<PAGE>2
As filed with the Securities and Exchange Commission on Dec. 9, 1999
Commission File Number
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under The Securities Act of 1933
ThermoElastic Technologies, Inc.
(formerly LPR Cybertek, Inc.)
Colorado Applied For
(State or other (Primary Standard Industrial (I.R.S. Employer)
jurisdictions Classification Code Number) Identification number)
of incorporation
or organization)
5466 Canvasback Road
Blaine Washington 98230
Telephone: (360) 371-5061
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Julie C. Lalande
15451 East Wyoming Drive, Unit D
Aurora, CO 80017
(Name, address and telephone number of agent for service.)
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
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: |x|
<TABLE>
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee
<S> <C> <C> <C> <C>
Common stock 800,000 $1.50 $1,200,000 $333.60
Common stock(1) 6,756,593 $1.50 $10,134,890 $2,817.50
Common stock(2) 666,400 $2.00 $1,332,800 $370.52
Common stock(3) 666,400 $3.00 $1,999,200 $555.78
---------- ---------- ---------
8,889,393 $14,666,890 $4,077.40
</TABLE>
(1)Represents common stock to be registered on behalf of selling
security holders.
(2)Represents common stock underlying the Class A Warrants.
(3)Represents common stock underlying the Class B Warrants
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 the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>3
PRELIMINARY PROSPECTUS DATED December 8, 1999
SUBJECT TO COMPLETION
Up to a maximum of 800,000 common shares
6,756,593 common shares being registered
on behalf of selling security holders
1,332,800 common shares underlying the Series A and
B Warrants being registered on behalf of
selling security holders
ThermoElastic Technologies, Inc.
We shall receive $1,044,423 of the proceeds from the sale of the
common shares after paying the selected broker dealer discounts and
commissions of $120,000 and before expenses estimated at $35,577.
We will not receive any cash or other proceeds in connection with the
subsequent sale by selling security holders
The Securities and Exchange Commission may deem each selling security
holder an underwriter under the Securities Act of 1933.
Our common stock does not trade. We have applied for the quotation of
our common stock on the NASD Electronic Bulletin Board.
The information in this prospectus is not complete and we may change
it. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
We will market a new moldable acrylic composite used primarily in the
dental industry and allied fields. We are acquiring the licensing
rights to exclusively market this acrylic product to all industries
worldwide.
This is our initial public offering, and no public market currently
exists for our shares. The offering price may not reflect the market
price of our shares after the offering.
Consider carefully the risk factors beginning on page 6 in the
prospectus.
Neither the SEC nor state securities commission has approved these
certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
<PAGE>4
<TABLE>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY 5
RISK FACTORS 6
AVAILABLE INFORMATION 10
SELLING SECURITY HOLDERS 11
TERMS OF THE OFFERING 13
SOURCE AND USE OF PROCEEDS 14
DILUTION 14
OUR COMPANY 15
BUSINESS ACTIVITIES 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 21
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
MANAGEMENT 22
Officers and Directors
Remuneration
Indemnification
CERTAIN TRANSACTIONS 26
PRINCIPAL SHAREHOLDERS 27
SHARES ELIGIBLE FOR FUTURE SALE 29
MARKET FOR REGISTRANT'S COMMON EQUITY 29
DESCRIPTION OF SECURITIES 30
LEGAL MATTERS 31
LEGAL PROCEEDINGS 31
EXPERTS 31
INTERESTS OF NAMED EXPERTS AND COUNSEL 32
ADDITIONAL INFORMATION 32
</TABLE>
<PAGE>5
PROSPECTUS SUMMARY
The following summary contains basic information about this offering.
It likely does not contain all the information that is important to
you. For a more complete understanding of this offering, we encourage
you to read this entire document and the documents we have referred you
to.
ThermoElastic
ThermoElastic will market a new moldable acrylic composite used
primarily in the dental industry and allied fields. ThermoElastic has
entered into an agreement to acquire the licensing rights to exclusively
market this acrylic product to all industries worldwide.
The Offering
<TABLE>
<S> <C>
The Offering. ThermoElastic is offering
up to 800,000 common
shares at $ 1.50 per
common share. There is
no minimum investment and
no minimum offering amount
Common shares outstanding
prior to this offering 17,338,164
Common shares to be outstanding
after offering (assuming exercise of
the Series A and B Warrants) 19,470,964
Percent of common shares owned by
current shareholders after maximum
offering 89.05%
Gross proceeds after maximum offering $1,200,000
Use of proceeds from sale of
common shares ThermoElastic intends to use
the funds from the sale of its
common shares primarily for
See Source and Use of
Proceeds."
Resales by Selling
Shareholders. We are registering common
shares on behalf of selling
security holders. We will not
receive any cash or other
proceeds from the selling
security holders' sale of
their common shares. We are
not selling any common shares
on behalf of selling security
holders. We have no control
or affect on these selling
security holders. See
"Selling Security Holders."
Market For the Common Stock
Prior to the date of this
prospectus, we have had no
trading market for our common
stock. We have applied for
the quotation of our common
stock on the OTC Bulletin
Board.
We cannot offer assurance that
the NASD will quote our common
stock, that an active trading
and/or a liquid market will
develop or, if developed, that
<PAGE>6
it will be maintained. See
"Risk Factors" and "Market
Listing."
Risk Factors An investment in ThermoElastic
has material risks such as
uncertainty of future financial
results, liquidity dependent on
additional capital and debt
financing and risks related to
our operations, in connection
with the purchase of
the securities. See "Risk
Factors."
Absence of Dividends; Dividend Policy We do not currently
intend to pay regular cash
dividends on its common stock.
Our Board of Directors will
review this policy from time to
time in light of,
among other things, our
earnings and financial
position. We do not anticipate
paying dividends on our common
stock in the foreseeable
future. See "Risk Factors."
Transfer Agent Our transfer agent is Atlas
Stock Transfer 5899 S. State
Street, Suite 24 Salt Lake
City, UT 84107
</TABLE>
- ----------------------------------------------------------
RISK FACTORS
- ----------------------------------------------------------
In analyzing this offering, you should read this entire prospectus and
carefully consider, among other things, the following risk factors:
1. There could be adverse effects due to the contemporaneous primary
offering of 800,000 common shares offering by ThermoElastic and the
secondary offering of common shares by Selling Security Holders.
ThermoElastic, through our officers and directors, will sell our common
shares in a direct participation self-underwritten offering at the same
time as the selling security holders will be selling their registered
shares. Certain shareholders have entered into written agreements
not to sell their common shares until ThermoElastic's offer is fully
subscribed or terminated. ThermoElastic is not selling any common
shares on behalf of selling security holders and has no control or
affect on the 1,820,564 common shares of these selling security holders
which are not subject to any lock-up agreement. Selling security
holders will sell their common stock regardless of the outcome of the
primary offering by ThermoElastic.
Other than the written agreements with the certain shareholders,
ThermoElastic has not taken any measures to delay the offering by
selling security holders until after the completion of the primary
offering by ThermoElastic.
The demand for ThermoElastic's common stock may be decreased due to the
large number of common shares being sold in the secondary offering by
the selling security holders. Due to the fact that the secondary
offering will be conducted contemporaneously with a primary offering by
ThermoElastic, the market price of ThermoElastic's common stock (when
trading of the common stock begins) may be less than the offering price
of $1.50 per common share. In the event the average bid price of the
stock falls below $1.50 for three consecutive days, the primary
offering by ThermoElastic will be terminated. ThermoElastic may
never complete its offering of 800,000 common shares.
<PAGE>7
2. If we do not receive additional financing, we may not be able to
develop our business and you could lose your entire investment
Even if we sell all of the 800,000 common shares, we may require
additional financing for our operations and working capital. We cannot
be assured that additional funds will be available from any source. If
these funds are not available, we may not be able to develop our
business and you may lose your entire investment.
3. Our management has limited experience, may not run the company in
a profitable manner and you may lose your entire investment.
Our management has limited experience in the conduct of a public
corporation. Compared to other companies, we do not have depth of
managerial, administrative and technical personnel. See "Management".
We may not run the company in a profitable manner due to this
inexperience and you may lose your entire investment.
4. Customers may not view our products as being any different from
our competitors products and we may not be able to achieve significant
national, regional and local name recognition resulting in decreased
revenue.
Many of our competitors have achieved significant national, regional
and local name recognition. Many of ThermoElastic s competitors have
longer operating histories and greater financial resources. We cannot
be assured that customers will regard our products as sufficiently
distinguishable from similar products offered by the competitors. Our
sales could decrease in the event of significant or sustained price
discounting in the industry.
5. If we have to comply with any new government regulation, we may
have to spend large amounts of resources to meet these new regulations.
The components of our products currently comply with or are exempt from
regulation by the United States government. In Canada the sale of our
products currently comply with or is exempt from regulation of the
Canadian government. In the event the regulations change or new laws
or regulations are enacted, our financial resources could decrease due
to costs involved in complying with any new regulation.
6. The value of any common shares purchased in this offering will be
decreased immediately after the offering.
The net tangible book value of the common shares offered in this
prospectus will decrease by $1.43 (95.33%). This decrease does not
include any of the Common Shares to be issued upon exercise of the
Series A and B Warrants. If we sell only 400,000 common shares, the
net tangible book value of the common shares offered in this prospectus
will decrease by $1.45 (96.67%). ThermoElastic may issue additional
shares in private business transactions and may pursue a public
offering in the future to complete its business plan. Your net
tangible book value could further decrease as a result of the
issuances.. See "Dilution."
7. We arbitrarily determined the sales price of the common shares and
the sale price may not indicate the actual fair market value of the
common shares.
Our management arbitrarily determined the sales price for the common
shares offered hereby. The offering price is not based on our assets,
book value, or earnings. Accordingly, the offering price should not be
common stock.
8. Current warrant holders may not be able to exercise their warrants
if we do not update the prospectus with current information.
In order for the warrant holders to exercise their warrants,
ThermoElastic must maintain a current prospectus as part of this
registration statement. ThermoElastic cannot be assured that we will
have the resources to prepare the necessary documentation. Warrant
holders may not be able to exercise their warrants when desired, if at
all.
<PAGE>8
9. The principal shareholders control the common shares of
ThermoElastic and they will be able to elect all of the directors.
Currently 14,628,380 common shares are controlled by the officers,
directors and principal shareholders who will have more than 95.59% of
our outstanding stock if this offering is fully sold. They are in a
position to elect all of our Directors. Our Directors, in turn, elect
all of our executive officers. These individuals directly or
indirectly, will be able to control all of our affairs. It is possible
that your interests will not be the same as those of the principal
shareholders.
10. Your voting rights or other rights could be reduced if our Board
of Directors issue preferred shares.
Our Board of Directors do not need shareholder approval to issue up to
25,000,000 preferred shares, with dividends, liquidation, conversion,
voting or other rights and preferences which could reduce the voting
power or other rights of the common stockholders. If the Board of
Directors issued preferred shares, these issuances could, under certain
circumstances, make it more difficult for a third party to gain control
of ThermoElastic, discourage bids for ThermoElastic's common stock at a
premium, or otherwise reduce the voting or other rights of the
preferred shares outstanding, and the market price of the common stock
could be lowered. We do not have any plans to issue preferred shares.
See "Description of Securities".
11. If our common stock has no active trading market, you may not be
able to sell your common shares easily.
Our common shares do not have an active trading market. We cannot be
assured that a trading market will ever develop. If no market
develops, you may not be able to sell your common shares easily, if at
all.
12. It is likely that you will not receive dividends on your common
shares due to dividend and redemption provisions of Colorado law.
We are prohibited by Colorado law from paying any dividends or
redeeming any of our capital stock if we do not have retained earnings
or capital surplus equal to the amount of the proposed dividend or
redemption payment. Because of these restrictions, we cannot be
assured that we will be able to pay any dividends. ThermoElastic
intends to retain earnings, if any, for the foreseeable future to fund
the development and growth of the business.
13. We do not have any experience in selling common shares and we may
not be able to sell the offering fully or quickly.
Our officers and directors are selling the common shares in this
offering. Although we may enter into a placement agency agreement with
one or more broker/dealers for the sale of its securities, we cannot be
assured that we will be able to obtain any broker/dealer to act in such
capacity. Our lack of experience in securities sales may make it
difficult for us to sell the offering completely or quickly
14. Warrant holders may have to pay the exercise prices at a
disadvantageous or difficult time or accept the redemption price if we
redeem the warrants.
We can redeem the warrants at a price of $0.01 per Series A Warrant
and $0.01 per Series B Warrant, with not less than 30 days' written
notice. The holders of the warrants have exercise rights until the
close of the business day before the redemption date. Notice of
redemption of the warrants could force the holders to exercise the
warrants and pay the respective exercise prices at a time when it may
be disadvantageous or difficult for them to do so, or to accept the
redemption price which is likely to be substantially less than the
market value of the warrants at the time of redemption. See
"Description of Securities."
15. We have made forward looking statements that may not prove to be
correct.
Certain statements in this prospectus constitute forward-looking
statements within the meaning of Regulation Section 27A of the
Securities Act and Regulation Section 21E of the Exchange Act. These
statements include, but are not limited to, statements regarding
<PAGE>9
business and financing plans, business trends and future operating
revenues and expenses. Although we believe that the expectations
reflected in these statements are reasonable, we can give no assurance
that such expectations will prove to be correct.
Forward-looking statements are typically identified by the words:
believe, expect, anticipate, intend, estimate and similar expressions,
which by their nature refer to future events. We caution you that any
forward-looking statements made by us are not guarantees of future
performance and that actual results may differ materially from those in
the forward-looking statements as a result of various factors,
including, but not limited to our ability to be able to continue our
projected growth or be able to fully implement its various business
strategies.
