects
on the substrate. (i.e. making the interconnect images on the photo-
resist).
DIRECT DIGITAL IMAGING: Selectively cross linking a photo-resist (photo-
polymer) with a laser without using a photo-tool or insitu mask. This
technique has not seen wide scale usage due to high equipment costs and
slow production speeds. Speeds are directly related to density.
ELECTRONIC INTERCONNECTS: The conductors that provide electrical paths
or connections between electronic elements such as semiconductors "chips"
and electronic components (resistors, capacitors etc.) forming a circuit.
(i.e. a printed circuit (wiring) board.)
ELECTRO-MECHANICAL: Assemblies involving electronic, mechanical and
optical components.
EXPOSING SYSTEMS: A piece of equipment that takes film or computerized
images and produces them on a resist coated substrate for interconnect
manufacture.
FLEXIBLE MANUFACTURING CELL. A collection of work stations which perform
different manufacturing operations on the interconnects as they move
through the cell from station to station - progressing from raw materials
to finished product. An automated factory.
HIGH DENSITY ELECTRONIC INTERCONNECTS (HDI): Interconnects that are
small in size and spaced close together. (i.e. printed circuit boards whose
interconnects are greater in density than 100 conductors (wires) per square
inch (5/1000 of an inch lines and spaces)).
IMAGING DEFECTS: Variations in the image from the desired.
IMAGING WORK STATION: Part of a flexible manufacturing cell that coats
substrates with a photo-resist, masks that resist by applying an emulsion
film, then exposing the emulsion film with an exposure system the utilizes
an electronic form of the interconnect images, develops the emulsion film
forming an insitu mask. The photo-resist is then exposed and developed,
making the substrate ready for etching or plating of the interconnect.
INSITU: In position of close contact. Direct contact with minimal
spacing. A mask that is in direct contact with the photo-polymer resist.
INTEGRATED CIRCUIT (IC): See semiconductors.
MASKS: A medium that selectively allows light transmission. (i.e. a
black and white film used as a photo-tool). In electronic interconnect
production, masks (photo-tool or insitu mask) are placed on top of a photo-
polymer. Light is passed through the mask, causing the photosensitive layer
to be selectively exposed. The exposed areas become chemically cross-linked
while the unexposed areas remain in their original state. This process
determines what will become the conducting (interconnect) and nonconducting
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parts of the substrate (i.e. printed circuit board with conducting traces,
or wires). Masks are used for selecting which areas will not be affected
(masked off) in a process and which areas which will be affected (i.e.
which areas will be plated and which areas will not be plated to produce
the desired circuit).
MASKS, HIGH DENSITY: Masks that have high resolution and provide fine
features. (i.e. 100 conducting lines per square inch. See high density
interconnects).
MASKS MADE BY THE COMPANY'S PROPRIETARY METHODS: A photographic film
emulsion is coated on the photo-polymer (resist) to form an insitu mask
that is selectively exposed by the company's proprietary methods and
developed to form the desired circuit (interconnect) images. The resist
(photo-polymer) is then cross-linked and developed. The desired
interconnects are subsequently plated or etched.
MULTI-CHIP MODULE (MCM): An interconnection method for interconnecting
semiconductors (chips) wherein the conductors are deposited on silicon
substrates. Chips that require a high number of interconnections between
them can be connected together in a module thereby reducing the number of
interconnects that the PCB must provide to the module.
OPTICALS: The lenses and optical components of an exposing system.
PHOTO-PLOTTER: An electronic-optical and mechanical apparatus for making
photo-tools (circuit images on plastic based film).
PHOTO-RESIST: A photo-polymer that, when cross-linked by exposure to
light and developed, resists a plating or an etching process. The required
exposure is about 1/100 joules per square centimeter of ultra violet light
energy.
PHOTO-TOOL: A black and white film upon which circuit (interconnect)
images are recorded. In PCB production the photo-tool is placed on a photo-
resist coated substrate and the photo-tool is flooded with UV light to
cross-link the photo-resist to form the circuit (interconnect) images. The
circuit is then produced by an etching or plating process.
PRINTED CIRCUIT BOARD (PCB): A substrate upon which electronic
interconnects (conductors that provide electrical paths "wires" between
electronic elements) are made. The printed circuit board generally is the
structure upon which the components are placed and soldered into position
completing the connection path.
PRINTED WIRING BOARD (PWB): See printed circuit board.
PROTOTYPE: The first model of a new design.
RESIST: See photo-resist.
SCALEABLE: Process that can be improved over time by refinements without
requiring new inventions.
SCRAP RATE: The amount of product produced that is not shippable due to
defects compared to the amount of products that could be shipped if there
were no defects.
SEMICONDUCTORS: Circuit elements made in a common package such as a
personal computer chip, i.e. Pentium by Intel and 486 by Advanced Micro
Devices, etc.
SERVICE CENTER FOR IMAGING: A common location for supplying interconnect
(circuit) imaged substrates (printed circuit board substrates) to multiple
customers (printed circuit board manufacturers).
SUBSTRATE: The non-conducting surface upon which the circuit
interconnects are made. (i.e. bare (non-metallic clad) printed circuit
board).
WORK STATION: A part of a flexible manufacturing cell that performs
specific operations on the interconnects as they move through the cell.
(i.e. placing the interconnect image on the substrate and preparing it for
an etch or plating operation to form the interconnects).
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RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider the
following risk factors and the other information contained in this
Prospectus before making an investment in the Units. Information contained
in this Prospectus contains "forward-looking statements" which can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "should" or "anticipates" or the negative thereof or
other variations thereon or comparable terminology or by discussions of
strategy. See, e.g., "MANAGEMENT'S PLAN OF OPERATIONS" and "BUSINESS." No
assurance can be given that the future results covered by the forward-
looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results
covered in such forward-looking statements. Other factors could also cause
actual results to vary materially from the future results covered in such
forward-looking statements.
RISKS INHERENT IN A NEW START-UP COMPANY
LIMITED OPERATING HISTORY. The Company was only recently incorporated,
has no significant assets, no current business operations nor any history
of operations and is considered to be a development stage enterprise. There
is absolutely no assurance that the Company will be able, upon completion
of this Offering, to successfully implement its proposed business or that
it will ever operate profitably.
LIMITED CAPITAL/NEED FOR ADDITIONAL CAPITAL. The Company presently has
no significant assets or operating capital and is totally dependent upon
receipt of the proceeds of this Offering to provide the minimum capital
necessary to commence its proposed business. Upon completion of the
Offering, the amount of capital available to the Company will still be
extremely limited. The Company has no commitments for additional cash
funding beyond the proceeds expected to be received from this Offering. In
the event that the proceeds from this Offering are not sufficient, the
Company may need to seek additional financing from commercial lenders or
other sources, for which it presently has no commitments or arrangements.
See "USE OF PROCEEDS."
NO DIVIDENDS. The Company does not currently intend to pay cash
dividends on its common stock and does not anticipate paying such dividends
at any time in the foreseeable future. At present, the Company will follow
a policy of retaining all of its earnings, if any, to finance development
and expansion of its business. See "DIVIDEND POLICY."
LIMITED LIABILITY OF OFFICERS AND DIRECTORS. The Nevada Revised Statutes
provides that the Company shall provide indemnification of officers and
directors and certain employees under certain circumstances and payment of
expenses outlined in the statute. The Bylaws of the Company provide that
the officers and directors of the Company shall be indemnified to the
fullest extent allowable under the statute. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being offered, the Company will, unless in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court or appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
OTHER CONFLICTS OF INTEREST. The Company will be dependent upon the
availability of the office and other physical facilities provided by its
officer's wife for record keeping and for manufacturing and engineering.
The Company presently contemplates entering into a one-year lease agreement
with the Company having the option for an additional year. The arrangements
under which such facilities were made available to the Company were
determined by the officer and were not the result of arms length
negotiation. It is also contemplated that the Company my enter into
additional non arms length transactions with members of management.
Management intends that such transactions be entered into on a fair and
reasonable basis to the Company; however, due to the non arms length nature
of such transactions, there is no assurance of this. See "CERTAIN
TRANSACTIONS."
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RISKS RELATED TO THE NATURE OF THE PROPOSED BUSINESS
UNCERTAIN MARKET ACCEPTANCE. The Company will initially develop,
manufacture and market equipment used for the production of new high
density electronic interconnect products used for the interconnecting of
electronic components and equipment. These are products that could help
make electronics run at higher speeds and become smaller, lighter and more
reliable. Management believes that these products, when developed, could
enhance some electronics and could spur the growth of new electronic
products, and, hence, a market for the products which the Company intends
to market. However, no assurance can be given that a market for the
products will arise once the product development is complete. The Company
has not undertaken any independent market studies to determine the
feasibility of the products that the Company intends to market. Even if
demand for the products does arise, it is possible that the Company will be
unable to capitalize immediately on the opportunity because of the
necessary time and resources needed to develop the market.
RISK OF NEW PRODUCT DEVELOPMENT. The Company may experience difficulties
that could delay or prevent the development, introduction and marketing of
new products. The Company will be dependent in the near future upon
products that will be developed. There can be no assurance that, despite
testing by the Company, problems will not be found in the Company's
products, or, if problems are discovered, corrected in a timely manner. If
the Company is unable on a timely basis to develop new products or
enhancements to existing products, or if its products do not achieve market
acceptance, the Company's business, operational results and financial
condition will be materially adversely affected. See "BUSINESS - The Base
Product" and "Development Opportunities."
RISK OF TECHNOLOGICAL DEVELOPMENT. The Company believes that currently
no competitor is working on the development of interconnecting electronic
components and equipment that are based on the proprietary approach of the
Company's. These methods, when developed, may enhance electronics that
would benefit from higher density interconnects and could spur the growth
of new electronic products where size & weight are an issue. There can be
no guarantee that there is not currently in existence another technology or
proprietary approach with superior characteristics and range, nor that such
a technology or proprietary approach will not be developed. Accordingly,
the Company's success is dependent on its ability to anticipate
technological changes in the industry and to continually identify, develop
and successfully market new products that satisfy evolving technologies,
customer preferences and industry requirements. There can be no assurance
that competitors will not market products which have perceived advantages
over those of the Company or which render the Company's products obsolete
or less marketable. Any imaging workstations, or other workstations, used
in the production of high density electronic interconnects that prove
superior to the Company's could significantly damage the sales of the
Company.
The patents represent basic concepts, whose reduction to industrial
production may be more difficult than anticipated. The patents do not cover
all phases of the process of making high density interconnects. And,
although management feels that the phases not covered by the patented
technology are less critical in the manufacture of high density inter-
connects, they may turn out to be more difficult to solve than anticipated.
Other risks associated with the technological development of the Company's
products will be associated with existing process limitations. These
include the ability to place solder (the melting of a tin lead alloy) into
small places in order to join the components to the interconnects, the
ability to keep the characteristics (flatness, smoothness, etc.) of the
surface upon which the circuit image is placed and the problem of heat
build-up when component (chips) are placed in close proximity to each
other, thereby limiting the possible packing density. These process
limitations may restrict the interconnect feature size.
POTENTIAL PRODUCT DEVELOPMENT DELAYS. The successful development of new
products by the Company is essential to the success of the Company. The
Company aims to develop an imaging workstation and other work stations
necessary to complete a flexible manufacturing cell which will produce high
resolution electronic interconnects over the next four years and expects
the development time for the various products to take between 3 and 12
months. If successfully developed, the imaging workstation, by itself, may
not have the desired marketplace acceptance to bring the Company to
profitability since it will solve only one aspect of the problems of making
high density interconnects. There can be no guarantees that the Company
will be able to develop any new products during this time frame. The
process of developing a workstation involves trying to reduce the basic
concepts of the Company's patents to practice, designing, manufacturing
and, finally, testing the product. The nature of the development process
means that there is a risk, that even if the products are successfully
developed, the process could take significantly longer than expected.
Delays in the development of new
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<PAGE>
products would delay the sales that the Company requires in order to attain
profitability. Additionally, failure on the part of the Company to develop
the intended products quickly could lead to another technology gaining
market acceptance before the Company's products; therefore, reducing the
market share available to the Company, and increasing the difficulty of
selling the products. Any delays could materially adversely affect the
Company's business, financial condition and results of operations. See
"MANAGEMENT'S PLAN OF OPERATIONS."
DEPENDENCE ON SUPPLIERS. The Company does not initially plan any long-
term supply agreements with any of its suppliers, and the majority of the
critical components for subassemblies included in the Company's products
are obtained from a limited group of suppliers. The manufacture of certain
components for the subassemblies is complex and requires long lead times
and the Company's systems cannot be produced without certain critical
components. Additionally, alternative suppliers for many of these
components may not be readily available, and no substantial increase in the
number of alternative suppliers is anticipated. The Company intends to
continue to rely on outside suppliers because of their specialized
expertise in component fabrication and subsystem assembly. The Company's
reliance on a limited group of suppliers involves several risks, including
the potential inability to obtain an adequate supply of components and
reduced control over pricing and delivery time. There can be no assurance
that delays or shortages caused by suppliers will not occur in the future.
Any inability to obtain adequate, timely deliveries of components or
subassemblies could prevent the Company from meeting scheduled shipment
dates. This would damage relationships with prospective customers and would
materially adversely affect the Company's business, financial condition and
results of operations. See "BUSINESS Manufacturing", "BUSINESS - Base
Product - Imaging Workstation."
HEALTH AND SAFETY REGULATIONS AND STANDARDS The Company's products are
subject to numerous governmental regulations designed to protect the health
and safety of operators of manufacturing equipment and the environment. In
addition, numerous domestic semiconductor manufacturers, including certain
of the Company's potential customers, have subscribed to voluntary health
and safety standards and decline to purchase equipment not meeting such
standards. The Company believes that its products will comply with all
applicable material governmental health and safety regulations and
standards and with the voluntary industry standards currently in effect. In
part because the future scope of these and other regulations and standards
cannot be predicted, there can be no assurance that the Company will be
able to comply with any future regulation or industry standard. Non-
compliance could result in governmental restrictions on sales and/or
reductions in customer acceptance of the Company's products. Compliance may
also require significant product modifications, potentially resulting in
increased costs and impaired product performance. See "BUSINESS -
Government Regulations and Industry Standards."
DEPENDENCE ON PATENT PROTECTION. The Company currently plans to develop
an imaging work station and eventually other work stations which will be
used in a flexible manufacturing cell for the development and production of
high density electronic interconnects. The technology for developing the
new equipment for the production of the new high density electronic
interconnects and new electronic interconnects will be protected by certain
patents exclusively licensed by the Company. The Company intends to enforce
its licensed patents aggressively. However, there can be no assurance that
such protection will be available in any particular instance nor that the
Company will have the financial resources necessary to enforce its rights
adequately. The unavailability of such protection or the inability to
adequately enforce such rights could materially adversely affect the
Company's business and operating results. The Company operates in a
competitive environment in which it would not be unlikely for a third party
to claim that certain of the Company's future products may infringe the
patents or rights of such third parties. If any such infringements exit or
arise in the future, the Company may be exposed to liability for damages
and may be required to obtain licenses relating to technology incorporated
into the Company's products. The Company will continue to seek patents for
all the products that it develops; however, there can be no guarantee that
future products will be patent protected, nor that a competitor may not
find a means of circumventing any patents that are awarded. The Company's
inability to obtain such licenses on acceptable terms or the occurrence of
related litigation could materially adversely affect the Company's
operation. See "BUSINESS - Patent Licensing and Marketing Agreements."
DEPENDENCE ON KEY PERSONNEL. The Company is dependent upon the
management of N. Edward Berg, its President and Chief Executive Officer.
Although the Company intends to retain other experienced and qualified
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managers, the loss of the services of Mr. N. Edward Berg, whether as a
result of death, disability or otherwise, could have a material adverse
effect on the Company's operations. The Company does not have the resources
to obtain key-man insurance on the lives of its key officers and employees.
COMPETITION. The Company plans to market new equipment to produce new
and improved high density electronic interconnects and eventually to
produce and sell the new high density interconnects themselves. These
products are being developed and produced using the patented proprietary
technology that the Company has exclusively licensed. The market for the
Company's products when developed is intensely competitive, quickly
evolving and subject to rapid technological change. Competitors may develop
superior products or products of similar quality for sale at lower prices.
Moreover, there can be no assurance that the Company's products will not be
rendered obsolete by changing technology or new industry standards. The
Company expects competition to persist and increase in the future. The
Company's current and potential competitors have longer operating
histories, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than the
Company. This intense level of competition could materially adversely
affect the Company's future business, operating results and financial
condition. Competitive factors in the industry include product pricing,
capabilities, reliability, speed and cost. There can be no assurance that
the Company will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial
condition. Many of the Company's competitors have the financial resources
necessary to enable them to withstand substantial price and product
competition, which is expected to increase. They can be expected to
implement extensive advertising and promotional programs, both generally
and in response to efforts by other competitors, to enter into existing
markets or introduce new products. The industry is also characterized by
frequent introductions of new products. The Company's ability to compete
successfully will be largely dependent on its ability to anticipate and
respond to various competitive factors affecting the industry. These
include new products which may be introduced, changes in customer
preferences, demographic trends, pricing strategies by competitors and
consolidation in the industry where smaller companies with leading edge
technologies may be acquired by larger multinational companies. This,
together with the limited capital available to the Company which will limit
its marketing effort, creates a significant competitive disadvantage. If
the Company is not able to compete successfully, regardless of the
development of its products and the success of this Offering, it will not
succeed. See "BUSINESS - Competition."
RISKS RELATED TO THE OFFERING
BEST EFFORTS OFFERING/NO FIRM COMMITMENT. The Units are offered by the
Company on a "best efforts, all or none basis"; there is no underwriter and
no firm commitment from anyone to purchase all or any of the Units offered.
No assurance can be given that all of the Units will be sold. However,
escrow provisions have been made to insure that if subscriptions for all
the Units are not received within the offering period, plus any extensions,
all funds received will be promptly refunded to subscribers without
interest thereon or deductions therefrom. During the offering period, which
could last up to 180 days, subscribers will receive no interest on their
funds nor have any use or right to return of the funds.
LACK OF UNDERWRITER PARTICIPATION. Because the Company has not engaged
the services of the Underwriter with respect to this Offering, the
independent due diligence review of the Company, its affairs and financial
condition, which would ordinarily be performed by an underwriter and its
legal counsel, has not been performed with respect to the Company, and
investors will not have the benefit of an underwriter's independent due
diligence review. Furthermore, lack of underwriter or broker/dealer
participation in the Offering is likely to increase the risk that no market
for the Company's securities will develop upon completion of the Offering.
UNCERTAIN SUFFICIENCY OF FUNDS. The Company believes that the net
proceeds to the Company from the sale of the Units offered hereby (assuming
that all Units offered hereby are sold) will provide the Company with
sufficient capital to fund continuing operation, development and expansion
of the Company's business. Many factors may, however, affect the Company's
cash needs, including the Company's possible failure to generate sufficient
revenues from the sale of its products (see "USE OF PROCEEDS").
POSSIBLE NEED FOR ADDITIONAL FINANCING. The Company has had no revenues
to date and is entirely dependent upon the proceeds of this Offering to
commence operations relating to its prospective business. The Company will
not receive any revenues until, at the earliest, revenues are received
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from the sales of the Company's proposed imaging workstation which could be
at least 12 months or longer from the time of closing of this Offering.
Although the Company believes that the proceeds of this Offering will be
sufficient to effect its business, the Company cannot ascertain with any
degree of certainty the capital requirements for the development and
production of a marketable imaging workstation. In the event that the net
proceeds of this Offering prove to be insufficient for purposes of
developing and producing an imaging workstation, the Company currently has
no plans or arrangements with respect to the possible acquisition of
additional financing which may be required to continue the operations of
the Company. It is presently not contemplated that any of the Company's
executive officers or directors or their respective affiliates will be
providing any loans to the Company. There can be no assurance that such
financing would be available on acceptable terms, if at all. To the extent
that such additional financing proves to be unavailable when needed to
finish the development and production of an imaging workstation, the
Company would find that such failure by the Company to secure such
additional financing could have a material adverse effect on the continued
development or growth of the business.
There are currently no limitations relating to the Company's ability to
borrow funds to increase the amount of capital available to the Company to
finance the operations of the business. The amount and nature of any
borrowings by the Company will depend on numerous considerations, including
the Company's capital requirements, the Company's perceived ability to meet
debt service on such borrowings and the prevailing conditions in the
financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or otherwise sought, would be
available on terms deemed to be commercially acceptable and in the best
interests of the Company. The inability of the Company to borrow funds for
an additional infusion of capital into the business may have material
adverse effects on the Company's financial condition and future prospects.
To the extent that debt financing ultimately proves to be available, any
borrowings may subject the Company to various risks traditionally
associated with incurring indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal and
interest.
Because of the Company's small size, investors in the Company should
carefully consider the business constraints on its ability to raise
additional capital when needed. Until such time as any enterprise, product
or service which the Company acquires generates revenues sufficient to
cover operating costs, it is conceivable that the Company could find itself
in a situation where it needs additional funds in order to continue its
operations. This need could arise at a time when the Company is unable to
borrow funds and/or when market acceptance for the sale of additional
shares of the Company's Common Stock does not exist.
RISK THAT ADDITIONAL FINANCING WILL BE UNAVAILABLE. Although there is a
specific business plan contemplated by management, it may be expected that
any such business will present such a level of risk that conventional
private or public offerings of securities or conventional bank financing
would not be available.
BENEFITS TO PRESENT STOCKHOLDERS/DISPROPORTIONAL RISKS. The 1,000,000
presently outstanding Shares of the Company's common stock was purchased by
the founder of the Company for $10,000.00. If the founder does not purchase
any of the securities offered hereby, such person will still own,
immediately after completion of the Offering, 87% of the then outstanding
common stock, and investors in this Offering will own the other 13%, for
which they will have paid $300,000 cash. Investors in this Offering will
contribute to capital of the Company a disproportionately greater
percentage than the ownership they receive. Present stockholders will
benefit from a disproportionately greater share of the Company if
successful, while investors in this Offering risk a disproportionally
greater loss of cash invested if the Company is not successful. See
"COMPARATIVE DATA."
BROAD DISCRETION AS TO USE OF PROCEEDS. The Company's Management shall
have wide discretion as to the exact allocation and priority and timing of
the allocation of funds raised from this Offering. The allocation of the
Proceeds of the Offering may vary significantly depending upon numerous
factors, including the success that the Company has developing and
marketing its products. Accordingly, management will have broad discretion
with respect to the expenditure of the net proceeds of this Offering.
Investors purchasing the Units offered hereby will be entrusting their
funds to the Company's management, upon whose judgement the Subscribers
must depend. See "USE OF PROCEEDS."
DISCRETIONARY USE OF PROCEEDS; POSSIBLE NEED FOR ADDITIONAL FINANCING.
The Board of Directors of the Company will have broad discretion in
allocating the net proceeds of the Offering among the categories discussed
in "USE OF PROCEEDS." If the net proceeds of the Offering are not adequate
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for completion of the Company's anticipated uses, additional financing may
be necessary. No assurance can be given that the Company will be able to
secure additional financing or that such financing will be available on
favorable terms. If the Company is unable to obtain such additional
financing, the Company's ability to maintain its current level of
operations could be materially adversely affected and the Company may be
required to reduce its overall expenditures. See "USE OF PROCEEDS,"
"BUSINESS" and "MANAGEMENT'S PLAN OF OPERATIONS."
DILUTION. Persons purchasing Units in the Offering will suffer an
immediate and substantial dilution to the net tangible asset value of their
shares below the public offering price. As of December 31, 1998, the Company
had a net tangible asset value of approximately $.009 per share. Assuming
that all Units offered hereby are sold, the Company will have a net
tangible asset value of approximately $.22 per share, or a decrease from
the $2.00 purchase price of 89%. Dilution may also occur if the Company
issues additional shares at a price lower than the offering price stated
herein. A substantial portion of the 50,000,000 authorized shares of common
stock of the Company will remain unissued if all shares offered hereby are
sold. The Board of Directors has, however, the power to issue such shares
without shareholder approval. Following the Offering, any additional
issuances of shares by the Company from its authorized but unissued shares
would have the effect of further diluting the book value of shares and the
percentage ownership interest of investors in this Offering. See
"DILUTION."
CONTINUATION OF MANAGEMENT CONTROL. The Company's present officers,
directors and principal shareholders own a majority of the Company's
outstanding stock and they may, subject to certain restrictions, purchase
Units in the Offering. However, even if the officers, directors and
principal shareholders do not purchase any of the securities offered
hereby, such persons, upon the completion of this Offering, will own
approximately 87% of the total outstanding securities and will have working
control of the Company. Investors in this Offering will have no ability to
remove, control or direct such management. See "PRINCIPAL SHAREHOLDERS."
NO PRESENT ACQUISITION OR MERGER TRANSACTION CONTEMPLATED. None of the
Company's officers, directors, promoters, their affiliates or associates
have had any preliminary contact or discussions with and there are no
present plans, proposals, arrangements or understandings with any
representatives of the owners of any business or company regarding the
possibility of an acquisition or merger transaction contemplated in the
prospectus.
STOCK OPTION PLAN. The Board of Directors has adopted and present
shareholders have approved a Stock Option Plan pursuant to which 1,000,000
shares of the Company's Common Stock are reserved for issuance upon
exercise of options which may be granted under the plan to officers,
directors and employees of the Company, subject to the terms and conditions
of the plan. Holders of such options will be given the opportunity, during
the exercise period of such options, to benefit from any rises in the
market price of the Company's Common Stock, and can be expected to exercise
such options at a time when the Company would be able to sell its
securities at a higher price. Exercise of such options may result in
further substantial dilution to investors in this Offering in the net
tangible book value per share of their Common Stock as well as a
substantial reduction in their proportionate ownership in the Company. See
"1998 STOCK OPTION PLAN."
ARBITRARY DETERMINATION OF OFFERING PRICE. The public offering price of
the Units offered hereby was arbitrarily determined by management of the
Company and was set at a level substantially in excess of the price
recently paid by such management for shares of common stock of the Company.
The price bears no relationship to the Company's assets, book value, net
worth or other economic or recognized criteria of value. In no event should
the public offering price be regarded as an indicator of any future market
price of the Company's securities.
EFFECT OF PURCHASES OF UNITS IN THIS OFFERING BY OFFICERS, DIRECTORS AND
AFFILIATES. Officers and directors of the Company may purchase up to 30,000
of the Units sold in the Offering under the same terms and conditions as
the public investors. Such purchases, if made, will be in compliance with
Rule 10b-6 and be for investment purposes only and not for redistribution
(i.e., no present intention to distribute or resell the securities). Such
purchases may be made for the purpose of closing the minimum Offering.
To the extent of any such purchases for investment purposes only, a
portion of the securities, from this Offering will not enter the "public
float." The public float is the amount of free-trading securities which are
immediately resalable in the trading market. Such reduction means that
there are fewer securities for the public investors to purchase and resell
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and may cause a lack of liquidity in the trading of the Company's
securities. Also, such a reduction in the public float may make possible
the commitment of public investors in the absence of public demand for the
Offering.
NO COMMITMENT TO PURCHASE UNITS. No commitment exists by anyone to
purchase any of the Units offered. Consequently, no assurance can be given
that any Units will be sold. Although no commitment has been made, officers
and directors may purchase up to 30,000 Units of the Offering. This
Offering is being made on a "best efforts, all or none" basis. In the event
that the 150,000 Units are not sold within 150 days from the effective date
of this prospectus, subject to an extension at the sole discretion of the
Company for an additional period not to exceed 30 days in aggregate, all
proceeds raised will be returned promptly to the subscriber in full without
interest thereon. Subscribers will not be entitled to a return of funds
from the escrow during the offering period (including the extension
thereof). (See "THE OFFERING" and "PLAN OF DISTRIBUTION.")
OFFICERS OR DIRECTORS MAY PURCHASE UP TO 20% OF THE UNITS IN THIS
OFFERING. The company may make sales of Units to officers and directors of
the company and that such persons may purchase up to 30,000 of the Units
offered hereby, although they have made no commitment to do so. Such
purchases shall be made for investment purposes only and in a manner
consistent with a public offering of the Company's Units. Such purchases
may be used to reach the amount required for closing in the event such
amount is not reached as a result of purchases by the general public. The
officers and directors could purchase up to 20% of the amount required for
closing if no sales are made to new shareholders, of which could be 30,000
Units. Such purchases will increase the percentage of securities being held
by the officers and directors.
NO ASSURANCE OF A LIQUID PUBLIC MARKET FOR SECURITIES. There has been no
public market for the Units or Warrants prior to the Offering made hereby.
The Units and Warrants will not be listed on an exchange or quoted on the
NASDAQ system upon completion of this Offering and there can be no
assurance any market will develop for the securities or that if a market
does develop, that it will continue. There can also be no assurance as to
the depth or liquidity of any markets for the Units or Warrants or the
prices at which holders may be able to sell the securities. As a result, an
investment in the Units may be totally illiquid, and investors may not be
able to liquidate their investment readily or at all when they need or
desire to sell.
VOLATILITY OF STOCK PRICES. In the event a public market does develop
for the Units or Warrants, market prices will be influenced by many
factors, and will be subject to significant fluctuation in response to
variations in operating results of the Company and other factors, such as
investor perceptions of the Company, supply and demand, interest rates,
general economic conditions and those specific to the industry,
developments with regard to the Company's activities, future financial
condition, and management.
SHARES ELIGIBLE FOR FUTURE SALE. All 1,000,000 shares of the Company's
Common Stock outstanding are "restricted securities" and under certain
circumstances may in the future be sold in compliance with Rule 144 adopted
under the Securities Act of 1933, as amended. Future sales of those shares
under Rule 144 could depress the market price of the Common Stock in any
market that may develop. All of the current outstanding shares become
eligible for sale pursuant to Rule 144 on February 16, 1999.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate
of the Company (or persons whose shares are aggregated) who has owned
restricted shares of Common Stock beneficially for at least one year, is
entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares
of the same class or, if the Common Stock is quoted on NASDAQ, the average
weekly trading volume during the four calendar weeks preceding the sale.
The person who has not been an affiliate of the Company for at least three
months immediately preceding the sale and who has beneficially owned shares
of Common Stock for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above. No
prediction can be made as to the effect, if any, that sales of "restricted"
shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility than substantial amounts of Common Stock may be sold in the
public market may adversely affect prevailing market prices for the Common
Stock and could impair the Company's ability to raise capital through the
sale of its equity securities. See "PRINCIPAL SHAREHOLDERS" and "SHARES
ELIGIBLE FOR FUTURE SALE."
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POTENTIAL ISSUANCE OF ADDITIONAL COMMON STOCK. The Company is authorized
to issue up to 50,000,000 shares of common stock, of which only 1,150,000
shares will be issued and outstanding upon completion of this Offering, but
excluding up to 300,000 shares that may in the future be issued pursuant to
outstanding warrant holders. To the extent of such authorization, the Board
of Directors of the Company will have the ability, without seeking
shareholder approval, to issue additional shares of common stock in the
future for such consideration as the Board of Directors may consider
sufficient. The issuance of additional common stock in the future will
reduce the proportionate ownership and voting power of the common stock
offered hereby. See "DESCRIPTION OF SECURITIES - Common Stock."
ISSUANCE OF PREFERRED STOCK. The Company is authorized to issue up to
10,000,000 shares of preferred stock, $.001 par value per share, none of
which is currently issued or outstanding. Although the Company's Board of
Directors has no present intention to do so, it has the authority, without
action by the Company's shareholders, to issue the authorized and unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other
rights of the series. Preferred stock may, if and when issued, have rights
superior to those of the common stock offered hereby. See "DESCRIPTION OF
SECURITIES - Preferred Stock."
POSSIBLE PAYMENT OF FINDER'S FEES TO MANAGEMENT OR AFFILIATES.
Management does not currently intend to pay any finders fees from the
revenues or other funds of the Company. In the event that a person or
entity assists the Company in connection with the introduction to a
prospective business product opportunity which is ultimately consummated,
such person or entity may be entitled to receive, upon Board of Directors
approval, a finder's fee through the issuance of securities in
consideration for such introduction. Such person may be required to be
registered as, among other things, an agent or broker/dealer under the laws
of certain jurisdictions. The Company is not presently obligated to pay any
finder's fees. The executive officers, directors or affiliates of the
Company may be entitled to receive a finder's fee in the event they
originate a prospective business product or opportunity. See "MANAGEMENT."
CUMULATIVE VOTING AND PRE-EMPTIVE RIGHTS. There are no pre-emptive
rights in connection with the Company's common stock. Cumulative voting in
the election of directors is not permitted. Accordingly, the holders of a
majority of the shares of common stock, present in person or by proxy, will
be able to elect all of the Company's Board of Directors. Even if all the
Units are sold, the current shareholders will own a majority interest in
the Company. Accordingly, the present shareholders will continue to elect
all of the Company's directors and generally control the affairs of the
Company. See "DESCRIPTION OF SECURITIES - Common Stock."
PENNY STOCK REGULATION. Broker/dealer practices in connection with
transactions in "penny stocks " are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally
are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker/dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market. The
broker/dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker/dealer and
its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a
transaction in a penny stock the broker/dealer make a special written
determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject
to the penny stock rules. If the Company's securities become subject to the
penny stock rules, investors in this Offering may find it more difficult to
sell their securities.
APPLICABILITY OF LOW PRICED STOCK RISK DISCLOSURE REQUIREMENTS. The
securities of the Company will be considered low-priced securities under
rules promulgated under the Exchange Act. Under these rules, broker/dealers
participating in transactions in low priced securities must first deliver a
risk disclosure document which describes the risks associated with such
stocks, the broker/dealer's duties, the customer's rights and remedies, and
certain market and other information, and make a suitability determination
approving the customer for low priced stock transactions based on the
customer's financial situation, investment experience and objectives.
Broker/dealers must also disclose these restrictions in writing to the
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customer and obtain specific written consent of the customer, and provide
monthly account statements to the customer. The likely effect of these
restrictions, will be a decrease in the willingness of broker/dealers to
make a market in these securities, decreased liquidity of these securities
and increased transaction costs for sales and purchases of these securities
as compared to other securities.
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SHARES. The
Company has not registered the Securities in any states except Colorado,
New Hampshire, Utah, Pennsylvania, Massachusetts and New York. The Company
will seek to obtain an exemption from registration to offer the Securities
in various state jurisdictions and may also make additional application to
register the Securities in some states. Purchasers of the Securities in
this Offering must be residents of such jurisdictions which either provide
an applicable exemption or in which the Securities are registered. In order
to prevent resale transactions in violation of states' securities laws,
public stockholders may only engage in resale transactions in the Securities
in such jurisdictions in which an applicable exemption is available or a
blue sky application has been filed and accepted. As a matter of notice to
the holders thereof, the Common Stock and Warrant certificates shall contain
information with respect to resale of the Securities. Further, the Company
will advise its market makers in the Securities, if any, of such restriction
on resale. Such restriction on resales may limit the ability of investors to
resell the Securities purchased in this Offering.
Several additional states may permit secondary market sales of the
Securities (i) once or after certain financial and other information with
respect to the Company is published in a recognized securities manual such
as Standard & Poor's Corporation Records, (ii) after a certain period has
elapsed from the date hereof, or (iii) pursuant to exemptions applicable to
certain investors.
EXERCISE OF WARRANTS. As a result of the short exercise period, high
exercise price of the warrants and the right of the Company to redeem the
Warrants, the Warrants may become worthless. In the event the then current
trading price of the Common Stock is not at least equal to the exercise
price of $2.50 for the Warrants, it is unlikely that the Warrants would
have any value, with the result that it is unlikely the additional proceeds
will be received by the Company from exercise of Warrants. See "DESCRIPTION
OF SECURITIES - Warrants."
NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES OF COMMON STOCK
UNDERLYING THE WARRANTS. The Warrants are not convertible or exercisable
unless, at the time of exercise, the Company has a current prospectus
covering the shares of Common Stock issuable upon exercise of the Warrants
and such shares of Common Stock have been registered, qualified or deemed
to be exempt under the securities laws of the states of residence of the
holders of such Warrants. There can be no assurance that the Company will
have or maintain a current prospectus or that the securities will be
qualified or registered under any state laws. See "DESCRIPTION OF
SECURITIES - Warrants."
REDEMPTION OF WARRANTS. The Warrants may be redeemed by the Company
under certain circumstances upon 30 days' written notice to the Warrant
holders at $.01 per Warrant. In such event, the Warrants will be
exercisable until the close of business on the date fixed for redemption in
such notice. Any Warrants not exercised by that time will cease to be
exercisable, and the holders will be entitled only to the redemption price,
which is likely to be substantially less than the market value of the
Warrants. Accordingly, such redemption could force the Warrantholders to
exercise the Warrants and pay the exercise price at a time when it might be
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disadvantageous for them to do so or sell the Warrants at the then market
price when they might otherwise prefer to hold the Warrants. See
"DESCRIPTION OF SECURITIES - Warrants."
DILUTION
Dilution is the difference between the offering price of $2.00 per
Unit for the common stock offered herein (ascribing no value to the
Warrants included in the Units), and the net tangible book value per share
of common stock immediately after its purchase. The Company's net tangible
book value per share of common stock is calculated by subtracting the
Company's total liabilities from its total assets less intangible assets,
and then dividing by the number of shares then outstanding. The net
tangible book value of the Company, based on the December 31, 1998 audited
financial statements, was $8,844, or approximately $.009 per share of
common stock. Assuming no changes in net tangible book value subsequent to
December 31, 1998, other than those resulting, from the sale of all the
Units offered hereby, the post offering pro forma net tangible book value
of the Company would be $252,064, or approximately $.22 per share,
representing animmediate increase in net tangible book value of $.211 per
share to existing stockholders and an immediate dilution of $1.78 per share
(or 89%)to new investors. The following table illustrates the foregoing
information with respect to dilution of new investors on a per share basis.
Offering price per Unit $2.00
Net book value per share prior to offering $.009
Increase attributable to purchase of Units by new
investors $.211
Post offering pro forma net book value per share $.22
Dilution to investors in this offering $1.78
COMPARATIVE DATA
The following chart illustrates the pro-forma proportionate ownership in
the Company, upon completion of the Offering, of present stockholders and
of investors in this Offering, compared to the relative amounts paid and
contributed to capital of the Company by present stockholders and by
investors in this Offering, assuming no changes in net tangible book value
other than those resulting from the Offering.
Shares Cash Price/
Owned Percent Paid Percent Share
Present Shareholders 1,000,000 87% $10,000 3% $.01
New Investors 150,000 13% $300,000 97% $2.00
The following discussion and table does not include shares issuable upon
exercise of the Warrants. See "DILUTION."
USE OF PROCEEDS
The net proceeds to the Company from the sale of Units offered hereby at
an offering price of $2.00 per Unit are estimated to be $243,220 after
deducting estimated offering expenses of $26,780 for legal, accounting and
printing in connection with the Offering and $30,000 for sales commissions.
The Company does not expect to pay sales commissions or other compensation
in connection with the Offering inasmuch as the Units will be offered and
sold by the Company through its president and director, N. Edward Berg,
without underwriting discounts, sales commissions or other forms of
remuneration. The net proceeds will be used principally to provide for
research and development activities and working capital during the initial
commencement of operations as follows:
PERCENT
OF
PURPOSE AMOUNT PROCEEDS
Research and Development Activities*
Salaries expense* $143,000 58.80%
Parts and Supplies expense* $85,620 35.20%
Office expense* $9,600 3.95%
Sales and Marketing expense* $3,000 1.23%
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Travel expense* $2,000 .82%
TOTAL* $243,220 100.00%
* The expected expenses for the 12 months following the successful
completion of this Offering.
RESEARCH AND DEVELOPMENT ACTIVITIES
Approximately $228,620 of the net proceeds of the Offering are intended
to be used for research and development activities. These activities will
primarily consist of labor to try and reduce the basic concepts of the
Company's patents to the industrial production of an imaging workstation.
The Company expects to pay approximately $143,000 (58.80% of the net
proceeds) for salaries and approximately $85,620 (35.20% of the net
proceeds)for parts and supplies. Parts and supplies will consist of the
materials for fabrication and the electronic fabrication and testing and
any mechanical manufacturing of the imaging workstation. See "BUSINESS -
Base Products", BUSINESS - Development Opportunities", BUSINESS - Product
Development" AND MANAGEMENT'S PLAN OF OPERATIONS."
OFFICE EXPENSE
Approximately $9,600 (3.95% of the net proceeds) will be used by the
Company to pay for the executive and manufacturing space that the Company
will lease upon completion of this Offering. The Company expects that these
facilities will be sufficient for the development and initial production
phase of the imaging work station. See "BUSINESS - Facilities."
SALES AND MARKETING EXPENSE
Approximately $3,000 (1.23% of the net proceeds) will be used by the
Company to pay for sales and marketing expenses. See "BUSINESS -
Marketing."
TRAVEL EXPENSE
Approximately $2,000 (.82% of the net proceeds) will be used by the
Company for travel expenses associated with the development, production,
marketing and sales of the imaging workstation.
The foregoing represents management's best current estimate of the
allocation to be made of the proceeds of this Offering and is subject to
change based on changing circumstances and differing needs of the Company
as they may, in management's judgement, exist in the future. The Company
reserves the right to reallocate the proceeds within the above described
categories or to other purpose in response to, among other things, changes
in its plans, industry conditions, and the Company's future revenues and
expenditures.
The Board of Directors of the Company will have broad discretion in
allocating the net proceeds of the Offering among the categories discussed
above. See "RISK FACTORS - Discretionary Use of Proceeds; Possible Need for
Additional Financing" and "Broad Discretion as to Use of Proceeds."
The Company believes that the net proceeds to the Company from the sale
of the Units offered hereby (assuming that all Units offered hereby are
sold) will provide the Company sufficient capital to fund initial
operation, development and expansion of the Company's business for the
first 12 months following the successful completion of this Offering. Many
factors may, however, affect the Company's cash needs, including the
Company's possible failure to develop or generate sufficient revenues from
the sale of its products. The Company may not have sufficient capital for
its funding requirements and may be unable to find suitable financing on
terms acceptable to the Company to finance growth or profitable operations
of the Company. If the Company is unable to obtain such additional
financing, the Company's ability to maintain its current level of
operations could be materially adversely affected and the Company may not
succeed. This event would significantly increase the risk to those persons
who invest in this Offering. See "RISK FACTORS - Uncertain Sufficiency of
Funds" and "Discretion as to Use of Proceeds; Possible Need for Additional
Funding."
The Company does not currently have any intentions to raise additional
capital by the private placements of restricted stock, secondary offerings,
etc. However, if the Company eventually determines that the business
requires additional funds, regardless of the net proceeds raised, the
Company may seek such additional financing through loans, additional stock
issuances or through other financing arrangements. No such financing
arrangements presently exist,
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and no assurances can be given that such additional financing will be
available, or, if available, whether such additional financing will be on
terms acceptable to the Company. Investors buying Units in this Offering
will not, unless otherwise required by law, participate in the
determination of whether to obtain additional financing or as to the terms
of any such financing.
The net proceeds of this Offering may be used, in Management's
discretion, to make loans (other than to officers and other affiliates); no
restrictions exist other than as set forth above, as to whom loans may be
made. Further, no criteria have as yet been established for determining
whether or not to make loans, whether any such loans will be secured or
limitations as to amount.
The Company has not and does not presently intend to impose any limits or
other restrictions on the amount or circumstances under which any of such
transactions may occur except, that none of the Company's officers,
directors or their affiliates shall receive any personal financial gain
from the proceeds of this Offering except for reimbursement for out-of-
pocket offering expenses. No assurance can be given that any of such
potential conflicts of interest will be resolved in favor of the Company or
will otherwise not cause the Company to lose potential opportunities.
None of the proceeds raised hereby will be used to make any loans to the
Company's promoters, management or their affiliates or associates of any of
the Company's shareholders. Further, the Company may not borrow funds and
use the proceeds there from to make payments to the Company's promoters,
management or their affiliates or associates.
The Company anticipates being able to use proceeds as soon as they
become available, but any portion not required for immediate expenditure
may be deposited in interest-bearing accounts or invested in short-term
government notes, treasury bills, or similar obligations of financial
institutions. Any proceeds received by the Company upon exercise of the
Warrants, and any funds not applied to research and development expense
will be added to working capital.
MANAGEMENT'S PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction with
Company's consolidated financial statements and the notes associated with
them contained elsewhere in this prospectus. Micro Interconnect Technology
( the "Company") was recently incorporated under the laws of the State of
Nevada on February 11, 1998. The Company has not commenced planned
principal business operations and is considered a development stage
company. The Company has no significant assets (See Financial Statements),
no active business operations nor any results therefrom. To date,
activities have been limited to organizational matters, research and due
diligence for the corporate business plan and the preparation and filing of
the registration statement of which this prospectus is a part. The purpose
of the Company's formation is to initially engage in the business of trying
to reduce, to industrial production, the proprietary technology contained
in one of four patents exclusively licensed to the Company. If successful
the Company will use this proprietary technology initially to develop and
manufacture an imaging workstation that can be used to help make high
density electronic component interconnections that are utilized in the
growing trend to make electronics run at higher speeds, be smaller and
lighter, less expensive and more reliable.
The Company has allocated the use of approximately $228,620 (94% of the
net proceeds of this Offering) for research and development (salaries,
parts and supplies) of this imaging workstation and the remaining $14,600
(6% of the net proceeds of this Offering) for office, sales and travel
expenses. See "USE OF PROCEEDS." The majority of the cost in developing the
imaging workstation will be in the form of labor to reduce, to industrial
production, the basic concepts of the proprietary technology contained in
the Company's exclusively licensed patents. Management recognizes that this
will be the most difficult and hazardous aspect involved in the production
of the imaging workstation. Management expects a development period of at
least 12 months, barring any unexpected delays or challenges, before a
marketable imaging workstation could be produced. See "RISK FACTORS -
Potential Product Development Delays."
The Company will both sell and lease its products. Consideration will be
given for the imaging workstation initially be set up as a service center
to provide imaged circuit substrates for a cluster of customers such as
Printed Circuit Board ("PCB") or Multi-Chip Module("MCM") manufacturers.
The domestic markets will be pursued until appropriate opportunities for
foreign sales arise. See "BUSINESS - Marketing - Marketing Strategy."
If the Company is unsuccessful in developing and profitably marketing an
imaging workstation, it will, more than likely, be unable to continue
operations. The Company, if able to generate sufficient revenues from the
future sales of a developed imaging workstation or to obtain some other
suitable form of financing, will begin developing, one at a time, using the
Company's other licensed proprietary technology patents, a drilling
workstation, electroplating work station and chemical processing
workstation. These workstations, if successfully developed, would also be
marketed and sold
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by the Company. If the Company can successfully develop and profitably
produce these four workstations it would then try to incorporate them
together to create a complete flexible manufacturing cell (factory) for
producing high density electronic interconnects, which the Company itself
would sell to the manufacturers and suppliers of electronic components and
devices. The Company estimates that there exists at least a 3-12 month
development period for each of these other workstations and expects that it
could take up to four years before possibly reaching the phase for trying
to develop and produce a flexible manufacturing cell (factory). There are
no guarantees that the Company will be able successfully to fund, develop,
manufacture and profitably market these additional workstations or create
the flexible manufacturing cell (factory) for producing high density
electronic interconnects. The risk of failure is high, because the Company
may find it more difficult than anticipated to reduce the basic concepts of
the patents to industrial production. And since the technology covered by
these patents does not cover all the phases of the process of making high
density electronic interconnects, there is a high probability that the
Company may not be able to develop and manufacture any of these
workstations. There can be no guarantees that the market will give
financial support to these products when and if they are developed and
manufactured. See " RISK FACTORS - Risk of Technological Development."
Upon successful completion of this Offering, the Company expects to
spend the following 12 months trying to develop an imaging workstation that
can produce insitu masks that will have high resolution, accurate
alignment, and can be computer compensated for manufacturing defects.
First, the Company must complete the design of the imaging workstation's
overall system. The research and development activities of the project
primarily consist of labor to reduce to, industrial production, the
concepts of the patents. Next would be the development of the exposing
system where the electro-mechanical and optical concepts would need to be
finalized, a prototype produced and debugged. The film coating and pad
processing to be used are modeled after the airborne photo reconnaissance
systems widely used in World War II. This is old technology, but further
work will be needed to apply it successfully in the imaging workstation.
The run-time and other software must be designed and needs to be coded and
debugged. There can be no guarantees that the Company will be able to
successfully complete any of these steps within the 12 month period
following funding. If the Company is not able to develop the imaging
workstation on a timely basis because of design set backs, non-delivery of
parts, uncompleted testing, software failures, lack of funding or other
risks inherent with the development of new technological products, or if
the imaging workstation does not achieve market acceptance, the Company's
business, operation results and financial condition will be materially
adversely affected. See "RISK FACTORS - Uncertain Market Acceptance", "RISK
FACTORS - Risk of Technological Development", and "RISK FACTORS - Potential
Product Development Delays."
The officers and directors of the Company have not recently or in the
past used any particular consultants (or advisors) on a regular basis and
are not recommending any specific consultants. The Company may obtain the
services of independent outside consultants for help in the development and
production of the imaging workstation and other future projects. If the
Company uses an outside consultant to help in the development or production
of the imaging station, they will have to have the requisite skills,
experience and reputation before being hired. The Company will compensate
such consultants at competitive rates and presently there is no way to
estimate the term of such service, if necessary. The Company is presently
using its directors as part-time consultants. These directors will not
receive any compensation other than their out-of-pocket expenses incurred
when consulting with the Company. There is not any agreement or
understanding, other than those described above, to use the services of any
outside consultants for such purposes. Indeed the Company may choose not to
seek such consulting services.
The Company presently has no office facilities but will use the home
office of N. Edward Berg, its president, on a rent-free basis until the
completion of this Offering, at which time the Company will enter into an
agreement for leasing approximately 1200 square feet of executive and
manufacturing space. The manufacturing space will have a computer and
software support system and manufacturing type tools needed for fabrication
support. See BUSINESS - Facilities" and "BUSINESS - Manufacturing."
Inasmuch as there is no assurance that the Offering will be successful
or that the Company will receive any net proceeds therefrom, the Company
has not presently entered into any contracts or commitments for leasing of
offices, factory space, purchasing of materials and equipment and delivery
of products and services to customers. Therefore, there is no assurance the
Company will be able, with the proceeds of this Offering, to lease
sufficient office space and factory space, acquire materials and equipment,
develop a potential customer base to commence operations. There is also no
assurance that the Company will be successful in its effort to develop or
produce the workstations, electronic interconnects or any other equipment
that will enable the Company to generate enough business to operate
profitably.
The Company has reviewed the Year 2000 issue, where, if not corrected,
many computer applications could fail or create erroneous results by or at
the Year 2000. Management feels that there are presently no anticipated
potential costs or uncertainties related to any of the Company's developing
products surrounding its software and hardware. No software programs
presently
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anticipated by the Company will be written with code that would cause a
Year 2000 stoppage on time critical operations. The only uncertainties, of
which the Company cannot give any assurance that could or could not
develop, would be if the Company's suppliers and the future purchasers of
the Company's imaging workstation would be unable to resolve any Year 2000
issues that could aversely affect their operations. If this was to be the
case, it could cause delays in the development, production and sales of the
imaging workstation, which would have a material adverse effect on the
continued development and growth of the business. See "BUSINESS - YEAR
2000."
Based upon the anticipated proceeds of the Offering, management believes
that the proceeds of this Offering will be adequate to meet its working
capital requirements for the next 12 months following the Offering.
Thereafter the Company anticipates that it could need additional financing
to meet its current plan for the development of additional workstations and
a flexible manufacturing cell. The Company presently anticipates that
future sales of the imaging workstation, if successfully developed, will
provide the needed financial resources. No assurance can be given of the
Company's ability to obtain sufficient revenues from the sales of its
imaging workstation or obtain outside financing on favorable terms, if at
all. See "RISK FACTORS - Discretionary Use of Proceeds; Possible Need for
Additional Financing." If the Company is unable to obtain additional
financing, its ability to meet its current plan for the development of
additional workstations and a flexible manufacturing cell could be
materially adversely affected.
BUSINESS
DESCRIPTION OF BUSINESS HISTORY OF COMPANY
Micro Interconnect Technology, Inc. (the "Company") was recently
incorporated under the laws of the State of Nevada on February 11, 1998.
The Company has not commenced business operations and is considered a
development stage company. To date, activities have been limited to
organizational matters and the preparation and filing of the registration
statement of which this prospectus is a part. In connection with the
organization of the Company, the officer and founder of the Company
contributed $10,000 cash to initially capitalize the Company in exchange
for 1,000,000 shares of Common Stock. The Company has no significant
assets, and is totally dependent upon the successful completion of this
Offering and receipt of proceeds therefrom, of which there is no assurance,
for the ability to commence its proposed business operations.
PROPOSED BUSINESS OF THE COMPANY
The proposed business and purpose of the Company's formation is to
engage in the business of developing and manufacturing equipment designed
from proprietary patents exclusively licensed to the Company to make high
density electronic component interconnections that are utilized in the
growing trend to make electronics run at higher speeds, be smaller and
lighter and more reliable. In addition to developing and manufacturing such
equipment to make high density electronic component interconnections, the
Company intends to develop a complete flexible manufacturing cell (factory)
for producing the improved electronic interconnects itself. The Company
intends to sell to the manufactures and suppliers of electronic components
and devices.
The Company wants to develop an imaging workstation, a hole drilling
workstation, an electroplating workstation and a chemical processing
workstation and, eventually, a flexible manufacturing cell (factory). The
first workstation the Company wants to develop is the imaging workstation.
Funding for its development is dependent upon the Company receiving the net
proceeds of this Offering. The Company presently is estimating that it will
take 12 months to develop and manufacture its imaging workstation before
actual sales and revenues might be generated. Funding for the other
workstations will be dependent upon sufficient revenues being received for
their funding from the sales of an imaging workstation or from some other
form of funding, which there can be no guarantees will ever be available or
obtainable. It is estimated that the three other workstations will each
take approximately 3-12 months to develop and manufacture and there can be
no guarantees that any of these workstations can be developed or
manufactured within these time frames. The earliest the Company can foresee
beginning development of the flexible manufacturing cell (factory) is
approximately 4 years from the initial development of the imaging
workstation. There are a great number of risks involved in the development
of any new technological products and, combined with the fact that
anticipated future funding for the other workstations and flexible
manufacturing cell will be essentially tied to the Company being
successfully in generating sales and revenues from its products as they are
developed. That it may prove to be more difficult than anticipated to
reduce the basic concepts of the patents to industrial production only
increases the risks involved. See "RISK FACTORS - Risk of New Product
Development", "Risk of Technological Development", "Uncertain Market
Acceptance", Potential Product Development Delays", "Dependence on
Suppliers", MANAGEMENT'S PLAN OF OPERATIONS", "BUSINESS - The Base Product"
and "Development Opportunities."
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THE INDUSTRY
The growing trend to make electronics smaller and to pack more functions
into smaller spaces is evidenced by the growth of the laptop and palmtop
computer industries. If the laptop computers were priced comparably to
desktop computers, many people would buy a laptop computer. Palm-tops would
be more popular if they were as capable as the laptops. All three could
benefit from using the same basic computer chips. The cost is higher for a
smaller size product, because packaging electronics in small spaces
increases costs. One packaging cost is the cost of smaller (high density)
interconnections for the electronic components. The present methods, by
which the chips are interconnected, plays a role in limiting the
capabilities of the smaller type (laptop and palmtop)computers and making
them more costly. The present limitation on interconnection density is an
impediment in this trend to make things smaller, faster and more reliable.
IBM, Merix, Continental Circuits, AMP, and Shedlahl have all made
significant investments in high density interconnects and are producing
product. Products currently used by the PWB Industry are not of the same
high density resolution contemplated for possible future development and
production by the Company. These companies, who have and are still
investing in high density interconnects could initially be potential
customers for the Company's work stations, if developed. If and when the
flexible manufacturing cell is developed, these companies could then become
competitors in the production of high density electronic interconnections.
A common method used for low-density interconnections is the printed
circuit (wiring) board ("PCB"), due to its low cost. The interconnect
density provided by PCB's, has been stagnant, while interconnect density
internal to semiconductor chips has improved by a factor of 8 in the past
10 years. The chips are now so far ahead of the PCB's in interconnection
density that the cost and performance of electronic devices is now more
dependent upon the limiting density of the packaging and the PCB
interconnects. Multi-layer PCB's in the 1970's and surface mount in the
1980's were the last major improvements. In the past five years,
improvements have been slight when compared to the chip industry. PCB's as
the favored interconnection technology for high density interconnects,
seems to be at a dead end. Attempts to increase interconnection density are
currently taking directions that bypass the PCB. In the attempt to fulfill
the growing need for high density chip to chip interconnects a whole new
industry has come into being. It is called the Multi-Chip Module ("MCM")
which has grown into a large industry in spite of high costs. Some MCM use
expensive silicon back-planes upon which the chip to chip interconnect
wires are deposited. Another approach to overcome the limitations of the
interconnect density problem is to make chips which perform more functions.
This is called "Upscale" integration. Upscale integration in the mixed
signal environment is difficult since the digital signal chips and the
analog signal chips use different masking techniques. The Company feels its
approach for interconnections is chip mask independent. Upscale integration
will be most effective in the non mixed signal environment. PCB and MCM
manufactures will always be looking for new ways to make the imaging phase
of interconnect manufacture, faster, more accurate, more dense and less
error prone. Imaging defects are a contributor to the high scrap rate
encountered in the targeted industries.
Although the PCB and MCM industries, along with the semiconductor
industry, have recently experienced significant growth, there can be no
assurance that such growth can be sustained. The overall PCB, MCM and
semiconductor industries have been and could continue to be cyclical with
periods of oversupply. A downturn in the demand for printed circuit boards,
multi-chip modules and semiconductors would likely reduce the demand for
high density electronic component interconnections and could reduce the
demand for all types of equipment for their production or, alternatively,
place pricing pressure on those equipment vendors. The Company's ability to
reduce expenses in response to any such downturn is limited by its needs
for continued research and development expenses and in customer service and
support. Previous downturns in capital investment by the PCB, MCM and
semiconductor fabrication industry have materially affected the operating
results of other businesses in the PCB, MCM and semiconductor capital
equipment industry and future downturns may have similar adverse effects.
There are no guarantees that the Company can address these concerns, and,
accordingly, this could have a sustained material adverse effect on the
Company's business.
THE BASE PRODUCT
Imaging Workstation
Presently the Company has no developed products. The Company's first
product for development will be an imaging workstation. The Company will be
totally dependent upon the funding received upon completion of this
Offering for the finances to develop and produce an imaging workstation.
The Company anticipates that after the receipt of such funding the
development and production process will take about 12 months to complete
and could take longer if unforseen development and production problems
should arise. The Company wants to try to develop this imaging workstation
using the proprietary technology from the Company's exclusively licensed
patents.
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The first step in the development of the imaging workstation involves
designing the overall system. The research and development activities of
the project primarily consist of labor to reduce to manufacturing the
concepts of the patents. Next would be the development of the photographic
exposing system, where the electro-mechanical and optical designs would
need to be finalized and a prototype produced and debugged.
The Company intends to use a pre-coated, strippable photographic
emulsion to be transferred to the photopolymer substrate. This layer will
receive the circuit image through the optical printer and thus form the
insitu photo tool after developing the image using pad processing. "Pad
processing" is a technique in which photographic development chemicals are
included in a moistened coated layer (the "pad"), which transfers the
chemicals by diffusion into the image layer while pressed against it. This
avoids the need for volumes of aqueous solutions in the usual photographic
development bath. Pad processing is an old technique and was used in
airborne photo reconnaissance systems widely used in World War II. Even
though the techniques of strippable layers and pad processing are well
known, their application in the imaging workstation may not be
straightforward. If serious problems arise in this regard, the Company
might have to fall back on the more widely used processes of wet coating
and bath processing. This would adversely affect the complexity, cost and
ease of use of the imaging work station module and also its
manufacturability and potential profitability.
The run-time and other software must be designed and needs to be coded
and debugged. There are no assurances that this proprietary technology will
be able to be transformed into a usable format for producing any new
imaging workstation that will produce high resolution insitu masks which
form the image of the desired electronic circuitry on a resist coated
substrate. There are no assurances, that even if such an imaging
workstation, if developed, would be superior to present imaging
workstations, that it would be able to achieve market acceptance in the PCB
and MCM industries. See "RISK FACTORS - " Rapid Technological Change",
"Dependence on Product Development", "Potential Product Development
Delays", and "Uncertain Market Acceptance."
The Company will try to develop its proprietary technology to produce an
imaging workstation that will function automatically and eliminate problems
inherent in current manual methods. The Company will try to develop an
imaging workstation that works at higher speeds than current manual
methods, produces higher resolution, will more accurately position the
image, provides high accuracy alignment for layers of circuitry and
provides the ability to correct the image for subsequent process
distortions. There can be no guarantees that the Company, using the
proprietary technology it has licensed, would be able to develop the
imaging work station to any of the above described standards.
The imaging workstation that the Company is trying to develop and
produce would combine and perform the functions of three separate pieces of
equipment, namely the photo-resist coating equipment, the photo-plotter and
the exposure systems in use everywhere today. Some of the features that the
Company hopes to try to develop in the imaging workstation is the ability
to automatically apply the resist and place the circuit image mask directly
on the resist coated circuit substrate with no intermediary photo-tool, to
have the circuit substrate panel enter the workstation and exit with fully
developed circuit images and to create photo tools that will be able to
produce the resolution required for smaller circuit features which current
photo-plotters can't produce. Anther objective is to produce a chemical
system that will leave the user with fewer and more conveniently manageable
hazardous waste materials from which silver can more easily be recovered.
The Company has no preliminary agreements or understandings with the
respect to the sale of any imaging workstations when and if successfully
developed and manufactured.
The electronic components of the workstations will be purchased from
electronic distributors such as Mauser or Digi-Key or similar suppliers.
The opticals will be purchased from Edmunds Scientific or similar
suppliers. There is presently no known single-source of required building
materials to be used in the construction of the imaging workstation. See
"RISK FACTORS - Dependence on Suppliers" and "BUSINESS - Manufacturing."
The Company's proposed imaging workstation, to developed using the
Company's proprietary technology for producing insitu photographic masks,
would consist mainly of the Company's imaging system, software, high-end
computers with large informational storage devices and related material
handling hardware having photographic chemistry ability.
The Company, if successful in developing and producing its imaging
workstation, will compete with three groups of suppliers to the PCB and MCM
industries: 1) the suppliers of photo-resist coating equipment such as
Advanced West, Dupont, Insulectro, Kepro, Circuit Systems, Technica and
others; 2) the suppliers of photo-plotters such as AGFA Div. Bayer Corp.,
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AOI International, Artnet Technology, Barco, Inc., Gerber Systems Corp.,
Unidyne International and others; and 3) the suppliers of exposure systems
such as AWT World Trade, Advanced West, Elektrotech Services, Ltd., Morton
Electronic Materials, OAC, Inc., Technica and others. See "BUSINESS -
Competition."
There can be no guarantees that the Company will be able to successfully
develop, manufacture and profitably market an imaging workstation. The
risks for failure are high because the Company may find it more difficult
than anticipated to reduce, to industrial production, the basic concepts of
the patents. And, whereas the technology covered by these patents does not
cover all the phases of the process of making high density electronic
interconnect components, there is still a high probability that the Company
may not be able to develop and manufacture the imaging workstation. There
can be no guarantees that the market will support this product financially
or that new competitive process won't be developed that doesn't use the
Company's imaging workstation. See "RISK FACTORS - " Risk of Technological
Development", "Dependence on Product Development", "Risk of New Product
Development Delays", and "Uncertain Market Acceptance."
DEVELOPMENT OPPORTUNITIES
Workstations
If the Company is able to develop and produce the imaging workstation
successfully and able to productively market it and create sufficient
revenue, then, if funding is available, the Company will undertake to
develop either a hole drilling workstation, an electroplating workstation
and chemical processing workstation. The Company estimates that each of
these workstations will take between 3-12 months to develop and produce and
will have essentially the same risks as those described in the development
of the imaging workstation. Future development of each of these three
workstations will be dependent upon the successful development of each of
the previous workstations and the Company's ability to successfully market
and sell those developed workstations in order to create sufficient
revenues to maintain operations and help in the creation of funding for the
next workstation. All four of the workstations the Company is proposing to
try to develop and produce over the next four years will need to be
available for the development of a flexible manufacturing cell ( factory)
which would, upon successful development, be able to produce high
resolution electronic interconnects. As in the development of the imaging
workstation, the ability of the Company to develop and use its proprietary
technology successfully to develop other types of workstations to be used
in the development of a flexible manufacturing cell for high resolution
electronic interconnects, would have to be considered very difficult and a
high risk. There could be no guarantees that any other type of workstation
could be developed and manufactured and that a flexible manufacturing cell
would ever be fully developed. The Company believes that a hole drilling
workstation, an electroplating workstation and a chemical processing
workstation would need to be developed and produced using the Company's
proprietary technology in order to complete the above mentioned flexible
manufacturing cell. The Company acknowledges that its patents are basic
concepts whose reduction to industrial production may be more difficult
than anticipated but believes that they cover the most critical parts of
the process and that the phases not covered by the proprietary technology
are less critical to the successful development of any of the Company's
proposed workstations. There can be no guarantees that the Company will
ever be able successfully to reduce to practice any of its proprietary
technology for use in building any of the above-mentioned workstations.
The Company's success in developing, manufacturing and selling these new
products depends upon a variety of factors, including accurate prediction
of future customer requirements, introduction of new products on schedule,
cost-effective manufacturing and product performance in the field. The
Company's new product decisions and development commitments must anticipate
the equipment needed to satisfy the requirements for high density
electronic interconnects processes one or more years in advance of sales.
Any failure to predict accurately the customer requirements and to develop
new generations of products to meet those requirements would have a
sustained material adverse effect on the Company's business, financial
condition and results of operations. New product transitions could
adversely affect sales of existing systems, and product introductions could
contribute to quarterly fluctuations in operating results as orders for new
products commence and orders for existing products or enhancements of
existing products fluctuate. See "RISK FACTORS - Risk of Technological
Development" and "Risk of New Product Development."
Interconnects
The Company must be successful in the development, production,
marketing and selling of the imaging, the hole drilling, the electro-
plating and the chemical processing workstations before trying to develop
and
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incorporate all of them into a flexible manufacturing cell (factory) to
produce high density electronic interconnects for wholesale. The Company
expects the development of these four workstations may take up to 4 years
before the development of the flexible manufacturing cell can begin. The
Company believes that if it is able to develop and produce its interconnect
technology that it could be scaleable, which means in the industry that the
density of the interconnects may be improved over time.
There can be no guarantees that the Company will ever be able to that
may arise for reducing the patents' basic concepts to industrial production
and that the patents do not cover all phases of the process of making high
density interconnects. Moreover, there can be no assurance that the
Company's products will not be rendered obsolete by changing technology or
new industry standards. See "BUSINESS - Competition." This would have a
materially adverse effect on the Company's business, financial condition
and results of operations. There can be no guarantees that a flexible
manufacturing cell (factory) will ever be developed for the production of
high density interconnects. See "RISK FACTORS - " Risk of Technological
Development", "Risk of New Product Development", "Product Development
Delays", and "Uncertain Market Acceptance."
MANUFACTURING
The Company's manufacturing activities consist of the assembly of
components comprising its system, the fabrication of sheet metal and
mechanical parts and the computer software and the testing of the completed
system. The subassembly of proprietary printed circuit boards and other
electronic parts will be performed by the Company. The Company will need
skills in photographic materials. The needed film technology can be
supplied by companies like Polaroid, Kodak, Agfa, Fuji, Rockland, and many
consultants in photographic film technology. The Company is currently
negotiating with Polaroid on an agreement to assist the Company and the
Company anticipates, but there are no guarantees, that it will be able to
obtain the needed "photographic technology." The electronic components of
the workstations will be purchased from electronic distributors such as
Mauser or Digi-Key or similar suppliers. The opticals will be purchased
from Edmunds Scientific or similar suppliers. There is presently no known
single-source of required building materials used in the construction of
the imaging workstation.
There can be no assurances, that delays or shortages caused by suppliers
will not occur in the future. Any ability to obtain adequate, timely
deliveries of subassemblies and components could delay the development and
manufacturing of the Company's products. This could materially adversely
affect the Company's business, financial condition and results of
operations. See "RISK FACTORS - "Potential Product Development Delays" and
"Dependence on Suppliers."
COMPETITION
As an equipment supplier to the PCB and MCM industries, the Company's
initial imaging workstation will compete in a market that is intensely
competitive, quickly evolving and subject to rapid technological change.
Competitors may develop superior products or products of similar quality
for sale at lower prices. Moreover, there can be no assurance that the
Company's products will not be rendered obsolete by changing technology or
new industry standards. The Company expects competition to persist and
increase in the future. The Company's current and potential competitors
have longer operating histories, greater name recognition, larger customer
bases and significantly greater financial, technical and marketing
resources than the Company. The Company, if successful in developing and
producing its imaging workstation, will compete with three groups of
suppliers to the PCB and MCM industries: 1) the suppliers of photo-resist
coating equipment such as Advanced West, Dupont, Insulectro, Kepro, Circuit
Systems, Technica and others.; 2) the suppliers of photo-plotters such as,
AGFA Div. Bayer Corp., AOI International, Artnet Technology, Barco, Inc.,
Gerber Systems Corp., Unidyne International and others; and 3) the
suppliers of exposure systems such as AWT World Trade, Advanced West,
Elektrotech Services, Ltd., Morton Electronic Materials, OAC, Inc.,
Technica and others. See "BUSINESS - The Base Product - Imaging
Workstation."
Competitive factors in the industry include product pricing,
capabilities, reliability, speed and cost. There can be no assurance that
the Company will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial
condition. Many of the Company's competitors have the financial resources
necessary to enable them to withstand substantial price and product
competition, which are expected to increase, and to implement extensive
advertising and promotional programs, both generally and in response to
efforts by other competitors to enter into existing markets or introduce
new products. The industry is also characterized by frequent introductions
of new products. The Company's ability to compete successfully will be
largely
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dependent on its ability to anticipate and respond to various competitive
factors affecting the industry, including new products which may be
introduced, changes in customer preferences, demographic trends, pricing
strategies by competitors and consolidation in the industry where smaller
companies with leading edge technologies may be acquired by larger
multinational companies.
Management feels that, if eventually the manufacturing cell is
developed, it will open up additional markets where the Company will
compete in the less competitive industry of electronic interconnect markets
occupied by the PCB and MCM manufacturers. Competition will be based on
many factors including price, and the quality of products and service. The
Company's competitors will have greater financial, marketing and
manufacturing resources.
This, together with the limited capital available to the Company, which
will limit its marketing effort, creates a significant competitive
disadvantage. If the Company is not able to compete successfully,
regardless of the development of its products and the success of this
Offering, it will have little chance succeeding.
EMPLOYEES
The Company will, upon successful completion of this Offering, hire 2
full time employees and others will be hired on an as needed basis. It is
intended that initially all employees will be hired through an employee
company, who will assign them to work for the Company.
FACILITIES
The Company owns no real property. Further, the Company does not
currently lease any office or manufacturing space. The Company will use the
home office of N. Edward Berg, its President, in Bedford, New Hampshire on
a rent-free basis until the completion of this Offering, at which time the
Company will enter into an agreement for leasing approximately 1200 square
feet of executive and manufacturing space for $800 per month for a one year
period from the president's wife. The Company, at its option, may lease the
space for an additional year under the same terms and conditions. The
monthly rent will also include the utilities, heat, use of the facility's
computer systems and manufacturing type tools and equipment. The Company
believes that this facility will be more than sufficient in the beginning
phases of the developmental process of the imaging workstation. In the
event the Company needs to locate new facilities to meet growing needs,
there can be no guarantee that the Company will be able to locate such
facilities successfully on an affordable basis, This may adversely
materially affect the Company's business, financial condition and results
of operations. The office space is located at the end of Tirrell Hill Road
in Goffstown, N.H. with a mailing address of 72 Tirrell Hill Road, Bedford,
NH 03110. The current address of the Company is 70 Horizon Drive, Bedford,
NH 03110. See "CERTAIN TRANSACTIONS."