16. If we are unable to resolve all of our year 2000 issues before
the end of the year, we could experience additional costs, errors or
system failures.
We are working to resolve the potential impact of the year 2000 on the
ability of our computerized information systems to accurately process
information that may be date-sensitive. Any of our programs that
recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures.
We utilize a number of computer programs across our entire operation.
We have not completed our assessment, but currently believe that the
costs of addressing this issue will not have a material adverse impact
on ThermoElastic' s financial position. However, if ThermoElastic and
third parties upon which it relies are unable to address this issue in
a timely manner, ThermoElastic plans to devote all resources required
to resolve any significant year 2000 issues in a timely manner.
17. Our operations are not diversified and we will not have the
benefit of reducing our financial risks by relying on other revenues.
We are engaged in the sale, promotion and marketing of dental
applications. As a result, our financial viability will depend almost
exclusively on our ability to generate revenues from our operations.
We will not have the benefit of reducing our financial risks by relying
on revenues derived from other operations.
18. We do not meet the requirements for our stock to be quoted on
NASDAQ and it will be more difficult for you to sell your common
shares.
We have applied for the quotation of our common shares on the OTC
Bulletin Board and then NASDAQ upon meeting the requirements for a
NASDAQ listing, if ever. Upon completion of this offering, we will not
meet the requirements for a NASDAQ listing. Until we obtain a listing
on NASDAQ, if ever, our securities will be covered by a rule that
imposes additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and
institutional accredited investors (generally institutions with assets
in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with
their spouse).
For transactions covered by the rule, the broker-dealer must give all
investors in penny stocks
- - a risk disclosure document required by Rule 15g-9 of the
Securities Exchange Act of 1934;
- make a special suitability determination of the purchaser,
and
- have received the purchaser's written agreement to the
transaction prior to the sale.
In order to approve a person's account for transactions in penny
stock, the broker or dealer must
- (1) obtain information concerning the
person's financial situation, investment experience and
investment objectives;
- (2) reasonably determine, based on the information required by
paragraph (1) that transactions in penny stock are suitable
for the person and that the person has sufficient knowledge
and experience in financial matters that the person
<PAGE>10
reasonably may be expected to be capable of
evaluating the rights of transactions in penny stock; and
- (3) deliver to the person a written statement setting
forth the basis on which the broker or dealer made the
determination required by paragraph (2) in this section,
stating in a highlighted format that it is unlawful for the
broker or dealer to effect a transaction in a designated
security subject to the provisions of paragraph (2) of this
section unless the broker or dealer has received, prior to
the transaction, a written agreement to the transaction
from the person; and stating in a highlighted format
immediately preceding the customer signature line that the
broker or dealer is required to provide the person with the
written statement and the person should not sign and
return the written statement to the broker or dealer if it
does not accurately reflect the person's financial
situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy
of the written statement.
A penny stock means any equity security other than a security:
- - (1) registered, or approved for registration on
notice of issuance on a national securities exchange that
makes transaction reports available pursuant to 17 CFR
11Aa3-1
- - (2) authorized or approved for authorization upon notice
of issuance, for quotation in the NASDAQ system;
- - (3) that has a price of five dollars or more or .
. . .
- - (4) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less
than fifteen months previously that the broker or dealer
has reviewed and has a reasonable basis to believe are true
and complete in relation to the date of the transaction
with the person.
Consequently, broker-dealers may be unable to sell our securities and
also you may be unable to sell your common shares easily in the
secondary market. See "Market for Registrant's Common Equity and
Related Stockholder Matters - Broker-Dealer Sales of Company's
Securities."
- -----------------------------------------
AVAILABLE INFORMATION
- -----------------------------------------
ThermoElastic has filed with the Securities and Exchange Commission
a registration statement including all amendments and required
exhibits, the "Registration Statement") under the Act with respect to
the securities offered by ThermoElastic. This prospectus does not
contain all of the information set forth in the registration statement.
Certain parts of the registration statement are omitted pursuant to the
rules and regulations of the Commission. For further information with
respect to ThermoElastic and the securities offered by ThermoElastic,
shareholders should examine the registration statement. Copies of such
materials may be examined without charge at, or obtained upon payment
of prescribed fees from, the Public Reference Section of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, at the Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and the New
York Regional Office, 7 World Trade Center, New York, New York 10048.
ThermoElastic will voluntarily file periodic reports in the event our
obligation to file such reports is suspended under Section 15(d) of the
Exchange Act.
ThermoElastic will provide without charge to each person who receives a
prospectus, upon written or oral request of such person, a copy of any
of the information that was incorporated by reference in the prospectus
(not including exhibits to the information that is incorporated by
reference unless the exhibits are themselves specifically incorporated
by reference). Requests for copies of said documents should be
directed to Kenneth B. Liebscher at ThermoElastic.
The Commission maintains a Web site -- //www.sec.gov -- that contains
reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.
<PAGE>11
- --------------------------------------
SELLING SECURITY HOLDERS
- --------------------------------------
ThermoElastic, through its officers and directors, will sell our
securities in a direct participation self-underwritten offering at the
same time as the selling security holders will be selling their
registered shares. Three principal shareholders are
participating as selling security holders. These individuals have
entered into written agreements not to sell their common shares until
ThermoElastic's offer is fully subscribed or terminated.
ThermoElastic is not selling any common shares on behalf of selling
security holders and has no control or affect on the 1,820,564 common
shares and 1,332,800 common shares underlying the Series A and B
Warrants of these selling security holders which are not restricted
under any lock-up agreement. The offering of securities by these
selling security holders will occur regardless of the outcome of the
primary offering by ThermoElastic.
Other than the written agreements with Rosemarie Berman, Sondra Black
and Joshua Kerbel, principal shareholders, ThermoElastic has not taken
any measures to delay the offering by selling security holders until
after the completion of the primary offering by ThermoElastic. The
demand for ThermoElastic's common stock may be decreased due to the
common shares being sold in the secondary offering by the selling
security holders. Due to the fact that the secondary offering will be
conducted contemporaneously with a primary offering by ThermoElastic,
the market price of ThermoElastic's common stock (upon commencement of
trading) may be less than the offering price of $1.50. In the event the
average bid price of the stock falls below $1.50 for three consecutive
days, the primary offering will be terminated.
There may be conflicts of interests due to the fact that the primary
offering of ThermoElastic and the secondary offering of the selling
security holders will be conducted at the same time. ThermoElastic
shall concentrate its sales efforts in the period immediately after the
effective date of the offering. Additionally, ThermoElastic may
pursue alternate financing to avoid any conflict of interests once
trading of our common stock commences.
We are not selling any common shares on behalf of selling security
holders and have no control or affect on the sale of common shares by
these selling security holders which are not subject to any lock-up
agreement.
The selling security holders may sell their common shares in one or
more transactions (which may include "block" transactions in the over-
the-counter market), in negotiated transactions or in a combination of
such methods of sales, at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The selling
security holders may effect such transactions by selling the
common shares directly to purchasers, or may sell to or through agents,
dealers or underwriters designated from time to time, and such agents,
dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the selling security holders
and/or the purchaser(s) of the common shares for whom they may act as
agent or to whom they may sell as principals, or both. The selling
security holders and any agents, dealers or underwriters that act in
connection with the sale of the common shares might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities
Act, and any discount or commission received by them and any profit on
the resale of the common shares as principal might be deemed to be
underwriting discounts or commissions under the Securities Act.
The offering by selling security holders will terminate on or before
June 30, 2000. In ThermoElastic's sole discretion, the offering of
common shares by selling security holders may be extended for up to
three Thirty day periods, but in no event later than September 30,
2000.
<PAGE>12
On behalf of the selling security holders, we are registering 6,756,593
common shares currently outstanding and 1,332,800 common shares to be
issued upon exercise of the Series A and Series B Warrants. The
percentage owned prior to and after the offering reflects all of the
then outstanding common shares. The amount and percentage owned after
the offering assumes the sale of all of the common shares being
registered on behalf of the selling security holders and the exercise
of all Series A and Series B Warrants.
<TABLE>
<CAPTION>
Name and Amount Total Number % Owned Number of % Owned
Being Registered Owned Prior to Shares Owned After
Currently Offering After Offering Offering
<S> <C> <C> <C> <C>
Rosemarie Berman - 1,644,457 1,653,207 9.54% 8,750 .05%
Sondra Black - 1,624,661 1,629,661 9.40% 5,000 .03%
Vista Group - 300,000 300,000 1.73% 0 0%
Joshua Kerbel - 1,666,911 1,670,411 9.63% 4,000 .02%
Twentieth Century - 400,000 400,000 2.31% 0 0%
Michael Curtis - 550,000 550,000 3.17% 0 0%
166,332 166,332(1) 24.96%(2) 0 0%
166,332 166,322(3) 24.96%(4) 0 0%
Oliver D. Yue - 136,668 136,668(1) 20.51%(2) 0 0%
- 136,668 136,668(3) 20.51%(4) 0 0%
Lonnie Bumstead - 26,000 26,000(1) 3.90%(2) 0 0%
- 26,000 26,000(3) 3.90%(4) 0 0%
Glenn May - 40,000 40,000(1) 6.00%(2) 0 0%
- 40,000 40,000(3) 6.00%(4) 0 0%
Tim Mullen - 8,000 8,000(1) 1.20%(2) 0 0%
- 8,000 8,000(3) 1.20%(4) 0 0%
John F. Ennamorato - 52,000 52,000(1) 7.80%(2) 0 0%
- 52,000 52,000(3) 7.80%(4) 0 0%
Brian Skipper - 6,000 6,000(1) .90%(2) 0 0%
- 6,000 6,000(3) .90%(4) 0 0%
Bobby Chaudhuri - 150,000 140,000(1) 21.01%(2) 0 0%
- 150,000 140,000(3) 21.01%(4) 0 0%
Dr. Joseph Butchey - 7,000 7,000(1) 1.05%(2) 0 0%
- 7,000 7,000(3) 1.05%(4) 0 0%
Keith Jebodhsingh - 14,000 14,000(1) 2.10%(2) 0 0%
- 14,000 14,000(3) 2.10%(4) 0 0%
Michael Lyons- 8,400 8,400(1) 1.26%(2) 0 0%
- 8,400 8,400(3) 1.26%(4) 0 0%
Terry MacKay - 10,000 10,000(1) 1.50%(2) 0 0%
- 10,000 10,000(3) 1.50%(4) 0 0%
Enzo Mecozzi - 10,000 10,000(1) 1.50%(2) 0 0%
- 10,000 10,000(3) 1.50%(4) 0 0%
Warren Milando - 10,000 10,000(1) 1.50%(2) 0 0%
- 10,000 10,000(3) 1.50%(4) 0 0%
The Postal
Connection, Inc.- 7,000 7,000(1) 1.05%(2) 0 0%
- 7,000 7,000(3) 1.05%(4) 0 0%
Rubin Rapuch - 5,000 5,000(1) .75%(2) 0 0%
- 5,000 5,000(3) .75%(4) 0 0%
Glen Smeltzer - 6,000 6,000(1) .90%(2) 0 0%
- 6,000 6,000(3) .90%(4) 0 0%
Walter Von Schilling &
Edith Von Schilling - 4,000 4,000(1) .60%(2) 0 0%
- 4,000 4,000(3) .60%(4) 0 0%
</TABLE>
(1)Represents common stock underlying the Series A Warrants
(2)Represents percentage of Series A Warrants owned
(3)Represents common stock underlying the Series B Warrants
(4)Represents percentage of Series B Warrants owned
We are not aware of any current or future plans, proposals,
arrangements or understandings by any selling security holders to
distribute their registered common shares of ThermoElastic to their
respective outstanding shareholders or partners.
We are not aware of any plans, arrangements or understandings by any
selling security holders to sell their registered shares of common
stock to any particular individual(s) or to use such registered shares
to satisfy contractual obligations.
We will receive no portion of the proceeds from the sale of the
common shares by the selling shareholder and will bear all of the costs
relating to the registration of this offering (other than any fees and
<PAGE>13
expenses of counsel for the selling security holders). Any
commissions, discounts or other fees payable to a broker, dealer,
underwriter, agent or market maker in connection with the sale of any
of the common shares will be paid by the selling security holders.
- ----------------------------------------------------------
TERMS OF THE OFFERING
- ----------------------------------------------------------
Plan of Distribution. ThermoElastic hereby offers up to 800,000 common
shares purchase price of $1.50 per common share. We are offering the
common shares on a "direct participation" basis by our officers and
directors) and possibly selected broker-dealers. The officers and
directors who shall sell the offering on our behalf are Dennis Epstein,
Kenneth B. Liebscher, Fred J. Heaps, Bernard Teitelbaum and Lawrence
Pinkney. These individuals will be relying on the safe harbor in Rule
3a4-1 of the Securities Exchange Act of 1934 to sell ThermoElastic's
securities. No sales commission will be paid for common shares sold by
ThermoElastic. Selected broker-dealers shall receive a sales
commission of up to 10% for any common shares sold by them.
ThermoElastic reserves the right to withdraw, cancel or reject an offer
in whole or in part. The common shares offered hereby will not be
sold to insiders, control persons, or affiliates of our company.
We have made no plans, proposals, arrangements or understandings with
any potential sales agent with respect to participating in the
distribution of our securities. When, in the future, assuming such
participation develops, the registration statement will be amended to
identify such persons.