PATENT LICENSING & MARKETING AGREEMENTS
The Company has an exclusive licensing Agreement for four US patents;
5,281,325 dated January 25, 1994 for Uniform Electroplating of Printed
Circuit Boards; 5,377,404 dated January 3, 1995 for Method for Fabricating
a Multi-Layer Printed Circuit Board; 5,384230 dated January 15, 1995 for
Process for Fabricating Printed Circuit Boards and; 5,653,893 dated August
5, 1997 for Method of Forming Through-Holes in Printed Wiring Board
Substrates. These four patents belong to the president of the Company, N.
Edward Berg and the following is a brief abstract of each patent.
5281325 : Uniform electroplating of printed circuit boards
------------------------------------------------------
INVENTORS: Berg; N. Edward, Bedford, NH 03110
ASSIGNEES: none ISSUED:Jan. 25, 1994 FILED: July 2, 1992 SERIAL NUMBER:
907830 MAINT. STATUS: CC INTL. CLASS (Ed. 5):C25D 005/02; C25D 017/00;
U.S. CLASS:205/125; 204/194; FIELD OF SEARCH:205-125 ; 204-194 ;
ABSTRACT: A method and apparatus for the uniform electroplating of
printed circuit boards is described. At least one non conductive apertured
mask covers selected areas of the electro active surface of the anode or
cathode electrode, whereby to establish substantially uniform
electroplating ion transfer over the target areas of the target cathode.
5377404 : Method for fabricating a multi-layer printed circuit board
------------------------------------------------------
INVENTORS: Berg; N. Edward, Bedford, NH 03110
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ASSIGNEES: none ISSUED:Jan. 3,1995 FILED: Dec. 10, 1993SERIAL NUMBER:
166166 MAINT. STATUS: INTL. CLASS (Ed. 6):H05K 003/36; B23P 021/00;
U.S. CLASS:029/830; 029/703; 029/846; 029/DIG.12; 408/704; FIELD OF
SEARCH:029-26 A,703,720,825,829,830,833,846,DIG. 12; 156-233,273.3;
346-108; 408-3,1 R,16,230, 704; 430-270-273,314;
ABSTRACT: A method for fabricating at least one via or hole in a multi-
layer printed circuit board comprises separately drilling the board layers,
stacking and laminating the drilled board layers utilizing conformal
mapping digital imaging in a computer, and then finish drilling the holes.
The invention also provides a method for correcting artwork to compensate
for lamination distortion.
5384230 : Process for fabricating printed circuit boards
------------------------------------------------------
INVENTORS: Berg; N. Edward, Bedford, NH 03110
ASSIGNEES: none ISSUED: Jan. 24, 1995 FILED: Mar. 2, 1992SERIAL NUMBER:
845266 MAINT. STATUS: INTL. CLASS (Ed. 6):G03F 007/00; U.S.
CLASS:430/313; 430/273; 430/314; 430/315; 430/318; 430/324;
430/39430/396; 430/503; FIELD OF SEARCH: 430273,260,261,503,394,
313,314,315,318,324,396;
ABSTRACT: A process for forming interconnection lines on a printed
circuit board is described. The surface of a circuit board substrate is
covered with a photoresist layer, and the photoresist layer in turn is
covered with a halide emulsion layer. The emulsion layer is then exposed to
a predetermined pattern of white light, and the image developed. The board
is then exposed to UV light through the imaged emulsion layer which acts as
a pattern masking selected portions of the photoresist mask. The emulsion
layer is then stripped and the photoresist processed in conventional
manner.
5653893 : Method of forming through-holes in printed wiring board
substrates
------------------------------------------------------
INVENTORS:Berg; N. Edward, Bedford, NH 03110
ASSIGNEES: none ISSUED: Aug. 5 , 1997 FILED: June 23, 1995 SERIAL
NUMBER: 493965 MAINT. STATUS: INTL. CLASS (Ed. 6):H05K 003/00; U.S.
CLASS:216/018; 216/017; 216/083; 216/092; FIELD OF SEARCH:216- 17, 18,
39, 56, 83, 92;
ABSTRACT: Through-holes are formed in a printed circuit board substrate
by chemical etching a metal foil clad circuit board having open positions
in the metal foil where a hole is to be formed using N-methyl-2-
pyrrolidone, a mixture of methylene chloride and HF, or a mixture of
methylene chloride, HF and xylene.
The license agreement states that the Company will be able to use these
patents for the manufacture of products for sale to business and the
general public throughout the United States, its territories and
possessions. The Company will be required to actively pursue the technology
and pay an annual fee of 1% of the gross sales of the Company's products
produced using the technology as a royalty beginning January, 1999. The
exclusive provisions of the Company's license agreement with Mr. Berg
becomes non-exclusive on March 31, 2007. The Company may in the future
agree with Mr. Berg to further amend the Technology License, although there
are no such agreements currently. These US patents provide no foreign
protection.
These patents do not cover all phases of the development of the imaging
workstation or the other workstations necessary for development of the
flexible manufacturing cell (factory). The Company feels that they cover
the most critical parts of the process and the phases not covered are less
critical. The Company acknowledges that the patents are basic concepts,
whose reduction to industrial practice may be more difficult than
anticipated and may even be impossible. But, even if the Company can reduce,
to production, the proprietary technology of its patents for use in certain
phases in the development of the imaging workstation and the other
workstations needed for the production of high density electronic
interconnects there still remains the risk that the Company will still be
unable to develop and produce the imaging workstation or any of the other
workstations necessary for the production of high density electronic
interconnects because of the possible failure in the development of any of
the other phases involved in their development and production. This would
have a materially adverse effect on the Company's business, financial
condition and results of operations.
There can be no assurance that any of the Company's future patent
applications will be granted, that any current or future patent or patent
application will provide significant protection for the Company's products
or technology, be of commercial benefit to the Company, or that the
validity of such patents or patent applications will not be challenged.
Moreover, there can be no assurances that foreign patent, trade secret or
copyright laws will protect the Company's technologies or that the Company
will not be vulnerable to competitors who attempt to copy or use the
Company's products or processes. See "RISK FACTORS - Dependence on Patent
Protection" and "CERTAIN TRANSACTIONS."
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GOVERNMENTAL REGULATIONS AND INDUSTRIAL STANDARDS
The Company's products are subject to numerous governmental regulations
designed to protect the health and safety of operators of manufacturing
equipment and the environment. In addition, numerous domestic semiconductor
manufacturers, including certain of the Company's potential customers, have
subscribed to voluntary health and safety standards and decline to purchase
equipment not meeting such standards. In New Hampshire the Company will
have to deal with the management of Waste Photo-processing Solutions in
compliance with all Federal state and local laws. The governing body for
these matters will be the New Hampshire Department of Environmental
Services (DES) since their rules are more astringent than the Federal. The
Local government has no additional rules beyond the State of New Hampshire.
Most of the contemplated photo-processing solutions that will be used by
the Company should be exempt as found in DES Env-Wm 401 listing. The
generators of recyclable photographic waste are not subject to the full
standards for generators under Env-Wm 500 but are subject to Env-Wm 808 for
materials such as spent fixers. The generator is, however, required to
notify DES of its activities and must ship the wastes via a New Hampshire
registered hazardous waste transporter using a uniform hazardous waste
manifest to a facility authorized to accept such wastes.
Spent developers, fixers, and cleaners will all be shipped as wastes via
a New Hampshire's registered hazardous waste transporter to an authorized
waste facility. The Town of Goffstown must be kept informed with regards to
the handling of recyclable photographic waste but do not have special
permits or licensing requirements for photo-processing solutions.
The Company believes that its products will comply with all applicable
material governmental health and safety regulations and standards and with
the voluntary industry standards currently in effect. In part because the
future scope of these and other regulations and standards cannot be
predicted, there can be no assurance that the Company will be able to
comply with any future regulation or industry standard. Non-compliance
could result in governmental restrictions on sales or reductions in
customer acceptance of the Company's products. Compliance may also require
significant product modifications, potentially resulting in increased costs
and impaired product performance. See "RISK FACTORS - Health and Safety
Regulations and Standards."
THE MARKET
The Company will look to establish itself over time in two markets. The
first Market will be as an equipment supplier to companies in the PCB and
MCM industries. The second market will be as a manufacturer selling high
density electronic interconnects to electronic component and device
manufacturers and suppliers.
MARKETING
The Company's initial marketing plan will consist of a direct sales
force for the sale of the workstations and other products developed or
offered to the Company's Customers. The sales force will grow as required
by the Company's growth and only the domestic markets will be pursued until
the appropriate opportunities for foreign sales arise.
MARKETING STRATEGY
The Company will both sell and lease its equipment. The Company will
also consider using the equipment for commercial contracting services to
customers.
SALES STRATEGY
The Company will seek out the difficult electronic interconnect problems
facing the industry and generate a presence in those arenas and develop a
posture of being the supplier of advanced technology. It will try to
enhance this posture by engaging independent writers to generate industry
articles on technology showing the Company's position. The Company will
participate in industry conferences where technical sessions are held,
initially as attendee, then as presenters. Simultaneous with the posturing
effort, the Company will begin a selected selling effort. Customers will be
selected by finding those who have the greatest incentive to reduce product
size or pack in additional capabilities. Direct approach will be made to
these potential customers by phone and visitation. Follow-up on the
companies who have already expressed interest will be the first priority in
the sales efforts. Emphasis in all selling presentations will focus on the
economic benefits and market advantages gained by utilizing the advanced
technology. Reference customers will be cultivated to help sell others and
be rewarded by having priority in obtaining new improvements as the
technology moves forward. Specific examples, of how the technology can
apply to the customer needs, will be an integral part of each sales
presentation. The Company intends to develop a world wide web presence in
the form of a
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forum for advanced technology. A home page that has minimal graphics and
maximal information will be established and continually updated, to keep
inquirers interested. Caution will be exercised to provide appropriate
information useful for consumers and of lessor value to the Company's
competitors.
PRODUCT DEVELOPMENT
The Company has not developed any equipment or products to this point,
and the successful development of new products by the Company is essential
to the success of the Company. The Company is going to initially try to
develop an imaging workstation. If successful, the next product for
development would be either a hole drilling workstation, a electroplating
workstation or a chemical processing workstation. The Company will market
these workstations, when and if developed, to try to create sufficient
revenues for continued working capital for the Company and funding for the
development of the next product. Should the Company be able to develop
successfully all four of these workstations, it will try to use them to
develop a flexible manufacturing cell for the production of high resolution
electronic interconnects. The Company hopes to accomplish the development
and production of an imaging workstation within 12 months after the
successful completion of this Offering and the development of the other
projects over the next four years. The Company expects the development time
for the various projects to take between 3 and 12 months. The reductions to
manufacturing production of the basic concepts of the Company's patents may
be more difficult than expected, if not impossible, and the Company may
experience difficulties that could delay or prevent the development,
introduction and marketing of these new products. The Company will be
substantially dependent in the near future upon these products to be
developed. There can be no assurance that, despite testing by the Company,
problems will not be found in the Company's products, or, if problems are
discovered, that they can be corrected in a timely manner.
The nature of the development process means that there is a risk, even
if the products are successfully developed, that the process could take
significantly longer than expected. Delays in the development of new
products would delay the improvement in sales that the Company requires in
order to attain profitability. Additionally, failure on the part of the
Company to develop the intended products quickly could lead to another
technology gaining market acceptance before the Company's products do,
thereby, reducing the market share available to the Company and increasing
the difficulty of selling the products. See "RISK FACTORS - Risk of
Technological Development", Risk of New Product Development", "Potential
Product Development Delays" and "Uncertain Market Acceptance."
YEAR 2000
The Company does not see any Year 2000 issues that will affect the
development of its imaging workstation. No software programs presently
anticipated by the Company will be written with code that would cause a
Year 2000 stoppage on time critical operations. The only uncertainties, of
which the Company cannot give any assurances of that could or could not
develop, would be if the Company's suppliers and the future purchasers of
the Company's imaging workstation would be unable to resolve any Year 2000
issues that could aversely affect their operations. If this was to be the
case, it could cause delays in the development, production and sales of the
imaging workstation, which would have a material adverse effect on the
continued development and growth of the business. See "MANAGEMENT'S PLAN OF
OPERATIONS."
MANAGEMENT AND AFFILIATES
EXECUTIVE DIRECTORS AND OFFICERS
The names, addresses, ages and respective positions of the current
Directors and Officers of the Company are as follows:
Name Age Position
N. Edward Berg 64 President and a Director
70 Horizon Drive
Bedford, NH 03110
David B. Ostler 40 Secretary/Treasurer and a Director
210 Pleasant Street
Concord, NH 03301
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James R. Boyack 63 Director
298 Bishops Forest Dr.
Waltham, MA 02154
Woodie Flowers 53 Director
214 Boston Post Road
Weston, MA 02193
Peter Roth 62 Director
34B Charles River Rd.
Waltham, MA 02154
Each director is elected for a period of one year and serves until his
successor is elected by the Company's shareholders.
It is presently not contemplated that any of the Company's executive
officers or directors or their respective affiliates will be providing any
loans to the Company.
BIOGRAPHIES
N. EDWARD BERG, age 64, will serve as the President and as a Director of
the Company. As such, his duties will include primary responsibility for
overall management of the Company, its new product development and testing,
supervision of employees and marketing of the Company's products as
developed. Mr. Berg is self-employed and has spent the last five years
working on the research and development of new electronic interconnect
technology and is the inventor of seven US Patents on electronic
technology. He has been the founder of three high technology based
electronics companies. He founded Bedford Computer in 1975, which
developed, manufactured and marketed pre-press type and image systems
utilizing early proprietary workstations. He established German, Swedish
and Japanese sales subsidiaries for the company. Bedford Computer completed
a successful IPO with the firm Prescott, Ball and Turben and became public
on July 28, 1981. Annual sales grew to $9.3 million annually. The Company
began experiencing financial difficulties and so in 1985, Mr Walter
Alderman became president of Bedford Computer, and N. Edward Berg resigned
as president. The Company filed for Chapter 11 bankruptcy protection and
subsequently filed a Form 15 in January 1987. Mr. Berg founded and
developed Hendrix Electronics, a division of Hendrix Wire and Cable. The
company built computer workstations and host computer systems. One major
client was Associated Press (the news wire service). Mr. Berg was involved
in a buy-out of the division from Hendrix Wire & Cable with Connecticut
General, Wells Fargo, Old Colony Trust, Bank of Boston, Industrial National
Bank and others. Mr. Berg was also the founder of Contronics, a company
that designed and built custom automated test equipment. Clients included
the U.S. Navy and companies in the semi-conductor and printed wiring board
industries. Contronics had annual sales of $3.2 million and was a pioneer
in the automatic testing of electronic components. Mr. Berg graduated from
M.I.T with a degree in Electrical Engineering and an Option in Industrial
Management from the Sloan School of Management. Mr. Berg is the holder of
numerous national awards, has written three books published by the Graphic
Arts Technical Foundation (Pittsburgh, PA) and has served on the Advisory
Board of the State of New Hampshire Small Business Development Center.
DAVID B. OSTLER, age 40, is the Secretary/Treasurer and will serve as a
Director of the Company. Mr. Ostler is currently employed as Director of
Managed Cares Systems for the Hitchcock Clinic. He has worked as a
consultant in health care information and analysis. Mr. Ostler has been
involved with two other successful start-up companies, Codman Research
Group, 1985-1993, where he served as a Board member, CEO, CFO and COO. and
with a company called Executive Perspectives, 1983-1985, as a Co-Founder
and software technician. Executive Perspectives provided executive
education through seminars and computer simulations-based on executive MBA
software solutions. Mr. Ostler received a MBA from Dartmouth College in
1983 and received a BS in Quantative Techniques and Analysis from the
University of Utah in 1981.
DR. JAMES R. BOYACK, age 63, is a Director and part-time consultant of
the Company. Dr. Boyack is presently retiring from the Polaroid Corporation
where he has spent 28 years on the physical chemistry of instant
photographic systems and, more recently, on digital image processing.
Previous to his employment with Polaroid he was a senior research scientist
for 8 years with the General Electric Company. Dr. Boyack has a BS degree
in Chemistry and a PHD Degree in Physical Chemistry from the University of
Utah. Dr. Boyack was an officer, director and beneficial owner of the
public company, Express Technologies, Inc. Dr. Boyack resigned as an
officer and director on October 1, 1994 and is no longer an affiliate or
beneficial owner. The Company changed
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its name to Dougal Gaming Corporation and was in the business of attempting
to acquire assets and/or businesses in the gaming and/or hospitality
industry.
PROFESSOR WOODIE FLOWERS, age 53, is a Director and part time consultant
of the Company. Professor Flowers is currently at Massachusetts Institute
of Technology ("M.I.T.") as the Pappalardo Professor serving as a professor
of mechanical engineering and as a Director of the New Products Program.
Professor Flowers attended Louisiana Polytechnic University and M.I.T.. He
received his bachelor of Science in 1966, his Master of Science in 1968,
his degree in Mechanical Engineering in 1970 and his Doctor of Philosophy
in 1972. Since 1966 Professor Flowers has been employed or associated with
M.I.T. as a research assistant, instructor, associate professor, professor
and director. He has received numerous awards and achieved major
accomplishments such as writing approximately 100 publications, giving
approximately 200 invited lectures, having 12 domestic and foreign patents
and supervising over 170 student theses. Professor Flowers also is a member
of numerous associations and societies. He is the overseer of Museum of
Fine Arts, Boston and a National Advisor for U.S. FIRST (Foundation for
Inspiration and Recognition of Science and Technology). Professor Flowers
has served since 1995 and is currently serving on the Board of Directors of
the public company General Scanning, Inc. General Scanning, Inc., which
trades on Nasdaq under the symbol GSCN.
PETER ROTH, age 62, is a Director and part time consultant of the
Company. Mr. Roth is currently working for Polaroid Corporation as a
Research Fellow. Mr. Roth has a BS Degree from C.C.N.Y. in Chemical
Engineering. He also has received a Masters Degree in Physical Chemistry
and a Masters Degree in Solid-State Physics from Northeastern University.
KEY EMPLOYEES
The following sets forth certain biographical information relating to
possibly future key employees of the Company.
William Freeman, age 48 could become a key employee of the Company. Mr.
Freeman upon successful completion of this Offering would hopefully be
hired as the Chief Software and Hardware Engineer. Currently employed with
Digital Equipment (a division of Compaq), Mr. Freeman has previously worked
with N. Edward Berg on this and other projects. Mr. Freeman is a graduate
engineer from MIT. His experience includes both hardware and software
engineering.
Currently the Company has not entered into any employment agreements.
General discussions have taken place in which Mr. Freeman has expressed his
desire to work in a small company atmosphere where he can make individual
contributions utilizing his software and hardware skills. He has stated
that he is willing to entertain such an opportunity based on an annual
compensation of $73,000 and with the possibility of being granted stock
options based on performance in the future. Further discussion with Mr.
Freeman will be contingent upon the closing of this Offering.
Mr. Berg, president of the Company has not entered into any employment
agreement with the Company and intends to enter into an oral employment
agreement after the completion of this Offering. Mr. Berg has previously
stated that he would be willing to enter into an employment agreement with
the Company based on an annual compensation of $70,000.
Upon completion of this Offering, the expected annual compensation to be
paid to these two employees would represent approximately 59% of the
proceeds from this Offering. The research and development activities
primarily consist of labor to reduce, to industrial production, the
concepts of the Company's proprietary technology related to the imaging
workstation.
There can be no guarantees that upon successful completion of this
Offering that Mr. Freeman can be employed for the stated compensation
above. If the Company is unable to hire him or another like skilled
individual for approximately the same compensation discussed herein, it may
materially adversely affect the Company and its ability to succeed. See
"MANAGEMENT AND AFFILIATES - Executive Compensation."
EXECUTIVE COMPENSATION
The Company was only recently incorporated, has not yet commenced
planned operations and has not paid any compensation to any person
associated with the Company, and the Company presently has no formal
employment agreements or other contractual arrangements with the officers,
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directors or anyone else regarding the commitment of time or the pay of
salaries or other compensation. The Company hopes, upon the successful
completion of this Offering, to negotiate and enter into employment
agreements with Mr. Berg and Mr. Freeman. The anticipated annual
compensation for these two individuals or any other individuals with
similar skills and experience is expected to be approximately $143,000 or
59% of the net proceeds of this Offering. See "MANAGEMENT AND AFFILIATES -
Dependence on Key Personnel." The research and development activities
primarily consist of labor to reduce, to industrial production, the
concepts of the Company's proprietary technology for the proposed imaging
workstation. See "USE OF PROCEEDS", "MANAGEMENT'S PLAN OF OPERATIONS",
"BUSINESS - The Base Products", and "THE COMPANY."
The Company does not currently have any intention to issue shares of the
Compay's authorized but unissued Common Stock for services rendered and/or
in connection with business product acquisition or opportunities as
compensation, but management anticipates that shares of the Company's
authorized but unissued Common Stock may in the future be utilized for
services rendered and/or in connection with business product acquisition or
opportunities as compensation to the Company's management, promoters, or
their affiliates or associates. See "RISK FACTORS - Possible Payment of
Finder's Fees to Management or Affiliates."
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the date of this Memorandum, the
outstanding shares of common stock of Micro Interconnect Technology, Inc.
owned of record or beneficially by each person who owned of record, or was
known by the Company to own beneficially, more than 5% of the Company's
common stock, and the name and shareholdings of each Officer and Director
and all Officers and Directors as a group:
Principal Shareholder's Number of Percent Prior Percent
Name and Addresses Shares Owned to Offering Post Offer
N. Edward Berg(1)(2) 1,000,000 100% 87%
David B. Ostler(1)(2) -0- 0% 0%
James R. Boyack(2) -0- 0% 0%
Woodie Flowers(2) -0- 0% 0%
Peter Roth(2) -0- 0% 0%
All Officers and
Directors as a Group
(5) 1,000,000 100% 87%
Footnotes;
(1)An Officer of the Company.
(2)A Director of the Company.
"1998" STOCK OPTION PLAN
In February 1998, the Board of Directors of the Company adopted and the
present stockholders approved, a 1998 Stock Option Plan,("1998 Plan"). The
1998 Plan authorizes the granting of awards of up to 1,000,000 shares of
Common Stock to the Company's key employees, officers, directors,
consultants, advisors and sales representatives. Awards consist of stock
options (both non-qualified options and options intended to qualify as
"Incentive" stock options under Section 422 of the Internal Revenue Code of
1986, as amended), restricted stock awards, deferred stock awards, stock
appreciation rights and other stock-based awards, as described in the 1998
Plan.
The 1998 Plan is administered by the Board of Directors which determines
the persons to whom awards will be granted, the number of awards to be
granted and the specific terms of each grant, including the vesting
thereof, subject to the provisions of the 1998 Plan. In connection with
qualified stock options, the exercise price of each option may not be less
than 100% of the fair market value of the Common Stock on the date of grant
(or 110% of the fair market value in the case of a grantee holding more
than 10% of the outstanding stock of the Company). The aggregate fair
market value of shares for which qualified stock options are exercisable
for the first time by such employee during any calendar year may not exceed
$100,000. Non-qualified stock options granted under the 1998 Plan may be
granted at a price determined by the Board of Directors, not to be less
than the fair market value of the Common Stock on the date of grant.
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The 1998 Plan also contains certain change in control provisions which
could cause options and other awards to become immediately exercisable and
restrictions and deferral limitations applicable to other awards to lapse
in the event any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, including a "group" as defined in
Section 13(d), but excluding certain stockholders of the Company, became
the beneficial owners of more than 25% of the Company's outstanding shares
of Common Stock.
CERTAIN TRANSACTIONS
The 1,000,000 presently outstanding Shares of the Company's Common Stock
were purchased by the founder of the Company for $10,000.00. See "PRINCIPAL
SHAREHOLDERS."
It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company, which even though
they may involve conflicts of interest in that they are not arms' length
transactions, but are believed to be fair and equitable transactions in the
best interest of the Company. These transactions include the following:
The Company owns no real property. Further the Company does not
currently lease any office or manufacturing space. The Company will use the
home office of N. Edward Berg, its President, in Bedford, New Hampshire on
a rent-free basis until the completion of this Offering, at which time the
Company will enter into an agreement for leasing approximately 1200 square
feet of executive and manufacturing space for $800 per month for a one year
period from the president's wife. The Company, at its option, may lease the
space for an additional year under the same terms and conditions. The
monthly rent will also include the utilities, heat, use of the facilities
computer systems and manufacturing type tools and equipment. The Company
believes that this facility will be more than sufficient in the beginning
phases of the developmental process of the imaging workstation. In the
event the Company needs to locate new facilities to meet growing needs,
there can be no guarantees that the Company will be able to successfully
locate such facilities on an affordable basis which may adversely
materially affect the Company's business, financial condition and results
of operations. The office space is located at the end of Tirrell Hill Road
in Goffstown, N.H. with a mailing address of 72 Tirrell Hill Road, Bedford,
NH 03110. The current address of the Company is 70 Horizon Drive, Bedford,
NH 03110. See "BUSINESS - Facilities."
The Company has entered into an exclusive licensing agreement for 4 U.S.
patents belonging to the president of the Company, N. Edward Berg with such
agreement being subject to the completion of this Offering. These 4 U.S.
patents are the proprietary technology from which the Company intends to
develop its workstations which will eventually be used to complete a
flexible manufacturing cell (factory) for production of high density
electronic interconnects.
The Company presently has no formal written employment agreement or
other contracts, except for the exclusive licensing agreement described
above, with any of its officers or key employees, but upon completion of
this Offering the Company anticipates entering into employment agreements
with both, N. Edward Berg and William Freeman. Preliminary discussions have
been held concerning possible compensation, but no oral or written
agreement have been entered into. The other terms of full time employment
have not yet been determined either. See "MANAGEMENT & AFFILIATES -
Executive Compensation."
It is presently anticipated that the proceeds of this Offering will be
sufficient to permit the Company to enter into the lease and licensing
agreement with Mr. Berg to enter into development of the imaging
workstation. Inasmuch as the Company is dependent upon the receipt of the
proceeds of this Offering to be able to develop such equipment, and there
is no assurance that this Offering will be successfully completed,
management has not entered into any contracts for leasing, licensing or the
development of such equipment, and has no commitments or other assurances
that the Company will be able, with the proceeds of this Offering, to fully
develop the intended equipment.
It is presently not contemplated that any of the Company's executive
officers or directors or their respective affiliates will be providing any
loans to the Company.
CONFLICTS OF INTEREST
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
dealings the parties will attempt to deal on terms competitive in the
market and on the same terms that either party would deal with a third
person. Presently, none of the officers and directors have any transactions
which they contemplate entering into with the Company, aside from the
matters described herein.
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Inasmuch as some Officers, Directors and Key Employees of the Company
are not employed full time and are engaged in other businesses, either
individually or through partnerships and corporations, in which they have
an interest, hold an office or serve on boards of directors. Certain
conflicts of interest may arise between the Company and its Officers and
Directors.
INDEMNIFICATION
Management will attempt to resolve any conflicts of interest that may
arise in favor of the Company. Failure to do so could result in fiduciary
liability to management. The General Corporation Law of Nevada permits
provisions in the articles, by-laws or resolutions approved by shareholders
which limit liability of directors for breach of fiduciary duty to certain
specified circumstances, namely, breaches of their duties of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, acts involving unlawful payment of dividends (the
Company is not anticipating paying any dividends) or unlawful stock
purchases or redemptions, or any transaction from which a director derives
an improper personal benefit. The articles with these exceptions eliminate
any personal liability of a director to the Company or its shareholders for
monetary damages for the breach of a director's fiduciary duty, and
therefore a director cannot be held liable for damages to the Company or
its shareholders for gross negligence or lack of due care in carrying out
his fiduciary duties as a director. The Company's by-laws indemnify its
officers and directors to the full extent permitted by Nevada law. Nevada
law permits indemnification if a director or officer acts in good faith in
a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation. A director or officer must be indemnified as
to any matter in which he successfully defends himself. Indemnification is
prohibited as to any matter in which the director or officer is adjudged
liable to the corporation. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers,
and controlling persons of the Company pursuant to the foregoing provisions
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
FIDUCIARY RESPONSIBILITY OF THE OFFICERS AND DIRECTORS
The Officers and Directors of the Company are accountable to the
Shareholders of the Company as fiduciaries, which means such Officers and
Directors are required to exercise good faith and integrity in handling the
Company's affairs.
A shareholder may be able to institute legal action on behalf of himself
and all other similarly situated shareholders to recover damages where the
Company has failed or refused to observe the law. Shareholders may, subject
to applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce their rights, including rights under certain
federal and state securities laws and regulations. Shareholders who have
suffered losses in connection with the purchase or sale of their interest
in the Company due to a breach of a fiduciary duty by an Officer or
Director of the Company in connection with such sale or purchase, including
the misapplication by any such Officer or Director of the proceeds from the
sale of these securities, may be able to recover such losses from the
Company.
The Company and its affiliates may not be liable to its shareholders for
errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud or a knowing violation of the law, since provisions have
been made in the Articles of Incorporation and By-laws limiting such
liability. The Articles of Incorporation and By-laws also provide for
indemnification of the Officers and Directors of the Company in most cases
for any liability suffered by them or arising out of their activities as
Officers and Directors of the Company if they were not engaged in
intentional misconduct, fraud or a knowing violation of the law. Therefore,
purchasers of these securities may have a more limited right of action than
they would have except for this limitation in the Articles of Incorporation
and By-laws. In the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933 is
contrary to public policy and, therefore, unenforceable.
The Company will not acquire assets from its current management or any
entity in which such management has a five percent or greater equity
interest unless the Company has first received an independent opinion as to
the fairness of the terms of the acquisition. In negotiation the terms of
the acquisition of the assets, management may be influenced by the
possibility of future personal benefit from unrelated business dealings
with such persons or entities. Management believes that any such conflict
will be resolved in favor of the Company and its shareholders. The Officers
and Directors are required to exercise good faith and integrity in handling
the Company's affairs. Management of the Company has agreed to abide by
this fiduciary duty.
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It should be noted that this is a rapidly developing and changing area
of the law. Investors are urged to consult their own legal counsel.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as Indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons for the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that any claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred
or paid by a director, officer or controlling person of the small business
issuer in the defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the securities Act and will be governed by the final adjudication of such
issue.
ORGANIZATION WITHIN LAST FIVE YEARS
The Company is a developmental company and has no operating history. As
soon as the money from this Offering is made available, the Company expects
to make all arrangements necessary so that it can commence operations in
1998.
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified
in their entirety by reference to the detailed provisions of the Company's
Articles of Incorporation and Bylaws, copies of which will be furnished to
an investor upon written request therefor. See "FURTHER INFORMATION."
AUTHORIZED CAPITAL
The company's authorized capital stock consists of 50,000,000 shares of
$.001 par value Common Stock. As of the date of this Offering Memorandum,
the Company has outstanding 1,000,000 shares of its Common Stock, all of
which are validly issued, fully paid and non-assessable.
UNITS
Each Unit being offered hereby consists of one share of the Company's
Common Stock, $.001 par value and two Warrants to purchase two additional
shares of Common Stock. The Shares being registered pursuant to the
registration statement of which this prospectus is a part are shares of
Common Stock, all of the same class and entitled to the same rights and
privileges as all other shares of Common Stock. The Common Stock and
Warrants constituting a single Unit will be separately transferrable upon
issuance. Currently there are no markets for the Units or Warrants and no
assurances there will ever be a public market in the future.
COMMON STOCK
The Company is presently authorized to issue 50,000,000 shares of $.001
par value Common Stock. The Company presently has 1,000,000 shares issued
and outstanding, and 150,000 shares of Common Stock are included in the
Units which are for sale in this Offering, and an additional 300,000 shares
are issuable upon exercise of the Warrants contained in the Units. The
Company has reserved from its authorized but unissued shares a sufficient
number of shares of Common Stock for issuance of the Common Stock included
in the Units offered hereby and underlying the Warrants included in the
Units.
The shares of Common Stock issuable on completion of the Offering and
upon exercise of the Warrants will be, when issued in accordance with the
terms of the Offering, fully paid and non-assessable.
The holders of Common Stock, including the shares contained in the Units
offered hereby and those issuable upon exercise of any Warrants, are
entitled to equal dividends and distributions, per share, with respect to
the Common
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Stock when, as and if declared by the Board of Directors from funds legally
available therefore. However, the Company has not paid any dividends on
Common Stock to date and does not anticipate paying dividends on Common
Stock in the foreseeable future. The Company intends for the foreseeable
future to follow a policy of retaining all of its earnings, if any, to
finance the development and expansion of its business. No holder of any
shares of Common Stock has a pre- emptive right to subscribe for any
securities of the Company nor are any common shares subject to redemption
or convertible into other securities of the Company. Upon liquidation,
dissolution or winding up of the Company, and after payment of creditors
and preferred stockholders, if any, the assets will be divided pro-rata on
a share-for-share basis among the holders of the shares of Common Stock.
All shares of Common Stock now outstanding are fully paid, validly issued
and non-assessable. Each share of Common Stock is entitled to one vote with
respect to the election of any director or any other matter upon which
shareholders are required or permitted to vote. Holders of the Company's
Common Stock do not have cumulative voting rights, so that the holders of
more than 50% of the combined shares voting for the election of directors
may elect all of the directors, if they choose to do so and, in that event,
the holders of the remaining shares will not be able to elect any members
to the Board of Directors.
PREFERRED STOCK
None of the Company's 10,000,000 shares of preferred stock is issued and
outstanding, and the Company currently has no plans to issue any preferred
stock. The Company's Board of Directors has authority, without action by
the shareholders, to issue all or any portion of the authorized but
unissued preferred stock in one or more series and to determine the voting
rights, preferences as to dividends and liquidation, conversion rights, and
other rights of such series. The preferred stock, if and when issued, may
carry rights superior to those of the common stock.
The Company considers it desirable to have preferred stock available to
provide increased flexibility in structuring possible future acquisitions
and financing and in meeting corporate needs which may arise. If
opportunities arise that would make desirable the issuance of preferred
stock through either public offerings or private placements, the provisions
for preferred stock in the Company's Certificate of Incorporation would
avoid the possible delay and expense of a shareholder's meeting, except as
may be required by law or regulatory authorities. Issuance of the preferred
stock could result, however, in a series of securities outstanding that
will have certain preferences with respect to dividends and liquidation
over the common stock which would result in dilution of the income per
share and the net book value of the common stock. Issuance of additional
common stock pursuant to any conversion right which may be attached to the
terms of any series of preferred stock may also result in the dilution of
the net income per share and the net book value of the common stock. The
specific terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing, and other
factors existing at the time of issuance. Therefore, it is not possible at
this time to determine in what respect a particular series of preferred
stock will be superior to the Company's common stock or any other series of
preferred stock which the Company may issue. The Board of Directors does
not have any specific plan for the issuance of preferred stock at the
present time and does not intend to issue any preferred stock, except on
the terms which it deems to be in the best interest of the Company and its
shareholders.
WARRANTS
Each Warrant represents the right to purchase one share of Common Stock
at an initial exercise price of $2.50 per share for a period of one year
from the date hereof. The exercise price and the number of shares issuable
upon exercise of the Warrants are subject to adjustment in certain events,
to the extent that such events occur after the effective date of the
Warrant Agency Agreement, including the issuance of Common Stock as a
dividend on shares of Common Stock, subdivisions or combinations of the
Common Stock or similar events. Except as stated in the preceding sentence,
the Warrants do not contain provisions protecting against dilution
resulting from the sale of additional shares of Common Stock for less that
the exercise price of the Warrants or the current market price of the
Company's securities.
Warrants, beginning six months from the date hereof, may be redeemed in
whole or in part, at the option of the Company upon 30 days notice, at a
redemption price of $.01 per Warrant if the closing price of the Company's
Common Stock on the Nasdaq Bulletin Board is at least $3.00 per share (150%
of the Unit Price) for 20 consecutive trading days, ending not earlier than
five days before the Warrants are called for redemption. Although the
Company would not normally do so, in the event it calls for redemption of
the Warrants at a time when exercise is not possible or is impractical,
warrantholders would be compelled to accept the nominal redemption price of
$.01 per warrant. If exercise of the Warrants is qualified or exempt from
qualification, and the Company should call for redemption, warrantholders
would have a minimum of 30 days in which to decide whether to exercise
their Warrants, after which they would have to accept the redemption price.