The selling security holders may sell the common shares offered hereby
in one or more transactions (which may include "block" transactions in
the over-the-counter market, in negotiated transactions or in a
combination of such methods of sales, at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The
selling security holders may effect such transactions by selling the
Shares directly to purchasers, or may sell to or through agents,
dealers or underwriters designated from time to time, and such agents,
dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the selling security holders
and/or the purchaser(s) of the common shares for whom they my act as
agent or to whom they may sell as principals, or both. The selling
security holders and any agents, dealers or underwriters that act in
connection with the sale of the common shares might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities
Act, and any discount or commission received by them and any profit on
the resale of the common shares as principal might be deemed to be
underwriting discounts or commissions under the Securities Act.
ThermoElastic is not aware of any current or future plans, proposals,
arrangements or understandings by any selling security holders to
distribute their registered shares of common stock of ThermoElastic to
their respective outstanding shareholders or partners.
ThermoElastic is not aware of any plans, arrangements or understandings
by any selling security holders to sell their registered shares of
common stock to any particular individual(s) or to use such registered
shares to satisfy contractual obligations.
ThermoElastic will receive no portion of the proceeds from the sale of
the common shares by the selling shareholder and will pay all of the
costs relating to the registration of this offering (other than any
fees and expenses of counsel for the selling security holders). Any
commissions, discounts or other fees payable to a broker, dealer,
underwriter, agent or market maker in connection with the sale of any
of the common shares will be paid by the selling security holders.
Offering Period. The offering by ThermoElastic and selling security
holders will terminate on or before June 30, 2000. In ThermoElastic's
sole discretion, we can extend the offering of common shares for up to
three Thirty day periods, but in no event later than September 30,
2000.
Determination of Offering Price. The offering price and other terms
of the total offering amount needed and the possible dilution to
existing and new shareholders.
<PAGE>14
Subscription Procedure. The full amount of each subscription will be
required to be paid with a check payable to ThermoElastic in the amount
of the subscription. Purchasers or soliciting broker/dealers should
remit payment directly to ThermoElastic before 12:00 noon, on the
following business day, together with a list showing the names and
addresses of the person subscribing for the offered common shares or
copies of subscriber's confirmations.
No Escrow Account. There is no minimum offering amount and no escrow
account. As a result, we will deposit any and all offering proceeds
directly into our operating account.
- --------------------------------------------------------------
SOURCE AND USE OF PROCEEDS
- --------------------------------------------------------------
Assuming successful completion of the offering, we shall receive net
proceeds of $1,044,423 after payment of commissions ($120,000) and
offering expenses of approximately $35,577. The commission amount
would only be payable if a broker-dealer is engaged. If we raise
significantly less than the maximum amount, we will be able to pay
operational expenses but will have less working capital to expand
operations. We shall utilize the net proceeds from the sale
of our common shares as described below. The proceeds are to be
utilized over a six-month period.
<TABLE>
<CAPTION>
Raised Raised
---------- ----------
<S> <C> <C>
Gross Proceeds $600,000 $1,200,000
less commissions 60,000 120,000
offering expenses 35,577 35,577
---------- ----------
Net Proceeds $504,423 $1,044,423
R & D $150,000 $300,000
Professional
(legal,accounting) 50,000 100,000
Consulting
Agreements 135,000 270,000
Marketing and
Testing 100,000 200,000
Working Capital 69,423 174,423
--------- ---------
Net Proceeds used $504,423 $1,044,423
</TABLE>
In the event that the minimal amount is not received, we will have to
scale back operations and may pursue a rights offering.
Any proceeds received from the exercise of the Series A and Series B
Warrants shall be utilized for general working capital purposes.
We will not receive any cash proceeds from the sale of common shares by
the selling security holders.
- ------------------------------------------------------
DILUTION
- ------------------------------------------------------
Dilution. Common shares outstanding will be a total of 19,470,964 and
17,738,164, respectively if $1,200,000 or $600,000 is raised. We are
assuming that the warrants are exercised. The following table
illustrates the per share dilution as of the date of this prospectus,
which investors may experience if we reach the various levels listed
below.
<TABLE>
<CAPTION>
$1,200,000 $600,000
Raised Raised
---------- ----------
<S> <C> <C>
Offering price $1.50 $1.50
Net tangible book value per
share before offering .02 .02
<PAGE>15
Increase per share
attributable to investors .05 .03
------ ------
Pro Forma net tangible
book value per common
share after offering .07 .05
----- -----
Dilution to investors 1.43 1.45
Dilution as a percent of
offering price 95.33% 96.67%
</TABLE>
Further Dilution. We may issue additional restricted common shares
pursuant to private business transactions. We do currently have any
plans, arrangements or commitments regarding any private business
transactions. Any sales under Rule 144 after the applicable holding
period may have a depressive effect upon the market price of our common
shares and investors in this offering. See "Sales of Stock Pursuant to
Rule 144."
- -------------------------------------------------------
OUR COMPANY
- -------------------------------------------------------
L.P.R. Cybertek, Incorporated ("LPR Cybertek"), was incorporated on
January 30, 1995 under the laws of the State of Colorado, to engage in
any lawful corporate undertaking, including, but not limited to,
selected mergers and acquisitions.
On July 15, 1999, LPR Cybertek entered into an Agreement and Plan of
Reorganization with ThermoElastic Technologies, Inc., a Delaware
corporation "ThermoElastic Delaware". Pursuant to the Agreement and Plan
of Reorganization, ThermoElastic Delaware was merged into LPR Cybertek.
Then current shareholders of ThermoElastic Delaware received 138,164
common shares, 666,400 Class A Warrants, 666,400 Class B Warrant and
100,000 options to purchase common shares of LPR Cybertek at $1.00 per
common share in return for all of their common shares, warrants and
options in ThermoElastic Delaware.
Pursuant to the terms of the merger, we changed our name from LPR Cybertek
to ThermoElastic Technologies, Inc. ("ThermoElastic").
Additionally, on July 15, 1999, the shareholders of LPR Cybertek sold
15,766,629 Common Shares (representing 91.67% of the outstanding Common
Shares) to ThermoElastic Delaware designees resulting in a change in
control in LPR Cybertek.
ThermoElastic's principal offices are located at 5466 Canvasback Road,
Blaine, Washington 98230, telephone number (360) 371-5061. These
offices consist of 150 square feet on a month to month lease. The
monthly rental fee is included in management remuneration.
Employees. We do not currently have any employees. We have
engaged consultants to assist us in our operations.
Government Regulations. At the present time, there are no pervasive
regulations of our business.
Competition. It is important to note that none of the competing
products in the marketplace today possess the thermoelastic consistency
of BITEM. All the competing products are single purpose products and
have distinctive drawbacks. Some of the existing products on the
market have functions similar to the products made with BITEM, but we
are of the opinion that there is no comparison in performance.
1. The Myoloc System: Similar to BITEM blocks, one of the BITEM
applications, are made of bent metal wires. These wires act as rigid
sublingual stabilizers, which are difficult to place into the neutral
zone under the tongue. Myolocs must be removed from the patient's
mouth to be adjusted.
2. Myoflex: A single purpose Technologies utilizing the sub mandibular
undercut to retain a lower denture. Nylon inserts are incorporated
into the extended flange and make the extensions movable. This method
is complicated and technique sensitive. Impressions have to be very
precise in order to assure patient comfort. The patient cannot control
tension on the extensions, resulting in possible pain and discomfort.
<PAGE>16
3. Molloplast-B: A superior soft reline material that will form a
silicone cushion under the denture. Such relines are often difficult
to bond to acrylic and will eventually harden and can cause odor over
time.
4. Flexite M.P.: This material is a poly thermoplastic that can only
be injection molded. The metal-free denture designs are somewhat
similar to BITEM partials but flexite is not compatible with acrylic
and cannot be repaired or bonded to teeth. It is injected under heat
but once set it is not thermal adjustable. Eventually the flexite
material becomes brittle and often snaps.
5. Brux-Eze/Impak/Thermoflex: This material is used to construct
sports guards and night guards. It will soften in warm water, but the
consistency is not controllable and usually remains relatively soft.
- -------------------------------------------------
BUSINESS ACTIVITIES
- -------------------------------------------------
Product Introduction
Apple Dental Ventures has developed a "new generation" acrylic. This
new technology can immediately find applications in almost every facet
of the dental field and many medical, sport, and allied areas. This
product is currently being used by dentists, denturists, and dental
laboratories in Ontario, Canada, where testing occurred. Currently, in
the dental field, "BITEM" is the acronym for Biocompatable Intraoral
Thermal Elastic Material and represents the trade name for this acrylic
composition.
The Technologies
The uniqueness of BITEM lies in the control of flexibility, memory and
rigidity, during and after the processing stage. This material allows
for the creation of more than 60 new applications in the dental field.
The greatest improvements are with fit, tightness, aesthetics and
comfort for removable dental appliances.
This special composition once added to a denture softens in warm water
and can be adapted to the contours of the patient's gums and/or teeth.
The acrylic material requires the temperature of the water to be only
between 120 - 155 degrees Fahrenheit or 50 - 63 degrees Celsius. This
process can be repeated as many times as necessary to ensure complete
fit and comfort. The innovation of these patented technologies lies in
the controlling mixture of the two liquid monomers: A- the softener and
B-the hardener. The relative proportions of the two monomers determine
the range of BITEM's consistencies, from the cushiony soft to the hard
acrylic base of commonplace denture material.
After polymerization BITEM remains "thermoelastic"- meaning that the
material may be heated in water to soften, in order to be adapted to
tissues and teeth as often as necessary to insure the most comfortable
fit. It is unique with its dual qualities- the rigidity is
controllable during the mixing process and remains "thermo" adjustable
everafter.
The quality of BITEM is that it is a consistently controllable thermo
elastic acrylic material that can be used to fabricate dental
appliances of varying rigidities. This appliance can be softened with
hot water or a hot air dryer and fashioned to the contour of the
patient's mouth.
The Products
Dental Applications
In the world of full and partial dentures, more comfort is now a
reality, due to the newly invented thermo-adjustable parts. This is
the primary benefit to the patient. This system is so versatile that
it can be applied in more than a dozen ways using a diverse range of
flexibilities and rigidities in critical areas of a denture. The
advantage of using this material as a heat sensitive reliner is that it
allows denture wearers the luxury of being able to fit and refit their
own dentures when there is any discomfort just by softening the liner
in warm water.
<PAGE>17
This material is available in raw material (powder and liquid), "heat-
cure". or in "self-cure" packages. It can made available in pre-
manufactured sublingual wings containing the thermoelastic material and
can be used to stabilize existing lower dentures by installing them
under the tongue.
Dental patients will be the primary beneficiaries of BITEM due to the
increased comfort afforded by the material. The dentist will also
benefit due to the product's ease of use. Most products available in
the dental business have a single purpose or are use specific. The
dual properties of BITEM, provides the dentist with abilities never
before available
A) complete control in the mixing process - allowing an infinite
variety of rigidities
B) the ability to create many different critical parts of dental
appliances; and
C) to create a dental appliances which are thermo-adjustable for
their lifetime.
D) the following are 15 examples of the over 60 dental applications
of BITEM.
1. Post dam for upper dentures
The back part of a denture on the palate is known as the post dam and
can be easily adjusted and manipulated using hot water to ensure the
appliance's direct contact with the tissue surface.
2. Lingual flange on lower dentures
If there is little ridge height to support prosthesis, the dentist may
expand the prosthesis in the lingual space. The resultant extensions
are easily adjusted using hot water and tongue posturing giving the
denture increased stability.
3. Sublingual stabilizer wings
Engagement of undercuts in the retromylohyoid fossa to improve
retention of the mandibular prosthesis. The flanges can be displaced
after being tempered in hot water and then repositioned intraorally to
engage the undercuts.
4. Clasps on partial dentures
In order to cut down on the amount of metal use in a cast partial
denture, and to improve the aesthetics, particularly in the anterior
area of the mouth, tooth colored BITEM material can be used in order to
make the clasps for those particular areas.
5. Gasket clasps
These allow for maintenance of the remaining teeth in a partially
edentulous mouth. Processing the material into inter-proximal areas
will also allow increased retention. By tempering the denture, the
denture can be inserted and retained.
6. Stressbreaker connected to rigid attachment or implants
Instead of complex and expensive precision attachments, conventionally
used for this application, a layer of Thermoelastic material is
chemically layered into the denture right behind the attachment. This
will provide a simple, strong and relentless method of stress breaking
on abutment teeth.
7. Temporo-Mandibular Joint (TMJ) appliances
These appliances, commonly known as "splints" or oral orthopedic
appliances are used to correct malocclusion for malpositioning of the
lower jaw. Currently made with hard acrylic and metal ball clasps to
retain, can now be constructed with a thermo-adjustable flap.
8. Obturator
These appliances are made to correct parts of oral cavity, caused by
birth defects or accidents. Often they are difficult to insert;
however with the availability of producing certain parts of these
appliances with BITEM, the placement in the mouth could mean the start
of a whole new Technologies.
9. Thermo relines
Relining prosthesis with a softened version of BITEM will allow the
prosthesis to sit comfortably and allow the patient to modify the
prosthesis on a daily basis. Before insertion of the prosthesis in the
morning, the prosthesis is tempered in water, the patient then seats
the prosthesis and occludes heavily. The inner surface of the
prosthesis will then mold to the tissues and create a newly adapted
surface.
<PAGE>18
10. Preformed sheets of vacuum forming
Existing Technologies provides different sheets for forming trays over
dental models. With BITEM SHEETS, parts of appliances can be formed
and will be able to be used for many novel ideas.
11. Pre-made forms for temporary crowns
These crowns would be made of tooth-colored BITEM material and can be
used by dentists as temporary crowns, while the laboratory is preparing
the permanent crowns.
12. Supplemental prosthetic devices for specialized use
Sometimes it is necessary to construct a prosthetic appliance for a
specialized use. For example, denture wearing wind instrument players
need a specialized appliance to allow them to play their instrument.