Holders of Warrants may exercise their Warrants for the purchase of shares
of Common Stock only if a current prospectus relating to such shares is
then in effect and only if such shares are qualified for sale, or deemed to
be exempt from qualification, under applicable state securities laws. The
Company is required to use its best efforts to maintain a current
Prospectus
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<PAGE>
relating to such shares of Common Stock at all times when the market price
of the Common Stock exceeds the exercise price of the Warrants until the
expiration date of the Warrants, although there can be no assurance that
the Company will be able to do so.
Holders of Warrants will be entitled to notice in the event of (a) the
granting by the Company to all holders of its Common Stock of rights to
purchase any shares of capital stock or any other rights or (b) any
reclassification of the Common Stock, any consolidation of the Company
with, or merger of the Company into any other person or merger of any other
person into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of any outstanding
shares of Common Stock), or any sale or transfer of all or substantially
all of the assets of the Company.
The Company has reserved, from its authorized unissued shares, a
sufficient number of shares of Common Stock for issuance on exercise of the
Warrants. During the period in which a Warrant is exercisable, exercise of
such Warrant may be effected by delivery of the Warrant, duly endorsed for
exercise and accompanied by payment of the exercise price and any
applicable taxes or governmental charges, to the Warrant Agent. The shares
of Common Stock issuable on exercise of the Warrants will be, when issued
in accordance with the Warrants, full paid and non-assessable.
For the life of the Warrants, the holders thereof have the opportunity
to profit from a rise in the market value for the Company's Common Stock,
with a resulting dilution in the interest of all other shareholders. So
long as the Warrants are outstanding, the terms on which the Company could
obtain additional capital may be adversely affected. The holders of such
Warrants might be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain any needed capital by offering
of securities on terms more favorable than those provided for by such
Warrants.
Except as described above, the holders of the Warrants have no rights as
stockholders of the Company until they exercise their Warrants.
TRANSFER AND WARRANT AGENT
Interwest Transfer Company, Inc, 1981 East 4800 South, Suite 100, Salt
Lake City, Utah 84117 is the Transfer Agent and Registrar for the Company's
$.001 par value Common Stock and warrant agent for the Warrants.
DIVIDEND POLICY
The Company has not paid any dividends on Common Stock to date and does
not anticipate paying dividends on Common Stock in the foreseeable future.
The Company intends for the foreseeable future to follow a policy of
retaining all of its earnings, if any, to finance the development and
expansion of its business.
SHARES ELIGIBLE FOR FUTURE SALE.
Upon the consummation of this Offering, the Company will have 1,150,000
shares of Common Stock outstanding. Of these shares, the 150,000 shares
sold in this Offering will be freely tradable without restriction or
further registration under the Securities Act, except for any shares
purchased by an "affiliate" of the Company (in general, a person who has a
control relationship with the Company) which will be subject to limitations
of Rule 144 promulgated by the Commission under the Securities Act. All of
the remaining 1,000,000 shares are deemed to be "restricted securities," as
that term is defined under Rule 144 promulgated under the Securities Act,
in that such shares were issued in private transactions not involving a
public offering. All, of such shares are not eligible for sale under Rule
144 until February 16, 1999 at which time they will have been held longer
than one year.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate
of the Company (or persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares
of the same class or, the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate
of the Company for at least the three months immediately preceding the sale
and who has beneficially owned shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any
of the limitations described above.
Prior to this Offering, there has been no market for the Common Stock,
and no prediction can be made as to the effect, if any, that market sales
of restricted shares of Common Stock or the availability of such shares for
sale
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will have on the market prices prevailing from time to time. Nevertheless,
the possibility that substantial amounts of Common Stock may be sold in the
public market may adversely affect the price for the sale of the Company's
equity securities in any trading market which may develop. See "RISK FACTOR
- - Shares Eligible for Future Sale."
PLAN OF DISTRIBUTION
GENERAL
The Company is offering through it officers and directors on a "best-
efforts, all or none" basis 150,000 Units of the Company's securities. Each
Unit consists of one (1) share of $.001 par value common stock and two (2)
Redeemable Common Stock Purchase Warrants at a purchase price of $2.00 per
Unit. The Offering will be managed by the Company without any underwriter,
and without any underwriting discounts or sales commissions. The Units will
be offered and sold by the Company's president and director N. Edward Berg,
who will receive no sales commissions or other compensation, except for
reimbursement of expenses actually incurred on behalf of the Company for
such activities. In connection with his efforts, he will rely on the "safe
harbor" provisions of Rule 3a4-1 of the Securities and Exchange Act of 1934
(the "1934 Act"). Generally speaking, Rule 3a4-1 provides an exemption from
the broker/dealer registration requirements of the 1934 Act for associated
persons of an issuer. No one, including the Company, has made any
commitment to purchase any or all of the Units. Rather, Mr. Berg will use
his best efforts to find purchasers for the Units for a period of 150 days
from the date of this prospectus, subject to an extension at the sole
discretion of the Company for an additional period not to exceed 30 days in
aggregate.
Offering proceeds will be escrowed pending completion or termination of
the Offering. Funds held in escrow will be promptly returned to
subscribers, without interest thereon or deduction therefrom, unless the
Offering is completed on or before that date upon receipt of subscriptions
for the entire offering amount. See "THE OFFERING - Use of Proceeds."
The Company anticipates making sale of the Units to persons whom it
believes may be interested or who have contacted the Company with interest
in purchasing the securities. The Company may sell Units to such persons if
they reside in a state in which the Units may be sold and in which the
Company is permitted to sell the Units. The Company is not obligated to
sell Units to any such persons.
Investors should be aware that while this Offering is being conducted
through it officer and director, N. Edward Berg, that the Company retains
the right to utilize the services of broker/dealers ("Participating
Broker/Dealers") who are members of the National Association of Securities
Dealers, Inc. ("NASD"). The Company reserves the right to pay commissions
in connection with sales effectuated through Participating Broker/Dealers
in an amount not to exceed 10% of the sales price for sale effectuated by
them. Prior to the involvement of any Participating Broker/Dealer in the
Offering, the Company must obtain a no objection position from the NASD
regarding any contemplated compensation and arrangements. In view of the
Commission's Division of Corporation Finance any Participating
Broker/Dealer that sells securities in this Offering will be deemed an
underwriter as defined in Section 2(11) of the Securities Act of 1933, as
amended. Further, the Company will amend the Prospectus and the
registration statement of which it is a part to by post-effective amendment
to identify a selected Participating Broker/Dealer at such time as such
Participating Broker/Dealer sells 5% or more of the Offering hereby.
In as much as the Company is offering the Units and an underwriter was
not retained for such purposes, the Company's determination of the offering
price and the exercise price of the Warrants has not been determined by
negotiation with an underwriter, as is customary in most offerings. To the
extent an underwriter has not been involved in determining the offering
price, subscribers are subject to an increased risk that the price of the
Company's securities has been arrived at arbitrarily.
Officers, directors present shareholders of the Company and persons
associated with them may be sold some of the Units. However, officers,
directors and their affiliates shall not be permitted to purchase more than
20% of the Units sold hereunder and such purchases will be held for
investment and not for resale. In addition, no proceeds from this Offering
will be used to finance any such purchases.
METHOD OF SUBSCRIBING
Persons may subscribe for the Units by filling in and signing the
Subscription Agreement and other execution documents included herewith and
delivering them to the Company prior to the Expiration Date as defined
below. These documents will contain representations as to the investor's
qualifications to purchase the Units and his ability to evaluate and bear
the
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risk of an investment in the Company, and will contain an acknowledgment of
the receipt of the opportunity to make inquiries and obtain additional
information. The Company may reject any subscription in its sole discretion
for any reason. Certificates of Common Stock and Warrants subscribed for
will be issued as soon as practicable after the Subscription is accepted by
the Company after review of the subscription materials.
EXPIRATION DATE
The subscription offer will expire ("Expiration Date") on the earlier of
, , 1999 or when the entire Offering is subscribed for (unless
the Company, at its option, extends the offering period and updates the
disclosures contained herein.)
RIGHT TO REJECT
The Company reserves the right to reject any subscription in its sole
discretion for any reason whatsoever prior to the time funds for such
subscription are deposited by the Company and to withdraw this offer at any
time.
OPPORTUNITY TO MAKE INQUIRIES
The Company will make available to each Offeree prior to any sale of the
Units the opportunity to ask questions and receive answers from the
Officers and Directors of the Company concerning any aspect of the
investment and to obtain any additional information contained in this
Memorandum, to the extent that the Company possesses such information or
can acquire it without unreasonable effort or expense. All information to
be obtained from the Company, at 70 Horizon Drive, N.H., Bedford, NH 03110,
telephone (603) 472-7068, facsimile (603) 472-7043.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The statements under the heading "Certain Federal Income Tax
Considerations," to the extent such statements refer to matters of tax law,
are solely the opinions of management. Management has not sought nor
obtained any formal legal opinion as to such matters, and no conclusion of
counsel is binding on the Internal Revenue Service or the courts in any
event. There can be no assurance that the Internal Revenue Service or the
courts will not reach different conclusions regarding the transactions
contemplated hereby. This discussion does not address certain Federal
income tax consequences that are the result of special rules, such as those
that apply to life insurance companies, tax exempt entities, foreign
corporations- and non-resident alien individuals. In addition, the
discussion does nor address alternative minimum tax considerations and is
limited to investors who will hold Common Stock as "capital assets"
(generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
discussion also assumes that the Common Stock will be traded on an
established securities market. This discussion is based on relevant
provisions of the Code the Treasury Regulations promulgated thereunder (the
"Regulations"), revenue rulings published in the Internal Revenue Bulletin
and judicial decisions in effect at the date of this Prospectus. There can
be no assurance that future changes in applicable law or administrative and
judicial interpretations thereof will not adversely affect the tax
consequences discussed herein.
The tax treatment to a holder of Common Stock may vary depending on such
holders' particular situation. Potential investors should consult their own
tax advisors as to the tax treatment that may be anticipated to result from
the ownership or disposition of common stock in their particular
circumstances, including the application of foreign, state or local tax
laws or estate and gift tax considerations
STATE AND LOCAL INCOME TAXES
A holder of Common Stock may be liable for state and local income taxes
with respect to dividends paid or gain from the sale, exchange or
redemption of Common Stock. Many states and localities do not allow
corporations a deduction analogous to the Federal dividends received
deduction. Prospective investors are advised to consult their own tax
advisors as to the state, local and other tax consequences of acquiring,
holding and disposing of Common Stock.
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LEGAL MATTERS
To the knowledge of management there is no material litigation pending
or threatened against the Company. Legal counsel for the Company, in
connection with this offering, is David C. Cundick, Bank One Tower, Suite
900, 50 West Broadway, Salt Lake City, Utah 84101.
EXPERTS
The financial statements of Micro Interconnect Technology, Inc. as of
December 31, 1998, included in this Prospectus have been examined by
Pritchett, Siler, & Hardy, PC, independent certified public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance on such report given upon the authority of that firm as experts in
accounting and auditing.
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No dealer, salesman or other
person is authorized to give
any information or to make
any representations other
than those contained in this
Prospectus in connection
with the offer made hereby.
If given or made, such
information or
representations must not be
relied upon as having been
authorized by the Company.
This Prospectus does not
constitute an offer to sell
or a solicitation of an
offer to by any of the
securities covered hereby in
any jurisdiction or to any
person to whom it is
unlawful to make such offer
or solicitation in such
jurisdiction. Neither the
delivery of this Prospectus
nor any sale made hereunder
shall, in any circumstances,
create any implication that
there has been no change in
the affairs of the Company
since the date hereof.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION. . . . . . . . . . ii
PROSPECTUS SUMMARY . . . . . . . . . . . 1
GLOSSARY OF INDUSTRIAL TERMS . . . . . . 5
RISKS FACTORS. . . . . . . . . . . . . . 7
DILUTION . . . . . . . . . . . . . . . . 16
COMPARATIVE DATA . . . . . . . . . . . . 16
USE OF PROCEEDS. . . . . . . . . . . . . 16
MANAGEMENTS PLAN OF
OPERATION. . . . . . . . . . . . . . . . 18
BUSINESS . . . . . . . . . . . . . . . . 20
MANAGEMENT AND AFFILIATES. . . . . . . . 28
PRINCIPAL SHAREHOLDERS . . . . . . . . . 31
CERTAIN TRANSACTIONS . . . . . . . . . . 32
FIDUCIARY RESPONSIBILITY OF
OFFICERS AND DIRECTORS. . . . . . . 33
ORGANIZATION WITHIN LAST FIVE YEARS. . . 34
DESCRIPTION OF SECURITIES. . . . . . . . 34
PLAN OF DISTRIBUTION . . . . . . . . . . 37
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS. . . . . . . . . . . 38
LEGAL MATTERS. . . . . . . . . . . . . . 38
EXPERTS. . . . . . . . . . . . . . . . . 39
FINANCIAL STATEMENTS . . . . . . . . . F-1
MICRO INTERCONNECT
TECHNOLOGY, INC.
150,000 Units
PROSPECTUS
January , 1999
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and officers
The statutes, charter Provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant
are insured or indemnified in any manner against any liability which they
may incur in such capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act
provides that each corporation shall have the following powers:
1. A corporation may indemnify any person who was or is a party or is
threatened to he made a party to any threatened, pending or completed
action, suit or 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 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 faith and in a manner which he reasonably
believed to be in or not opposed to the best interest 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, or itself creates 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.
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 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 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.
3. 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 1 and 2, or in
defense of any claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must he 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:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
(c) 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
(d) If a quorum consisting of directors two were not parties to
the act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide 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 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 corporate personnel other than directors or officers
may Director be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
(a) 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 2 or for the advancement of
expenses made pursuant to subsection 5, 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.
(b) 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.
7. The registrant's Articles of Incorporation limit liability of
its officers and Directors to the full extent permitted by the Nevada
Business Corporation Act.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and
expenses to be paid by the Company in connection with the
Offering described in the Registration Statement.
Amount
SEC registration fee $310
Blue sky fees and expenses $3,970
Printing and shipping expenses $500
Legal fees and expenses $20,000
Accounting fees and expenses $1,000
Transfer and Miscellaneous expenses $1,000
Total $26,780
* All expenses except SEC registration fee are estimated.
ITEM 26. Recent Sales of Unregistered Securities
On February 11, 1998 Mr. N. Edward Berg purchased 1,000,000 shares for
$10,000 in conjunction with foundation of the Company. As of this date, Mr.
Berg owns 1,000,000 shares of restricted common stock of the Company for
which he paid a total of $10,000.
ITEM 27. Exhibits Index
SEC
Reference Exhibit No. Document
*3a 3a Articles of Incorporation.
*3b 3b BY-Laws.
*4a 4a Instruments defining the rights
of security holders, including indentures
(contained in Exhibits 3a and 3b).
*4b 4b Subscription Agreement
*5 5 Opinion on Legality.
*23 23 Consents of Experts and Counsel.
*27 27 Financial Data Schedule.
*99a 99a Micro Interconnect Technology, Inc. 1998.
Stock option Plan.
*99b 99b Fund Impound Agreement.
*99c 99c Patent Licensing Agreement.
*99d 99d Lease Agreement for Facilities
*99e 99e Patent 5281325
*99f 99f Patent 5377404
*99g 99g Patent 5384230
*99h 99h Patent 5653893
-----------
* Previously filed
+ To be filed by amendment
ITEM 28. Undertakings
Subject to the terms and conditions of section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registration hereby undertakes to
file with the Securities and Exchange Commission such supplementary and
periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred to that section.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to its Articles of Incorporation or provisions
of the Nevada Revised Statutes, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question, whether or not such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
The Registrant hereby undertakes to:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3)of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
2. For determining liability under the Securities Act treat each post
effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
amendment to Registration Statement to be signed on its behalf by the
undersigned, in the City of Bedford, State of New Hampshire, on
January 27, 1999.
MICRO INTERCONNECT TECHNOLOGY, INC.
By:/s/ N. Edward Berg
N. Edward Berg
Chairman (Chief Executive officer)
Director and President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Signatures Title Date
/s/ N. Edward Berg Chairman January 27, 1999
N. Edward Berg (Chief Executive officer)
Director and President
/s/ David B. Ostler Director January 27, 1999
David B. Ostler Secretary/ Treasurer
/s/ James R. Boyack Director January 27, 1999
James R. Boyack
/s/ Woodie Flowers Director January 27, 1999
Woodie Flowers
/s/ Peter Roth Director January 27, 1999
Peter Roth
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1998
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report 1
- Balance Sheet, December 31, 1998 2
- Statement of Operations, from inception
on February 11, 1998 through December 31,
1998 3
- Statement of Stockholders' Equity,
from inception on February 11, 1998
through December 31, 1998 4
- Statement of Cash Flows, from inception
on February 11, 1998 through December 31,
1998 5
- Notes to Financial Statements 6 - 8
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 East 400 South
Salt Lake City, Utah 84111
(801) 328-2727
INDEPENDENT AUDITORS' REPORT
Board of Directors
MICRO INTERCONNECT TECHNOLOGY, INC.
Bedford, New Hampshire
We have audited the accompanying balance sheet of Micro
Interconnect Technology, Inc. [a development stage company] at
December 31, 1998, and the related statements of operations,
stockholders' equity and cash flows from inception on February
11, 1998 through December 31, 1998. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts 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. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of Micro
Interconnect Technology, Inc. as of December 31, 1998, and the
results of its operations and its cash flows for the period from
inception through December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
January 22, 1999
Salt Lake City, Utah
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1998
_____________
CURRENT ASSETS:
Cash in bank $ 6,200
___________
OTHER ASSETS:
Organization costs, net 405
Deferred stock offering costs 5,037
___________
Total Other Assets 5,442
___________
$ 11,642
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,312
Accounts payable - related party 486
___________
Total Current Liabilities 2,798
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,000,000 shares issued and
outstanding 1,000
Capital in excess of par value 9,000
Deficit accumulated during the
development stage (1,156)
___________
Total Stockholders' Equity 8,844
___________
$ 11,642
___________
The accompanying notes are an integral part of this financial
statement.
-2-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on February 11,
1998 Through
December 31, 1998
_________________
REVENUE:
Interest income $ 112
EXPENSES:
General and Administrative 1,268
_____________
LOSS BEFORE INCOME TAXES (1,156)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $(1,156)
_____________
LOSS PER COMMON SHARE $ (.00)
_____________
The accompanying notes are an integral part of this financial
statement.
-3-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON FEBRUARY 11, 1998
THROUGH DECEMBER 31, 1998
Deficit
Capital Accumulated
Preferred Stock Common Stock In Excess During the
___________ _______ _________________ of Par Development
Shares Amount Shares Amount Value Stage
___________ _______ ________ _______ _______ ________
BALANCE,
February 11, 1998 - $ - - $ - $ - $ -
Issuance of
1,000,000 shares
common stock for
cash, February,
1998 at $.01 per
share - - 1,000,000 1,000 9,000 -
Net loss for the
period ended
December 31, 1998 - - - - - (1,156)
___________ _______ _________ ______ _______ __________
BALANCE,
December 31, 1998 - $ - 1,000,000 $1,000 $9,000 $ (1,156)
___________ _______ _________ ______ _______ __________
The accompanying notes are an integral part of this financial
statement.
-4-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
on February 11,
1998 Through
December 31, 1998
__________________
Cash Flows to Operating Activities:
Net loss $ (1,156)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization expense 81
Increase (decrease) in accounts payable 1,175
Increase (decrease) in
accounts payable - related party 486
________________
Net Cash Flows from Operating Activities 586
________________
Cash Flows to Investing Activities:
Payments for organization costs (486)
________________
Net Cash to Investing Activities (486)
________________
Cash Flows from Financing Activities:
Proceeds from common stock issuance 10,000
Stock offering costs (3,900)
________________
Net Cash from Financing Activities 6,100
________________
Net Increase in Cash 6,200
Cash at Beginning of Period -
________________
Cash at End of Period $ 6,200
________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental schedule of Noncash Investing and Financing
Activities:
For the period ended December 31, 1998:
The Company accrued $1,137 in accounts payable for deferred
stock offering costs.
The accompanying notes are an integral part of this financial
statement.
-5-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Nevada on February 11, 1998. The Company has not
commenced planned principal operations and is considered a
development stage company as defined in SFAS No. 7. The Company
is planning to engage in the business of developing proprietary
technology to make electronic devices that link electronic
components together smaller and to operate at higher speeds. The
Company has, at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Organization Costs - The Company is amortizing its organization
costs, which reflect amounts expended to organize the Company,
over sixty [60] months using the straight line method.
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
period presented in accordance with statement of Financial
Standard No. 128, "Earnings Per Share". [See Note 6]
Statement of Cash Flows - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting 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, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from
those estimated.
Stock Based Compensation - The Company accounts for its stock
based compensation in accordance with Statement of Financial
Accounting Standards 123 "Accounting for Stock-Based
Compensation." This statement establishes an accounting method
based on the fair value of equity instruments awarded to
employees as compensation. However, companies are permitted to
continue applying previous accounting standards in the
determination of net income with disclosure in the notes to the
financial statements of the differences between previous
accounting measurements and those formulated by the new
accounting standard. The Company has adopted the disclosure only
provisions of SFAS No. 123 accordingly, the Company has elected
to determine net income using previous accounting standards.
NOTE 2 - CAPITAL STOCK
Stock Option Plan - On February 17, 1998, the Board of Directors
of the Company adopted and the stockholders at that time
approved, the 1998 Stock Option Plan. The plan provides for the
granting of awards of up to 1,000,000 shares of common stock to
sales representatives, officers, directors, consultants and
employees. The awards can consist of stock options, restricted
stock awards, deferred stock awards, stock appreciation rights
and other stock-based awards as described in the plan. Awards
under the plan will be granted as determined by the board of
directors. At present, no awards have been granted under the
plan.
-6-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK [Continued]
Common Stock - During February, 1998, in connection with its
organization, the Company issued 1,000,000 shares of its
previously authorized, but unissued common stock. Total proceeds
from the sale of stock amounted to $10,000 (or $.01 per share).
Preferred Stock - The Company has authorized 10,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares are issued and outstanding at
December 31, 1998.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1998 there were no
material deferred tax assets or liabilities, current or deferred
tax expense, or net operating loss carryforwards.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any
compensation to its officers and directors.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his home as a mailing address, as needed, at no
expense to the Company.
Payable to Related Party - An officer/shareholder of the Company
paid organization costs of $486 on behalf of the Company.
NOTE 5 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan.
However, the possibility exists that the Company could expend
virtually all of its working capital in a relatively short time
period and may not be successful in establishing on-going
profitable operations.
NOTE 6 - LOSS PER SHARE
The following data shows the amounts used in computing loss per
share for the period ended December 31, 1998:
1998
____________
Loss from continuing operations
available to common shareholders
(numerator) $(1,156)
____________
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) $ 1,000,000
____________
-7-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - SUBSEQUENT EVENTS
Proposed Public Offering of Common Stock - The Company is
proposing to make a public offering of 150,000 units consisting
of a total of 150,000 shares of common stock and 300,000
redeemable common stock purchase warrants. Each warrant allows
the holder to purchase one share of common stock for $2.50; the
warrants are subject to adjustment in certain events and are
exercisable for a period of one year from the date of the
offering. The Company may redeem the warrants at a price of $.01
per warrant, at any time beginning six months after the date of
the offering upon not less than 30 days prior written notice, if
the closing bid price of the Company's common stock on the Nasdaq
Bulletin Board is at least $3.00 per share for twenty consecutive
trading days, ending not earlier than five days before the
warrants are called for redemption. The Company plans to file a
registration statement with the United States Securities and
Exchange Commission on Form SB-2 under the Securities Act of
1933. An offering price of $2 per unit has arbitrarily been
determined by the Company. The offering will be managed by the
Company without any underwriter. The units will be offered and
sold by an officer of the Company, who will receive no sales
commissions or other compensation in connection with the
offering, except for reimbursement of expenses actually incurred
on behalf of the Company in connection with the offering. The
Company has incurred stock offering costs of approximately $5,000
as of December 31, 1998, but any such costs will be deferred and
netted against the proceeds of the proposed public stock
offering.
License Agreement - The Company entered into an exclusive
licensing agreement with the officer and shareholder of the
Company for the exclusive rights for patents covering electronic
interconnection manufacturing technologies for the United States
and it's territories and possessions. The agreement expires
March 31, 2007. The Company will pay a 1% royalty of gross sales
and receipts for the right beginning January 1999.
-8-
<PAGE>
ARTICLES OF INCORPORATION
OF
MICRO INTERCONNECT TECHNOLOGY, INC.
ARTICLE I
The name of the corporation (which is hereinafter
referred to as the "Corporation") is Micro Interconnect
Technology, Inc.
ARTICLE II
The address of the registered office of the Corporation
in the State of Nevada is 3230 East Flamingo Road, Suite
#156, Las Vegas, Nevada 89121. The name of the registered
agent of the Corporation is Gateway Enterprises, Inc.
ARTICLE III
The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be
organized under the provisions of Chapter 78 of the Nevada
Revised Statutes.
ARTICLE IV
a. Common Stock. The aggregate number of shares of
Common Stock which the Corporation shall have
authority to issue is 50,000,000 shares at a par
value of $.001 per share. All stock when issued
shall be fully paid and non-assessable, shall be
of the same class and have the same rights and
preferences.
Each share of Common Stock shall be entitled to
one vote at a stockholder's meetings, either in
person or by proxy. Cumulative voting in
elections of Directors and all other matters
brought before stockholders meeting, whether they
be annual or special, shall not be permitted.
The holders of the capital stock of the
Corporation shall not be personally liable for the
payment of the Corporation's debts and the private
property of the holders of the capital stock of
the Corporation shall not be subject to the
payment of debts of the Corporation to any extent
whatsoever.
Stockholders of the Corporation shall not have
any preemptive rights to subscribe for additional
issues of stock of the Corporation except as may
be agreed from time to time by the Corporation and
any such stockholder.
b. Preferred Stock. The aggregate number of share of
Preferred Stock which the Corporation shall have
-1-
<PAGE>
authority to issue is 10,000,000 shares, par value
$.001, which may be issued in series, with such
designations, preferences, stated values, rights,
qualifications or limitations as determined solely
by the Board of Directors of the Corporation.
ARTICLE V
The amount of the authorized stock of the Corporation of
any class or classes may be increased or decreased by the
affirmative vote of the holders of a majority of the voting
power of all shares of the Corporation entitled to vote
generally in the election of directors, voting together as
a single class.
ARTICLE VI
SECTION 1. Number. Election and Terms of Directors. The
members of the governing board of the Corporation shall be
styled Directors of the Corporation. The number of the
Directors of the Corporation shall be fixed from time to
time by or pursuant to the By-Laws of the Corporation, and
shall initially be one.
SECTION 2. Newly Created Directorships and Vacancies.
Newly created directorships resulting from any increase in
the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled
only by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of
the Board of Directors. No decrease in the number of
Directors constituting the Board of Directors shall shorten
the term of any incumbent Director.
SECTION 3. Removal of Directors. Any Director may be
removed from office, with or without cause, only by the
affirmative vote of the holders of 51% of the voting power
of all shares of the Corporation entitled to vote generally
in the election of Directors, voting together as a single
class.
ARTICLE VII
Any action required or permitted to be taken by the
stockholders of the Corporation may be effected by any
consent in writing by such holders, signed by holders of
not less than that number of shares of Common Stock
required to approve such action.
ARTICLE VIII
Subject to any express provision of the laws of the
State of Nevada or these Articles of Incorporation, the
Board of Directors shall have the power to make, alter,
amend and repeal the By-Laws of the Corporation (except so
-2-
<PAGE>
far as By-Laws of the Corporation adopted by the
stockholders shall otherwise provide). Any By-Laws made by
the Directors under the powers conferred hereby may be
altered, amended or repealed by the Directors or by the
stockholders.
ARTICLE IX
Election of Directors need not be by ballot unless the
By-laws of the Corporation shall so provide.
ARTICLE X
SECTION 1. Elimination of Certain Liability of
Directors. A Director of the Corporation shall not be
personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the
Director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing
violation of law, (iii) for the payment of distributions to
stockholders in violation of Section 78.300 of the Nevada
Revised Statutes, or (iv) for any transaction from which
the Director derived an improper personal benefit.
SECTION 2. Indemnification and Insurance.
a. Action, etc.. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may
hereafter be amended, any Agent (as hereinafter
defined) against costs, charges and Expenses (as
hereinafter defined), judgments, fines and amounts
paid in settlement actually and reasonably
incurred by the Agent in connection with such
action, suit or proceeding, and any appeal
therefrom, if the Agent acted in good faith and in
a manner the Agent 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 such conduct was unlawful. The termination
of any action, suit or proceeding--whether by
judgment, order, settlement conviction, or upon a
plea of nolo contendere or its equivalent--shall
not, of itself, create a presumption that the
Agent did not act in good faith and in a manner
which the Agent reasonably believed to be in or
not opposed to the best interests of the
Corporation, and, with respect to any criminal
action or proceeding, that the Agent had
reasonable cause to believe that the Agent's
conduct was unlawful.
-3-
<PAGE>
b. Action, etc., by or in the Right of the
Corporation. The Corporation shall indemnify any
person who was or is a party or is threatened to
be made a party to any threatened, pending or
completed judicial action or suit brought by or in
the right of the Corporation to procure a judgment
in its favor by reason of the fact that such
person is or was an Agent, against costs, charges
and Expenses actually and reasonably incurred by
the Agent in connection with the defense or
settlement of such action or suit and any appeal
therefrom if the Agent acted in good faith and in
a manner such person reasonably believed to be in
or not opposed to the best interests of the
Corporation, except that no indemnification shall
be made in respect of any claim, issue or matter
as to which such person shall have been adjudged
to be liable for gross negligence or wilful
misconduct in the performance of the Agent's duty
to the Corporation unless and only to the extent
that the court in which such action or suit was
brought shall determine upon application that,
despite the adjudication of liability but in view
of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for
such costs, charges and Expenses which such court
shall deem proper.
c. Determination of Right of Indemnification. Any
indemnification under Paragraphs (a) and (b) of
this Section (unless ordered by a court) shall be
paid by the Corporation unless a determination is
reasonably and promptly made (i) by the Board of
Directors by a majority vote of a quorum
consisting of Directors who were not parties to
such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Directors so directs,
by independent legal counsel in a written opinion,
or (iii) by the stockholders, that such person
acted in bad faith and in a manner that such
person did not believe to be in or not opposed to
the best interests of the Corporation, or, with
respect to any criminal proceeding, that such
person believed or had reasonable cause to believe
that his conduct was unlawful.
d. Indemnification Against Expenses of Successful
Party. Notwithstanding the other provisions of
this Section, to the extent that an Agent has been
successful on the merits or otherwise, including,
without limitation, the dismissal of an action
without prejudice, the settlement of an action
without admission of liability, or the defense of
any claim, issue or matter therein, or on appeal
from any such proceeding, action, claim or matter,
such Agent shall be indemnified against all costs,
charges and Expenses incurred in connection
therewith.
-4-
<PAGE>
e. Advances of Expenses. Except as limited by
Paragraph (f) of this Section, costs, charges, and
Expenses incurred by an Agent in any action, suit,
proceeding or investigation or any appeal
therefrom shall be paid by the Corporation in
advance of the final disposition of such matter if
the Agent shall undertake to repay such amount in
the event that it is ultimately determined as
provided herein that such person is not entitled
to indemnification. Notwithstanding the foregoing,
no advance shall be made by the Corporation if a
determination is reasonably and promptly made by
the Board of Directors by a majority vote of a
quorum of disinterested Directors, or (if such a
quorum is not obtainable or, even if obtainable, a
quorum of disinterested Directors so directs) by
independent legal counsel in a written opinion,
that, based upon the facts known to the Board of
Directors or counsel at the time such
determination is made, the Agent acted in bad
faith and in a manner that such person did not
believe to be in or not opposed to the best
interests of the Corporation, or, with respect to
any criminal proceeding, that such person believed
or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in
instances where the Board of Directors or
independent legal counsel reasonably determines
that the Agent deliberately breached such persons'
duty to the Corporation or its stockholders.
f. Right of Agent to Indemnification upon
Application: Procedure upon Application. Any
indemnification under Paragraphs (a), (b) and (d)
or advance under Paragraph (e) of this Section,
shall be made promptly, and in any event within 60
days, upon the written request of the Agent,
unless with respect to applications under
Paragraphs (a), (b) or (e), a determination is
reasonably and promptly made by the Board of
Directors by a majority vote of a quorum of
disinterested Directors that such Agent acted in a
manner set forth in such Paragraphs as to justify
the Corporation's not indemnifying or making an
advance to the Agent. In the event no quorum of
disinterested Directors is obtainable, the Board
of Directors shall promptly direct that
independent legal counsel shall decide whether the
Agent acted in the manner set forth in such
Paragraphs as to justify the Corporation's not
indemnifying or making an advance to the Agent.
The right to indemnification or advances as
granted by this Section shall be enforceable by
the Agent in any court of competent jurisdiction
if the Board of Directors or independent legal
counsel denies the claim in whole or in part or if
no disposition of such claim is made within 60
days. The Agent's costs, charges and Expenses
incurred in connection with successfully
establishing such persons' right to
-5-
<PAGE>
indemnification, in whole or in part, in any such
proceeding shall also be indemnified by the
Corporation.
g. Other Rights and Remedies. The indemnification
provided by this Section shall not be deemed
exclusive of, and shall not affect, any other
rights to which an Agent seeking indemnification
may be entitled under any law, By-law, or charter
provision, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to
action in such person's official capacity and as
to action in another capacity while holding such
office, and shall continue as to a person who has
ceased to be an Agent and shall inure to the
benefit of the heirs, executors and administrators
of such a person. All rights to indemnification
under this Section shall be deemed to be contract
between the Corporation and the Agent who serves
in such capacity at any time while these Articles
and other relevant provisions of the general
corporation law and other applicable law, if any,
are in effect. Any repeal or modification thereof
shall not affect any rights or obligations then
existing.
h. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is
or was an Agent against any liability asserted
against such person and incurred by him or her in
any such capacity, or arising out of such
persons's status as such, whether or not the
Corporation would have the power to indemnify such
person against such liability under the provisions
of this Section. The Corporation may create a
trust fund, grant a security interest or use other
means (including, without limitation, a letter of
credit) to ensure the payment of such sums as may
become necessary to effect indemnification as
provided herein.
i. Other Enterprises. Fines and Serving at
Corporation's Request. For purposes of this
Section, references to "other enterprise" in
Paragraph (a) shall include employee benefit
plans; references to "fines" shall include any
excise taxes assessed on a person with respect
to any employee benefit plan; and references to
"serving at the request of the Corporation"
shall include any service by Agent as Director,
officer, employee, agent or fiduciary of the
Corporation which imposes duties on, or involves
services by, such Agent with respect to any
employee benefit plan, its participants, or
beneficiaries; and a person who acted in good
faith and in a manner such person reasonably
believed to be in the interest of the
participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the
Corporation" as referred to in this Section.
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j. Savings Clause. If this Section or any portion
thereof shall be invalidated on any ground by any
court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each
Agent as to costs, charges and Expenses,
judgments, fines and amounts paid in settlement
with respect to any action, suit, proceeding or
investigation, and any appeal therefrom, whether
civil, criminal or administrative, and whether
internal or external, including a grand jury
proceeding and an action or suit brought by or in
the right of the Corporation, to the full extent
permitted by any applicable portion of this
Section that shall not have been invalidated, and
to the fullest extent permitted by applicable law.
k. Common Directors - Transactions between
Corporations. No contract or other transaction
between this corporation and any one or more of
its directors or any other corporation, firm,
association, or entity in which one or more of its
directors or officers are financially interested,
shall be either void or voidable because of such
relationship or interest, or because such director
or directors are present at the meeting of the
Board of Directors, or a committee thereof, which
authorizes, approves, or ratifies such contract or
transaction, or because his or their votes are
counted for such purpose if: (a) the fact of such
relationship or interest is disclosed or known to
the Board of Directors or committee which
authorizes, approves, or ratifies the contract or
transaction by vote or consent sufficient for the
purpose without counting the votes or consents of
such interested director; or (b) the fact of such
relationship or interest is disclosed or known to
the stockholders entitled to vote and they
authorize, approve, or ratify such contract or
transaction by vote or written consent, or (c) the
contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in
determining the presence of a quorum at a meeting
of the Board of Directors or committee there of
which authorizes, approves or ratifies such
contract or transaction.
l. Definitions. For the purposes of this Article:
1. "Agent" means 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 or investigation, whether civil,
criminal or administrative, and whether
external or internal to the Corporation (other
than a judicial action or suit brought by or
in the right of the Corporation) by reason of
the fact that he or she is or was or has
agreed to be a Director, officer, employee,
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agent or fiduciary of the Corporation, or
that, being or having been such a Director,
officer, employee, agent or fiduciary, he or
she is or was serving at the request of the
Corporation as a Director, officer, employee,
agent or fiduciary of another corporation,
partnership, joint venture, trust or other
enterprise.
2. "Expenses" shall include all reasonable
attorneys' fees, retainers, court costs,
transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges,
postage, delivery service fees, and all other
disbursements or expenses of the types
customarily incurred in connection with
prosecuting, defending, preparing to prosecute
or defend, investigating, or being or
preparing to be a witness in a proceeding.
ARTICLE XI
The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, and
other provisions authorized by the laws of the State of
Nevada at the time in force may be added or inserted, in
the manner now or hereafter prescribed by law; and all
rights, preferences and privileges of whatsoever nature
conferred upon stockholders, Directors or any other persons
whomsoever by and pursuant to these Articles of
Incorporation in its present form or as hereafter amended
are granted subject to the right reserved in this Article.
ARTICLE XII
The name and address of each incorporator of the
Corporation is:
Name Address
N. Edward Berg 70 Horizon Drive, Bedford, NH 03110.
ARTICLE XIII
The name and address of each member of the Board of
Directors of the Corporation is:
Name Address
N. Edward Berg 70 Horizon Drive, Bedford, NH 03110.
ARTICLE XIV
The Corporation shall exist in perpetuity, from and
after the date of filing of its original Articles of
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Incorporation with the Secretary of State of the State of
Nevada unless dissolved according to law.
IN WITNESS WHEREOF, this certificate has been executed
by N. Edward Berg, the Incorporator of Micro Interconnect
Technology, Inc. on this 10th day of February,1998.
/S/ N. Edward Berg
N. Edward Berg, Incorporator
STATE OF New Hampshire )
)ss
COUNTY OF Hillsborough )
On the 10th day of February,1998, personally appeared
before me N. Edward Berg whom, being by me first duly
sworn, declared that he was the person who signed the
foregoing document as Incorporator of Micro Interconnect
Technolgoy, Inc. and that the statements therein contained
are true.
IN WITNESS THEREOF, I have hereunto set my hand and seal
this 10th day of February,1998.
/s/ Deborah A. Gelinas
NOTARY PUBLIC
Residing at Bedford, NH 03110
My commission expires:
October 9, 2001
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BY-LAWS
OF
MICRO INTERCONNECT TECHNOLOGY, INC.
A NEVADA CORPORATION
ARTICLE I
offices
Section I. The principal office of the Corporation
shall be at 70 Horizon Drive, Bedford, NH 03110. The
Corporation may have such other offices, either within or
without the State of Nevada as the Board of Directors may
designate or as the business of the Corporation may require
from time to time.
The registered office of the Corporation required by
the Nevada Business Corporation Act to be maintained in the
State of Nevada may be, but need not be, identical with the
principal offices in the State of Nevada, and the address
of the registered office may be changed, from time to time,
by the Board of Directors.
ARTICLE II
stockholders
Section 1. Annual Meeting. The annual meeting of
stockholders shall be held at the principal office of the
Corporation, at 70 Horizon Drive, Bedford, NH 03110, or at
such other places on the second Tuesday of February or at
such other times as the Board of Directors may, from time
to time, determine. If the day so designated falls upon a
legal holiday then the meeting shall be held upon the first
business day thereafter. The Secretary shall serve
personally or by mail a written notice thereof, not less
than ten (10) nor more than fifty (50) days previous to
such meeting, addressed to each stockholder at his address
as it appears on the stock book; but at any meeting at
which all stockholders shall be present, or of which all
stockholders not present have waived notice in writing, the
giving of notice as above required may be dispensed with.
Section 2. Special Meetings. Special meetings of
stockholders other than those regulated by statute, may be
called at any time by a majority of the Directors. Notice
of such meeting stating the place, day and hour and the
purpose for which it is called shall be served personally
or by mail, not less than ten (10) days before the date set
for such meeting. If mailed, it shall be directed to a
stockholder at his address as it appears on the stock book;
but at any meeting at which all stockholders shall be
present, or of which stockholders not present have waived
notice in writing, the giving of notice as above described
may be dispensed with. The Board of Directors shall also,
in like manner, call a special meeting of stockholders
whenever so requested in writing by stockholders
representing not less than ten percent (10%) of the capital
stock of the Corporation entitled to vote at the meeting.
The President may in his discretion call a special meeting
of stockholders upon ten (10) days notice. No business
other than that specified in the call for the meeting shall
be transacted at any special meeting of the stockholders,
except upon the unanimous consent of all the stockholders
entitled to notice thereof.
Section 3. Closing of Transfer Books or fixing of
Record Date. For the purpose of determining stockholders
entitled to receive notice of or to vote at any meeting of
stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend; or in order to
make a determination of stockholders for any other proper
purpose, the Board of Directors of the Corporation may
provide that the stock transfer books shall be closed for a
stated period not to exceed, in any case, fifty (50) days.
If the stock transfer books shall be closed for the purpose
of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be
closed for a least ten (10) days immediately preceding such
meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record
date for any such determination of stockholders, such date
in any case to be not more than fifty (50) days, and in
case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action,
requiring such determination of stockholders, is to be
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taken. If the stock transfer books are not closed, and no
record date is fixed for the determination of stockholders
entitled to receive notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment
of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination as
to stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been
made as provided in this section, such determination shall
apply to any adjournment thereof.
Section 4. Voting. At all meetings of the
stockholders of record having the right to vote, subject to
the provisions of Section 3, each stockholder of the
Corporation is entitled to one (1) vote for each share of
stock having voting power standing in the name of such
stockholder on the books of the Corporation. Votes may be
cast in person or by written authorized proxy.
Section 5. Proxy. Each proxy must be executed in
writing by the stockholder of the Corporation or his duly
authorized attorney. No proxy shall be valid after the
expiration of eleven (11) months from the date of its
execution unless it shall have specified therein its
duration.
Every proxy shall be revocable at the discretion of the
person executing it or of his personal representatives or
assigns.
Section 6. Voting of Shares by certain Holders.
Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the by-laws of
such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation
may determine.
Shares held by an administrator, executor, guardian or
conservator may be noted by him either in person or by
proxy without a transfer of such shares into his name.
Shares standing in the name of a trustee may be voted by
him either in person or by proxy, but no trustee shall be
entitled to vote shares held by him without a transfer of
such shares into his name.
Shares standing in the name of a receiver may be voted
by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the
transfer thereof into his name if authority so to do be
contained in an appropriate Order of the Court by which
such receiver was appointed.
A stockholder whose shares are pledged shall be
entitled to vote such shares until the shares have been
transferred into the name of the pledge, and thereafter the
pledgee shall be entitled to vote the shares so
transferred.
Shares of its own stock belonging to the Corporation or
held by it in a fiduciary capacity shall not be voted,
directly or indirectly, at any meeting, and shall not be
counted in determining the total number of outstanding
shares at any given time.
Section 7. Election of Directors. At each election
for Directors every stockholder entitled to vote at such
election shall have the right to vote, in person or by
proxy, the number of shares owned by him for as many
persons as there are Directors to be elected and for whose
election he has a right to vote. There shall be no
cumulative voting.
Section 8. Quorum. A majority of the outstanding
shares of the Corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting
of the stockholders.
If a quorum shall not be present or represented, the
stockholders entitled to vote thereat, present in person or
by proxy, shall have the power to adjourn the meeting, from
time to time, until a quorum shall be present or
represented. At such rescheduled meeting at which a quorum
shall be present or represented any business or any
specified item of business may be transacted which might
have been transacted at the meeting as originally notified.
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The number of votes or consents of the holders of stock
having voting power which shall be necessary for the
transaction of any business or any specified item of
business at any meeting of stockholders, or the giving of
any consent, shall be a majority of the outstanding shares
of the Corporation entitled to vote.
Section 9. Informal Action by Stockholders. Any
action required or permitted to be taken by the
stockholders of the Corporation may be effected by any
consent in writing by such holders, signed by holders of
not less than that number of shares of Common Stock
required to approve such action.
ARTICLE III
directors
Section 1. Number. The affairs and business of this
Corporation shall be managed by a Board of Directors. The
present Board of Directors shall consist of one (1) member.
Thereafter the number of Directors may be increased to not
more than nine (9) by resolution of the Board of Directors.
Directors need not be residents of the State of Nevada and
need not be stockholders of the Corporation.
Section 2. Election. The Directors shall be elected
at each annual meeting of the stockholders, but if any such
annual meeting is not held, or the Directors are not
elected thereat, the Directors may be elected at any
special meeting of the stockholders held for that purpose.
Section 3. Term of Office. The term of office of each
of the Directors shall be one (1) year, which shall
continue until his successor has been elected and
qualified.
Section 4. Duties. The Board of Directors shall have
the control and general management of the affairs and
business of the Corporation. Such Directors shall in all
cases act
as a Board, regularly convened, and may adopt such rules
and regulations for the conduct of meetings and the
management of the Corporation, as may be deemed proper, so
long as it is not inconsistent with these By-Laws and the
laws of the State of Nevada.
Section 5. Directors' Meetings. Regular meetings of
the Board of Directors shall be held immediately following
the annual meeting of the stockholders, and at such other
time and places as the Board of Directors may determine.
Special meetings of the Board of Directors may be called by
the President or the Secretary upon the written request of
one (1) Director.
Section 6. Notice of Meetings. Notice of meetings
other than the regular annual meeting shall be given by
service upon each Director in person, or by mailing to him
at his last known address, at least three (3) days before
the date therein designated for such meeting, of a written
notice thereof specifying the time and place of such
meeting, and the business to be brought before the meeting,
and no business other than that specified in such notice
shall be transacted at any special meeting. At any
Directors' meeting at which a quorum of the Board of
Directors shall be present (although held without notice),
any and all business may be transacted which might have
been transacted if the meeting had been duly called if a
quorum of the Directors waive or are willing to waive the
notice requirements of such meeting.
Any Directors may waive notice of any meeting under the
provisions of Article XII. The attendance of a Director at
a meeting shall constitute a waiver of notice of such
meeting except where a Director attends a meeting for the
express purpose of objecting to the transaction of any
business because the meeting is not lawfully convened or
called.
Section 7. Voting. At all meetings of the Board of
Directors, each Director is to have one (1) vote. The act
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.
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Section 8. Newly Created Directorships and Vacancies.
Newly created directorships resulting from any increase in
the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled
only by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of
the Board of Directors. No decrease in the number of
Directors constituting the Board of Directors shall shorten
the term of any incumbent Director.
Section 9. Removal of Directors. Any Director may be
removed from office, with or without cause, only by the
affirmative vote of the holders of 2/3's of the voting
power of all shares of the Corporation entitled to vote
generally in the election of Directors, voting together as
a single class.
Section 10. Quorum. The number of Directors who shall
be present at any meeting of the Board of Directors in
order to constitute a quorum for the transaction of any
business or any specified item of business shall be a
majority.
The number of votes of Directors that shall be
necessary for the transaction of any business of any
specified item of business at any meeting of the Board of
Directors shall be a majority.
If a quorum shall not be present at any meeting of the
Board of Directors, those present may adjourn the meeting,
from time to time, until a quorum shall be present.
Section 11. Compensation. By resolution of the Board
of Directors, the Directors may be paid their expenses, if
any, of attendance at each meeting of the Board of
Directors or each may be paid a stated salary as Director.
No such payment shall preclude any Director from serving
the Corporation in any other capacity and receiving
compensation therefore.
Section 12. Presumption of Assent. A Director of the
Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken
unless his dissent is entered in the minutes of the meeting
or unless he shall file his written dissent to such action
with the person acting as the Secretary of the meeting
before the adjournment thereof or shall forward such
dissent by registered or certified mail to the Secretary of
the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
ARTICLE IV
officers
Section 1. Number. The officers of the Corporation
shall be: President, Vice-President, Secretary, and
Treasurer, and such assistant Secretaries as the President
shall determine.
Any officer may hold more than one (1) office.
Section 2. Election. All officers of the Corporation
shall be elected annually by the Board of Directors at its
meeting held immediately following the meeting of
stockholders, and shall hold office for the term of one (1)
year or until their successors are duly elected. Officers
need not be members of the Board of Directors.
The Board may appoint such other officers, agents and
employees as it shall deem necessary who shall have such
authority and shall perform such duties as, from time to
time, shall be prescribed by the Board.
Section 3. Duties of Officers. The duties and powers
of the officers of the Corporation shall be as follows:
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President
The President shall preside at all meetings of the
stockholders. He shall present at each annual meeting of
the stockholders and Directors a report of the condition of
the business of the Corporation. He shall cause to be
called regular and special meetings of these stockholders
and Directors in accordance with these By-Laws. He shall
appoint and remove, employ and discharge, and fix the
compensation of all agents, employees, and clerks of the
Corporation other than the duly appointed officers, subject
to the approval of the Board of Directors. He shall sign
and make all contracts and agreements in the name of the
Corporation, subject to the approval of the Board of
Directors. He shall see that the books, reports,
statements and certificates required by the statutes are
properly kept, made and filed according to law. He shall
sign all certificates of stock, notes, drafts, or bills of
exchange, warrants or other orders for the payment of money
duly drawn by the Treasurer; and he shall enforce these By-
Laws and perform all the duties incident to the position
and office, and which are required by law.
Vice-President
During the absence or inability of the President to
render and perform his duties or exercise his powers, as
set forth in these By-Laws or in the statutes under which
the Corporation is organized, the same shall be performed
and exercised by the Vice-President; and when so acting, he
shall have all the powers and be subject to all the
responsibilities hereby given to or imposed upon such
President.
Secretary
The Secretary shall keep the minutes of the meetings of
the Board of Directors and of the stockholders in
appropriate books. He shall give and serve all notices of
the Corporation. He shall be custodian of the records and
of the corporate seal and affix the latter when required.
He shall keep the stock and transfer books in the manner
prescribed by law, so as to show at all times the amount of
capital stock issued and outstanding; the manner and the
time compensation for the same was paid; the names of the
owners thereof, alphabetically arranged; the number of
shares owned by each; the time at which each person became
such owner; and the amount paid thereon; and keep such
stock and transfer books open daily during the business
hours of the office of the Corporation, subject to the
inspection of any stockholder of the Corporation, and
permit such stockholder to make extracts from said books to
the extent prescribed by law. He shall sign all
certificates of stock. He shall present to the Board of
Directors at their meetings all communications addressed to
him officially by the President or any officer or
stockholder of the Corporation; and he shall attend to all
correspondence and perform all the duties incident to the
office of Secretary.
Treasurer
The Treasurer shall have the care and custody of and be
responsible for all the funds and securities of the
Corporation, and deposit all such funds in the name of the
Corporation in such bank or banks, trust company or trust
companies or safe deposit vaults as the Board of Directors
may designate. He shall exhibit at all reasonable times
his books and accounts to any Director or stockholder of
the Corporation upon application at the office of the
Corporation during business hours. He shall render a
statement of the conditions of the finances of the
Corporation at each regular meeting of the Board of
Directors, and at such other times as shall be required of
him, and a full financial report at the annual meeting of
the stockholders. He shall keep, at the office of the
Corporation, correct books of account of all its business
and transactions and such other books of account as the
Board of Directors may require. He shall do and perform
all duties appertaining to the office of Treasurer. The
Treasurer shall, if required by the Board of Directors,
give to the Corporation such security for the faithful
discharge of his duties as the Board may direct.
Section 4. Bond. The Treasurer shall, if required by
the Board of Directors, give to the Corporation such
security for the faithful discharge of his duties as the
Board may direct.
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Section 5. Vacancies, How Filled. All vacancies in
any office shall be filled by the Board of Directors
without undue delay, either at its regular meeting or at a
meeting specifically called for that purpose. In the case
of the absence of any officer of the Corporation or for any
reason that the Board of Directors may deem sufficient, the
Board may, except as specifically otherwise provided in
these By-Laws, delegate the power or duties of such
officers to any other officer or Director for the time
being; provided, a majority of the entire Board concur
therein.
Section 6. Compensation of Officers. The officers
shall receive such salary or compensation as may be
determined by the Board of Directors.
Section 7. Removal of Officers. The Board of
Directors may remove any officer, by a majority vote, at
any time with or without cause.
ARTICLE V
certificates of stock
Section 1. Description of Stock Certificates. The
certificates of stock shall be numbered and registered in
the order in which they are issued. They shall be bound in
a book and shall be issued in consecutive order therefrom,
and in the margin thereof shall be entered the name of the
person owning the shares therein represented, with the
number of shares and the date thereof. Such certificates
shall exhibit the holder's name and number of shares. They
shall be signed by the President or Vice President, and
countersigned by the Secretary or Treasurer and sealed with
the Seal of the Corporation.
Section 2. Transfer of Stock. The stock of the
Corporation shall be assignable and transferable on the
books of the Corporation only by the person in whose name
it appears on said books, his legal representatives or by
his duly authorized agent. In case of transfer by
attorney, the power of attorney, duly executed and
acknowledged, shall be deposited with the Secretary. In
all cases of transfer the former certificate must be
surrendered up and canceled before a new certificate may be
issued. No transfer shall be made upon the books of the
Corporation within ten (10) days next preceding the annual
meeting of the stockholders.
Section 3. Lost Certificates. If a stockholder shall
claim to have lost or destroyed a certificate or
certificates of stock issued by the Corporation, the Board
of Directors may, at its discretion, direct a new
certificate or certificates to be issued, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with
such sureties if any that the Board may require.
ARTICLE VI
seal
Section 1. Seal. The seal of the Corporation shall be
as follows:
NO SEAL IN USE AT THIS TIME
ARTICLE VII
dividends
Section 1. When Declared. The Board of Directors
shall by vote declare dividends from the surplus profits of
the Corporation whenever, in their opinion, the condition
of the Corporation's affairs will render it expedient for
such dividends to be declared.
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Section 2. Reserve. The Board of Directors may set
aside, out of the net profits of the Corporation available
for dividends, such sum or sums (before payment of any
dividends) as the Board, in their absolute discretion,
think proper as a reserve fund, to meet contingencies, or
for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purpose
as the Directors shall think conducive to the interest of
the Corporation, and they may abolish or modify any such
reserve in the manner in which it was created.
ARTICLE VIII
indemnification
Section 1. Any person made a party to or involved in
any civil, criminal or administrative action, suit or
proceeding by reason of the fact that he or his testator or
intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator,
or intestate served as such at the request of the
Corporation, shall be indemnified by the Corporation
against expenses reasonably incurred by him or imposed on
him in connection with or resulting from the defense of
such action, suit, or proceeding and in connection with or
resulting from any appeal thereon, except with respect to
matters as to which it is adjudged in such action, suit or
proceeding that such officer, Director, or employee was
liable to the Corporation, or to such other corporation,
for negligence or misconduct in the performance of his
duty. As used herein the term "expense" shall include all
obligations incurred by such person for the payment of
money, including without limitation attorney's fees,
judgments, awards, fines, penalties, and amounts paid in
satisfaction of judgment or in settlement of any such
action, suit, or proceedings, except amounts paid to the
Corporation or such other corporation by him.
A judgment of conviction whether based on plea of
guilty or nolo contendere or its equivalent, or after
trial, shall not of itself be deemed an adjudication that
such Director, officer or employee is liable to the
Corporation, or such other corporation, for negligence or
misconduct in the performance of his duties. Determination
of the rights of such indemnification and the amount
thereof may be made at the option of the person to be
indemnified pursuant to procedure set forth, from time to
time, in the By-Laws, or by any of the following
procedures: (a) order of the Court or administrative body
or agency having jurisdiction of the action, suit, or
proceeding; (b) resolution adopted by a majority of the
quorum of the Board of Directors of the Corporation without
counting in such majority any Directors who have incurred
expenses in connection with such action, suit or
proceeding; (c) if there is no quorum of Directors who have
not incurred expense in connection with such action, suit,
or proceeding, then by resolution adopted by a majority of
the committee of stockholders and Directors who have not
incurred such expenses appointed by the Board of Directors;
(d) resolution adopted by a majority of the quorum of the
Directors entitled to vote at any meeting; or (e) Order of
any Court having jurisdiction over the Corporation. Any
such determination that a payment by way of indemnity
should be made will be binding upon the Corporation. Such
right of indemnification shall not be exclusive of any
other right which such Directors, officers, and employees
of the Corporation and the other persons above mentioned
may have or hereafter acquire, and without limiting the
generality of such statement, they shall be entitled to
their respective rights of indemnification under any By-
Law, Agreement, vote of stockholders, provision of law, or
otherwise in addition to their rights under this Article.
The provision of this Article shall apply to any member of
any committee appointed by the Board of Directors as fully
as though each person and been a Director, officer or
employee of the Corporation.
ARTICLE IX
amendments
Section 1. How Amended. These By-Laws may be altered,
amended, repealed or added to by the vote of the Board of
Directors of the Corporation at any regular meeting of said
Board, or at a special meeting of Directors called for that
purpose provided a quorum of the Directors as provided by
law and by the Articles of Incorporation, are present at
such regular meeting or special meeting. These By-Laws and
any amendments thereto and new By-Laws added by the
Directors may be amended, altered or replaced by the
stockholders at any annual or special meeting of the
stockholders.
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ARTICLE X
fiscal year
Section 1. Fiscal Year. The fiscal year shall end on
the 31st day of DECEMBER.
ARTICLE XI
waiver of notice
Section 1. Whenever any notice is required to be given
to any shareholders or directors of the Corporation under
the provisions of these By-Laws, under the Articles of
Incorporation or under the provisions of the Nevada
Business Corporation Act, a waiver thereof in writing,
signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
ADOPTED this 17thday of February,1998.
Micro Interconnect Technology, Inc.
a Nevada corporation,
/s/ N. Edward Berg
N. Edward Berg, President
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting
Secretary\Treasurer of Micro Interconnect Technology,
Inc., A Nevada Corporation: and
2. That the foregoing By-Laws, comprising eight (8) pages,
constitute the By-Laws of said Corporation as duly
adopted at a meeting of the Board of Directors thereof
duly held on the 17thday of February,1998.
/s/ N. Edward Berg
N. Edward Berg, Secretary/Treasurer
-8-
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
COMMON STOCK SUBSCRIPTION AGREEMENT
The shares of common stock, (The "Shares") of Micro Interconnect
Technology, Inc., a Nevada Corporation (The "Company"), purchased
pursuant to this agreement have a par value of $.001 and have been
authorized by incorporation of the Company and are subject under the
laws of Nevada.
1. Subscription. The Undersigned Subscriber, who having expended
time and effort in incorporating this Company is desirous of becoming a
shareholder of the Company and agrees to be legally bound hereby, does
subscribe for and agrees to purchase 1,000,000 shares of the Company's
Common Stock at a purchase price of $.001 per Share (i.e. a total
purchase price of $10,000). The Undersigned Subscriber herewith must
tender payment in such amount, on or before March 31, 1998.This
transaction shall be completed upon the execution hereof by both parties
and the delivery of good funds to the Company. The Company shall issue
the shares as soon as practicable thereafter.
2. Representations and Warranties of Subscriber. To induce the
company to accept this subscription, the Undersigned Subscriber hereby
represents and warrants to the Company:
A. The Undersigned has had access to the books and records of the
Company, and is fully familiar with and understands their contents; it
acknowledges that it has had the opportunity to ask questions of and
receive answers from the management and from the authorized
representatives of the Company concerning the Company and to obtain any
additional information necessary to verify the accuracy of the
information furnished; has read carefully this Subscription Agreement;
and has based the Undersigned's investment decision on such information
as is described above and supplied herein.
B. The Undersigned understands and acknowledges the following:
1. The Shares are being offered and sold under the applicable
exemption from securities registration as provided by the states the
securities are sold in.
2. The Undersigned also understands and agrees that stop
transfer instructions relating to the securities will be placed in the
Company's stock transfer ledger, and that the certificates evidencing
the securities sold will bear the legend in substantially the following
form:
"No sale, offer to sell, or transfer of the shares represented
by this certificate shall be made unless a registration statement under
the Federal Securities Act of 1933, as amended, with respect to such
shares is then in effect or an exemption from the registration
requirements of said act is then in fact applicable to said shares."
C. The Undersigned recognizes any investment in the Company
involves substantial risk factors.
D. The Undersigned has adequate financial means of providing for
its current needs and financial contingencies without the need for
liquidity in this investment and has the ability to bear the economic
risk of this investment and can afford a complete loss of the
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<PAGE>
purchase price; and the Undersigned has no reason to contemplate any
change in the Undersigned's financial circumstances.
E. The Undersigned, through its management and advisors, is
familiar with, and has the knowledge and expertise in, financial and
business matters to evaluate the merits and the risks involved in the
purchase of the Shares.
F. The representations provided to the Company by the Undersigned
are true and correct as of the date hereof and the Undersigned agrees to
advise the Company prior to its acceptance of this Subscription of any
material change in any of such information.
G. The Undersigned understands that no governmental agency has
approved or disapproved the shares or passed upon or endorsed the merits
of the sale or purchase thereof.
H. The Undersigned, if a corporation, is duly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation.
I. The Undersigned has full power, in accordance with law, to
execute and perform this Agreement, and such execution and performance
does not conflict with any applicable charter or bylaw provision or with
any contract to which it is a party or to which it is subject. The
Board of Directors of the Undersigned has duly authorized this
Agreement, the transactions contemplated herein, and their execution by
the Undersigned
3. Representations and Warranties of Company. To induce the
Undersigned to subscribe hereunder, the Company does hereby represent as
follows:
A. The Company's Shares to be delivered to Subscriber will
constitute, under Nevada corporate law, valid and legally issued Shares
of the Company, fully-paid, and non-assessable.
B. The officers of the Company are duly authorized to execute this
Agreement and have taken all action required by law and agreement, its
charter and Bylaws, to properly and legally execute this Agreement.
C. The Company is not involved in any pending litigation, claims
or governmental investigation or proceeding not reflected in its
financial statements or otherwise disclosed in writing to the Subscriber
and there are no lawsuits, claims assessments, investigations, or
similar matters, to the best knowledge of management, threatened or
contemplated against the Company, its management or properties.
D. The Company is duly organized, validly existing, and in good
standing under the laws of the State of Nevada; it has the corporate
power to own its property and to carry on its business as now being
conducted and is duly qualified to do business in jurisdiction where so
required.
E. Pursuant to its Certificate of Incorporation, as amended, the
Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.001 per share and 10,000,000 shares Preferred Stock, par value
$.001 per share. -0- shares of which are issued and outstanding, fully
paid and non-
-2-
<PAGE>
assessable. The Company has no treasury stock. There are no other
subscription agreements, options, warrants, or other agreements or
commitments obligating the Company to issue any additional shares of its
capital stock of any class, or any options or rights with respect
thereto, or any securities convertible into any shares of stock of any
class. No shareholder of the Company has any right of first refusal or
any preemptive rights with respect to the issuance of the Company's
capital stock.
F. The Company has no subsidiaries.
G. The Company is not a party to any material contract either
written or oral.
H. The Company has in all material respects performed all
obligations required to be performed by it in the past and no claim
exists for default in any material respect under any agreements, leases,
or other documents to which the Company was a party.
I. The Company has complied in all material respects with all
applicable statutes and regulations of any governmental authority having
jurisdiction over it or that have been applicable to its business.
J. The Company has filed in correct form all income tax returns
due with respect to all prior years, and all franchise, real and
personal property tax returns that are required to be filed, and has
paid all taxes as shown on the said returns and all assessments received
by it to the extent that such taxes and assessments have become due.
The Federal Internal revenue Service has not examined any income tax
returns of the Company.
K. No loans or other obligations are payable to officers,
directors, employees, or stockholders of the Company.
4. Inspection Rights. It is understood that all documents, records,
and books pertaining to this investment have been made available for
inspection by the Undersigned and each of the Undersigned's attorney,
accountant, and representative, and that they will be available, upon
reasonable notice, for inspection during reasonable business hours at
the office of the Company.
5. Indemnification by Subscriber. The Undersigned hereby agrees to
indemnify and hold harmless the Company and its officers and directors
from and against any and all loss, damage, or liability (including
attorney's fees) due to or arising out of a breach of any representation
or warranty made by the Undersigned contained in this Subscription
Agreement.
6. Indemnification by Company. The Company agrees that it will
indemnify Subscriber against, and will hold it harmless from, any and
all demands, claims, actions and liabilities of the Company of every
kind and description, absolute and contingent, including, without being
limited to, legal costs and counsel fees, in connection with any
action, claim or proceeding related to such liabilities, which shall
arise or result from any breach of the representations and warranties
set forth in paragraph 3 herein.
7. Governing Law. This Agreement shall be construed in accordance
with and governed and interpreted by the laws of the State of Nevada.
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<PAGE>
8. Heirs and Assigns. This Agreement and the rights, powers and
duties there under, excepts as otherwise set forth herein, shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, personal representatives, and successors of the parties
hereto.
9. Entire Agreement. This Subscription Agreement constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior or contemporaneous agreements.
This Subscription Agreement may be amended only by a writing executed by
all of the parties hereto.
10. Survival. The representations, warranties and agreements
contained herein shall survive delivery of and payment for Shares.
11. Advice of Counsel. Each of the parties hereby represents that
each has read and fully understood each of the provisions as contained
herein, and has been afforded an opportunity to review same with his
attorney of choice.
12. Counterparts. This Agreement may be signed in one or more
counterparts, which when taken together, shall constitute an agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this
Subscription Agreement this 16th day of, February, 1998.
Company: Subscriber:
Micro Interconnect Technology, Inc.
(a Nevada corporation)
/s/ N. Edward Berg /s/ N. Edward Berg
N. Edward Berg Incorporator N. Edward Berg
Address: 70 Horizon Drive
Bedford, NH 03110
Tax ID# ###-##-####
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<PAGE>
DAVID C. CUNDICK
Attorney at Law
50 West Broadway, Suite 900
Salt Lake City, Utah 84101
(801) 328-5600
FAX (801) 328-5651
January 28, 1999
Board of Directors
Micro Interconnect Technology, Inc.
70 Horizon Drive
Bedford, N.H. 03110
Re: Opinion and Consent of Counsel with respect to Registration
Statement on Form SB-2.
Gentlemen,
You have requested the opinion and consent of this law firm, as counsel,
with respect to the proposed issuance and public distribution of certain
securities of the Company pursuant to the filing of a registration statement
on Form SB-2 with the Securities and Exchange Commission.
The proposed offering and public distribution relates to 150,000 Units
of the Company's securities, each Unit consists of one share of $.001 par
value common stock and two Redeemable Common Stock Purchase Warrants, to be
offered and sold to the public at a price of $2.00 per Unit. It is this firm's
opinion that the Common Stock and Warrants will, when issued in accordance
with the terms and conditions set forth in the registration statement, be duly
authorized, validly issued, fully paid and nonassessable in accordance with
the corporation laws of the state of Nevada.
I hereby consent to be named as counsel for the Company in the
registration statement and prospectus included therein.
Sincerly,
/s/ David Cundick
David C. Cundick
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form SB-2 for Micro
Interconnect Technology, Inc., of our report dated
January 22, 1999 relating to the December 31, 1998 financial
statements of Micro Interconnect Technology, Inc., which
appears in such Prospectus. We also consent to the reference
to us under the heading "Experts".
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
January 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> FEB-11-1998
<PERIOD-END> DEC-31-1998
<CASH> 6,200
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,200
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,642
<CURRENT-LIABILITIES> 2,798
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 7,844
<TOTAL-LIABILITY-AND-EQUITY> 11,642
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,268
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,156)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,156)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,156)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
MICRO INTERCONNECT TECHNOLOGY, INC.
1998 STOCK OPTION PLAN
SECTION I. PURPOSE; DEFINITIONS.
1.1 Purpose. The purpose of the Micro Interconnect
Technology, Inc. ("Company") 1998 Stock Option Plan
("Plan") is to enable the Company to offer to its key
employees, officers, directors, consultants, advisors
and sales representatives whose past, present and/or
potential contributions to the Company and its
Subsidiaries have been, are or will be important to
the success of the Company, an opportunity to acquire
a proprietary interest in the Company. The various
types of long-term incentive awards which may be
provided under the Plan will enable the Company to
respond to changes in compensation practices, tax
laws, accounting regulations and the size and
diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following
terms shall be defined as set forth below:
a. "Agreement" means the agreement between the Company
and the Holder setting forth the terms and conditions
of an award under the Plan.
b. "Board" means the Board of Directors of the Company.
c. " Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto
and the regulations promulgated thereunder.
d. "Committee" means the Stock Option Committee of the
Board or any other committee of the Board, which the
Board may designate to administer the Plan or any
portion thereof. If no Committee is so designated,
then all references in this Plan to "Committee" shall
mean the Board.
e. "Common Stock" means the Common Stock of the Company,
par value $.001 per share.
f. "Company" means Micro Interconnect Technolgoy, Inc.,
a corporation organized under the laws of the State
of Nevada.
g. "Deferred Stock" means Stock to be received, under an
award made pursuant to Section 9, below, at the end
of a specified deferral period.
h. "Disability" means disability as determined under
procedures established by the Committee for purposes
of the Plan.
i. "Effective Date" means the date set forth in Section
13.1, below.
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<PAGE>
j. "Employee" means any employee, director, general
partner, trustee (where the registrant is a business
trust), officer or consultant or advisor.
k. "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations
issued thereunder, means, as of any given date: (i)
if the Common Stock is listed on a national
securities exchange or quoted on the Nasdaq National
Market or Nasdaq SmallCap Market, the last sale price
of the Common Stock in the principal trading market
for the Common Stock on the last trading day
preceding the date of grant of an award hereunder, as
reported by the exchange or Nasdaq, as the case may
be; (ii) if the Common Stock is not listed on a
national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, but is
traded in the over-the-counter market, the closing
bid price for the Common Stock on the last trading
day preceding the date of grant of an award hereunder
for which such quotations are reported by the OTC
Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations;
and (iii) if the fair market value of the Common
Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall
determine, in good faith.
l. "Holder" means a person who has received an award
under the Plan
m. "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock
option" within the meaning of Section 422 of the
Code.
n. "Nonqualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
o. "Normal Retirement" means retirement from active
employment with the Company or any Subsidiary on or
after age 65.
p. "Other Stock-Based Award" means an award under
Section 10, below, that is valued in whole or in part
by reference to, or is otherwise based upon, Stock.
q. "Parent" means any present or future parent
corporation of the Company, as such term is defined
in Section 424(e) of the Code.
r. "Plan" means the Micro Interconnect Technology, Inc.
"1998" Stock Option Plan, as hereinafter amended from
time to time.
S. "Restricted Stock" means Stock, received under an
award made pursuant to Section 8, below, that is
subject to restrictions under said Section 8.
t. "SAR Value" means the excess of the Fair Market Value
(on the exercise date) of the number of shares for
which the Stock Appreciation Right is exercised over
the exercise price that the participant would have
otherwise had to pay to exercise the related Stock
Option and purchase the relevant shares.
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<PAGE>
u. "Stock" means the Common Stock of the Company, par
value $.001 per share.
v. "Stock Appreciation Right" means the right to receive
from the Company, on surrender of all or part of the
related Stock Option, without a cash payment to the
Company, a number of shares of Common Stock equal to
the SAR Value divided by the exercise price of the
Stock Option.
w. "Stock Option" or "Option" means any option to
purchase shares of Stock which is granted pursuant to
the Plan.
x. "Stock Reload Option" means any option granted under
Section 6.3, below, as a result of the payment of the
exercise price of a Stock Option and/or the
withholding tax related thereto in the form of Stock
owned by the Holder or the withholding of Stock by
the Company.
y. "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined
in Section 424(f) of the Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be
administered by the Board or a Committee. Committee
members shall serve for such term as the Board may
in each case determine, and shall be subject to
removal at any time by the Board.