By utilizing BITEM on these devices, we can accomplish a superior fit
over the conventional hard acrylic devices, providing greater comfort
and benefit to the musician. This is only a single example where BITEM
can be used in place of conventional acrylic material in specialized
conditions.
13. Orthodontic appliance
Spring retainers, one of the most frequently used Ortho appliances, can
be outfitted with BITEM incisor pads. The ability of the thermoelastic
material to replace clasps, wires and springs would make it extremely
useful.
14. Night guards/Athletic guards
These guards can be produced either with the Vacu-former (plus cold
cure thermoelastic in the case of night guards) or waxed and baked
liked the other applications.
15. Cosmetic adjustments
One example of cosmetic adjustments would be when the gum in the
anterior area has shrunk severely; the only cosmetic solution is to
fabricate a piece of rigid acrylic to fill the gap. This now can be
done using a BITEM adapted substitute resulting in more comfort for the
patient.
We are currently seeking uses for these Technologies inside and outside
of the dental world. We are currently pursuing the following
opportunities:
1. Orthotics
Orthotics are shoe inserts. They are intended to adjust an abnormal or
regular gait. They help make standing, walking and running more
comfortable by altering the angle at which the foot strikes the ground.
The goal of Orthotics is to improve foot function and minimize stresses
that can cause foot pain and deformity. There are two forms of
Orthotics.
Rigid Orthotics: they are designed to control foot function and are
made of a stiff material such as plastic. Rigid Orthotics are
fabricated from as mold of an individual's foot and normally extends
along the sole of the heel to the ball or toes of the foot. These
Orthotics are designed to control motion at the sub-talar joint. Rigid
Orthotics have a long life span and do not change shape. If the
patient requires a change for whatever reason, entirely new Orthotics
must be fabricated and it is not uncommon for a new pair of Orthotics
to cost a patient upwards of Five hundred dollars ($500).
Incorporating BITEM into the design of rigid Orthotics will result in a
dramatic cost saving to patients and to Medical insurers. The
thermoelastic qualities of BITEM allow doctors to adjust the patients
existing Orthotics to match the changing needs of the patient and to
reduce the need for costly fabrication of a new pair of Orthotics.
Soft Orthotics: They are designed to absorb shock and aid in increasing
foot comfort. They are constructed of compressible material and molded
to a plaster impression of the foot. Many geriatric patients help ease
the pain associated with arthritis and diabetic foot ulcers by the use
of soft Orthotics.
Incorporating BITEM into the fabrication of soft Orthotics reduces the
need to replace the Orthotics to accommodate changes in weight bearing
patterns that often occur as a result of foot pain. With Bitem, the
<PAGE>19
Orthotics can be, placed in hot water, remolded to the desired shape
and left to cool. The Orthotics can be remolded as many times as are
needed to accommodate the changes that are occurring in the patient's
feet.
2. Splints
The thermoelastic qualities of BITEM are particularly suitable for the
fabrication of low-cost splints. They are often used in the management
and prevention of soft tissue contractures, which often follow joint
immobilization, neurological insult and other joint and soft tissue
problems. The application of a low-level tissue stress for prolonged
periods of time is often the therapist's treatment of choice for such
conditions.
A contracture is a normal response to muscle spasticity or joint
immobilization that prevents the movements of the affected joint
through its range of motion. The loss of mobility in the soft tissue
is caused by a remodeling of the tissues in the joint-tendon-muscle
unit in response to joint immobilization. Eventually, the soft tissue
becomes stiff, thickened, and immobile, rendering the affective joint
useless. Management of soft tissue contracture relies on eliciting a
plastic response from the affected tissues. By eliciting a plastic
response from the soft tissue, a permanent elongating of the affected
tissue may be achieved. The plastic response can be elicited by
applying a progressive long-term, low intensity stretch to the affected
tissue. The most common way of doing this is with a dynamic splint.
Taking advantage of BITEM's thermoelastic properties, low cost
contracture management splints can be fabricated. Splints made from
BITEM can be constantly adjusted to progressively increase the amount
of tension applied to soft tissue surrounding a joint. The adjustment
process only requires that the splint be heated in hot water, then bent
to the desired angle and left to cool before the patient puts the
splint back on the body.
3. Medical Prostheses
The fabrication of prosthetic and orthopedic devices from BITEM adds a
new dimension to the practice of Prosthetics and Orthotics. By taking
advantage of the thermoelastic and consistency control capabilities of
BITEM, custom-made prosthetic devices can be made, that are both
economical and versatile. Prosthetic devices can be mass-produced to
standard sizes and yet customized for each individual user by molding
the prosthetic in hot water. The material will help increase the
lifespan of products and reduce costs at the same time.
4. Braces
Prosthetics and Orthopedic braces and artificial limbs are a billion
dollar a year industry in the United States. There are approximately
2.5 million amputees in the U.S. and is estimated that this number
grows by 125,000 annually. Approximately 54% of all amputations are
below the knee, 37% are above the knee and 7% are amputations of the
arm. The demands for orthotics and prosthetics are expected to grow
over the next twenty years, according to the National Commission on
Orthotic and Prosthetic Education. There will be a 25% percent
increase in the number of people with paralysis, deformity o orthopedic
impairments in that time. Over the same period, the number of people
expected to require prosthesis will increase by 47% and the number of
people using orthopedic braces is expected t increase by 3 1 %.
The market demands for Orthotics and Prosthetics is projected to grow
so fast, that even with a 20% increase in the number of certified
Orthotists and Prosthetists, only 65% of the population needs will be
met. (See: issues affecting the future demand for Orthotists and
Prosthetists: National Commission of Orthotic and Prosthetic Education,
1996).
According to the Orthotists and Prosthetists National Office, studies
show that for every dollar spent on rehabilitation, including Orthotic
and Prosthetic care, more than eleven dollars is saved in long-term
health care. Using our BITEM material could significantly add the
saving for the health care insurers and the patients.
<PAGE>20
5. Custom Furniture
The BITEM Technologies is now being used in the architectural process
to customize a new artistically designed line of contemporary
furniture. This "new form" is expected to revolutionize the industry
in form, comfort, and design.
6. Specialized Glasses
With BITEM, the Optical industry is able to customize the nose and ear
parts of the frames of all their clients. It would also be easy for
the patients to adjust their own frames from time to time as needed.
Many other uses in the industry would become available as the product
was used, especially in the area of disabilities and malformed
structures.
7. Hearing Aids
Audiologists are always looking for new technologies and materials to
improve upon the fit and service of the hearing aids for their
patients. Each ear differs and depending upon the type of hearing aid
used would determine how the patient could utilize BITEM. We intend to
explore this area with both doctors and technicians who make the
appliances and fit them.
8. Aids to daily living
Rehabilitation centers, physical and occupational therapists work with
many people who, because of accident, injury or disease have problems
with items standard in every household. With BITEM, we are able to
design special equipment to accommodate these special needs. Most of
these designs and manufacturing will be left to the specialists in the
field by entering into licensing agreements for BITEM's use. Many
situations can be easily remedied by the use of this new material.
9. Sports Equipment
In all sports, there is a need to customize the equipment used in that
sport and to fit each participant's particular requirements. Racquet
sports, such as tennis, squash or racquetball could benefit from custom
grips or handles made from BITEM. This could also apply to ski boots,
running shoes, poles etc., all to assist or improve the efficiency and
performance for the athletes whom participate within a given sport.
10. Customized Instrumentation
Any or trade that requires or uses specialized tools could be a
candidate for this a new material. There is a large market in many
fields, where this type of customization and adjustability would be
desired.
In most areas outside of Dentistry, we intend to license the
Technologies to various industries that specialize in the above area
and allow them to open up the various market places.
Currently in the dental field there are a total of ten products
offered. Dental companies such as Ash Temple, Central Dental, and
Unident are merchandising these products to the dental professions. As
the demand grows, new uses will be found for the thermoelastic
properties of BITEM.
PATENTS AND LICENSING RIGHTS
BITEM is protected by US Patent #5,431,563, Canadian Patent #2,111,789
and European Patent #0605912. The United States Divisional Patent for
the BITEM Technologies, allowed since February 1996 has been issued.
This second patent covers a thermoelastic composite material formed
using the BITEM Technologies and expands the use of the product into
all possible fields.
ThermoElastic Technologies, Inc. (TTI) has entered into an agreement
with regard to the acquisition of a license for the exclusive worldwide
rights and related privileges to the BITEM products, which provided for
a deposit of $50,000 payable by February 28, 1999 and the balance of
$200,000 due by February 28, 2000 and a graduated royalty fee: 5% for
the first $25,000,000 in gross annual income, 3.5% for the next
$25,000,000 and 2.5% for sales exceeding $50,000,000.
<PAGE>21
MARKETING
The goal of ThermoElastic Technologies, Inc. (TTI) is to market
products throughout specified geographical locations in the dental
field. Licensing agreements will be entered into with qualified
companies and individuals to fulfill the dynamic potential of this
material and to expand its use into other diverse areas and products.
Market Study
A preliminary North American market study on BITEM was conducted by the
Canadian Industrial Innovation Center in 1992. This report showed
shipments of dental equipment and supplies in the United States
increased at an annual compounded growth rate of 5.1% over the period
1986 to 1991. Presently there are an estimated 2.24 million Canadians
with dentures. Assuming a conservative 10% market penetration in the
first two years, it would suggest about 224,000 patients would be
served by the product.
- ----------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------
Trends and Uncertainties. Demand for ThermoElastic's services will be
dependent on, among other things, general economic conditions which are
cyclical in nature. Inasmuch as a major portion of ThermoElastic's
activities is the sales and marketing of dental application products,
ThermoElastic's business operations may be adversely affected by
ThermoElastic's competitors and prolonged recessionary periods.
Capital and Source of Liquidity. ThermoElastic currently has no
material commitments for capital expenditures.
For the period from inception (January 21, 1999) to July 15, 1999,
ThermoElastic Delaware (prior to the merger) purchased product rights
for $230,000 cash and common shares valued at $20,000 and had website
costs of $9,021. For that same period, ThermoElastic Delaware had an
increase in deposits of $5,000 and purchase equipment for $2,104. As
a result, ThermoElastic Delaware had net cash used in investing
activities of $246,125 for the period from inception to July 15, 1999.
For the period from inception to July 15, 1999, ThermoElastic Delaware
received $700,915 from the issuance of common stock in an offering
pursuant to Rule 504 and advanced $165,000 to LPR Cybertek evidenced by
a promissory note. As a result, ThermoElastic Delaware had net cash
provided by financing activities of $535,915 for the period from
inception to July 15, 1999.
We expect that the net proceeds from our recent offering and the cash
flow from future operations, if any, will be sufficient to allow us to
meet the expected growth in demand for our products and services.
Additionally, we expect to use any proceeds received from the exercise
of the Series A and B Warrants to expand operations. However, we
cannot be assured that the warrants will be exercised of that our sales
will meet our growth expectations. Should either of these fail to
occur, we may elect to (i) reduce the planned expansion of operations
or (ii) pursue other financing alternatives such as a rights offering,
warrant exercise or borrowings. Our planned growth and profitability
could be delayed or diminished if the two options listed above are not
implemented.
Over the next two years, our liquidity is dependent on increased
revenues from operations, additional infusions of capital and debt
financing. We believes that additional capital and debt financing in
the next six months will allow us to commence its marketing and sales
efforts and thereafter result in revenue and greater liquidity in the
long term. However, we cannot be assured that we will be able to
obtain additional equity or debt financing in the future, if at all.
Results of Operations. On a proforma consolidated basis as of July
15, 1999, we had a total comprehensive loss of $257,245. We had no
revenues and had operating expenses of $249,196. These operating
expenses consisted of consulting fees and expenses of $159,300,
professional fees and expenses of $32,500, insurance of $7,480,
stationary and office supplies of $9,250, travel and auto expenses of
$19,300, agency fees of $10,000 and miscellaneous expenses of $11,366.
<PAGE>22
Plan of Operation. ThermoElastic, over the next twelve months intends
to market and distribute dental applications in the United States and
internationally and to utilize the World Wide Web in the implementation
of its planned business operations. ThermoElastic shall conduct of
product research and development as funds allow. Management possesses
the experience to implement its business plan. No significant
equipment purchases are planned over the next twelve months.
ThermoElastic shall seek to maintain low operating expenses while
commencing operations and increasing operating revenues. We are
focusing on maintaining a low cost administrative approach.
However, increased marketing expenses will probably occur in future
periods as we attempt to further increase its marketing and sales
efforts.
ThermoElastic is working to resolve the potential impact of the year
2000 on the ability of ThermoElastic's computerized information systems
to accurately process information that may be date-sensitive. Any of
ThermoElastic's programs that recognize a date using "00" as the year
1900 rather than the year 2000 could result in errors or system
failures.
ThermoElastic utilizes a number of computer programs across its entire
operation. ThermoElastic has not completed its assessment, but
currently believes that the costs of addressing this issue will not
have a material adverse impact on ThermoElastic' s financial position.
However, if ThermoElastic and third parties upon which it relies are
unable to address this issue in a timely manner, ThermoElastic plans to
devote all resources required to resolve any significant year 2000
issues in a timely manner.
Recent Accounting Pronouncements - During 1998, the FASB issued statement
of Financial Accounting Standards No. 131 (SFAS No. 131), "Disclosure
About Segments of an Enterprise and Related Information" which changes the
way public companies report information about segments. SFAS No. 131
establishes standards for the way public companies report information
about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim
financial statements issued to the public. We do not have any disclosure
requirements under this standard.
Concentration of Credit Risk - ThermoElastic's financial instruments that
are exposed to concentrations of credit risk consist of cash, which
includes checking accounts placed with federally insured financial
institutions. Such accounts may at times exceed federally insured limits.
We have not experienced any losses on such accounts.
- ---------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------
Officers and Directors. Pursuant to our Articles of Incorporation,
each Director shall serve until the annual meeting of the stockholders,
or until his successor is elected and qualified. ThermoElastic's basic
philosophy requires the inclusion of directors who will be
representative of management, employees and the minority shareholders
of ThermoElastic. Directors may only be removed for "cause". The term
of office of each officer of ThermoElastic is at the pleasure of
ThermoElastic's Board.
The principal executive officers and directors of ThermoElastic are as
follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
Dennis Epstein, age 64 Chairman of the Board
Kenneth B. Liebscher, age 56 President,Director
Fred J. Heaps, age 60 Chief Executive Officer, Director
Bernard Teitelbaum, age 49 Vice President of Sales and Marketing, Secretary
Lawrence Pinkney. age 54 Chief Financial Officer and Treasurer
Dr. Lorne Berman, age 37 Director
Dr. Stephen Rivers, age 50 Director
Dr. Ila Berman, age 38 Director
Dr. Gregory K. Slater, age 42 Director
<PAGE>23
Dr. Izchak Barzilay, age 39 Director
Bonnie D. Walton, age 45 Director
</TABLE>
All of the above officers and directors began their terms on July 30,
1999 subsequent to the merger with ThermoElastic Technologies, Inc., a
Delaware corporation.
Resumes:
Dennis Epstein CA, CMC, CBV, Chairman of the Board. Mr. Epstein is a
co-founder of ThermoElastic Delaware and has been a partner with
Horwath Orenstein from 1966 to the present. Mr. Epstein was the
managing partner of Horwath Orenstein from 1983 to 1992. Horwath
Orenstein is a Toronto based Chartered Accounting firm and member of
Horwath International. He is a member of the Institute of Chartered
Accountants of Ontario, Canadian Association of Management Consultants
of Ontario, and the Canadian Institute of Chartered Business Valuators.
He has successfully completed the Canadian Security Course, is a member
of such associations as the Canadian Franchise Association, the
Canadian Venture Capital Association. His practice includes public
financing of early stage technology opportunities, debt equity
financing proposals, acquisitions and mergers, real estate
syndications, transportation technologies, franchising and assisting
entrepreneurs to manage growth for profit. Mr. Epstein has written a
book, "Growth Hormones in the Technology Sector.
Lawrence Pinkney, Chief Financial Officer and Treasurer. Mr. Pinkney
is a recognized specialist in resolving financial, management and
administrative difficulties. Mr. Pinkney has had contracts with the
following firms: Dominion Skate Co. Ltd., Holden Day Wilson, Inter
Technology, Inc., Trist Construction Group, Porta-Flex Manufacturing
and CEE Elavator Services, Ltd., Southern Sanitation, Inc., Wasteco,
Hibar Systems, Ltd. and Fasken Campbell Godfrey, Barristers &
Solicitors of which he was Director of Finance and Chief Financial
Officer. From 1985 to 1989, Mr. Pinkney was Vice President, Finance
and Administration, with Comtrade Petroleum, Inc. From 1980 to 1984,
he was Assistant Controller for Canadian Bank of Commerce. Between
the years of 1972-1979, Mr. Pinkney worked with the Imperial Oil
Company Limited as Finance Section Supervisor, Finance Unit Supervisor
and Senior Financial Analyst. Mr. Pinkney has his Bachelor of
Commerce degree and also his CA.
Dr. Lorne Berman, Director. Mr. Berman has been in private practice
as an optometrist in Toronto from 1985 until the present. From 1998
to 1999, he was a lecturer for the Canadian College of naturopathic
Medicine. From 1986 to 1987, Dr. Berman was a Clinical Supervisor,
University of Waterloo, School of Optometry. Dr. Berman is a member of
the Canadian Association of Optometrists, the Ontario Association of
Optometrists, Glaucoma Research Society and an Affiliate Doctor with
TLC, the Laser Center. Dr. Berman graduated from the University of
Waterloo School of Optometry in 1985.
Dr. Stephen Rivers, Director. Dr. Rivers received his Honors BA in
Psychology at Carleton University in 1971. He graduated from McMaster
University with an MA in Psychology in 1973. Dr. Rivers obtained his
Ph.D. in Psychology from Carleton University in 1979. He was under
contract with the Canadian Federal Government in 1979. From 1995 to
present, Dr. Rivers has been a Coordinator in the Adolescents Substance
Abuse Program at the Hospital for Sick Children in Toronto. Dr.
Rivers is employed as a staff psychologist. He also carries on a
part-time private practice in a medical clinic as a psychologist
treating both adults and children. His expertise falls into the areas
of parenting and child management, marital relationships, relationship
issues, drug/alcohol abuses, work dissatisfaction, depression and
stress management. From 1992 to 1995, Dr. Rivers worked at the
Thistletown Regional Center for Children and Adolescents as a staff
psychologist for the Peel Children's Center in Mississauga, Ontario.
From 1988 until 1989, he id his externship in family therapy at
Thistletown/Peel Children's Center. From 1981 to 1987, Dr. Rivers was
employed by the Ottawa Board of Education as a staff psychologist on a
full-time basis. From 1980 to 1981, Dr. Rivers was under contract
with the Children's Aid Society of the County of Lamark, working with
adolescents and counseling adults, performing psychometric and
emotional assessments of infants and young children. Dr. Rivers is
registered with The College of Psychologist of Ontario. He is
<PAGE>24
affiliated with the following organizations; Canadian Psychology
Association, American Psychology Association and The Ontario
Psychological Association. Dr. Rivers has published extensively and
has many conference presentations to his credit.
Dr. Ila Berman, Director. Dr. Berman graduated from the School of
Architecture, Carleton University in Ottawa, Canada with a Bachelor of
Architectural Degree with High Distinction in 1983. She studied
abroad at the Techinion Institute of Technology, Haifa, Israel for one
semester from 1983 to 1984. Dr. Berman worked as an architect in Tel
Aviv, Israel in 1984. She returned to Toronto and worked for Norr
Partnership Limited, Architects and Engineers, in the position of
Project Design Architect. Dr. Berman was responsible for the
principal research program and development of design pertaining to Norr
Care, a division of Norr, established to respond to social needs, by
providing architectural alternatives to traditional institutions
related to the community, social services, housing and health care.
From 1986-1989 she designed Covenant House, Street Youth Hostel Crisis
Care Center in Toronto. From 1986-1989 Dr. Berman designed Woodroffe
Center in Ottawa, the Cape Breton Regional Hospital in Cape Breton,
Nova Scotia, the St. Thomas-Elgin Rehabilitation Unit in St. Thomas and
the Freeport Hospital Chronic Care Facility in Kitchener, Ontario. In
1991, Dr. Berman graduated with a masters of Design Studies in
Architecture from Harvard University Graduate School of Design. In
1993, Dr. Berman received her Doctorate in Design in Architecture from
Harvard University Graduate School of Design. From 1997 to 1999, Dr.
Berman held the position of Assistant Professor to the Illinois
Institute of Technology College of Architecture. During he time at
Harvard University, Dr. Berman has received numerous awards,
fellowships and scholarships. When Dr. Berman graduated from Carleton
University in 1983, she received the lieutenant Governor of Ontario's
Metal for Design and Architecture. Dr. Berman is not only a scholar
and a teacher, but she is also a recognized artists and has had a
number of one artist shows and group exhibitions.
Dr. Gregory K. Slater, Director. Dr. Slater received his Doctor of
Dental Surgery Degree from the University of Toronto in 1982, and is
licensed by the Royal College of Dental Surgeons. Dr. Slater is a
member of the Toronto Academy of Cosmetic Dentistry, the Ontario Dental
Association, the Toronto Dental Seminars and the American Academy of
Cosmetic Dentistry. Recently, Dr. Slater successfully completed the
State University of New York at Buffalo's Postgraduate Program in
Esthetic Dentistry. Although Dr. Slater is proficient in all areas of
dental treatment his special interest in cosmetic dentistry to enhance
smiles and esthetic dentistry to restore teeth back their natural
function and beauty. Dr. Slater has a private practice in downtown
Toronto.
Bonnie D. Walton, Director. Ms. Walton, 45, is presently the Managing
Director of Walton Interiors, specializing in commercial and
residential interiors and construction. She has completed her studies
at Sheridan College in Ontario and at Christies Education in London,
England. In the past Bonnie has been extensively involved in the
management, sale, developing and redeveloping of commercial real
estate. Bonnie has also had extensive business management experience
having provided management services on a contract basis to the legal
profession.
Fred J. Heaps, Chief Executive Officer. From 1991 to 1998, Mr. Heaps,
60, was Managing Director and Partner of ITIS, Inc., an information and
database provider to the North American Travel industry, located in
Concord, Ontario. In 1990 Mr. Heaps was President and CEO of Armada
Equipment Co. From 1964 to 1989 he was with DENTSPLY INTERNATIONAL
INC., where his positions included Sales Representative, Division
Manager for North East United States and Canada, Vice President and CEO
of DENTSPLY CANADA LTD., President of Amalgamated Dental Company,
President of Ash USA, President of Medical and Industrial Equipment,
President of National Refining Co. and President of Canadian Dental
Supply Company. Mr. Heaps has 30 years of multinational corporate
management experience in North America and Europe at all levels of
product development, financing and marketing, with recent in depth
involvement in Canadian information services and database environments,
procedures and development processes. Mr. Heaps graduated from the
University of British Columbia with a business major. He attended York
University and added business and financial postgraduate courses. He
also attended University of Chicago taking additional marketing
courses.
<PAGE>25
Kenneth B. Liebscher, President, Director. Mr. Liebscher, 56, is an
international businessman with 28 years of executive management
experience. He was 22 years with the world's largest dental products
manufacturer, DENTSPLY INTERNATIONAL INC. He held several positions
culminating as the Manager of their West Coast division, headquartered
in San Francisco, CA. Mr. Liebscher was recruited by a major European
based competitor, IVOCLAR LIECHTENSTEIN, to lead their entry into the
North American market and within two years became Executive Vice
President of Sales and Marketing and helped expand this company 's
sales to 300 million dollars U.S. before retiring. Mr. Liebscher
became a Director of E.T.C., a publicly traded company, in 1992 and
became President of it's wholly owned subsidiary, The Electric Car
Company. In 1994 he led a team that developed the Ml- 6 prototype
electric car from the ground up. Mr. Liebscher serves on the Board of
Directors of several public companies listed on the Vancouver and U.S.
Stock Exchanges. Mr. Liebscher is graduate of St. George's School,
Vancouver B.C. and also attended the University of British Columbia.
Bernard Teitelbaum, Vice President Sales and Marketing. From 1990
until 1994, Mr. Teitelbaum, 49, was with DENTSPLY CANADA LTD. as
Director of Sales and Marketing. He was fully responsible for sales
and marketing for both business units i.e. the dental laboratory and
dental equipment divisions. He launched the Trublend SLM, the largest
single tooth company, launched in the Corporation's history with 100%
dealer network penetration. From 1986 until 1992, Mr. Teitelbaum
continued with Dentsply as Sales Manager of the Laboratory Products
Business Unit. He successfully launched, in the European market, a
tooth line called Biodent into a 50 % dealer distribution network and
also captured 33 % of the market share in Europe with pre-mixed
opaquing porcelain called Biopaque. From 1981 until 1986, he was
Treasurer and Controller of DENTSPLY CANADA LTD. and was an Officer and
Director of DENTSPLY CANADA LTD. Operating Divisions. He was directly
responsible for the full financial reporting, planning, data processing
and asset management for all Canadian businesses of DENTSPLY
INTERNATIONAL INC. From 1977 until 1981, Mr. Teitelbaum was with
DENCO, A DIVISION OF MCGAW SUPPLY LTD. as Assistant Controller. Mr.
Teitelbaum graduated from University of Toronto in 1971 with a Bachelor
of Commerce degree. He took additional courses at Osgoode Hall Law
school in the L.L.B. program, Sir Wilfred Laurier University in export
management, University of Toronto in strategic planning, intermediate
accounting & auditing. He also took courses at Xerox York,
Pennsylvania in professional selling skills and has attended many one
and two day special interest courses in sales and marketing management.
Dr. Izchak Barzilay, Director. Dr. Barzilay, 42, graduated from the
University of Toronto with a Bachelor of Science Degree in 1979. He
obtained s DDS from the Faculty of Dentistry, University of Toronto in
1983. He then put in a one-year Faculty Internship Program with the
Department of Oral Medicine and Pathology at the University of Toronto,
Faculty of Dentistry. Dr. Barzilay, at the Eastman Dental Center,
University of Rochester, obtained his Specialty Certificate in
Prosthodontics in 1986. He continued on in the Department of Dental
Research, University of Rochester and obtained his Masters Degree in
1991. Dr. Barzilay has been in private practice in Toronto as a
Prosthodontist since 1987. He is an Associate in Dentistry, Department
of Prosthodontics, Faculty of Dentistry, University of Toronto. Dr.
Barzilay is on staff at the Toronto Hospital and is Head of the
Division of Prosthodontics, Mount Sinai Hospital. He is also on the
Editorial Board of Dental Implant Perspectives. Dr. Barzilay's
professional experience, includes the following: Faculty Internship at
the University of Toronto, Clinical Instructor in Oral Diagnosis and
Emergency Departments, Resident Dentist, University of Toronto Mobile
Dental Clinic for the Disabled Resident and Department of Dentistry,
Moose Factory General Hospital. Izchak was in private practice in
General Dentistry in 1984. Between 1985 and 1986 he attended at the
Genesee Hospital, Prosthodontics. Between 1986 and 1987 he was at
Strong Memorial Hospital in Prosthodontics, attending. He was
Assistant Professor, Department of Prosthodontics, Eastman Dental
Center, Rochester, NY, and a Member - Executive of the Ontario Study
Club for Osseointegration between the years of 1991 and 1993. In 1991,
he was President of the Ontario study Club for Osseointegration.