2.2 Powers of Committee. The Committee shall have full
authority, subject to Section 4, below, to award,
pursuant to the terms of the Plan: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, (iv) Deferred Stock, (v) Stock
Reload Options and/or (vi) Other Stock-Based
Awards. For purposes of illustration and not of
limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):
a. to select the officers, key employees, directors,
consultants, advisors and sales representatives of
the Company or any Subsidiary to whom Stock
Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock, Reload Stock Options and/or
Other Stock- Based Awards may from time to time be
awarded hereunder.
b. to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited
to, number of shares, share price, any restrictions
or limitations, and any vesting, exchange,
surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee
shall determine);
c. to determine any specified performance goals or
such other factors or criteria which need to be
attained for the vesting of an award granted
hereunder;
d. to determine the terms and conditions under which
awards granted hereunder are to operate on a tandem
basis and/or in conjunction with or apart from
other equity awarded under this Plan and cash
awards made by the Company or any Subsidiary
outside of this Plan;
-3-
<PAGE>
e. to permit a Holder to elect to defer a payment
under the Plan under such rules and procedures as
the Committee may establish, including the
crediting of interest on deferred amounts
denominated in cash and of dividend equivalents on
deferred amounts denominated in Stock;
f. to determine the extent and circumstances under
which Stock and other amounts payable with respect
to an award hereunder shall be deferred which may
be either automatic or at the election of the
Holder; and
g. to substitute (i) new Stock Options for previously
granted Stock Options, which previously granted
Stock Options have higher option exercise prices
and/or contain other less favorable terms, and (ii)
new awards of any other type for previously granted
awards of the same type, which previously granted
awards are upon less favorable terms.
2.2 Powers of Committee.
a. Committee Authority. Subject to Sections 4 and 12,
below, the Committee shall have the authority to
adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to
interpret the terms and provisions of the Plan and
any award issued under the Plan (and to determine
the form and substance of all Agreements relating
thereto), and to otherwise supervise the
administration of the Plan. Subject to Section 12,
below, all decisions made by the Committee pursuant
to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and
binding upon all persons, including the Company,
its Subsidiaries and Holders.
b. Incentive Stock Options. Anything in the Plan to
the contrary notwithstanding, no term or provision
of the Plan relating to Incentive Stock Options
(including but limited to Stock Reload Options or
Stock Appreciation rights granted in conjunction
with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be
so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of
the Holder(s) affected, to disqualify any Incentive
Stock Option under such Section 422.
Section 3. Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of
Common Stock reserved and available for
distribution under the Plan shall be 1,000,000
shares. Shares of Stock under the Plan may consist,
in whole or in part, of authorized and unissued
shares or treasury shares. If any shares of Stock
that have been granted pursuant to a Stock Option
cease to be subject to a Stock Option, or if any
shares of Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred
Stock award, Reload Stock Option or Other Stock-
Based Award granted hereunder are forfeited or any
such award otherwise terminates without a payment
being made to the Holder in the form of Stock, such
shares shall again be available for distribution in
connection with future grants and awards under the
Plan. Only net shares issued upon a stock-for-stock
exercise (including stock used for withholding
taxes) shall be counted against the number of
shares available under the Plan.
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<PAGE>
3.2 Adjustment Upon Changes in Capitalization. Etc. In
the event of any merger, reorganization,
consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock
split, or other change in corporate structure
affecting the Stock, such substitution or
adjustment shall be made in the aggregate number of
shares reserved for issuance under the Plan, in the
number and exercise price of shares subject to
outstanding Options, in the number of shares and
Stock Appreciation Right price relating to Stock
Appreciation Rights, and in the number of shares
subject to, and in the related terms of, other
outstanding awards (including but not limited to
awards of Restricted Stock, Deferred Stock, Reload
Stock Options and Other Stock-Based Awards) granted
under the Plan as may be determined to be
appropriate by the Committee in order to prevent
dilution or enlargement of rights, provided that
the number of shares subject to any award shall
always be a whole number.
Section 4. Eligibility.
Awards may be made or granted to key employees,
officers, directors, consultants, advisors and sales
representatives who are deemed to have rendered or to
be able to render significant services to the Company
or its Subsidiaries and who are deemed to have
contributed or to have the potential to contribute to
the success of the Company. No Incentive Stock Option
shall be granted to any person who is not an employee
of the Company or a Subsidiary at the time of grant.
Section 5. Required Six-Month Holding Period.
Any equity security issued under this Plan must be
held and may not be sold prior to six months from the
date of the grant of the related award, without the
approval of the Company.
Section 6. Stock Options.
6.1 Grant and Exercise. Stock Options granted under the
Plan may be of two types: (i) Incentive Stock
Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain
such terms, not inconsistent with this Plan, or
with respect to Incentive Stock Options, not
inconsistent with the Code, as the Committee may
from time to time approve. The Committee shall have
the authority to grant Incentive Stock Options,
Nonqualified Stock Options, or both types of Stock
Options and which may be granted alone or in
addition to other awards granted under the Plan. To
the extent that any Stock Option intended to
qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate
Nonqualified Stock Option. An Incentive Stock
Option may be granted only within the ten-year
period commencing from the Effective Date and may
only be exercised within ten years of the date of
grant (or five years in the case of an Incentive
Stock Option granted to an optionee ("10%
Stockholder") who, at the time of grant, owns Stock
possessing more than 10% of the total combined
voting power of all classes of stock of the
Company.
6.2 Terms and Conditions. Stock Options granted under
the Plan shall be subject to the following terms
and conditions:
a. Exercise Price. The exercise price per share of
Stock purchasable under an Incentive Stock Option
shall be determined by the Committee at the time of
grant and may not be less than 100% of the Fair
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<PAGE>
Market Value of the Stock as defined above;
provided, however, that the exercise price of an
Incentive Stock Option granted to a 10% Stockholder
shall not be less than 110% of the Fair Market
Value of the Stock. The exercise price per share of
Stock purchasable under any options granted that
are not Incentive Stock Option, shall be determined
by the Committee at the time of grants.
b. Option Term. Subject to the limitations in Section
6.1, above, the term of each Stock Option shall be
fixed by the Committee.
c. Exercisability. Stock Options shall be exercisable
at such time or times and subject to such terms and
conditions as shall be determined by the Committee
and as set forth in Section 11, below. If the
Committee provides, in its discretion, that any
Stock Option is exercisable only in installments,
i.e., that it vests over time, the Committee may
waive such installment exercise provisions at any
time at or after the time of grant in whole or in
part, based upon such factors as the Committee
shall determine.
d. Method of Exercise. Subject to whatever
installment, exercise and waiting period provisions
are applicable in a particular case, Stock Options
may be exercised in whole or in part at any time
during the term of the Option, by giving written
notice of exercise to the Company specifying the
number of shares of Stock to be purchased. Such
notice shall be accompanied by payment in full of
the purchase price, which shall be in cash or,
unless otherwise provided in the Agreement, in
shares of Stock (including Restricted Stock and
other contingent awards under this Plan) or, partly
in cash and partly in such Stock, or such other
means which the Committee determines are consistent
with the Plan's purpose and applicable law. Cash
payments shall be made by wire transfer, certified
or bank check or personal check, in each case
payable to the order of the Company; provided,
however, that the Company shall not be required to
deliver certificates for shares of Stock with
respect to which an Option is exercised until the
Company has confirmed the receipt of good and
available funds in payment of the purchase price
thereof. Payments in the form of Stock shall be
valued at the Fair Market Value of a share of Stock
on the day prior to the date of exercise. Such
payments shall be made by delivery of stock
certificates in negotiable form which are effective
to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Subject
to the terms of the Agreement, the Committee may,
in its sole discretion, at the request of the
Holder, deliver upon the exercise of a Nonqualified
Stock Option a combination of shares of Deferred
Stock and Common Stock; provided that,
notwithstanding the provisions of Section 9 of the
Plan, such Deferred Stock shall be fully vested and
not subject to forfeiture. A Holder shall have none
of the rights of a stockholder with respect to the
shares subject to the Option until such shares
shall be transferred to the Holder upon the
exercise of the Option.
e. Transferability. Unless otherwise determined by the
Committee, no Stock Option shall be transferable by
the Holder other than by will or by the laws of
descent and distribution, and all Stock Options
shall be exercisable, during the Holder's lifetime,
only by the Holder.
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<PAGE>
f. Termination by Reason of Death. If a Holder's
employment by the Company or a Subsidiary
terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined by
the Committee at the time of grant and set forth in
the Agreement, shall be fully vested and may
thereafter be exercised by the legal representative
of the estate or by the legatee of the Holder under
the will of the Holder, for a period of one year
(or such other greater or lesser period as the
Committee may specify at grant) from the date of
such death or until the expiration of the stated
term of such Stock Option, whichever period is the
shorter.
g. Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary
terminates by reason of Disability, any Stock
Option held by such Holder, unless otherwise
determined by the Committee at the time of grant
and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the
Holder for a period of one year (or such other
greater or lesser period as the Committee may
specify at the time of grant) from the date of such
termination of employment or until the expiration
of the stated term of such Stock Option, whichever
period is the shorter.
h. Other Termination. Subject to the provisions of
Section 14.3, below, and unless otherwise
determined by the Committee at the time of grant
and set forth in the Agreement, if a Holder is an
employee of the Company or a Subsidiary at the time
of grant and if such Holder's employment by the
Company or any Subsidiary terminates for any reason
other than death or Disability, the Stock Option
shall thereupon automatically terminate, except
that if the Holder's employment is terminated by
the Company or a Subsidiary without cause or due to
Normal Retirement, then the portion of such Stock
Option which has vested on the date of termination
of employment may be exercised for the lesser of
three months after termination of employment or the
balance of such Stock Option's term.
i. Additional Incentive Stock Option Limitation. In
the case of an Incentive Stock Option, the
aggregate Fair Market Value of Stock (determined at
the time of grant of the Option) with respect to
which Incentive Stock Options become exercisable by
a Holder during any calendar year (under all such
plans of the Company and its Parent and Subsidiary)
shall not exceed $100,000.
j. Buyout and Settlement Provisions. The Committee may
at any time, in its sole discretion, offer to buy
out a Stock Option previously granted, based upon
such terms and conditions as the Committee shall
establish and communicate to the Holder at the time
that such offer is made.
k. Stock Option Agreement. Each grant of a Stock
Option shall be confirmed by, and shall be subject
to the terms of, the Agreement executed by the
Company and the Holder.
6.3 Stock Reload Option. The Committee may also grant
to the Holder (concurrently with the grant of an
Incentive Stock Option and at or after the time of
grant in the case of a Nonqualified Stock Option) a
Stock Reload Option up to the amount of shares of
Stock held by the Holder for at least six months
and used to pay all or part of the exercise price
of an Option and, if any, withheld by the Company
as payment for withholding taxes. Such Stock Reload
Option shall have an exercise price equal to the
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<PAGE>
Fair Market Value as of the date of the Stock
Reload Option grant. Unless the Committee
determines otherwise, a Stock Reload Option may be
exercised commencing one year after it is granted
and shall expire on the date of expiration of the
Option to which the Reload Option is related.
Section 7. Stock Appreciation Rights.
7.1 Grant and Exercise. The Committee may grant Stock
Appreciation Rights to participants who have been,
or are being granted, Options under the Plan as a
means of allowing such participants to exercise
their Options without the need to pay the exercise
price in cash. In the case of a Nonqualified Stock
Option, a Stock Appreciation Right may be granted
either at or after the time of the grant of such
Nonqualified Stock Option. In the case of an
Incentive Stock Option, a Stock Appreciation Right
may be granted only at the time of the grant of
such Incentive Stock Option.
7.2 Terms and Conditions. Stock Appreciation Rights
shall be subject to the following terms and
conditions:
a. Exercisability. Stock Appreciation Rights shall be
exercisable as determined by the Committee and set
forth in the Agreement, subject to the limitations,
if any, imposed by the Code, with respect to
related Incentive Stock Options.
b. Termination. A Stock Appreciation Right shall
terminate and shall no longer be exercisable upon
the termination or exercise of the related Stock
Option.
c. Method of Exercise. Stock Appreciation Rights shall
be exercisable upon such terms and conditions as
shall be determined by the Committee and set forth
in the Agreement and by surrendering the applicable
portion of the related Stock Option. Upon such
exercise and surrender, the Holder shall be
entitled to receive a number of Option Shares equal
to the SAR Value divided by the exercise price of
the Option.
d. Shares Affected Upon Plan. The granting of a Stock
Appreciation Rights shall not affect the number of
shares of Stock available under for awards under
the Plan. The number of shares available for awards
under the Plan will, however, be reduced by the
number of shares of Stock acquirable upon exercise
of the Stock Option to which such Stock
Appreciation Right relates.
Section 8. Restricted Stock.
8.1 Grant. Shares of Restricted Stock may be awarded
either alone or in addition to other awards granted
under the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be awarded,
the number of shares to be awarded, the price (if
any) to be paid by the Holder, the time or times
within which such awards may be subject to
forfeiture (the "Restriction Period"), the vesting
schedule and rights to acceleration thereof, and
all other terms and conditions of the awards.
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<PAGE>
8.2 Terms and Conditions. Each Restricted Stock award
shall be subject to the following terms and
conditions:
a. Certificates. Restricted Stock, when issued, will
be represented by a stock certificate or
certificates registered in the name of the Holder
to whom such Restricted Stock shall have been
awarded. During the Restriction Period,
certificates representing the Restricted Stock and
any securities constituting Retained Distributions
(as defined below) shall bear a legend to the
effect that ownership of the Restricted Stock (and
such Retained Distributions), and the enjoyment of
all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the
Plan and the Agreement. Such certificates shall be
deposited by the Holder with the Company, together
with stock powers or other instruments of
assignment, each endorsed in blank, which will
permit transfer to the Company of all or any
portion of the Restricted Stock and any securities
constituting Retained Distributions that shall be
forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
b. Rights of Holder. Restricted Stock shall constitute
issued and outstanding shares of Common Stock for
all corporate purposes. The Holder will have the
right to vote such Restricted Stock, to receive and
retain all regular cash dividends and other cash
equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on
such Restricted Stock and to exercise all other
rights, powers and privileges of a holder of Common
Stock with respect to such Restricted Stock, with
the exceptions that (i) the Holder will not be
entitled to delivery of the stock certificate or
certificates representing such Restricted Stock
until the Restriction Period shall have expired and
unless all other vesting requirements with respect
thereto shall have been fulfilled; (ii) the Company
will retain custody of the stock certificate or
certificates representing the Restricted Stock
during the Restriction Period; (iii) other than
regular cash dividends and other cash equivalent
distributions as the Board may in its sole
discretion designate, pay or distribute, the
Company will retain custody of all distributions
("Retained Distributions") made or declared with
respect to the Restricted Stock (and such Retained
Distributions will be subject to the same
restrictions, terms and conditions as are
applicable to the Restricted Stock) until such
time, if ever, as the Restricted Stock with respect
to which such Retained Distributions shall have
been made, paid or declared shall have become
vested and with respect to which the Restriction
Period shall have expired; (iv) a breach of any of
the restrictions, terms or conditions contained in
this Plan or the Agreement or otherwise established
by the Committee with respect to any Restricted
Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
c. Vesting: Forfeiture. Upon the expiration of the
Restriction Period with respect to each award of
Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (i)
all or part of such Restricted Stock shall become
vested in accordance with the terms of the
Agreement, subject to Section 11, below, and (ii)
any Retained Distributions with respect to such
Restricted Stock shall become vested to the extent
that the Restricted Stock related thereto shall
have become vested, subject to Section 11, below.
Any such Restricted Stock and Retained
Distributions that do not vest shall be forfeited
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<PAGE>
to the Company and the Holder shall not thereafter
have any rights with respect to such Restricted
Stock and Retained Distributions that shall have
been so forfeited.
Section 9. Deferred Stock.
9.1 Grant. Shares of Deferred Stock may be awarded
either alone or in addition to other awards granted
under the Plan. The Committee shall determine the
eligible persons to whom and the time or times at
which grants of Deferred Stock shall be awarded,
the number of shares of Deferred Stock to be
awarded to any person, the duration of the period
(the "Deferral Period") during which, and the
conditions under which, receipt of the shares will
be deferred, and all the other terms and conditions
of the awards.
9.2 Terms and Conditions. Each Deferred Stock award
shall be subject to the following terms and
conditions:
a. Certificates. At the expiration of the Deferral
Period (or the Additional Deferral Period referred
to in Section 9.2 (d) below, where applicable),
share certificates shall be issued and delivered to
the Holder, or his legal representative,
representing the number equal to the shares covered
by the Deferred Stock award.
b. Rights of Holder. A person entitled to receive
Deferred Stock shall not have any rights of a
stockholder by virtue of such award until the
expiration of the applicable Deferral Period and
the issuance and delivery of the certificates
representing such Stock. The shares of Stock
issuable upon expiration of the Deferral Period
shall not be deemed outstanding by the Company
until the expiration of such Deferral Period and
the issuance and delivery of such Stock to the
Holder.
c. Vesting: Forfeiture. Upon the expiration of the
Deferral Period with respect to each award of
Deferred Stock and the satisfaction of any other
applicable restrictions, terms and conditions all
or part of such Deferred Stock shall become vested
in accordance with the terms of the Agreement,
subject to Section 11, below. Any such Deferred
Stock that does not vest shall be forfeited to the
Company and the Holder shall not thereafter have
any rights with respect to such Deferred Stock.
d. Additional Deferral Period. A Holder may request
to, and the Committee may at any time, defer the
receipt of an award (or an installment of an award)
for an additional specified period or until a
specified event (the "Additional Deferral Period").
Subject to any exceptions adopted by the Committee,
such request must generally be made at least one
year prior to expiration of the Deferral Period for
such Deferred Stock award (or such installment).
Section 10. Other Stock-Based Awards.
10.1 Grant and Exercise. Other Stock-Based Awards may be
awarded, subject to limitations under applicable
law, that are denominated or payable in, valued in
whole or in part by reference to, or otherwise
based on, or related to, shares of Common Stock, as
deemed by the Committee to be consistent with the
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<PAGE>
purposes of the Plan, including, without
limitation, purchase rights, shares of Common Stock
awarded which are not subject to any restrictions
or conditions, convertible or exchangeable
debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to
the value of securities of or the performance of
specified Subsidiaries. Other Stock-Based Awards
may be awarded either alone or in addition to or in
tandem with any other awards under this Plan or any
other plan of the Company.
10.2 Eligibility for Other Stock-Based Awards. The
Committee shall determine the eligible persons to
whom and the time or times at which grants of such
other stock-based awards shall be made, the number
of shares of Common Stock to be awarded pursuant to
such awards, and all other terms and conditions of
the awards.
10.3 Terms and Conditions. Each Other Stock-Based Award
shall be subject to such terms and conditions as
may be determined by the Committee and to Section
11, below.
Section 11. Accelerated Vesting and Exercisability.
If (i) any person or entity other than the Company
and/or any stockholders of the Company as of the
Effective Date acquire securities of the Company (in
one or more transactions) having 25% or more of the
total voting power of all the Company's securities
then outstanding and (ii) the Board of Directors of
the Company does not authorize or otherwise approve
such acquisition, then, the vesting periods of any and
all Options and other awards granted and outstanding
under the Plan shall be accelerated and all such
Options and awards will immediately and entirely vest,
and the respective holders thereof will have the
immediate right to purchase and/or receive any and all
Stock subject to such Options and awards on the terms
set forth in this Plan and the respective agreements
respecting such Options and awards.
Section 12. Amendment and Termination.
Subject to Section 4 hereof, the Board may at any
time, and from time to time, amend alter, suspend or
discontinue any of the provisions of the Plan, but no
amendment, alteration, suspension or discontinuance
shall be made which would impair the rights of a
Holder under any Agreement theretofore entered into
hereunder, without the Holder's consent.
Section 13. Term of Plan.
13.1 Effective Date. The Plan shall be effective as of
February 17, 1998. ("Effective Date").
13.2 Termination Date. Unless terminated by the Board,
this Plan shall continue to remain effective until
such time no further awards may be granted and all
awards granted under the Plan are no longer
outstanding. Notwithstanding the foregoing, grants
of Incentive Stock Options may only be made during
the ten year period following the Effective Date.
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<PAGE>
Section 14. General Provisions.
14.1 Written Agreements. Each award granted under the
Plan shall be confirmed by, and shall be subject to
the terms of the Agreement executed by the Company
and the Holder. The Committee may terminate any
award made under the Plan if the Agreement relating
thereto is not executed and returned to the Company
within 10 days after the Agreement has been
delivered to the Holder for his or her execution.
14.2 Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments
not yet made to a Holder by the Company, nothing
contained herein shall give any such Holder any
rights that are greater than those of a general
creditor of the Company.
14.3 Employees.
a. Engaging in Competition With the Company. In the
event a Holder's employment with the Company or a
Subsidiary is terminated for any reason whatsoever,
and within one year after the date thereof such
Holder accepts employment with any competitor of,
or otherwise engages in competition with, the
Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the
economic value of any award which was realized or
obtained by such Holder at any time during the
period beginning on that date which is six months
prior to the date of such Holder's termination of
employment with the Company.
Termination for Cause. The Committee may, in the
event a Holder's employment with the Company or a
Subsidiary is terminated for cause, annul any award
granted under this Plan to such employee and, in
such event, the Committee, in its sole discretion,
may require such Holder to return to the Company
the economic value of any award which was realized
or obtained by such Holder at any time during the
period beginning on that date which is six months
prior to the date of such Holder's termination of
employment with the Company.
b. No Right of Employment. Nothing contained in the
Plan or in any award hereunder shall be deemed to
confer upon any Holder who is an employee of the
Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, nor
shall it interfere in any way with the right of the
Company or any Subsidiary to terminate the
employment of any Holder who is an employee at any
time.
14.4 Investment Representations. The Committee may
require each person acquiring shares of Stock
pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in
writing that the Holder is acquiring the shares for
investment without a view to distribution thereof.
14.5 Additional Incentive Arrangements. Nothing
contained in the Plan shall prevent the Board from
adopting such other or additional incentive
arrangements as it may deem desirable, including,
but not limited to, the granting of Stock Options
and the awarding of stock and cash otherwise than
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<PAGE>
under the Plan; and such arrangements may be either
generally applicable or applicable only in specific
cases.
14.6 Withholding Taxes. Not later than the date as of
which an amount must first be included in the gross
income of the Holder for Federal income tax
purposes with respect to any option or other award
under the Plan, the Holder shall pay to the
Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal,
state and local taxes of any kind required by law
to be withheld or paid with respect to such amount.
If permitted by the Committee, tax withholding or
payment obligations may be settled with Common
Stock, including Common Stock that is part of the
award that gives rise to the withholding
requirement. The obligations of the Company under
the Plan shall be conditioned upon such payment or
arrangements and the Company or the Holder's
employer (if not the Company) shall, to the extent
permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to
the Holder from the Company or any Subsidiary.
14.7 Governing Law. The Plan and all awards made and
actions taken thereunder shall be governed by and
construed in accordance with the laws of the State
of Nevada (without regard to choice of law
provisions).
14.8 Other Benefit Plans. Any award granted under the
Plan shall not be deemed compensation for purposes
of computing benefits under any retirement plan of
the Company or any Subsidiary and shall not affect
any benefits under any other benefit plan now or
subsequently in effect under which the availability
or amount of benefits is related to the level of
compensation (unless required by specific reference
in any such other plan to awards under this Plan).
14.9 Non-Transferability. Except as otherwise expressly
provided in the Plan, no right or benefit under the
Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred,
encumbranced or charged, and any attempt to
alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same
shall be void.
14.10 Applicable Laws. The obligations of the Company
with respect to all Stock Options and awards under
the Plan shall be subject to (i) all applicable
laws, rules and regulations and such approvals by
any governmental agencies as may be required,
including, without limitation, the Securities Act
of 1933, as amended, and (ii) the rules and
regulations of any securities exchange on which
the Stock may be listed.
14.11 Conflicts. If any of the terms or provisions of
the Plan or an Agreement (with respect to
Incentive Stock Options) conflict with the
requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to
the extent they so conflict with the requirements
of said Section 422 of the Code. Additionally, if
this Plan or any Agreement does not contain any
provision required to be included herein under
Section 422 of the Code, such provision shall be
deemed to be incorporated herein and therein with
the same force and effect as if such provision had
been set out at length herein and therein. If any
of the terms or provisions of any Agreement
conflict with any terms or provision of the Plan,
then such terms or provisions shall be deemed
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<PAGE>
inoperative to the extent they so conflict with
the requirements of the Plan. Additionally, if any
Agreement does not contain any provision required
to be included therein under the Plan, such
provision shall be deemed to be incorporated
therein with the same force and effect as if such
provision had been set out at length therein.
14.12 Non-Registered Stock. The shares of Stock to be
distributed under this Plan have not been, as of
the Effective Date, registered under the
Securities Act of 1933, as amended, or any
applicable state or foreign securities laws and
the Company has no obligation to any Holder to
register the Stock or to assist the Holder in
obtaining an exemption from the various
registration requirements, or to list the Stock on
a national securities exchange.
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<PAGE>
FUND IMPOUND AGREEMENT
NAME OF ISSUER: Micro Interconnect Technology, Inc.
ESCROW NUMBER: DATE FILED:
EXPIRATION DATE:
THE OFFICERS AND DIRECTORS OF Micro Interconnect Technology,
Inc. HEREBY AGREES TO DELIVER, BY NOON OF THE BUSINESS DAY
AFTER RECEIPT, and with names and addresses of investors at
time deposit is made, funds to be applied to an escrow account
in the amount of:
TO: ST. MARYS BANK $300,000
Bank Name Amount
200 Bedford Street, Manchester,NH 03105
Address City & State Zip Code
As escrow agent, the papers, money, or property hereinafter
described, to be held and disposed of by said escrow agent in
accordance with the duties, instructions, and upon the terms
and conditions hereinafter set forth to which the undersigned
hereby agree:
1. Above named bank (hereinafter called the "Bank") is not a
party to, or bound by any agreement which may be evidenced
by or arises out of the following instructions.
2. The Bank and its officers, agents, and employees, act
hereunder as a depository only, and are not responsible or
liable in any manner whatever for serving as escrow agent
in this matter or for the sufficiency, correctness,
genuineness or validity of any instrument deposited with
it hereunder, or with respect to the form or execution of
the same, or the identity, authority, or rights of any
person executing or depositing the same.
3. The Bank shall not be required to take or be bound by
notice of any default by any person, or to take any action
with respect to such default involving any expense or
liability, unless notified in writing is given an officer
of the Bank of such default by the undersigned or any of
them, and unless it is indemnified in a manner
satisfactory to it against any such expense or liability.
-1-
<PAGE>
4. The Bank shall be protected in acting upon any notice,
request, waiver, consent, receipt or other paper or
document believed by the Bank to be genuine and to be
signed by the proper party or parties.
5. The Bank shall not be liable for any error in judgment or
for any act done or step taken or omitted by it in good
faith or for any mistake or fact or law, or for anything
which it may do or refrain from doing in connection
herewith, except its own willful misconduct.
6. The Bank shall not be answerable for the default or
misconduct of any agent, attorney, or employee acting on
behalf of the Issuer.
7. In the event of any disagreement between the
undersigned(s)or any of them, and/or the person or persons
named in the foregoing instructions, and/or any other
person, resulting in adverse claims and demands being made
in connection with or for any papers, money or property
involved herein or affected hereby, the Bank shall be
entitled at its option to refuse to comply with any such
claim or demand, so long as such disagreement shall
continue, and in so refusing the Bank may make no delivery
or other disposition of any money, papers or property
involved herein or affected hereby and in so doing the
Bank shall not be or become liable to the undersigned or
any of them or to any person named in the foregoing
instructions for its failure or refusal to comply with
such conflicting or adverse demands; and the Bank shall be
entitled to continue so to refrain and refuse so to act
until:
a. The rights of the adverse claimants have been finally
adjudicated in the court assuming and having
jurisdiction of the parties and the money, papers and
property involved herein or affected hereby an/or
b. All differences shall have been adjusted by agreement
and the Bank shall have been notified thereof in
writing signed by all of the interested parties.
8. The papers, documents, money or property subject to this
escrow (if other than already named) are as follows:
Including such items as may be described on attached
schedules.
9. The other duties of the Bank under the terms of this
agreement are as follows:
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<PAGE>
10. The Bank will be named as depository only and has not
passed in any way upon the merits or qualifications of the
security and makes no recommendation with regard to its
purchase. The Bank does not authorize the use of its name
by any person for the promotion or sale of the security
11. Special requirements:
12. Fees for the usual services of the Bank under terms of
this agreement are set forth below, All such fees shall be
computed on a fiscal or calendar year period adjusted for
any fractional part thereof except that a fee for any
period shall not be less than the minimum fee indicated.
a. In the event the fees charged and due the Bank remain
unpaid for a period of one year, the bank shall have
the right, and is hereby authorized in its role and
absolute discretion to discontinue the escrow,
terminate all duties hereunder, close all accounting or
other records, and to destroy all documents, records
and files or to retain such items in a dormant account
status subject to the escheat laws of the State of New
Hampshire.
b. All fees charged shall be paid as follows:
c. The initial escrow fee shall be $0.00
d. The minimum escrow fee shall be $0.00 PER DEPOSIT
e. For fee for any check issued in refunding to
subscribers see(13b.
f. In addition to the escrow fee paid or agreed upon at
the inception of this escrow, the parties agree to pay
a reasonable compensation for any extra services
rendered or incurred by the Bank including a reasonable
attorney's fee if disputes arise or litigation is
threatened or commences which requires the Bank to
refer such dispute to its attorneys.
13. If a minimum of $300,000 is not deposited with the Bank by
the date nine months after the effective date of the
Offering or within an additional period of sixty days if
extended by the Company.
a. Issuer shall request termination of escrow and the Bank
shall refund to investors the full amount of
investment.
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<PAGE>
b. Issuer agrees to pay a fee of $2.00 per check for
this service if returned to investors or $2.00
for one check made to Micro Interconnect Technology,
Inc.
14. When 100% or more has been deposited with the escrow
agent, and all escrow requirements have been met, the
issuer shall request a release from the Bank setting forth
how funds are to be released pursuant to the terms of the
offering.
15. After release of escrow, the duties, responsibilities and
liability of every kind and character under the escrow
agreement shall cease and terminate.
ISSUER:
Micro Interconnect Technology, Inc.
/s/ N. Edward Berg
N. Edward Berg, President
BANK:
ST Marys Bank
by /s/ Terese M. Bullis
Terese M. Bullis
its Business Development Specialist
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<PAGE>
EXCLUSIVE LICENSE AGREEMENT
Agreement made this 31st day of March, 1998, between N. Edward
Berg, an individual, of 70 Horizon Drive, Bedford NH 03110
(The "Licensor") and Micro Interconnect Technology, Inc. a
corporation organized under the laws of the State of Nevada, with
its principal place of business at 70 Horizon Drive Bedford NH
03110 (the "Licensee").
RECITALS:
Licensor is the owner of the entire right, title, and interest
in the following letters of patent of the United States: (1)
#5281325 issued Jan. 25,1994 ; (2) #5377404 issued Jan. 3,1995 ;
(3) #5384230 issued Jan. 24, 1995 ; and (4) #5653893 issued Aug.
5, 1997.
Licensee is desirous of securing, and Licensor is willing to
grant, an exclusive license under the above referenced patents to
use these patents for the manufacture of products for sale to
business and general public.
In consideration of the covenants and obligations hereinafter
set forth, and the mutual benefits derived hereunder, the parties
agree as follows:
SECTION 1
DEFINITIONS
A. "Licensed Patents" means all patents issued after Jan 24,
1994 to Licensor.
B. "Licensed Process" means the process covered by the
patents herein written above.
SECTION 2
GRANT OF LICENSE
Licensor grants to Licensee an exclusive license to utilize
the above-described patents for the manufacture and sale of
products throughout the United States, its territories and
possessions for the full term beginning on the date of this
agreement and ending March 31, 2007 unless extended or reissued
by express written agreement of the parties hereto. At the end
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<PAGE>
of the full term of the licensee, including any extensions or
reissues thereof, the licensees hereunder shall terminate without
further notice to Licensee.
SECTION 3
ROYALTY
Licensee shall pay Licensor, annually, a royalty of one
percent (1%) of its gross sales and receipts. Payment of royalty
shall begin on January 1999 and continue for each year that
Licensee holds the exclusive license. Should the license
terminate prior to the completion of the full year, the royalty
shall be pro rated.
SECTION 4
COOPERATION
Licensor shall provide Licensee with all requested technical
information relating to the licensed processes, provided that
such information is in his possession, and shall aid Licensee in
developing the licensed process.
SECTION 5
REPORTING
Licensee shall submit written reports to Licensor quarterly,
within 30 days following any calendar quarter beginning in 1999.
Each such report shall include an earnings statement for the
proceeding three (3) calendar months, upon which a royalty is
payable, as provided in Section 3. The first report shall include
gross sales and receipts from the date of this agreement.
SECTION 6
IMPROVEMENTS
Any improvement related to the licensed process are hereby
included within the scope of this License Agreement. If a patent
is granted for any such improvement, Licensee shall then pay
Licensor the royalty as provided for in Section 3.
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<PAGE>
SECTION 7
DEFAULT
If Licensee commits any default or breaches with respect to
any of the provisions of this Agreement, or fails to account for
or pay Licensor any of the royalties that become due hereunder,
Licensor shall have the right to cancel this Agreement on thirty
(30) days written notice to Licensee. However, if Licensee cures
the default or breach within twenty (20) days, license shall not
be canceled. Any royalty payment that become more than ten (10)
business days overdue, shall accrue interest at the rate of 1.5%
per month on all overdue amounts.
SECTION 8
BANKRUPTCY
In the event of any adjudication of bankruptcy, appointment of
a receiver, assignment for the benefit of creditors, or levy of
execution directly involving Licensee, this Agreement shall
immediately terminate.
SECTION 9
ARBITRATION
All disputes that arise in connection with this Agreement and
that are not settled by the parties themselves shall be submitted
to arbitration in accordance with the Rules and Regulations of
the American Arbitration Association. All costs of arbitration
shall be divided equally between the parties, and the parties
agree to abide by the award. The unsuccessful party in
arbitration shall be required to pay the other party's attorney's
fees.
SECTION 10
WARRANTIES
Neither party makes any representations, extends any
warranties, or assumes any responsibilities whatever with respect
to use, sale, or other disposition by the other party, its
vendees or transferees of the licensed process.
SECTION 11
TRANSFERABILITY OF RIGHTS AND OBLIGATIONS
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<PAGE>
The license granted in this Agreement shall be binding on any
successor to ownership or control over licensed patents. The
obligation will run in favor of any successor of Licensor.
Licensee shall be prohibited from assigning its rights hereunder.
Licensor upon 30 days written notice to Licensee shall be
entitled to assign his rights to a successor Licensor. Either
party may have the right to assign its rights hereunder to the
purchaser of substantially all its business.
SECTION 12
MISCELLANEOUS
Other Patents. Should the Licensor file any additional patent
applications, the Licensee, at its option, may elect to pay the
attorney fees, filing fees and all other fees associated with any
new patent application in exchange for a 9 year exclusive
licensing agreement of said patent. An exclusive licensing
agreement incorporating the exact same terms and conditions as
written herein will be considered entered into as of the date the
new patent is issued.
Patent Taxes and Assessments. All taxes, annuities, and
assessments on the patents covered in this agreement shall be
paid by the Licensee.
Effectiveness. This agreement supersedes any and all
agreements, if any, previously made between the parties relating
to the subject matter hereof, and there are no understandings or
agreements other than those included herein.
Notices and Communications. Any notice , payment, request,
instruction, or other document to be delivered hereunder shall be
deemed sufficiently given if in writing and delivered personally
or mailed by certified mail, postage prepaid, of to Licensee,
addressed to the Licensee at the address first set forth above
and if addressed to Licensor, addressed as set forth above,
unless in each case Licensee or Licensor shall have notified the
other in writing of a different address.
Non Waiver. No delay or failure on the part or either party
in exercising any right hereunder, and no partial or single
exercise thereof, will constitute a waiver of such right or of
any other right hereunder.
Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
Hampshire.
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<PAGE>
Binding Nature. The provisions of this agreement shall be
binding upon and inure to the benefit of each of the parties
hereto and their respective successors and assigns.
Amendment. This agreement shall not be altered or otherwise
amended except pursuant to any instrument in writing signed by
all affected parties hereto.
Severability. All the terms and provisions contained in this
Agreement are severable in the event that any of them shall be
held invalid or unenforceable, then this Agreement shall be
interpreted as if such invalid or unenforceable term or provision
were not contained herein.