Research activities are many and varied in the area of Cured, Composite
Resins, Titanium Implants, Light-cured Composite Resins, Bonding
Composite Resins, Evaluation of Porcelain Repair Materials and from
1996, Clinical Evaluation of BITEM, our Intraoral Thermo Elastic
Material. Dr. Barzilay is a member of Alpha Omega Dental Fraternity,
The Canadian Dental Association, the American College of
Prosthodontist, American Association for Dental Research, Ontario Study
Club for Osseointegration, American Association of Dental Research
<PAGE>26
Implantology Group, Canadian Academy of Restorative Dentistry &
Prosthodontics, the Academy of Prosthodontics -Fellow, Academy of
Dentistry International Fellow and in many more. Dr. Barzilay has
received many honors and awards, and has lectured and published
extensively. Dr. Barzilay has done our main clinical study of the
BITEM product and he has become our Foremost Authority in this
particular Product.
Remuneration: To date, none of the officers have received any
compensation.
Board of Directors Compensation. Members of the Board of Directors
will receive a yet to be determined per meeting if these Directors are
not separately compensated by ThermoElastic and will be required to
attend a minimum of four meetings per fiscal year. All expenses for
meeting attendance or out of pocket expenses connected directly with
their Board representation will be reimbursed by ThermoElastic.
Director liability insurance may be provided to all members of the
Board of Directors. ThermoElastic has not yet obtained such insurance
and does not have any specifics for available cost and coverage.
ThermoElastic does not have a specific time frame to obtain the
insurance. No differentiation is made in the compensation of "outside
directors" and those officers of ThermoElastic serving in that
capacity.
Conflicts of Interest Policy. ThermoElastic has adopted a policy that
any transactions with directors, officers or entities of which they are
also officers or directors or in which they have a financial interest,
will only be on terms consistent with industry standards and approved
by a majority of the disinterested directors of ThermoElastic's Board
of Directors. The Bylaws of ThermoElastic provide that no such
transactions by ThermoElastic shall be either void or voidable solely
because of such relationship or interest of directors or officers or
solely because such directors are present at the meeting of the Board
of Directors of ThermoElastic or a committee thereof which approves
such transactions, or solely because their votes are counted for such
purpose if: (i) the fact of such common directorship or financial
interest is disclosed or known by the Board of Directors or committee
and noted in the minutes, and the Board or committee authorizes,
approves or ratifies the contract or transaction in good faith by a
vote for that purpose without counting the vote or votes of these
interested directors; or (ii) the fact of the common directorship or
financial interest is disclosed to or known by the shareholders
entitled to vote and they approve or ratify the contract or transaction
in good faith by a majority vote or written consent of shareholders
holding a majority of the common shares entitled to vote (the votes of
the common or interested directors or officers shall be counted in any
such vote of shareholders), or (iii) the contract or transaction is
fair and reasonable to ThermoElastic at the time it is authorized or
approved. In addition, interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors of ThermoElastic or a committee thereof which approves such
transactions.
- ------------------------------------------------------
CERTAIN TRANSACTIONS
- ------------------------------------------------------
On February 2, 1999, ThermoElastic Delaware entered into a contract
with Vista Developments Ltd., in which Vista would provide required
marketing, promotion and sales services. The contract stipulates such
services will cost $150,000 per annum, payable $12,500 per month, plus
certain stock options and commissions above stipulated sales levels.
On February 8, 1999, ThermoElastic Delaware entered into a five-year
contract with Gritell International Limited, in which Gritell would
provide certain management, business and financial advice and
expertise. As amended April 1, 1999, Gritell will receive $6,000 per
month for its services until further notice plus certain expenses. The
original compensation terms outlined in the contract were $13,334 per
month during the first year, $20,000 per the month during the second and
third years, and $33,334 per month during the fourth and fifth years.
Gritell has reserved the right to demand payment of any unpaid accrued
balances.
<PAGE>27
On February 22, 1999, ThermoElastic Delaware entered into a five-year
contract with Trilock Financial Corporation, in which Trilock would
provide certain management, business and financial advice and expertise.
As amended April 1, 1999, Trilock will receive $3,000 per month plus
certain other expenses for its services until further notice. The
original compensation terms outlined in the contract were $6,666 per month
during the first year, $10,000 per month during the second and third
years, and $16,666 per month during the fourth and fifth years. Trilock
has reserved the right to demand payment of any unpaid accrued balances.
All of the above agreements have been continued by us after the merger.
Due to Related Parties. As described above, ThermoElastic Delaware has
entered into management consulting fee contracts with Vista
Developments, Ltd., Gritell International Limited, Trilock Financial
Corporation and PEL Moulds, Inc. Vista Developments, Ltd. is a
shareholder in the Company. Gritell International Limited, Trilock
Financial Corporation and PEL Moulds, Inc. are owned by shareholders of
the Company.
Due to related parties consisted of the following at July 15, 1999:
Gritell International $ 16,250
Vista Developments, Ltd. 6,250
Trilock Financial Corporation 1,750
PEL Moulds, Inc. 900
-------
Total $ 25,150
========
Management fees and other expenses paid or accrued to related parties
consisted of the following at July 15, 1999:
Gritell International $ 41,298
Vista Developments, Ltd. 62,500
Trilock Financial Corporation 18,000
PEL Moulds, Inc. 19,486
--------
Total $ 141,284
=========
- ----------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ----------------------------------------------------------------
There are currently 17,338,164 common shares outstanding. The following
tabulates holdings of shares of ThermoElastic by each person who,
subject to the above, at the date of this Memorandum, holds of record
or is known by Management to own beneficially more than 5.0% of the
common shares and, in addition, by all directors and officers of
ThermoElastic individually and as a group.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of
Outstanding
Shares as
Adjusted
to Reflect
Percentage Shares Conclusion
Number Prior to Owned After of the
Name and Address of Shares(1) Offering Offering(2) Offering
<S> <C> <C> <C> <C>
Dennis Epstein 29,000 .17% 29,000 .16%
14 Chicora Avenue
Toronto, Ontario M5R 1T6
Kenneth B. Liebscher 0 0% 0 0%
1180 - 666 Burrard Street
Vancouver, B.C. V6C 2X8
Fred J. Heaps 0 0% 0 0%
390 Edgeley Boulevard, Unit 18
Concord, Ontario L4K 3Z6
<PAGE>28
Bernard Teitelbaum 0 0% 0 0%
390 Edgeley Bouleard, Unit 19
Concord, Ontario L4K 3Z6
Lawrence Pinkney 1,000 01% 0 0%
1695 Lincolshire Blvd
Mississauga, Ontario L5E 2T2
Dr. Lorne Berman 3,222,533 18.59% 2,722,533 15.01%
Ste. 4
2267 Islington Avenue
Toronto, Ontario M9W 1R4
Dr. Stephen Rivers 500 .003% 500 .003%
1 Corwin Cres.
Toronto, Ontario M3H 129
Dr. Ila Berman 500 0% 500 .003%
1106 Felicity St.
New Orleans, LA 70130
Dr. Gregory K. Slater 500 0% 0 0%
2 Bloor St. W.
Cumberland Terrace
Toronto, Ontario M4W 3E2
Dr. Izchak Barzilay 500 0% 0 0%
18 Green Acres Road
Thornhill, Ontario L4J 4S1
Bonnie D. Walton 0 0% 0 0%
Suite 906
94 Cumberland Street
Toronto, Ontario M5R 1A3
Rosemarie Berman 1,653,207 9.54% 8,750 .05%
PH 105
1131 Steeles Avenue West
Toronto, Ontario
Sondra Black 1,629,661 9.40% 5,000 .03%
21 Roxborough Lane
Thornhill, Ontario Canada L4J 4T1
Grace Maitland Carter 3,197,534 18.44% 3,197,534 18.44%
14 Chicora Avenue
Toronto, Ontario Canada
Howard Kerbel 3,223,033 18.59% 3,223,033 18.59%
120 Wembley Road
Toronto, Ontario Canada M6C 2G6
Dr. Joshua Kerbel 1,670,411 9.63% 4,000 .02%
525 Chaplin Crescent, Apt. 815
Toronto, Ontario Canada
Officers and Directors
As a Group (11 persons) 3,254,533 18.77% 2,752,533 15.18%
</TABLE>
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, beneficial ownership of a security consists of sole or
shared voting power (including the power to vote or direct the voting)
and/or sole or shared investment power (including the power to dispose
or direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable community property laws.
(2)Assumes sale of all common shares being registered on behalf of
selling security holders.
None of the officers, directors, principal shareholders or holders of
more than 5% of ThermoElastic common stock own any of the Series A or
Series B Warrants.
<PAGE>29
- ----------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
- ----------------------------------------------------------
ThermoElastic currently has 17,338,164 shares of common stock
outstanding. Of these, 9,148,238 common shares will be "restricted
securities" after the offering and may be sold in compliance with Rule
144 adopted under the Securities Act of 1933, as amended. Other
securities may be issued, in the future, in private transactions
pursuant to an exemption from the Securities Act. Rule 144 provides,
in essence, that a person who has held restricted securities for a
period of one year may sell every three months in a brokerage
transaction or with a market maker an amount equal to the greater of 1%
of ThermoElastic's outstanding shares or the average weekly trading
volume, if any, of the shares during the four calendar weeks preceding
the sale. The amount of "restricted securities" which a person who is
not an affiliate of ThermoElastic may sell is not so limited.
Non-affiliates may each sell without limitation shares held for two
years. ThermoElastic will make application for the listing of its
Shares in the over-the-counter market. Sales under Rule 144 may, in
the future, depress the price of ThermoElastic's Shares in the over-
the-counter market, should a market develop. Prior to this offering
we have not had a market for our common shares. The effect, if any, of
a public trading market or the availability of shares for sale at
prevailing market prices cannot be predicted. Nevertheless, sales of
substantial amounts of shares in the public market could adversely
effect prevailing market prices.
- ----------------------------------------------------------
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
- ----------------------------------------------------------
Prior to this offering, we have had no market for our common stock and
warrants. We have applied to have its common stock quoted on the OTC
Bulletin Board. If ThermoElastic is not accepted on the OTC Bulletin
Board, ThermoElastic will apply to have its common shares traded on the
pink sheets.
Dividends. Holders of ThermoElastic's common stock are entitled to
receive such dividends as may be declared by its Board of Directors.
Broker-Dealer Sales of Company Securities. Until ThermoElastic
successfully obtains a listing on the NASDAQ quotation system, if ever,
ThermoElastic's securities may be covered by Rule 15g-2 under the
Securities Exchange Act of 1934 that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally
<PAGE>30
institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouse). For transactions covered by
the rule, the broker-dealer must make a special suitability
determination of the purchaser and have received the purchaser's
written agreement to the transaction prior to the sale. In order to
approve a person's account for transactions in designated securities,
the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on the information
required by paragraph (i) that transactions in designated securities
are suitable for the person and that the person has sufficient
knowledge and experience in financial matters that the person
reasonably may be expected to be capable of evaluating the rights of
transactions in designated securities; and (iii) deliver to the person
a written statement setting forth the basis on which the broker or
dealer made the determination required by paragraph (ii) in this
section, stating in a highlighted format that it is unlawful for the
broker or dealer to effect a transaction in a designated security
subject to the provisions of paragraph (ii) of this section unless the
broker or dealer has received, prior to the transaction, a written
agreement to the transaction from the person; and stating in a
highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with
the written statement and the person should not sign and return the
written statement to the broker or dealer if it does not accurately
reflect the person's financial situation, investment experience and
investment objectives and obtain from the person a manually signed and
dated copy of the written statement. A designated security means any
equity security other than a security (i) registered, or approved for
registration upon notice of issuance on a national securities exchange
that makes transaction reports available pursuant to 17 CFR 11Aa3-1
(ii) authorized or approved for authorization upon notice of issuance,
for quotation in the NASDAQ system; (iii) that has a price of five
dollars or more or . . . (iv) whose issuer has net tangible assets in
excess of $2,000,000 demonstrated by financial statements dated less
than fifteen months previously that the broker or dealer has reviewed
and has a reasonable basis to believe are true and complete in relation
to the date of the transaction with the person. Consequently, the
rule may affect the ability of broker-dealers to sell ThermoElastic's
securities and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market.
ThermoElastic's securities will likely trade below $5.00 and such
securities will be subject to the penny stock rules discussed above.
- --------------------------------------------------------------
DESCRIPTION OF SECURITIES
- ---------------------------------------------------------------
Qualification. The following statements constitute brief summaries of
ThermoElastic's Articles of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their
entirety to the full text of the Articles of Incorporation and Bylaws.
Our Articles of Incorporation authorize the issuance of up to
100,000,000 common shares. Common shares purchased in this offering
will be fully paid and non-assessable.
Common Stock. Each record holder of common stock is entitled to one
vote for each share held on all matters properly submitted to the
stockholders for their vote. Cumulative voting for the election of
directors is not permitted by the Articles of Incorporation. The
holders of outstanding shares of common stock are entitled to such
dividends as may be declared from time to time by the Board of
Directors out of legally available funds; and, in the event of
liquidation, dissolution or winding up of the affairs of ThermoElastic,
holders are entitled to receive, ratably, the net assets of
ThermoElastic available to stockholders after distribution is made to
the preferred stockholders, if any, who are given preferred rights upon
liquidation. Holders of outstanding common shares are, and all
unissued shares when offered and sold will be, duly authorized, validly
issued, fully paid, and nonassessable. To the extent that additional
common shares are issued, the relative interest of then existing
stockholders may be diluted.