IN WITNESS WHEREOF, the Parties have hereunto set their hands on
the first day written above.
LICENSOR:
by /s/ N. Edward Berg
LICENSEE:
Micro Interconnect Technology, Inc.
by (Officer) /s/ N. Edward Berg, President
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<PAGE>
LEASE AGREEMENT
THIS LEASE in made on the ____ day of ___________1998. The Landlord
agrees to lease to the tenant and the tenant hereby agrees to hire and
take from the Landlord, the leased Premises described below pursuant to
the terms and conditions specified herein:
LANDLORD: Ruth Berg
ADDRESS: 70 Horizon Drive
Bedford, NH 03110
TENANT: Micro Interconnect Technology, Inc.
ADDRESS: 70 Horizon Drive
Bedford, NH 03110
1. Leased Premises.
The Leased Premises are those premises described as:
A 1200 square foot office/R&D space (Leased Premises) within the
property known as 70 Tirrell Hill Road, Goffstown New Hampshire with a
mailing address of 72 Tirrell Hill Road Bedford, NH 03110 (Premises)
shown in the drawing A marked as lease Premises.
The Lease includes equipment as listed in lease equipment appendix A.
2. Term.
The term of the Lease shall be for a period of 1 year(s) commencing
on the _____ day of _______month of 1998 and ending on the same day of
the same month in 1999 unless sooner terminated as hereinafter provided.
The Tenant has the option to renew for an additional year. The lease
will automatically renew unless Tenant gives sixty (60) days notice
prior to expiration.
3. Rent.
The tenant agrees to pay ANNUAL Rent of Nine thousand six hundred
dollars ($9,600.) payable in equal installments of $800. in advance on
the ________ day of each and every calendar month during the full term
of this lease. The above amount includes Tenant's rent and Tenants
contributions for taxes.
4. Rent Adjustment.
If in any year commencing with the current year, the real estate
taxes on the land and building, of which the Leased Premises are a part,
are in excess of the amount of the real estate taxes thereon for the
current year (herein after called the "Base Year") the rent shall be
adjusted accordingly. The rent separately from the taxes will escalate
annually according to the National CPI Index.
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<PAGE>
5. Security Deposit.
The sum of eight hundred dollars ($800.) is deposited by the Tenant
with the Landlord as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant. If the Tenant
faithfully performs all the covenants and conditions on his part to be
performed, then the sum deposited shall be returned to the tenant. The
Landlord is entitled to any interest collected on this security deposit.
6. Delivery of Possession.
If for any reason the Landlord cannot deliver possession of the
leased property to the Tenant when the lease term commences or at any
other time(s) there shall be an abatement of the rent for the period
between the commencement of the lease term and the time when the
Landlord delivers possession.
7. Use of the Leased Premised.
The Leased Premises may be used only for the following purposes;-
Office / R&D / Manufacturing.
8. Utilities.
Tenant shall be responsible for maintenance of all utilities and
services that are furnished to the Leased Premises. Tenant will be
responsible for removal of all Tenants trash. Tenant will be responsible
for its own telephone charges and services. Landlord will provide
electricity, water, heat and air conditioning. All other utilities will
be paid for by Tenant.
9. Condition of Leased Premises. Maintenance and Repair.
The Tenant acknowledges that the Leased Premises are in good order
and repair. The Tenant agrees to take good care of and maintain the
Leased Premises in good condition throughout the term of the Lease.
The Tenant, at his expense, shall make all necessary repairs and
replacements to the Leased Premises, including the repairs and
replacement of fixtures. Landlord shall maintain and keep in good repair
the exterior or the building (including the walls and roof) all
structural components. (including HVAC, plumbing, electrical) , and
shall provide water, telephone and all other utility hook-ups to the
Leased Premises.
10. Assignment/Subletting Restrictions.
Tenant may not assign this agreement or subject the Leased Premises
without the prior written consent of the Landlord. Any assignment,
sublease or other purported license to use the Leased Premises by Tenant
without the Landlord's consent shall be void and shall ( at the
Landlord's option) terminate this lease.
11. Insurance.
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<PAGE>
(I). By Landlord. Landlord shall at any times during the term of this
lease, at its expense, insure and keep in effect on the building in
which the Leased Premises is located fire insurance with extended
coverage. The Tenant shall not permit any new use of the Leased Premises
that make voidable any insurance on the property of which the Leased
Premises are part, or on the contents of said property or which shall be
contrary to any law or regulation from time to time established by the
applicable fire insurance rating association.
(II) By Tenant. Tenant shall, at it's expense, during the term
hereof, maintain and deliver to Landlord public liability and property
damage and plate glass insurance policies with respect to the Leased
Premises. Such policies shall name the Landlord and Tenant as both being
insured, and have limits of at least $1,000,000. for injury or death to
any person and $1,000,000. for any one accident, and $1,000,000. With
respect to damage to property and with full coverage for plate glass.
Such policies shall be in whatever form and such insurance companies as
are satisfied to Landlord, shall name the Landlord as additional
insured, and shall provide for at least twenty days' prior notice to
Landlord of cancellation.
12. Indemnification.
Each party shall defend, indemnify, and hold the other harmless from
and against any claim, loss, expense or damage to any person or property
in or upon the premises, arising out of such party's use or occupancy of
the Premises, or arising out of any act or neglect of such party or its
servants employees, agents, or invoices.
13. Condemnation.
If all or any part of the Premises is taken by eminent domain, this
lease shall expire on the date of such taking, and the rent shall be
apportioned as of this date. No part of any award shall belong to
Tenant.
14. Destruction of Premises.
If the building in which the leased is damaged by fire or other
casualty, without Tenant's fault, and the damage is so extensive as to
effectively constitute a total destruction of the property or building,
this Lease and the rest shall be apportioned to the time of the damage.
In all cases of damages without Tenant's fault, Landlord shall repair
the damage with reasonable dispatch, and if the damage has rendered the
Leased Premises wholly or partially non tenantable, the rent shall be
apportioned until the damage is repaired. In determining what
constitutes reasonable dispatch, consideration will be given to delays
caused by strikes, adjustment of insurance, and other causes beyond the
Landlord's control.
15. Landlord's Right upon Default.
In the event or any breach of this lease by the Tenant, which shall
not have been cured within eight (8) DAYS or if Tenant files for
bankruptcy or has an involuntary bankruptcy petition filed against that
is not discarded discharged) within 45 days, then the Landlord, besides
other rights or remedies it may have, shall have the immediate right of
entry and may
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<PAGE>
remove all persons and property from the Leased Premises; such property
may be removed and stored to a public warehouse or elsewhere at the cost
of, and for the account of, the Tenant. If the Landlord elects to
reenter as herein provided, or should take possession pursuant to any
advice provided by law, it may either terminate this lease or may, from
time to time, without terminating this lease re-let the Leased Premises
or any part thereof, for such terms and at such rental or rentals and
upon such other terms and conditions as the Landlord in the Landlord's
own discretion may deem advisable. Should such rentals received from
such re-letting during any month be less than that agreed to be paid
during the month by the Tenant hereunder, the Tenant shall pay the
deficiency to the Landlord monthly. The Tenant shall also pay to the
Landlord, as soon as ascertained, the cost and expenses incurred by the
Landlord in such re-letting.
16. Quiet Enjoyment.
The Landlord agrees that if the Tenant shall pay the rent as
aforesaid and perform the covenants and agreement herein contained on
its part to be performed, the Tenant shall peaceably hold and enjoy the
said rented premises without hindrance or interruption by the Landlord
or by any other persons acting under or through the Landlord.
17. Landlord's Right to Enter.
Landlord may, at any times, enter the Leased Premises to inspect it,
to make repairs or alterations, perform acts of maintenance, and to show
it to potential buyers, lenders or tenants.
18. Surrender upon Termination.
At the expiration of the lease term the Tenant shall surrender the
leased property in as good condition as it was in at the beginning of
the term, reasonable use and wear excepted.
19. Subordination.
This lease and the Tenant's leasehold interest, is and shall be
subordinate, subject and inferior to any and all times encumbrances now
and thereafter placed on the Leased Premises by Landlord, any and all
extensions of such liens and encumbrances and all advances paid under
such liens and encumbrances.
20. Additional Provisions.
The parties agree that they have executed this agreement without any
third party agent(s) involvement.
21. Miscellaneous Terms.
* Notices. Any notice, statement, demand or other communication by
one party to the other shall be by personal delivery or by mailing the
same, postage prepaid, addressed to the Tenant at the premises, or to
the Landlord at the address set forth above.
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<PAGE>
* Severability. If any clause or provision herein shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or
operation of any applicable law, it shall not effect the validity of any
other clause or provision, which shall remain in full force and effect.
* Waiver. The failure of either party to enforce any of the
provisions of this lease shall not be considered a waiver of that
provision or the right of the party to thereafter enforce the provision.
* Complete Agreement. This lease constitutes the entire understanding
of the parties with respect to the subject matter hereof and may not be
modified except by an instrument in writing and signed by the parties.
* Successors. This Lease is binding on all parties who lawfully succeed
to the rights or take the place of the Landlord or Tenant.
22. Non Compete and Other Restrictions.
The Landlord shall not lease any part of the Premises to any person
or entity in competition with the Tenant's business.
23. Environmental
Tenant shall not release any toxins or carcinogens on the property in
any way or form.
Tenant will comply with all existing and pending local and national
ordinances (laws) with regard to hazardous material usage and waste
disposal.
24. Leasehold improvement.
If Tenant makes leasehold improvements they shall become the property
of the Landlord and shall remain with the premises when the Tenant
vacates the premises.
IN WITNESS WHEREOF the parties have set their hands and seals on this
______/_______ day
_________________________ ________________________________
Landlord Tenant
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<PAGE>
Lease Equipment Appendix A
The following equipment is included in the facility rent.
6 tables
4 chairs
12 storage racks
5 four drawer letter sized files
Fax machine
2 telephones
Imaging workstation early rudimentary breadboard. Title conveys to Micro
Interconnect Technology Inc. upon receipt of first rent payment.
Stereo microscope (Dynascope) model ts-2 Vision Engineering
Light table NuArk model BB23T with floor stand
De-soldering station HAK 472 B
Soldering station XY Tronic
Power supply HP 6260B
Power supply Sorensen QRD 60-1.5
Environmental test chamber Tenney model T10 (no cooling)
Drill press Delta model 1310075
Bench grinder Craftsman 257-192110
1 Computer Dell 486DX with 14'' vga monitor running windows version 3.11
with HP laserjet series II printer.
1 Computer 804866DX133 with 17' vga monitor running windows 95 with HP
laserjet 5mp printer and deskjet 660c printer. And Scanport SQ2400 color
scanner.
Kinstin UV Exposure system
Hand tools screwdrivers pliers wrenches saws etc.
Tap and die set Craftsman 9-52382
2 Work benches
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<PAGE>
United States Patent
Patent Number: 5281325
Series Code: 7
Application No.: 907,830
Patent Type: 1
Art Record No.: 112
Date Filed: 19920702
Title: UNIFORM ELECTROPLATING OF PRINTED CIRCUIT BOARDS
Issue Date: 19940125
No. of Claims: 8
Exemplary Claim: 1
Pri. Examiner: Tufariello; T. M.
No. of Drawings: 1
No. of Figures: 3
[INVENTOR]
Name: Berg; N. Edward
Street: 43 Smith Rd.
City: Bedford
State: NH
Zip Code: 03110
[CLASSIFICATION]
US Class: 205/125
Cross Ref Class: 204/194
Intl. Class Ed. Field: 5
Intl. Class: C25D 502
Intl. Class: C25D 1700
Field of Search: 205
Subclasses: 125
Field of Search: 204
Subclasses: 194
[US REFERENCE]
Patent: 3809642
Issue Date: 19740500
Name: Bond
US Class: 205/78
[FOREIGN REFERENCE]
Patent: 2-25694
Issue Date: 19900900
Country: JPX
[LEGAL INFORMATION]
Legal Firm: Hayes, Soloway, Hennessey & Hage
[ABSTRACT]
A method and apparatus for the uniform electroplating of
printed circuit boards is described. At least one non
conductive apertured mask covers selected areas of the
electro-active surface of the anode or cathode electrode,
whereby to establish substantially uniform electroplating
ion transfer over the target areas of the target cathode.
[BACKGROUND AND SUMMARY]
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TECHNICAL FIELD OF THE INVENTION
This invention relates to electro-plating or
electro-deposition of metal on a target. The invention
has particular utility in connection with
electro-deposition of metal onto printed circuit boards
or panels and will be described in connection with such
utility, although other utilities are contemplated.
BACKGROUND OF THE INVENTION
Electroplating is an established process of producing a
metallic coating on a surface. Such coatings may perform
a protective function to prevent corrosion of the metal
on which they are deposited, e.g., plating with zinc or
tin (electro-galvanizing); or a decorative function,
e.g., gold or silver plating; or both functions, e.g.,
chromium plating.
The principal of electroplating is that the coating
metal is deposited from an electrolyte, typically an
aqueous acid or alkaline solution, onto a target
substrate or panel. The latter forms the cathode
(negative electrode) while a plate of the metal to be
deposited serves as the anode (positive electrode).
During a standard electroplating process, the periphery
of the printed circuit board, i.e., the portions of the
printed circuit board adjacent its outer edges, tends to
be at a higher current density than the center of the
printed circuit board. Hence, metal deposits more rapidly
adjacent the periphery of the printed circuit board than
at the center. The result of this is that by the time the
metal has deposited at the center of the circuit board to
form a desired thickness, the metal deposited adjacent
the periphery is at a thickness much greater than the
thickness at the center. As a result, the width of
depositing metal lines may grow laterally, and the
resulting plated lines near the periphery may develop a
cross sectional configuration resembling a mushroom.
In U.S. Pat. No. 4,828,654, it is reported that by
spacing the cathode a relatively large distance from the
anode, and by making the effective size of the panel to
be plated, i.e. the cathode, larger in size than the
anode, there is more uniform distribution of the
electroplating field. The more uniformly distributed
field causes the metallic ions to be electrolytically
deposited at a more uniform rate over the articles in the
panel. This prior art arrangement reportedly avoids
undesirable uneven plating build-up on the articles at
those areas where there is a concentration of the
electroplating field. It is also reported that field
concentrations occur when the size of the article is
smaller than the size of the anode, and results in the
edges of the article experiencing a substantial greater
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<PAGE>
build up of metallic ions than the center area of the
article. Making the effective size of the cathode (the
article to be plated) greater than the size of the anode
and spacing the anode a relatively large distance from
the cathode, operates to discourage the formation of
areas of concentration in the electroplating field and
encourages the ion transfer to become more uniform over
the entire area of the cathode.
U.S. Pat. No. 4,828,654 teaches an anode used in
electroplating formed by a plurality of individual anode
segments which can be selectively energized to establish
an effective anode size that relates to the size of the
article to be electroplated, thereby establishing an
electrical field of more uniform characteristics to
transfer ions from the anode to the articles at a more
uniform deposition rate over the whole surface of the
article. By adjusting the effective size of the anode to
correspond and relate to the size of the article, the
non-uniform deposition rates associated with concentrated
localized field reportedly are avoided, and the physical
size of the electroplating apparatus can be reduced.
U.S. Pat. No. 4,933,061 teaches an electroplating
apparatus for electroplating a plurality of items. The
patented apparatus includes a tank having a bottom wall
and side walls, adapted to hold a predetermined quantity
of electrolytic plating solution. A sparger system at the
bottom of the tank directs the electrolytic plating
solution in an upward direction. A cathode rack supports
the items to be electroplated and extends intermediate to
the anode plates and upwardly from the sparger system.
Strategically placed openings in the anodes and an anode
screen in conjunction with the sparger system reportedly
act to reduce the plating thickness variance over the
rack.
In U.S. Pat. No. 5,017,275, there is disclosed an anode
structure comprising a resilient anode sheet having an
active anode surface, and a support sub-structure for the
anode sheet. The anode sub-structure has a pre determined
configuration. By flexing the anode sheet onto the anode
sub-structure, so that the anode sheet conforms to the
configuration of the anode sub-structure, there
reportedly is provided an adequate electrical junction
for substantially uniform current distribution.
A collection of the known variables which affect the
electroplating process have been set out in detail in the
HANDBOOK OF PRINTED CIRCUIT MANUFACTURING by Raymond H.
Clark (1985). Therein it is reported that the factors
which effect the electroplating process include: 1.
plating pattern geography; 2. panel thickness and size of
plated through holes; 3. panel boarders; 4. plating rack;
5. bath chemistry, e.g., concentration of metals and
acids, concentration of organic leveling and brightening
agents, concentration of contaminants; 6. bath
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temperature; 7. anode-cathode spacing; 8. anode current
density; 9. anode depletion; 10. plating bath agitation;
11. cathode agitation; 12. rectifier consideration; and
13. the skill and experience of the plater.
The present invention provides an improved
electroplating system which overcomes the aforesaid and
other problems of the prior art which have resulted in
less than uniform electroplating and metallic deposition,
and in so doing provides substantially uniform
distribution of the deposited metal, from item to item in
an electroplating process.
SUMMARY OF THE INVENTION
In accordance with the present invention, a system for
electroplating comprises a receptacle for holding a bath
of electroplating solution. An electrically conducting
anode electrode is positioned within the receptacle in
contact with the bath. The anode is covered at least in
part with one or more electrically non-conductive masks
which operate to direct the electric current as it
travels through the electroplating solution to distribute
over the cross-sectional surface area of a conductive
substrate immersed in the electroplating receptacle at a
location spaced apart from the anode to establish
substantially uniform electroplating ion transfer over
the surface of the substrate. The mask or masks may be in
direct contact with the anode, or in close proximity
thereto. Completing the system are means for electrically
energizing the anode and completing the circuit to the
target/cathode.
The overall size of the anode, and the size and shape
of the mask or masks, mask openings, number of openings,
and location of openings in the non-conductive mask are
all selected with reference to the size, target
configuration and aspect ratio (anode-to-target) of the
article to be electroplated. The distance separating the
masked anode from the target panel substrate also is
adjusted to promote uniform targeting of the
electroplating current.
The present invention also provides a method of
electroplating an article with a generally uniform
thickness coating by covering the anode electrode at
least in part with one or more electrically
non-conductive masks having a pattern of openings of
predetermined configuration relative to the target
cathode whereby to result in substantially uniform
deposition over the target during electroplating.
[DRAWING DESCRIPTION]
BRIEF DESCRIPTION OF THE DRAWINGS
Further features and advantages of the present
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<PAGE>
invention will be apparent from the following detailed
description of the invention taken in conjunction with
the drawings, wherein like numerals depict like parts,
and wherein:
FIG. 1 is a perspective view of an electroplating
apparatus embodying the present invention;
FIG. 2 is a side view of portions of the electroplating
system of FIG. 1; and
FIG. 3 is a view similar to 2, and illustrating an
alternative form of electroplating system made in
accordance with the subject invention.
[DETAILS]
DETAILED DESCRIPTION OF PREFERRED
EMBODIMENTS
Referring to FIGS. 1 and 2, the electroplating system
10 includes an outer housing 12 which is preferably
formed of an electrically insulating and
corrosion-resistant material such as plastic. The housing
12 includes means in the form of a downward extending
receptacle 14 for holding a bath of an electroplating
solution 16. By way of example, for electroplating
copper, bath 16 may comprise a copper sulfate solution
commonly referred to as "acid copper". The plastic
material of the housing 12 and receptacle 14 resists the
toxic and corrosive effects of the bath 16.
The electroplating system 10 includes an anode
electrode 15 which is covered at least in part with a
non-conductive mask 18 (FIG. 2), which will be described
in detail below. Mask 18 may be coated directly on the
electro-active surface of anode electrode 15 or may
comprise a separate element which may be fixed to or
suspended in close proximity to the electro-active
surface of electrode 15. The anode electrode 15 and mask
18 are suspended from an upper support member 20 which is
preferably formed of plastic to resist the corrosive
effects of the bath 16 and to provide electrical
insulation. The anode electrode 15 and mask 18 are held
suspended from the support member 20 by fasteners such as
non-corrosive titanium machine screw 22.
The article to be plated typically comprises a printed
circuit board 26 which becomes the electrical cathode of
the electroplating system during electroplating. The
printed circuit board 26 is suspended in the bath by a
clamp 28 which includes a thumbscrew 30 or other similar
fastening device for attaching and suspending or
supporting the article to be electroplated in the bath.
Clamp 28 in turn is mechanically connected to an
electrically insulating support member 34. A handle 36
extends above the support member to allow the printed
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<PAGE>
circuit board to be inserted into and removed from the
bath 16 at the start and end of the electroplating
process.
Completing the system are electrical conductors 24 and
32 for electrically connecting the anode electrode 25 and
cathode target 26 to a direct current or quasi direct
current electrical energy source 38.
A feature and advantage of the present invention is the
ability to substantially and uniformly electroplate the
conductor paths, lands and holes of a target printed
circuit board. This is accomplished by covering selected
areas of the electro-active surface of the anode 15 with
a non-conductive mask 18 which directs the electric
current through the electroplating solution so that the
metal will be deposited onto the target cathode in a
controlled manner. The overall size of the anode, and the
size and shape of the openings, number of openings, and
location of the openings in the non-conductive mask are
selected with reference to the size and geometry of the
target article to be electroplated, with the result that
field concentrations at any location on the target
article are avoided, thereby achieving a relatively
uniform layer of electroplated material.
Typically, the anode mask will have openings which are
substantially the negative of the target article;
however, in order to compensate for uneven plating
buildup on the target panel periphery, the mask openings
corresponding to peripheral areas of the target board
preferably should be made relatively smaller than
corresponding deposition areas on edges of the target
board, while the mask openings corresponding to center
areas of the target board preferably should be made
relatively larger than the corresponding deposition areas
on center areas of the target board. Mask size and shape
also may be empirically determined using the above
criteria. The mask may be applied directly to the anode
electro-active surface, for example, by coating, or the
mask may comprise a separate element which may be fixed
directly to or held in close proximity to the anode
electro-active surface, thereby allowing various selected
exposed portions of the anode to serve as a source of
field concentration for the electroplating process.
The distance between the masked anode and the target
printed circuit board should be limited to a relatively
short distance, typically 2 to 3.5 inches at normal
plating potentials, so that bulk transfer through the
electroplating bath does not defeat the masking effect.
Certain changes may be made in the above constructions
without departing from the spirit and scope of the
invention. For example, as shown in FIG. 3, it also is
possible to achieve uniform deposition by covering the
cathode with one or more non-conductive apertured masks.
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In such case, the mask or masks should be spaced a short
distance, e.g. 1.75 to 3 inches from the cathode.
Locating the mask less than 1.75 inches or more than 3
inches from the cathode is not advised and does not
achieve uniform deposition. It is accordingly intended
that all matter contained in the above description or
shown in the accompanying drawings shall be interpreted
as illustrative and not in a limiting sense.
[CLAIMS]
I claim:
1. In an apparatus for electroplating a target cathode,
said apparatus including an anode electrode having an
electro-active surface in contact with an electroplating
bath, the improvement which comprises at least one
electrically non-conductive apertured mask closely spaced
from and covering the cathode at least in part whereby to
direct electric current through the electroplating
solution in a controlled manner onto the target cathode,
said at least one mask being spaced from the electro-
active surface of the cathode, and at least one
additional electrically non-conductive apertured mask
covering the anode at least in part.
2. In an apparatus as defined in claim 1, the
improvement wherein at least one mask is in direct
contact with the anode.
3. In an apparatus as defined in claim 1, the
improvement wherein at least one mask is spaced from the
electro-active surface of the anode.
4. In an apparatus as defined in claim 1, the
improvement wherein at least one mask is spaced 2 to 3.5
inches from the electro-active surface of the anode.
5. In an apparatus as defined in claim 1, the
improvement wherein at least one mask comprises a
plurality of openings which are adjusted to establish
substantially uniform electroplate ion transfer onto the
target cathode.
-7-
<PAGE>
6. In an apparatus for electroplating a target cathode,
said apparatus including an anode electrode having an
electro-active surface in contact with an electroplating
bath, the improvement which comprises at least one
electrically non-conductive apertured mask closely spaced
from and covering the cathode at least in part whereby to
direct electric current through the electroplating
solution in a controlled manner onto the target cathode,
said at least one mask being spaced 1.75 to 3 inches from
the electro-active surface of the cathode, said mask
comprising a plurality of openings which are adjusted to
establish substantially uniform electroplate ion transfer
onto the target cathode.
7. In a method of electroplating selected areas of a
target cathode immersed in an electroplating bath having
an anode disposed therein, the improvement which
comprises covering selected areas of the cathode electro-
active surface with at least one non-conductive apertured
mask spaced form 1.75 to 3 inches from the electro-active
surface of the cathode, and conducting anodic current
from the anode to electroplate the masked target cathode,
sai at least one mask comprising a plurality of openings
which are adjusted to establish substantially uniform
electroplate ion transfer onto the target cathode.
8. In a method of electroplating selected areas of a
target cathode immersed in an electroplating bath having
an anode disposed therein, the improvement which
comprises inter-spacing at least one non-conductive
apertured mask between the anode and the cathode whereby
to conduct electric current through the electroplating
bath in a controlled manner onto the target cathode,
wherein said at least one mask is spaced 1.75 to 3 inches
from the electro-active surface of the cathode.
* * * * *
-8-
<PAGE>
United States Patent
Patent Number: 5377404
Series Code: 8
Application No.: 166,166
Patent Type: 1
Art Record No.: 326
Date Filed: 19931210
Title: METHOD FOR FABRICATING A MULTI-LAYER PRINTED CIRCUIT BOARD
Issue Date: 19950103
No. of Claims: 11
Exemplary Claim: 1
Pri. Examiner: Vo; Peter Dungba
No. of Drawings: 1
No. of Figures: 4
[INVENTOR]
Name: Berg; N. Edward
Street: 43 Smith Rd.
City: Bedford
State: NH
Zip Code: 03110
[RELATED US APPLICATION DATA]
Assn/Reis. Code: 71
Application No.: 953,472
Date Filed: 19920929
Parent Stat Code: 0
[CLASSIFICATION]
US Class: 29/830
Cross Ref Class: 29/703
Cross Ref Class: 29/846
Cross Ref Class: 29/DIG.12
Cross Ref Class: 408/704
Intl. Class Ed. Field: 6
Intl. Class: H05K 336
Intl. Class: B23P 2100
Field of Search: 29
Subclasses: 26 A;703;720;825;829;830;833;846;DIG. 12
Field of Search: 156
Subclasses: 233;273.3
Field of Search: 346
Subclasses: 108
Field of Search: 408
Subclasses: 3;1 R;16;230;704
Field of Search: 430
Subclasses: 270-273;314
-1-
<PAGE>
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-2-
<PAGE>
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[FOREIGN REFERENCE]
Patent: 306111
Issue Date: 19891200
Country: JPX
US Class: 408/704
[LEGAL INFORMATION]
Legal Firm: Hayes, Soloway, Hennessey, Grossman & Hage
-3-
<PAGE>
[ABSTRACT]
A method for fabricating at least one via or hole in a multi-layer printed
circuit board comprises separately drilling the board layers, stacking and
laminating the drilled board layers utilizing conformal mapping digital
imaging in a computer, and then finish drilling the holes. The invention
also provides a method for correcting artwork to compensate for lamination
distortion.
[PARENT CASE TEXT]
This is a continuation of copending application Ser. No. 07/953,472 filed
on Sep. 29, 1992 now abandoned.
[BACKGROUND AND SUMMARY]
FIELD OF THE INVENTION
The present invention relates generally to a method for fabricating a
printed circuit board. The present invention has particular utility in the
fabricating of multi-layer printed circuit boards having at least one via
or through-hole, and will be described in connection with such utility,
although other utilities are contemplated.
BACKGROUND OF THE INVENTION
Multi-layer printed circuit boards have found increasing use in the
manufacture of electronic products. A typical multi-layer circuit board
comprises a plurality of individual circuit boards laminated together.
Each printed circuit board comprises an electrically non-conductive
substrate material having conductive patterns formed on one or both sides
thereof. The conductive patterns provide interconnect paths among the
active and passive electronic components mounted on the board. In order to
afford proper connections, predetermined points on the conductive paths on
different individual boards must be interconnected, and these
interconnections are typically made by drilling holes through the board at
precise locations, followed by plating the through-holes with an
electrically conductive material. Since a typical multi-layer board may
have a large number of holes, the drilling typically is accomplished using
a computer controlled automatic drilling apparatus. A typical drilling
apparatus used for this purpose has multiple drill spindles which are
independently activated by the master program in order to reduce the total
drilling time required to form the multiple holes on a single multi-layer
board. In order to properly position the multi-layer board initially in
the drilling apparatus, some fixed referencing arrangement is usually
employed, such as registration holes formed in edge portions of the board
which mate with pins carried by the drilling apparatus table.
A problem encountered in the multi-layer board fabrication art is that of
misregistration among the individual boards comprising the assembly. While
the individual board patterns can be formed very precisely using
conventional photolithography, exact registration among the multiple
patterns on the several boards is impossible to achieve due to distortions
introduced during the lamination processing. These distortions typically
lead to maximum misregistration at the outer edges of the panels. The
principal criterion for a useful board can be simply stated: each hole
drilled through the multi-layer board must be surrounded by a conductive
material at each layer in order to form a useful hole. Due, however, to
the misregistration introduced during the lamination process, this
criterion cannot be met by all multi-layer boards. In fact, the rejection
rate for multi-layer boards has a present practical range of from 5% to
-4-
<PAGE>
20%, depending upon the minimum pattern line width, maximum acceptable
hole diameter, pattern complexity, and number of layers.
In the past, attempts at quality control for multi-layer circuit boards
have centered about an inspection process wherein the developing
multi-layer board is photographed at preselected stages of the fabrication
process using an x-radiation sensitive film and an x-radiation source.
After the films are developed, the successive photographs are compared to
discern the degree of misregistration or distortion introduced during the
intervening steps between the preselected stages. Once final multi-layer
assembly is completed, and before the board is subjected to programmed
drilling, a final comparison is made and the board is either accepted or
rejected for drilling based upon this final comparison. Although useful,
this process is slow and cumbersome and can only effectively be employed
to sample representative multi-layer boards with theoretically identical
patterns, which are undergoing multi-layer lamination. Since this
technique is only amenable to spot sampling in a production environment,
many multi-layer boards which should be rejected for misregistration or
deformation may be passed on to the automatic drilling station, where they
are uselessly drilled and ultimately scrapped. The automated drilling of a
board which does not meet the minimum registration requirements is
wasteful, since it results in a product which cannot be used. With
relatively dense boards, thousands of holes may be drilled, which consumes
relatively large periods of the drilling machine time. For example, in an
18 inch.times.24 inch multi-layer board, the number of holes typically
ranges from 12,000 to 14,000, and the complete drilling of such a board
can take as long as 90 minutes. As a result, the x-radiation
source/x-radiation sensitive film inspection process has not been found to
be a satisfactory solution to the problem of effective quality control for
multi-layer boards prior to drilling.
In an effort to avoid the disadvantages with the x-radiation
source/x-radiation sensitive film inspection process, a system has been
developed to permit on-line inspection of multi-layer boards using an
x-ray imaging system which examines test holes formed near the corners of
the individual board layers and displays the percent of registration among
all corresponding holes in a given corner region. While useful, this
system is very large and expensive, and merely provides a percent
registration figure for each set of test holes on a sequential basis. If a
given multi-layer board falls within the permitted percentage of
misregistration, it will be passed on for drilling. For those accepted
boards which are close to the maximum permitted misregistration, the
accumulation of tolerance errors inherent in the drilling machine can
result in a multi-layer board with unacceptable through-holes.
The foregoing discussion of the prior art is taken largely from U.S. Pat.
No. 4,790,694 to Wilent et al who propose registering a multi-layer
printed circuit board prior to drilling by positioning the multi-layer
board in an inspection fixture, examining a plurality of target areas
located at predetermined locations on the multi-layer board with a
radiation source and a detector, comparing the locations of the target
areas with predetermined location coordinates, and marking the multi-layer
board with reference indicia to provide proper positioning of the
multi-layer board during drilling. Preferably, according to Wilent et al,
the comparison is performed using predetermined location coordinates
obtained by centering a master template having the target areas in the
inspection fixture, and storing the location coordinates of the master
-5-
<PAGE>
template target areas. Further preferably, the marking step includes the
formation of apertures along one edge portion of the multi-layer board.
While Wilent et al is believed to overcome certain of the deficiencies of
the prior art as above discussed, Wilent et al employs relatively slow
electromechanical servo-motors to move the master template in conjunction
with another electromechanical device, the marking mechanism, which slows
the process considerably. Moreover, the template itself is subject to
warping, misalignment, and design tolerance errors. Finally, marking the
multi-layer board with reference indicia in the form of apertures may
result in connection lines being inadvertently commoned, shorted, or
otherwise compromised.
Other problems common to multi-layer drilling systems include drilling
inaccuracies due to drill bit wear and chipping, drill bit warding due to
bit overheating, drill smear and machine down-time and rework costs due to
drill bit breakage.
It is an object of the present invention to provide a novel method for
fabricating a through-hole in a multi-layer printed circuit board which
overcomes the aforesaid and other deficiencies of the prior art. More
specific objects are to provide a novel multi-layer board registration and
drilling method. Yet another object of the present invention is to provide
a fabrication method that increases the quality of drilled through-holes
and substantially decreases drill bit wear.
SUMMARY OF THE INVENTION
The present invention in one aspect provides a method for fabricating a
through-hole in a multi-layer printed circuit board by separately drilling
each layer. Undersized through-holes are formed in predetermined positions
in each layer. The separate boards are then stacked and laminated to one
another, and the through-holes are then dressed out to finish size. In a
preferred embodiment of the invention exact hole positions of developing
multi-layer boards are sensed, and adjustments made in imaging subsequent
boards.
[DRAWING DESCRIPTION]
BRIEF DESCRIPTION OF THE DRAWINGS
For a further understanding of the nature and advantages of the present
invention, reference should be made to the following Detailed Description,
taken in conjunction with the accompanying drawings, where like numerals
represent like elements, and wherein:
FIG. 1 depicts a side elevational-exploded view of a multi-layer printed
circuit board, and showing its through-hole construction;
FIG. 2 is a schematic block diagram of a typical prior art method for
forming a through-hole in a multi-layer printed circuit board;
FIG. 3 is a schematic block diagram of a preferred embodiment of the
present invention; and
FIG. 4 is a perspective view of a circuit board layer at an interim stage
in the process of the present invention.
-6-
<PAGE>
[DETAILS]
DETAILED DESCRIPTION OF THE INVENTION
FIG. 1 depicts an exploded view of a multi-layer printed circuit board
showing typical through-hole construction. A typical multi-layer printed
circuit board, generally referred to as 1, comprises a plurality of
separate boards 3a, 3b and 3c each having a variety of conductive patterns
or lines 5 disposed upon them, and one or more through-holes 9 comprised
of separate holes 7a, 7b and 7c formed respectively in boards 3a, 3b and
3c. It should be understood at the outset, that although FIG. 1 depicts a
multi-layer circuit board comprising three separate boards the present
invention may be used in fabricating a through-hole in a multi-layer
circuit board comprising any number of separate layers.
FIG. 2 is a schematic block diagram of a typical prior art method of
forming a through-hole in a multi-layer board. Such prior art method
typically comprises forming the separate board layers in known manner at a
lithography station 20, registering the separate boards, and laminating
the stacked boards at a laminating station 22, and forming a through-hole
through all of the stacked boards at once, e.g. by drilling at a drilling
station 24. Drilling typically is then followed by cleaning and desmearing
at a cleaning station 26, and the cleaned and desmeared holes are then
plated through at a plating station 28.
Referring to FIG. 3, in accordance with the present invention a first board
layer is imaged at an imaging station 30. The imaged board is then
processed at a processing station 32 where the conductive patterns are
formed, and the processed board is then passed to a drilling station 34
which preferably comprises a multi-spindle drilling automatic drilling
machine. Alternatively, drilling station 34 may comprise a punch, a laser
drill or other hole-making device. The holes formed at drilling station 34
preferably are undersized by design, i.e. typically 50 to 75% of the
desired finish hole size. Making the holes initially smaller than the
desired finish hole size has the advantage of reducing wear on the larger
drill bits, and coupled with a finish drilling step may produce a
neater/cleaning final hole. However, it is not necessary to make the holes
initially smaller than the desired finish hole size.
The board, following drilling, is then passed to a stacking and laminating
station 42 where a plurality of boards are laminated together to produce a
developing multi-layer board. The developing board is then passed to a
measuring station 36 wherein one or more of preselected hole positions are
sensed, for example, using a light or x-ray or other source 38 and
receptors 40 (FIG. 4) which determine the actual position(s) of the
selected holes.
Measurements of hole positions taken at measuring station 36 are then fed
to a computer driven imager at imaging station 30 which "distorts" or
adjusts the computer generated image to accommodate for variations of
through-hole positions based on the actual observed position of the holes
using digital imaging or conformal mapping techniques to image the next
board or series of board layers, e.g., in accordance with the teachings of
U.S. Pat. Nos. 4,639,868, 4,815,000 and 5,005,135, the teachings of which
patents are incorporated herein by reference.
-7-
<PAGE>
The next imaged board layer or layers is/are then passed to processing
station 32 where the circuits, etc. are formed as before, and the next
processed board layers is/are then passed to drilling station 34, where
the individual board layers are drilled as before. The resulting drilled
boards are then passed to stacking and lamination station 42, wherein the
board layers are stacked and laminated in alignment on the developing
board. Hole position measurements are taken as before, and the new hole
position measurements are fed to the computer driven imager at imaging
station 30 where new adjustments are made in the artwork to accommodate
variations in the hole positions. The process is repeated until the
desired number of layers is achieved.
Finally, the through-holes are dressed out at a drilling station 44 to
conform substantially to the through-holes predetermined design position
and size. Inasmuch as only a small amount of material needs to be removed
in dressing out the through-holes at drilling station 44, the problems of
drill bit overheating, excessive wear and breakage, and drill smear,
present in conventional multi-layer drilling operations are avoided. Also,
since hole misregistration is essentially eliminated, board loss due to
drilling error also essentially is eliminated.
Separately drilling the individual board layers in accordance with the
present invention also permits drilling within the aspect ratio of the
drill bits, thus substantially reducing drilling problems of drill bit
overheating, drill bit excessive wear and breakage, machine down-time and
drill bit costs of conventional multi-layer drilling systems, as well as
board loss or rework costs resulting from worn or broken drill bits and
drill smear. Thus, even though more individual drilling operations and
board handling may be required, the overall cost of separately drilling
each board is less than drilling a stack of boards when down-time and
board loss is figured in.
While the above description provides a full and complete disclosure of the
preferred embodiment of the invention, various modifications may be made
without departing from the spirit and scope of the invention. For example,
while it is preferred to separately drill the individual board layers, two
or three board layers may be clamped together and drilled simultaneously
in accordance with the teachings of the present invention. Also, the
invention also may advantageously be employed to produce buried vias in a
multi-layer board.
Still other modifications will be apparent to one skilled in the art. For
example, the process of the present invention also advantageously may be
used to correct artwork to compensate for lamination distortion based on
examination, for example, of alignment marks using lights or x-rays.
Similarly, the process of the present invention may be used to measure the
effects of lamination distortion in advance using test artwork such as
patterns of fiducial marks (rather than the actual board artwork). Thus,
by deriving a model for the lamination error introduced into, for example,
a 6.times.12 board of a particular thickness and material, it should not
be necessary (other than for spot quality control checks) to measure the
lamination effects in a specific 6.times.12 board of similar thickness and
material, even if the artwork is different. In other words, using the
process of the present invention, it is possible to use the measurements
from one "master" 6.times.12 board to alter the artwork of all subsequent
6.times.12 boards, even if the subsequent boards have different artwork.
Another possible test pattern would be to fabricate a through-hole that
-8-
<PAGE>
only connects to one layer of the board. In other words, only one layer
has the "hole surround" copper area. This would make it possible to
distinguish the offset of one particular layer from the offset of the
other layers allowing for correction of lamination distortion that varies
in severity by board layer.
[CLAIMS]
What is claimed is:
1. A method of ensuring via or hole registration in a multi-layer printed
circuit board comprising the steps in sequence of:
(a) forming and drilling at least one hole in a first board layer in at
least one preselected position;
(b) illuminating at least a portion of a surface of said first board layer
with light;
(c) detecting light passing through said at least one hole in said first
board layer and determining the actual position of said at least one hole;
(d) generating in a computer a computer image representative of said first
board layer having said at least one hole in said actual position; and,
(e) automatically adjusting said preselected position, by conformal mapping
digital imaging techniques in said computer, so that said preselected
position conforms to said actual position and using said adjusted
preselected position to permit automatic formation and drilling of a next
board layer without using a physical template.
2. A method according to claim 1, wherein said light is detected by means
of a light receptor means.
3. A method according to claim 1, wherein said through-holes are
undersized, and including the steps of stacking and laminating said board
layers, and reaming said holes to finish size.
4. A method according to claim 1, wherein said light comprises visible
light.
5. A method according to claim 1, wherein said light comprises x-radiation.
6. A method for forming at least one via or hole in a multi-layer printed
circuit board, said multi-layer board including a plurality of separate
circuit board layers, comprising the steps of:
(a) forming holes in each of said plurality of separate board layers
according to the method of claim 1; and
(b) stacking and laminating said separate board layers to form a
multi-layer board.
7. A method according to claim 6, wherein said holes formed in said
separate board layers are undersized, and including the step of dressing
out said holes to finish size following said stacking and laminating.
8. A method of correcting for the effects of lamination distortion in the
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<PAGE>
production of a multi-layer printed circuit board comprising the steps in
sequence, of:
(a) forming a first board layer having at least one fiducial mark in a
preselected position;
(b) subjecting said first board layer to laminating conditions;
(c) illuminating at least a portion of a surface of said first board layer
with light;
(d) detecting light passing through or reflected from the illuminated
surface of said first board and determining the actual position of said at
least one fiducial mark; generating in a computer a computer image
representative of said first board layer having said at least one mark in
said actual position and determining any distortion to said first board
layer that has occurred as a result of said laminating conditions; and
(e) automatically adjusting formation of a next board layer by conforming
said preselected position to said actual position by using conformal
mapping techniques and accounting for said distortion, without using a
physical template.
9. A method according to claim 8, wherein said light is detected by means
of a light receptor means.
10. A method according to claim 8, wherein said light comprises visible
light.
11. A method according to claim 8, wherein said light comprises
x-radiation.
* * * * *
-10-
<PAGE>
United States Patent
Patent Number: 5384230
Series Code: 7
Application No.: 845,266
Patent Type: 1
Art Record No.: 157
Date Filed: 19920302
Title: PROCESS FOR FABRICATING PRINTED CIRCUIT BOARDS
Issue Date: 19950124
No. of Claims: 7
Exemplary Claim: 1
Pri. Examiner: Dote; Janis L.
No. of Drawings: 2
No. of Figures: 10
[INVENTOR]
Name: Berg; N. Edward
Street: 43 Smith Rd.
City: Bedford
State: NH
Zip Code: 03110
[CLASSIFICATION]
US Class: 430/313
Cross Ref Class: 430/273
Cross Ref Class: 430/314
Cross Ref Class: 430/315
Cross Ref Class: 430/318
Cross Ref Class: 430/324
Cross Ref Class: 430/394
Cross Ref Class: 430/396
Cross Ref Class: 430/503
Intl. Class Ed. Field: 6
Intl. Class: G03F 700
Field of Search: 430
Subclasses: 273;260;261;503;394;313;314;315;318;324;396
[US REFERENCE]
Patent: 4168980
Issue Date: 19790900
Name: La Rossa
US Class: 430/353
[US REFERENCE]
Patent: 4341856
Issue Date: 19820700
Name: Toyama et al.
US Class: 430/503
[US REFERENCE]
Patent: 4373018
Issue Date: 19830200
Name: Reichmanis et al.
US Class: 430/503
[US REFERENCE]
Patent: 4515877
-1-
<PAGE>
Issue Date: 19850500
Name: Barzynski et al.
US Class: 430/5
[US REFERENCE]
Patent: 4666818
Issue Date: 19870500
Name: Lake et al.
US Class: 430/261
[US REFERENCE]
Patent: 5015553
Issue Date: 19910500
Name: Grandmont et al.
US Class: 430/273
[LEGAL INFORMATION]
Legal Firm: Hayes, Soloway, Hennessey, Grossman & Hage
[ABSTRACT]
A process for forming interconnection lines on a printed circuit board is
described. The surface of a circuit board substrate is covered with a
photoresist layer, and the photoresist layer in turn is covered with a
halide emulsion layer. The emulsion layer is then exposed to a
predetermined pattern of white light, and the image developed. The board
is then exposed to UV light through the imaged emulsion layer which acts
as a pattern masking selected portions of the photoresist mask. The
emulsion layer is then stripped and the photoresist processed in
conventional manner.
[BACKGROUND AND SUMMARY]
FIELD OF THE INVENTION
The invention relates generally to the manufacture of printed wiring boards
for electrical components and more particularly to photoprocessing
techniques for manufacturing printed wiring boards.
BACKGROUND OF THE INVENTION
The ongoing integration and miniaturization of components for electronic
circuitry has become a growing challenge to the limits of printed wiring
board technology over the last twenty years. Printed circuit boards or
printed wiring boards (PWB) as they are more commonly termed, play several
key roles. First, the electrical components, such as specially packaged
integrated circuits, resistors, etc., are mounted or carried on the
surface of the flat usually sturdy card-like board. Thus, the PWB serves
as a support for the components. Secondly, using chemically etched or
plated conductor patterns on the surface of the board, the PWB forms the
desired electrical interconnections between the components. In addition,
the PWB can include a metal area serving as a heat sink.
Conductor patterns typically are formed by photoetching a copper foil clad
epoxy fiberglass substrate. A photoresist layer is applied to the copper
foil and patterned by exposure to ultraviolet (UV) light projected through
a mask, often referred to as "artwork", e.g., to a positive art work image
-2-
<PAGE>
of the circuit pathways and contacts. Those areas exposed to the light are
altered and are removed by treatment with a solvent for the resist,
leaving areas of copper, e.g., in the desired conductor pattern,
underneath the protective barrier of the remaining photoresist. The
exposed copper is etched away and the remaining photoresist is then
chemically removed to expose the resulting conductor pattern.
Alternatively, the photoresist can be patterned to form channels for
electroless plating of conductor patterns. There are, of course, many
variations on this procedure, but all of them require photo-patterning of
the resist layer.
Increased use of integrated circuits, and surface mount technology (SMT)
has accelerated the densification of electronic circuitry. Surface mount
devices (SMD) are applied directly to the surface of the PWB and soldered
using vapor phase, infra-red (IR) or other mass soldering techniques. SMT
is revolutionizing the electronic manufacturing industry by reducing
assembly cost by about 50%, increasing component density by over 40% and
enhancing reliability. The array of terminals on SMD's has a higher
density or finer pitch then those on conventional components. As each
terminal still has to be properly electrically connected to the respective
conductor on the board, registration of SMD's requires high resolution for
the PWB conductor lines. Indeed, SMD circuitry has become so dense that
double-sided boards cannot accommodate all of the needed electrical
connections. Thus, multilayer PWB's have become the focus of attention and
several competing technologies are evolving. Those techniques which rely
on stacks or layers of conductor patterns have interlayer registration
requirements in additional to the exacting line width and spacing of a
conductor pattern in a given layer. Manufacturing very fine lines on the
order of 3 to 5 mils in registration over four or more layers deep is very
difficult.
To take fullest possible advantage of the benefits offered by the emerging
SMT, new fabrication processes must be developed in the manufacture of
substrates and boards. In the past, one of the problem areas in
fabrication of PWB's has been the generation and use of artwork masters
for patterning the photoresist layers. Using photographic film or glass
plates poses inherent difficulties in stability, registration, transport
and storage.
In order to eliminate artwork masters the industry has fostered the
development of UV laser plotters. These machines pattern the UV sensitive
resist directly without artwork. Conductor patterns are designed using
computer-assisted design (CAD) which digitizes the coordinates and
dimensions of all of the paths and converts them to control signals for a
UV laser x-y plotter. However UV laser plotters have a number of
limitations, particularly when used for fine line, high density work.
Principal among these is the fact that UV sensitive resists are relatively
insensitive materials, requiring high levels of exposure energy. As a
result, line edge resolution is limited. In order to achieve high plot
speeds, these systems operate in a raster scan mode. Raster scanning
produces considerable edge irregularities which are particularly apparent
in plotting angled lines. Limitations in accuracy and minimum line width
are characteristic of existing raster plotting systems. Another problem of
current raster plotting systems is the short life expectancy of the laser
source. A further problem with direct-from-CAD UV plotting of the
photoprocessible layer is that such systems do not permit inspection
before polymerization. If an error is made in the plot, the mistake is
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indelibly embedded in the UV sensitive layer. In the case of a resist, the
board may be salvaged only by removing the entire resist layer and
starting over after cleaning and baking the board free of moisture a
second time. In the case of a UV plotted solder mask, a glitch in the
pattern may result in the entire panel being discarded. Also, UV laser
plotters are very expensive, and are relatively slow.
The foregoing discussion of the prior art is taken largely from Lake et al,
U.S. Pat. No. 4,666,818 who propose a method for fabricating a printed
circuit board utilizing two photo-reactive coatings. According to Lake et
al a photo-processable ultraviolet sensitive layer is overlayed with a
thin, unexposed, and undeveloped (silver halide) photographic film. A CAD
system, containing within it the desired pattern layout for the
interconnection lines, drives a white light X-Y plotter to expose the
silver halide film on the board in the desired pattern, without effecting
the underlying ultraviolet sensitive layer. The film is then developed and
used as an in-situ mask for patterning the ultraviolet layer during an
exposure of the board to ultraviolet light. The silver halide photographic
film is not further affected by the exposure of the board to ultraviolet
light. After the ultraviolet exposure, the silver halide photographic film
is peeled off, to expose the resist, and the resist-coated board is
processed further according to conventional methods.
Although capable of producing somewhat respectable interconnection line
resolution and definition, the teachings of this patent result in serious
drawbacks. First, even though Lake et al. teaches use of a white light x-y
plotter and not a UV laser, all of the drawbacks associated with the use
of a UV laser, e.g. speed, cost, etc., are presented by Lake et al.
Moreover, the presence of the photographic film substrate introduces
optical problems which results in reduced interconnection line definition
and resolution due to white light diffusion through the film.
OBJECTS OF THE INVENTION
Accordingly, it is a general object of the present invention to overcome
the aforementioned and other disadvantages of the prior art. A more
specific object of the present invention is to provide a process for
forming printed circuit interconnection lines of extremely fine definition
and high resolution. Yet another object of the present invention is to
provide such a process that does not require the use of highly complex
machinery and one which is relatively inexpensive to implement, and is
readily adapted for use in mass-producing printed circuit boards.
SUMMARY OF THE INVENTION
The present invention provides a system which overcomes the aforesaid and
other disadvantages of the prior art by coating a circuit board substrate
with a conventional photoresist layer, and covering the photoresist layer
with a formed in situ light sensitive silver halide emulsion layer. The
silver halide emulsion layer is then exposed to light of a first
wavelength, such as white light through a mask to a predetermined
patterned image by a conventional exposure lamp such as a white light
flash tube or the like. Alternatively, the silver halide emulsion may be
exposed by a computer driven array scanner, a raster, or the like. The
exposed emulsion layer is then developed, whereby to form a patterned
image overlaying the photoresist layer. Due to the high definition
characteristics of the halide emulsion layer the resulting patterned image
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forms a high definition mask in direct contact with the resist. The
resulting patterned image coated board is then exposed to light of a
second wavelength such as, ultraviolet light. The halide emulsion layer is
then stripped, leaving the patterned exposed photoresist layer coated
board ready for further processing in accordance with conventional
additive processes or in the case of a metallized or foil clad circuit
board substrate subtractive processes.
[DRAWING DESCRIPTION]
BRIEF DESCRIPTION OF THE DRAWINGS
Other features of the present invention will become apparent as the
following discussion proceeds and upon reference to the enclosed drawings,
wherein like numbers depict like parts, and wherein:.
FIG. 1 is a block flow diagram illustrating one process for producing a
printed circuit board in accordance with the present invention; and
FIGS. 2 to 10 are diagramatic cross-sectional views of a printed circuit
board at various stages of formation in accordance with the process of the
present invention.
While the present invention will hereinafter be described in connection
with preferred embodiments and methods, it will be understood that it is
not intended to limit the invention to these embodiments. On the contrary,
it is intended to cover all alternatives, modifications, and equivalents
as may be included within the spirit and scope of the invention as defined
only by the appended claims.
[DETAILS]
DESCRIPTION OF THE PREFERRED EMBODIMENT
Referring now to FIGS. 1 and 2 of the drawings, conductive layer 3 such as
a copper foil cladding or vapor deposited metal layer is disposed at
metallizing station 30 on one surface of conventional circuit board
substrate base 5, e.g., formed of an electrically insulating material such
as glass filled epoxy.
Referring also to FIG. 3, the metallized surface is then coated at a resist
coating station 32 with a conventional photoresist layer 7. Both the
material composition and manner of deposition of the photoresist layer
should not be viewed restrictively. Rather, it is to be understood that
all prior art methods of deposition and all prior art material
compositions may be used without departing from the teachings of the
present invention.
Referring also to FIG. 4, after depositing the photoresist layer 7 upon the
conductive layer 3 of the circuit board substrate 5, a halide emulsion
layer 9 is deposited thereon at an emulsion coating station 34.
Preferably, the halide emulsion layer comprises photographic grade silver
bromide; although other light sensitive silver halides may be used in the
instant invention. Also, if desired, one or more light sensitizing agents
may be included in the silver halide emulsion in known manner. The metal
halide layer may be cast, but preferably is spin coated in order to
achieve a thin, uniform coating. The metal halide emulsion layer should be
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made as thin as possible in order to enhance definition, since resolution
and definition of the photoresist layer is essentially a function of the
photodiffusion and distortion characteristics of the halide layer.
Preferably, the thickness of the halide layer is 0.1 to 1.0 mil.
Referring also to FIG. 5, the emulsion-coated board is then passed to a
first imaging station 36 where the coated board is then exposed through a
mask 11 having a pattern image 11 that corresponds negatively to the
desired pattern of interconnection lines to be embodied. The mask may
comprise a photographic plate or other such masking device comprising both
opaque regions 15 and transparent regions 13. Advantageously, a single
pattern image mask may be reused to produce any number of printed circuit
boards. The coated board is exposed to light of a predetermined wavelength
to which the silver halide layer is sensitive, e.g. white light, but which
light has little or no effect on the underlying photopolymer layer. The
light is passed through transparent regions and is prevented from passing
through opaque regions of the pattern image mask. Thus, only light
striking transparent regions passes through the pattern image to reach the
surface of the halide layer 9. The distance between the pattern image 11
and the surface of the halide layer 9 should be predetermined so as to
eliminate optical dispersion and aperturic distortion that may result from
placing the pattern mask at a distance that is either too close or too far
away from the surface of the halide layer 9. Light that is transmitted
through the pattern image 11 strikes and activates only selected areas of
halide layer 9. Alternatively, the exposure may be effected by a computer
driven array scanner, or raster or the like, which selectively directs
light in a predetermined pattern onto the halide layer.
The exposed plate is then developed at development station 38 employing
conventional silver halide photography development techniques which
reduces the activated halide particles to black metallic silver. Halide
particles which have not been activated by exposure to light can then be
dissolved out of the emulsion in a conventional fixing bath, resulting in
an emulsion layer having opaque 17 and transparent regions 19 portions
(FIG. 6). The opaque regions 17 and transparent regions 19 of the emulsion
layer 9, in turn function as a mask for the subsequent exposure of the
photoresist.
Referring also to FIG. 7, following development of the halide emulsion
layer 9, a conventional UV light is shone onto the surface of the
developed halide emulsion layer at a second exposure station 40. Those
portions of the photoresist layer 7 that are not covered by opaque regions
17 of the emulsion layer 9 are activated by the light passing through
transparent regions 19. The reaction resulting therefrom may be of a
polymerization-type or other such photosensitive reaction, depending upon
the type of photoresist used. The photosensitive reaction described above
thus produces reacted regions 21A, 21B, 21C, and 21D as depicted in FIG.
7.
Thereafter, the emulsion layer 9 and the unreacted portions of the
photoresist layer 7 are removed, e.g. by peeling or stripping the emulsion
layer, in a stripping station 42, and then dissolving the unreacted
portions of the photoresist in a known manner, in a differential solvent
for the resist in a solvent station 44 leaving a structure in which
selected areas of the conductive layer 3 are exposed, e.g. as shown in
FIG. 8. The resulting structure may then be passed to an etching station
46 wherein exposed areas of the conductive layer 3 are removed (as shown
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in FIG. 9), while areas (21E, 21F, 21G, 21H--FIG. 10) protected by the
photoresist remain intact. Finally, the remaining portions of photoresist
21 are removed, in known manner at a resist removal station 48, yielding a
substrate having formed therein a predetermined fine line conductive
pattern.
A feature and advantage of the present invention is the ability to achieve
extremely fine line definition and high resolution using conventional mass
exposure techniques. This feature and advantage follows from the provision
of a halide emulsion, directly on the photoresist. The halide emulsion,
after exposure and development, acts as a high definition mask in direct
contact with the photoresist. Thus, light scattering, etc. problems of
using a conventional separate mask are eliminated. Also, due to the
extreme fast exposure time, high definition and resolution achievable
using silver halide emulsion, fine line definition may be achieved from a
single fixed position light source. Thus, using the instant invention, it
is possible to rapidly and inexpensively mass produce printed circuit
boards having extremely fine line definition and high resolution, using
relatively low cost conventional exposure apparatus. Moreover, exposing
the silver halide layer by means of a scanning exposure system or the like
facilitates accomodating for pattern errors.
Although, the foregoing preferred description of the present invention was
described in connection with a subtractive process employing a metallized
circuit board having only one conductive layer, the instant invention also
may be used to produce multi-layer circuit boards. Also, the present
invention also may be advantageously used to produce circuit boards
employing additive techniques.
It is, therefore, evident that there has been provided, in accordance with
the present invention, a process for forming printed circuit board
interconnection lines that fully satisfies both the objects and advantages
hereinbefore set forth. While this invention has been described in
conjunction with specific embodiments thereof, it is evident that many
alternatives, modifications, and variations will be apparent to those
skilled in the art. Accordingly, it is intended to embrace all such
alternatives, modifications, and variations as fall within the spirit and
broad scope of the appended claims.
[CLAIMS]
I claim:
1. In a process for forming interconnection lines on a circuit board
substrate, wherein a circuit board substrate is covered with a photoresist
layer which is exposed through a mask to UV light, the improvement which
comprises the steps in sequence of:
(a) covering said photoresist layer directly with a light sensitive
emulsion layer, said emulsion layer being formed in situ from a silver
halide emulsion;
(b) exposing said emulsion layer to a predetermined pattern of light of a
first wavelength to which said silver halide emulsion is sensitive;
(c) developing said exposed emulsion layer whereby to form a mask including
both substantially opaque and substantially transparent portions in direct
contact with said photoresist;
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<PAGE>
(d) exposing said masked board to light of a second wavelength to which
said photoresist is sensitive whereby to expose areas of the photoresist
underlying said transparent portions;
(e) removing said exposed emulsion layer; and
(f) processing said exposed photoresist in a conventional manner.
2. In a process according to claim 1, the improvement wherein said silver
halide emulsion layer comprises a silver bromide emulsion and is formed as
a thin, uniform coating.
3. In a process according to claim 1, the improvement wherein said silver
halide emulsion layer is formed by spin coating.
4. In a process according to claim 1, the improvement wherein said silver
halide emulsion layer is formed by casting.
5. In a process according to claim 1, the improvement wherein said silver
halide emulsion layer has a thickness of 0.1 to 1.0 mil.
6. In a process according to claim 1, wherein the photoresist is coated on
the circuit board substrate, the improvement wherein said interconnection
lines are formed by additive processing techniques.
7. In a process according to claim 1, wherein the circuit board substrate
comprises a metallized circuit board and said photoresist is coated on the
metallized board, the improvement wherein said interconnection lines are
formed by subtractive processing techniques.
* * * * *
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<PAGE>
United States Patent
Patent Number: 5653893
Series Code: 8
Application No.: 493,965
Patent Type: 1
Art Record No.: 119
Date Filed: 19950623
Title: METHOD OF FORMING THROUGH-HOLES IN PRINTED WIRING BOARD SUBSTRATES
Issue Date: 19970805
No. of Claims: 10
Exemplary Claim: 1
Pri. Examiner: Dang; Thi
No. of Drawings: 3
No. of Figures: 6
[INVENTOR]
Name: Berg; N. Edward
Street: 43 Smith Rd.
City: Bedford
State: NH
Zip Code: 03110
[CLASSIFICATION]
US Class: 216/18
Cross Ref Class: 216/17
Cross Ref Class: 216/83
Cross Ref Class: 216/92
Intl. Class Ed. Field: 6
Intl. Class: H05K 300
Field of Search: 216
Subclasses: 17;18;39;56;83;92
[US REFERENCE]
Patent: 4155775
Issue Date: 19790500
Name: Alpaugh et al.
Cross Ref Class: 216/17
[US REFERENCE]
Patent: 4431478
Issue Date: 19840200
Name: Yamaoka et al.
US Class: 216/83
[US REFERENCE]
Patent: 4911796
Issue Date: 19900300
Name: Reed
US Class: 204/15
[US REFERENCE]
Patent: 4964948
Issue Date: 19901000
Name: Reed
US Class: 156/659..1
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<PAGE>
[US REFERENCE]
Patent: 5236772
Issue Date: 19930800
Name: Horikoshi et al.
US Class: 428/209
[US REFERENCE]
Patent: 5311660
Issue Date: 19940500
Name: Alpaugh et al.
Cross Ref Class: 216/18
[US REFERENCE]
Patent: 5346597
Issue Date: 19940900
Name: Lee et al.
US Class: 204/129..1
[US REFERENCE]
Patent: 5352325
Issue Date: 19941000
Name: Kato
US Class: 156/644
[LEGAL INFORMATION]
Legal Firm: Hayes, Soloway, Hennessey, Grossman & Hage, P.C.
[ABSTRACT]
Through-holes are formed in a printed circuit board substrate by chemical
etching a metal foil clad circuit board having open positions in the metal
foil where a hole is to be formed using N-methyl-2-pyrrolidone, a mixture
of methylene chloride and HF, or a mixture of methylene chloride, HF and
xylene.
[BACKGROUND AND SUMMARY]
BACKGROUND OF THE INVENTION
The present invention relates to a method of forming through-holes in
printed wiring board substrates; and more particularly to the formulation
of micro through-holes in the same accurately and effectively by means of
a chemical etching process.
Conventional methods of forming through-holes in printed wiring boards
employ mechanical drilling, laser drilling and plasma etching among
others.
Regarding mechanical drilling, it is very difficult to form micro
through-holes of 100 microns or less due to the difficulty in producing
drills of that size that do not readily break. Also, even using a drill
size of 250 microns it takes 4-6 hours to drill 10,000 holes, an
inordinate amount of time. Further, mechanical drilling creates burrs,
dust and debris that often block the holes or adhere to the surface of the
substrate material requiring additional cleaning process. If the substrate
is clad with a metal, the metal is smeared into the hole. And, the
drilling apparatus required is very expensive and additional expendables
such as entry and back-up boards also add to cost.
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Laser drilling and plasma drilling processes are incapable of forming holes
in substrate materials containing glass fibers which disallows use of the
most widely used and inexpensive substrates which normally do contain
glass fibers. In addition, equipment to perform laser or plasma drill is
also very costly.
The foregoing discussion of the prior art is taken largely from U.S. Pat.
No. 5,352,325 to Kato who proposes forming micro through-holes in circuit
boards by selectively dissolving or etching using alkaline potassium
permanganate in the case of a circuit board material not containing glass
fibers, and using fluoride chemicals in the case of a board material
containing glass fibers. According to Kato, a printed wiring board
substrate, consisting of a insulative layer (usually composed of resinous
material with or without glass fiber reinforcement) covered on both sides
with a conductive layer, is covered with an etching resist except for
specified locations where holes are to be formed; a selected chemical
etchant is brought into contact with said surfaces and selectively
dissolves the exposed parts of the conductor layer; the previously applied
etching resist is removed; the conductor surface is then exposed to a
strong alkaline solution and a solvent which softens the exposed areas of
the insulative core material where holes are to be opened; the surface is
then brought into contact with either alkaline potassium permanganate,
concentrated sulfuric acid, chromate or similar solution, under agitation
whereby to selectively remove by chemical dissolution the exposed resin
core material; this treatment is interrupted by acidic washing followed by
a neutralizing solution wash. The substrate is then exposed to a
fluoride-containing solution under agitation which dissolves the glass
fibers, thus completing the etching process and forming the micro
through-holes. Finally, the through-holes are plated to provide electrical
interconnection between the conductive layers on both sides of the board.
Using the aforedescribed method, Kato reports that it is possible to
precisely determine the exact size, shape and location of through-holes.
While the method disclosed by Kato may achieve certain of his stated
advantages, it is believed that the Kato method has not achieved any
degree of commercial success due to its complexity and the need to employ
multiple solvents and solvent application steps which dramatically
increases manufacturing time and cost. Moreover, the use of multiple
solvents and solvent application steps increases disposal costs, i.e. of
spent solvents.
OBJECTS OF THE INVENTION
It is therefore general object of the present invention to provide a method
for forming through-holes in a printed wiring board substrate which
overcomes the aforesaid and other disadvantages of the prior art. A more
specific object of the present invention is to provide a simplified method
of forming through-holes in printing wiring board substrates by chemical
etching.
SUMMARY OF THE INVENTION
The present invention provides a method for forming through-holes in
printed wiring board substrates in which a foil-clad circuit board
substrate is covered with a patterned mask having holes in predetermined
positions where through-holes are intended to be formed. The exposed
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portions of the foil are removed by a conventional etchant, whereby to
expose portions of the substrate board where holes are to be formed.
Thereafter, a solvent selected from NMP (N-methyl-2-pyrrolidone), or a
mixture of methylene chloride and HF alone or in combination with xylene
is sprayed on to the board. The board may be sprayed one side at a time,
or both sides sprayed simultaneously. The foil acts as a mask so that the
solvent etches the board only in the areas exposed through openings in the
foil, whereby to form the desired through-holes. The holes are then plated
through by conventional electrolytic or electrolysis plating techniques,
using one of the foils as a ground plane in the plating process. Finally,
circuits are formed on the foils by conventional additive or subtractive
methods.
[DRAWING DESCRIPTION]
Still other features and advantages of the present invention will become
clear from the following detailed description of the invention, taking in
conjunction with the attached drawings, in which like numerals represent
like parts, and wherein:
FIG. 1 is a block flow diagram illustrating one preferred embodiment of the
method of the present invention; and
FIGS. 2-6 are diagrammatic cross-sections of a printed wiring board at
various stages according to the process of the present invention as
illustrated in FIG. 1.
[DETAILS]
While the present invention will hereinafter be described in connection
with preferred embodiments, it will be appreciated that it is not intended
to be limited to those embodiments. On the contrary, the present invention
is intended to cover all such alternatives, modifications and equivalents
as may be included within the spirit and scope of the invention as defined
only by the hereinafter amended claims.
DETAILED DESCRIPTION OF PREFERRED EMBODIMENT
Referring to FIGS. 1 and 2 of the drawings, the method begins by applying
resist layers 20, 22 on opposite surfaces of a foil-coated circuit board
28 at a station 100. Circuit board 28 comprises a conventional insulative
substrate 30 having metallic, e.g. copper foils 32, 34 clad onto opposite
surfaces of the substrate 30. Substrate 30 comprises a conventional
circuit board insulative substrate and may be formed, for example, of a
glass-reinforced epoxy in the case of a rigid substrate, or may be formed
of a flexible polymeric material such as Kapton, in the case of a flexible
circuit.
Resist layers 20, 22 are patterned, developed and portions removed, in
conventional manner, at stations 102, 104 and 106 where through-holes 36
(see FIG. 3) are intended to be formed. The resulting patterned
resist-coated board 38 is then exposed to a suitable etchant such as
ferric chloride at an etching station 108 which dissolves the exposed
portions of the copper foil whereby to form openings 40 (see FIG. 4) in
the foil where through-holes are to be formed in the board substrate.
The resist layers 20, 22 are then stripped in station 110 in a conventional
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manner, and the resulting foil-covered board 42 is subjected to a solvent
etching step in station 112 using a selected solvent wherein those
portions of the substrate 30 exposed in openings 40 are removed by
chemical etching. In accordance with the present invention, I have
discovered several solvent systems which advantageously may be used for
chemically etching through the insulative substrate. These include NMP
(N-methyl-2-pyrrolidone), and methylene chloride containing HF alone or in
combination with xylene. In the case of the methylene chloride-containing
solvent system, the methylene chloride should be present in a range of
from 20 to 80 volume percent, preferably 40 to 60 volume percent, while
the xylene should be present in an amount up to about 10 volume percent.
Any of the aforesaid solvent systems may be used to dissolve the polymeric
base material forming the insulative substrate, although only the
HF-containing solvent dissolves both the polymeric material and the glass
fibers. However, inasmuch as the glass fibers are found not to interfere
with the subsequent plating through step (described below), any one of the
aforesaid solvent systems advantageously may be used in accordance with
the present invention.
In order to speed the etching step, the etchants preferrably are heated and
sprayed onto the circuit board. Spraying may be performed from one side at
a time, or simultaneously against both sides of the board. Once
etch-through 42 (FIG. 5) has occurred, the board may then be washed using
water, if desired, including an acid neutralizing material such as sodium
bicarbonate. If desired, detritus may be removed from the through-holes by
means of compressed air, or by flooding one or both surfaces of the board
with a defocused laser or using a gas flame such as natural gas.
The next step of the process involves plating through the holes formed in
the insulative substrate 30. Plating may be accomplished using
conventional electrolytic or electro-less plating at a plating station
114. One of the foil layers 30, 32 may be employed as a continuous ground
plane to facilitate the plating process. As mentioned supra, in the case
of a glass reinforced substrate, it is not necessary that the holes be
completely cleared of all glass fiber. The only requirement is that at
least some of the hole runs completely through the substrate so that
plating 44 (FIG. 6) between the foil layers 32, 34 will be continuous.
Following the plating step, the circuits are then formed on foils 32, 34
using conventional additive and/or subtractive methods at station 116.
Using the methods herein described, it is possible to accurately place and
form through-holes of 50 microns or less, and further possibly to reduce
the needed land diameter. Accordingly, the pattern density of a printed
circuit board made in accordance with the present invention can be
increased two to three or more times compared to those achievable for
conventional mechanical drilling. Also, using the method described herein,
it is possible to process the opening of micro through-holes in the
printed circuit board at a rate of five to ten times faster than that
which could be accomplished using conventional mechanical drilling
processes. Moreover, the method of the present invention advantageously
can be employed with substrate board containing glass fibers, whereas
plasma etching or laser drilling cannot. Yet another advantage of the
present invention is that the equipment necessary for implementing the
process costs but a fraction of the equipment necessary for plasma or
laser micro through-holes technologies.
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[CLAIMS]
I claim:
1. In a process for forming through-holes in a printed circuit board
substrate in which a metal foil clad circuit board having open positions
in the metal foil where a hole is to be formed is subjected to a chemical
etch, the improvement which comprising chemically etching through the
substrate board by means of a chemical etchant selected from the group
consisting of a mixture of methylene chloride and HF, and a mixture of
methylene chloride, HF and xylene.
2. In a method according to claim 1, wherein said chemical etchant is
sprayed onto the board.
3. In a method according to claim 1, wherein the methylene chloride is
present in a range of from 20-80 volume percent.
4. In a method according to claim 1, wherein the methylene chloride is
present in a range of from 40-60 volume percent.
5. In a method according to claim 1, and including the step of plating
through the resulting holes, using the metal foil as a ground plane.
6. In a method according to claim 1, and including clearing the
through-holes of any detritus using compressed air.
7. In a method according to claim 1, and including clearing the
through-holes of any detritus by flooding the board substrate with a
defocused laser.
8. In a method according to claim 1, wherein the xylene is present in an
amount of up to about 10 volume percent.
9. In a method according to claim 1, wherein the chemical etchant is
heated.
10. In a method according to claim 1, and including the step of subjecting
the board substrate to a flame treatment.
* * * * *
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