Preferred Stock. ThermoElastic's Articles of Incorporation authorize
the issuance of 20,000,000 shares of $.0001 par value preferred stock.
The Board of Directors of ThermoElastic is authorized to issue the
<PAGE>31
preferred stock from time to time in series and is further authorized
to establish such series, to fix and determine the variations in the
relative rights and preferences as between series, to fix voting
rights, if any, for each series, and to allow for the conversion of
preferred stock into common stock.
No preferred stock is currently issued.
Series A Warrants. There are current 666,400 Series A Warrants issued
and outstanding. The Series A Warrants are each exercisable for one
common share of ThermoElastic at an exercise price of $2.00. The
Series A Warrants are exercisable at any time after April 30, 2000,
subject to certain conditions, and expire December 31, 2001.
ThermoElastic may redeem the Series A Warrants upon written notice of
thirty (30) days, at $.01 per Series A Warrants.
The Series A Warrants exercise price and number and kind of common
stock or other securities and properties to be obtained upon exercise
of the Series A Warrants are subject to adjustments in the event of
stock dividends on, or a subdivision (stock split) of or consolidation
(reverse stock split) of the common stock, or the issuance of certain
rights or warrants to all holders of its common stock to purchase
common stock at less than market price or upon other distributions
(other than cash dividends) to all holders of common stock.
Series B Warrants. There are current 666,400 Series B Warrants issued
and outstanding. The Series B Warrants are each exercisable for one
common share of ThermoElastic at an exercise price of $3.00. The
Series B Warrants are exercisable at any time after April 30, 2000,
subject to certain conditions, and expire December 31, 2001.
ThermoElastic may redeem the Series B Warrants upon written notice of
thirty (30) days, at $.01 per Series B Warrants.
The Series B Warrants exercise price and number and kind of common
stock or other securities and properties to be obtained upon exercise
of the Series B Warrants are subject to adjustments in the event of
stock dividends on, or a subdivision (stock split) of or consolidation
(reverse stock split) of the common stock, or the issuance of certain
rights or warrants to all holders of its common stock to purchase
common stock at less than market price or upon other distributions
(other than cash dividends) to all holders of common stock.
Transfer Agent. Atlas Stock Transfer acts as transfer agent for
ThermoElastic.
- -----------------------------------------------------------
LEGAL MATTERS
- -----------------------------------------------------------
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon by J. M. Walker, Attorney-At-Law.
- --------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------
We are not involved in any legal proceedings as of the date of this
prospectus.
- --------------------------------------------------------
EXPERTS
- --------------------------------------------------------
The financial statements as of July 15, 1999 and for the period ended
from inception (January 21, 1999) through July 15, 1999 included in
this prospectus, have been audited by Meeks, Dorman & Company, P.A.
independent auditors, as stated in their report appearing herein (which
report expresses an unqualified opinion), and have been so included in
reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
<PAGE>32
- --------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- --------------------------------------------------------
None of the experts or counsel named in the prospectus are affiliated
with ThermoElastic.
- --------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------
Until , 1999 (90 days after the date of the prospectus), all
persons making transactions in the registered securities, whether or
not participating in the offering, may be required to deliver a
prospectus. This is in addition to the obligation of these persons to
deliver a prospectus when acting as underwriters and when utilizing
their unsold allotments or subscriptions.
No dealer, salesman, agent or any other person has been authorized to
give any information or to make any representation other than those
contained in this prospectus. If given or made, this information or
representation must not be relied upon as having been authorized by
ThermoElastic, or the underwriter, if an underwriter assists in the
sale of the securities.
This prospectus is not an offer or a solicitation by anyone to any
person in any state, territory or possession of the United States in
which an offer or solicitation is not authorized by the laws of a
state, territory or possession of the United States, or to any person
to whom it is unlawful to make an offer or solicitation.
Neither the delivery of this prospectus or any sale made hereunder
shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this prospectus or in the
affairs of ThermoElastic since the date of this prospectus.
<PAGE>33
- --------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------
Index to Financial Statements
Unaudited Pro Forma Condensed Combined Financial Data F-2
Unaudited Pro Forma Consolidated Balance Sheet as of
July 15, 1999 F-3
Unaudited Pro Forma Consolidated Statement of Operations
for the period ended July 15, 1999 F-4
Notes To Unaudited Pro Forma Consolidated Financial
Statements F-5
Independent Auditor's Report dated August 26, 1999 F-6
Balance Sheet as of July 15, 1999 F-7
Statement of Operations for the period from
inception (January 21, 1999 to July 15, 1999 F-8
Statement of Changes in stockholders' Equity For
The Period From Inception (January 21, 1999)
to July 15, 1999 F-9
Statements of Cash Flows For the Period From
Inception (January 21, 1999) to July 15, 1999 F-10
Notes to Financial Statements F-11
<PAGE>34
LPR CYBERTEK, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined balance sheet as
of July 15, 1999 and the unaudited pro forma condensed combined
statement of operations for the nine and one half month period ended
July 15, 1999 give effect to the Merger as of July 15, 1999 for the pro
forma consolidated balance sheet and as of January 1, 1998 for the pro
forma statement of operations.
The unaudited pro forma condensed combined financial statements are
based on historical financial statements of LPR Cybertek, Inc. ("LPR"
or the "Company") and ThermoElastic Technologies, Inc. ("TTI"), giving
effect to the Merger applying the purchase method of accounting and the
assumptions and adjustments as discussed in the accompanying notes to
the unaudited pro forma condensed combined financial statements (see
Note A). These unaudited pro forma condensed combined financial
statements have been prepared by the management of LPR based upon the
condensed combined financial statements of LPR and TTI as of December
31, 1998 and for the year ended December 31, 1998. The unaudited pro
forma condensed combined financial statements should be read in
conjunction with the historical financial statements and notes thereto.
The unaudited pro forma condensed combined financial statements are not
necessarily indicative of what actual results of operations would have
been for the period presented had the transaction occurred on the dates
indicated and do not purport to indicate the results of the future
operations.
F-2
<PAGE>35
LPR CYBERTEK, INC.
Unaudited Pro Forma Consolidated Balance Sheet
July 15, 1999
<TABLE>
<CAPTION>
ThermoElastic
LPR Cybertek Technologies, Inc.
July 15, July 15, Pro Forma
1999 1999 Adjustments Total
------------- ------------------ ----------- ------
<S> <C> <C> <C> <C>
Assets
Cash $ 165,081 $ 189,570 $ (165,000) (c) $189,651
Note receivable - 165,000 (165,000) (d) -
---------- --------- ----------- --------
Total current assets 165,081 354,570 (330,000) 189,651
---------- -------- ----------- -------
Property and Equipment, net 579 2,104 - 2,683
--------- -------- ----------- ------
Other Assets:
Deposit 5,000 5,000
Website 9,021 9,021
Product rights 250,000 250,000
--------- -------- ----------- -------
Total other assets 264,021 264,021
--------- -------- ----------- -------
Total asset $ 165,000 $620,695 $ (330,000) $ 456,335
========== ======== ========== =========
Liabilities and Stockholders' Equity
Accounts payable $ 546 $ 15,781 $ - $ 16,327
Note payable 165,000 (165,000) (d) -
Due to related parties 25,150 25,150
Stockholder advance 2,235 (2,235) (c) -
Product rights payable 110,000 110,000
---------- -------- --------- ---------
Total current liabilities 167,781 150,931 (167,235) 151,477
---------- -------- --------- ---------
Stockholders' equity
Preferred stock 165 (165) (c) -
Common stock 1,000 1,382 720 (a) 1,734
14 (b)
(1,382) (b)
Additional paid-in capital 29,200 719,533 (719,533) (b) 355,630
(162,600) (c)
(720) (a)
469,764 (b)
(14) (b)
Accumulated deficit (32,486) (249,196) 249,196 (b) (32,486)
Accumulated other comprehensive income:
Foreign currency translation adjustments (1,955) 1,955 (b) -
---------- -------- -------- -------
Total stockholders' equity (2,121) 469,764 (162,765) 304,878
---------- -------- -------- -------
Total liabilities and stockholders' equity $ 165,660 $ 620,695 $ (330,000) $ 456,355
========== ========= =========== =========
</TABLE>
See notes to unaudited pro forma consolidated balance sheet.
F-3
<PAGE>36
LPR CYBERTEK, INC.
Unaudited Pro Forma Consolidated Statements of Operations
For the period Ended July 15, 1999
<TABLE>
<CAPTION>
ThermoElastic
LPR Cybertek Technologies, Inc.
Period Period Pro Forma
Ended Ended Pro Forma Consolidated
July 15, 1999 July 15, 1999 Adjustments Company
------------- ------------------ ----------- ------
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
Operating expenses 6,094 249,196 - 255,290
--------- ----------- --------- ----------
Net loss (6,094) (249,196) - (255,290)
--------- ----------- --------- ----------
Other comprehensive loss - (1,955) - (1,955)
--------- ----------- --------- ----------
Total comprehensive loss $ (6,094) $ (251,151) $ - $ (257,245)
========= =========== ========= ==========
Total comprehensive loss per share $ (0.00) $ (0.01)
Weighted average shares outstanding 10,000,000 17,338,164
========== ==========
</TABLE>
See notes to unaudited pro forma consolidated statements of operations
F-4
<PAGE>37
LPR CYBERTEK, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
As consideration for LPR's acquisition of TTI through the Merger, LPR
has paid and has agreed to pay to holders of TTI common stock
consideration pursuant to the terms of the merger agreement , as
follows:
The consideration paid at closing was in the form of 138,164 shares of
LPR common stock, par value $.0001 per share. The Company also issued
7,200,000 shares of LPR common stock to LPR shareholders in connection
with the Company's 1.72-to-1 stock split.
NOTE B
The pro forma condensed combined balance sheet includes the adjustments
necessary to give full effect to the Merger as if it had occurred on
July 15, 1999 and to reflect the allocation of the cost of the merger
to the estimated fair value of assets acquired and liabilities assumed
including: (i) the issuance of approximately 7,200,000 shares of LPR's
common stock issued in connection with the Company's 1.72-to-1 stock
split; (ii) the issuance of 138,164 shares of LPR's common stock in
exchange for all of the outstanding shares of TTI; and (iii) the
elimination of TTI's equity accounts.
These adjustments are summarized as follows:
(a) Net effect of issuance of LPR Common Stock in 1.72-to-1
stock split $ 0
=========
(b) Issuance of LPR Common Stock in exchange
for TTI Common Stock $ 469,764
=========
Elimination of TTI's equity accounts:
Common stock $ (1,382)
Additional paid-in capital (719,533)
Accumulated deficit 249,196
Accumulated other comprehensive income effect
from foreign currency translation adjustments 1,955
----------
$(469,764)
=========
(c ) Repurchase and retirement of LPR Preferred Stock and elimination
of liabilities not assumed in the merger:
Stockholder advances $ 2,235
Preferred stock 165
Additional paid-in capital 162,600
Cash $(165,000)
(d) Upon the closing of the merger between LPR and TTI, the notes
receivable and payable of $165,000 was eliminated.
F-5
<PAGE>38
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
ThermoElastic Technologies, Inc.
We have audited the accompanying balance sheet of ThermoElastic
Technologies, Inc., a development stage entity, as of July 15,
1999 and the related statements of operations, changes in
stockholder's equity and cash flows for the period from inception
(January 21, 1999) to July 15, 1999. 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 referred to above
present fairly, in all material respects, the financial position
of ThermoElastic Technologies, Inc. as of July 15, 1999 and the
results of its operations and its cash flows for the period from
inception (January 21, 1999) to July 15, 1999, in conformity with
generally accepted accounting principles.
Meeks, Dorman & Company, P.A.
Longwood, Florida
August 26, 1999
F-6
<PAGE>39
THERMOELASTIC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTITY)
Balance Sheet
July 15, 1999
ASSETS
Current assets:
Cash $ 189,570
Note receivable (Note 2) 165,000
---------
Total current assets 354,570
Fixed assets 2,104
---------
Other assets:
Refundable deposit (Note 3) 5,000
Website 9,021
Product rights (Note 4) 250,000
---------
Total other assets 264,021
---------
Total Assets 620,695
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 15,781
Due to related parties (Note 6) 25,150
Product rights payable (Note 4) 110,000
--------
Total liabilities 150,931
---------
Commitments (Notes 8 & 9)
Stockholders' equity (Note 7):
Common stock, par value $.0001,
50,000,000 shares authorized
13,816,400 shares issued and
outstanding 1,382
Additional paid-in capital 719,533
Accumulated deficit (249,196)
Accumulated other comprehensive
income:
Foreign currency translation
adjustments (1,955)
--------
Total stockholders' equity 469,764
---------
Total Liabilities and Stockholders'
Equity $ 620,695
=========
The accompanying notes are an integral part
of these financial statements.
F-7
<PAGE>40
THERMOELASTIC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTITY)
Statement of Operations
For The Period From Inception
(January 21, 1999) to July 15, 1999
Revenue $ -
Operating expenses 249,196
--------
Net loss (249,196)
-------
Other comprehensive income:
Foreign currency translation adjustments (1,955)
-------
Total comprehensive loss $ (251,151)
----------
Net loss per share $ (.02)
----------
Weighted average common
shares outstanding 13,543,782
----------
The accompanying notes are an integral part
of these financial statements.
F-8
<PAGE>41
THERMOELASTIC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTITY)
Statement Of Changes In Stockholders' Equity
For the Period From Inception
(January 21, 1999) to July 15, 1999
<TABLE>
<CAPTION>
Common Shares
---------------------------- Deficit
Accumulated Accumulated
Number Additional Other During the Total
of Paid-In Comprehensive Development Stockholders'
Shares Amount Capital Income Stage Equity
------ ------ ------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 21, 1999 - $ - $ - $ - $ - $ -
Issuance of common stock
to founders for cash 13,050,000 1,305 - - - 1,305
Issuance of common stock
to founders for product
rights 100,000 10 20,000 - - 20,010
Issuance of common stock
in connection with
private offering for cash 666,400 67 699,533 - - 699,600
Net loss - - - - (249,196) (249,196)
Foreign currency translation
adjustments - - - (1,955) - (1,955)
---------- ------- --------- -------- ---------- ---------
BALANCE, July 15, 1999 13,816,400 $ 1,382 $ 719,533 $ (1,955) $ (249,196) $ 469,764
========== ======= ========= ========= ========== =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-9
<PAGE>42
THERMOELASTIC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTITY)
Statement of Cash Flow
For the Period From Inception
(January 21, 1999) to July 15, 1999
Cash flows from operating activities:
Net loss $ (251,151)
Increases in liabilities: -
Accounts payable 15,781
Due to related parties 25,150
Product rights payable 110,000
----------
Net cash used for operating activities: (100,220)
----------
Cash flows from investing activities:
Purchase of product rights (230,000)
Purchase of website (9,021)
Increase in deposits (5,000)
Purchase of equipment (2,104)
---------
Net cash used for investing activities: (246,125)
---------
Cash flows from financing activities:
Issuance of common stock 700,915
Issuance of note receivable (165,000)
---------
Net cash provided by financing activities: 535,915
---------
Net increase in cash 189,570
Cash, beginning of period -
Cash, end of period $ 189,570
=========
Supplemental disclosures of
cash flow information:
- -----------------------------------------------------------
Cash paid for interest $ -
Cash paid for income taxes $ -
Purchase of product rights through
issuance of stock $ 20,000
==========
The accompanying notes are an integral part
of these financial statements.
F-10
<PAGE>43
THERMOELASTIC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTITY)
Notes to Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - ThermoElastic Technologies, Inc., a
development stage entity (the "Company"), was incorporated on
January 21, 1999, in the State of Delaware to carry on the
business of marketing and distributing a new generation acrylic,
known as Biocompatible Intraoral Thermo Elastic Material (BITEM),
which is anticipated to be sold to dental related businesses and
other allied fields throughout the world.
Dependence on Future Financing - The Company is newly organized,
and has sustained losses since its inception. The Company's
ability to meet its obligations in the ordinary course of
business is dependent on its ability to raise additional
financing through public or private equity financings, or secure
other sources of financing.
The Company has no revenues from operations and is subject to
the risks, expenses, and uncertainties frequently encountered by
companies in the development stage. In the event the Company
does not successfully implement its business plan, certain
assets may not be recoverable.
Merger - Effective July 15, 1999, the Company entered into a
merger agreement with LPR Cybertek, a public shell company with no
operations. Pursuant to the agreement, the Company will be merged
into LPR Cybertek with LPR Cybertek being the surviving
corporation. The LPR Cybertek name will then be changed to
ThermoElastic Technologies, Inc.
Wholly-Owned Subsidiary - On June 14, 1999, the Company filed
articles of incorporation for a wholly-owned subsidiary,
ThermoElastic Technologies (Canada), Inc., a Canadian corporation.
As of July 15, 1999, no activity had taken place in the
subsidiary.
Cash Equivalents - The Company considers all highly liquid
investments with an original maturity of three months or less as
cash equivalents.
Fixed Assets - Fixed assets are stated at cost. Depreciation will
be provided for fixed assets over the estimated useful life of the
asset using a straight-line method.
Other Assets - Other assets includes intangible assets consisting
of product rights and a website carried at cost. These intangible
assets will be amortized on a straight-line basis over their
estimated useful lives once the Company commences operations.
Income Taxes - The Company follows the provisions of Statement of
Financial Accounting Standard No. 109, "Accounting for Income
Taxes," which requires the recognition of deferred tax assets and
liabilities for expected future tax consequences of events that
have been included in the Company's financial statements or tax
returns. Under this method, deferred tax assets and liabilities
are determined based on the difference between financial statement
and tax basis of assets and liabilities using enacted tax rates in
effect when these differences are expected to reverse. Valuation
allowances are established, when appropriate, to reduce deferred
tax assets to the amount expected to be realized.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
F-11
<PAGE>44
Note 1 - cont.
Long-Lived Assets - In March 1995, Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
("SFAS No. 121") was issued. SFAS No. 121 requires that long-
lived assets and certain identifiable intangibles to be held and
used or disposed of by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company
has adopted this statement and determined that no impairment loss
need be recognized for applicable assets.
Earnings Per Share - The Company has adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share,"
which requires presentation of basic earnings per share ("Basic
EPS") and diluted earnings per share ("Diluted EPS"). The
computation of Basic EPS is computed by dividing income available
to common stockholders by the weighted average number of
outstanding common shares during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during
the period. The computation of Diluted EPS does not assume
conversion, exercise or contingent exercise of securities that
would have an anti-dilutive effect on earnings.
The shares used in the computation as of July 15, 1999 were as
follows:
Basic EPS 13,543,782
----------
Diluted EPS 13,543,782
----------
Comprehensive Income - The Company has adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for
the reporting and display of comprehensive income and its
components in the financial statements. This schedule has been
included in the statement of operations.
Fair Value Of Financial Instruments - The carrying value of cash
and cash equivalents, notes receivable, accounts payable, due to
related parties, and product rights payable, approximates fair
value due to the relatively short maturity of these instruments.
Impact of Year 2000 Issue - During the period ended July 15, 1999,
the Company conducted an assessment of issues related to the Year
2000 and determined that there were no modifications needed in
order to ensure that its computer systems will properly utilize
dates beyond December 31, 1999. At this time, the Company cannot
determine the impact the Year 2000 will have on its key suppliers.
If the Company's suppliers do not convert their systems to become
Year 2000 compliant, the Company may be adversely impacted. The
Company is addressing these risks in order to reduce the impact on
the Company.
Recent Accounting Pronouncements - During 1998, the FASB issued
statement of Financial Accounting Standards No. 131 (SFAS No.
131), "Disclosure About Segments of an Enterprise and Related
Information" which changes the way public companies report
information about segments. SFAS No. 131 establishes standards
for the way public companies report information about operating
segments in annual financial statements and requires reporting
of selected information about operating segments in interim
financial statements issued to the public. The Company does not
have any disclosure requirements under this standard.
Concentration of Credit Risk - The Company's financial instruments
that are exposed to concentrations of credit risk consist of cash,
which includes checking accounts placed with federally insured
financial institutions. Such accounts may at times exceed
federally insured limits. The Company has not experienced any
losses on such accounts.
F-12
<PAGE>45
NOTE 2 - NOTE RECEIVABLE
On July 15, 1999, the Company had a $165,000 note receivable from
LPR Cybertek. The Company advanced money to LPR Cybertek to be
used for the repurchase of preferred stock in connection with the
merger. Upon the merger of the two companies, the note receivable
will be eliminated against the offsetting note payable of LPR
Cybertek.
NOTE 3 - REFUNDABLE DEPOSIT
On March 15, 1999, the Company paid a $5,000 refundable deposit
for the acquisition of a public shell company having no
significant assets and no on-going operations. As of the date of
these financial statements, the Company had acquired a different
public shell company, and it was management's intent to request a
refund of this deposit.
NOTE 4 - PRODUCT RIGHTS
The Company has entered into an exclusive agreement to acquire the
rights and related privileges to manufacture, market, distribute
and sell by retail, wholesale or any other method, the "BITEM"
products. These products are protected by U.S., Canadian and
European patents, and all divisional patents for non-dental
applications, along with improvements, variations and changes to
these patents for the entire world for a term which is the longer
of 25 years or the life of the patents or any extension or
amendments of the patents.
For granting this exclusive license, the licensor will receive,
the following:
(a) A royalty calculated as follows:
(i) 5% of the first $25,000,000 in gross annual income, and
(ii) 3.5% of the next $25,000,000 in gross annual income, and
(iii) 2.5% of gross annual income exceeding $50,000,000.
(b) A consulting agreement for a 3-year term, a maximum of
Canadian $60,000 (US $40,469 as of July 15, 1999) per year for
further research and development of new products, marketing and
training. This agreement shall be renewable on mutual consent for
two successive periods of two years.
(c) The right to purchase 100,000 common shares, par value of
$.0001 per share, at $.20 per share, or $20,000. This right had
been exercised as of the date of these financial statements.
(d) A two-year option to purchase 100,000 common shares at $1.00
per share.
The license agreement has been capitalized at a cost of $250,000.
Payments for the license agreement are $50,000 at the time of
initial funding, $20,000 in common stock, three payments of
$35,000 every 2 months, and $75,000 at the end of one year. At
July 15, 1999, $110,000 remained in product rights payable.
Product rights will begin being amortized once business
activities commence.
NOTE 5 - INCOME TAXES
The components of the net deferred tax assets consist of the
following at July 15, 1999:
Deferred tax assets:
Net operating loss carryforwards $ 99,200
--------
Gross deferred income tax assets 99,200
Valuation allowance (99,200)
--------
Total deferred income tax assets -
Total deferred income tax liabilities -
--------
Net deferred income tax assets -
========
F-13
<PAGE>46
The following summary reconciles differences from taxes at the
federal statutory rate with the effective rate:
Federal income taxes at statutory rates 34.0%
State taxes, net of federal benefit 5.5%
------
Net deferred income tax assets 39.5%
------
Unused net operating losses for income tax purposes, expiring in
various amounts through 2014, of $251,151 are available at July
15, 1999 for carryforward against future years' taxable income.
The tax benefit of these losses of approximately $99,200 has been
offset by a valuation allowance due to it being more likely than
not that the deferred tax assets be realized.
NOTE 6 - DUE TO RELATED PARTIES
The Company has entered into management consulting fee contracts
with Vista Developments, Ltd., Gritell International Limited,
Trilock Financial Corporation and PEL Moulds, Inc. as described
further in Note 8 - Commitments. Vista Developments, Ltd. is a
shareholder in the Company. Gritell International Limited,
Trilock Financial Corporation and PEL Moulds, Inc. are owned by
shareholders of the Company.
Due to related parties consisted of the following at July 15,
1999:
Gritell International $ 16,250
Vista Developments, Ltd. 6,250
Trilock Financial Corporation 1,750
PEL Moulds, Inc. 900
-------
Total $ 25,150
========
Management fees and other expenses paid or accrued to related
parties consisted of the following at July 15, 1999:
Gritell International $ 41,298
Vista Developments, Ltd. 62,500
Trilock Financial Corporation 18,000
PEL Moulds, Inc. 19,486
--------
Total $ 141,284
=========
NOTE 7 - STOCKHOLDERS' EQUITY
The Company issued a total of 13,150,000 common shares to its
founders for $1,305 in cash and $20,010 of product rights. In
addition, the Company issued 666,400 common shares for $999,600 in
a private placement. The Company paid $300,000 in fees due under
an investor relations consulting agreement.
In the Company's private offering, each share of common stock
issued includes one Series A warrant, exercisable for one share of
common stock at a price of $3.00, and one Series B warrant,
exercisable for one share of common stock at a price of $4.00.
The warrants are exercisable at any time after April 30, 2000.
Both Series A and Series B warrants expire December 31, 2001. The
Company may redeem its warrants with 30 days written notice at a
price of $0.01 per warrant.
NOTE 8 - COMMITMENTS
On February 2, 1999, the Company entered into a contract with
Vista Developments Ltd., in which Vista would provide required
marketing, promotion and sales services. The contract
stipulates such services will cost $150,000 per annum, payable
$12,500 per month, plus certain stock options and commissions
above stipulated sales levels.
On February 8, 1999, the Company entered into a five-year
contract with Gritell International Limited, in which Gritell
would provide certain management, business and financial advice
F-14
<PAGE>47
and expertise. As amended April 1, 1999, Gritell will receive
$6,000 per month for its services until further notice plus
certain expenses. The original compensation terms outlined in the
contract were $13,334 per month during the first year, $20,000 per
the month during the second and third years, and $33,334 per month
during the fourth and fifth years. Gritell has reserved the right
to demand payment of any unpaid accrued balances.
On February 22, 1999, the Company entered into a five-year
contract with Trilock Financial Corporation, in which Trilock
would provide certain management, business and financial advice
and expertise. As amended April 1, 1999, Trilock will receive
$3,000 per month plus certain other expenses for its services
until further notice. The original compensation terms outlined in
the contract were $6,666 per month during the first year, $10,000
per month during the second and third years, and $16,666 per month
during the fourth and fifth years. Trilock has reserved the right
to demand payment of any unpaid accrued balances.
NOTE 9 - OPERATING LEASE COMMITMENTS
The Company leases two vehicles under operating leases with four-
year terms. The Company leases two offices under operating leases
with terms of one year or less. Future minimum lease payments
under the vehicle leases, are as follows:
2000 $ 13,712
2001 13,712
2002 13,712
2003 11,963
--------
Total $ 53,099
=========
F-15
<PAGE>48
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 24. Indemnification of Officers and Directors.
The By-Laws of ThermoElastic provides that a director of the registrant
shall have no personal liability to the Registrant or its stockholders
for monetary damages for breach of a fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (b) for acts and
omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, and (c) pursuant to Colorado law for any
transaction from which the director derived an improper personal
benefit. Registrant's By-Laws exculpates and indemnifies the
directors, officers, employees, and agents of the registrant from and
against certain liabilities. Further the By-Laws also provides that
the Registrant shall indemnify to the full extent permitted under
Colorado law any director, officer employee or agent of Registrant who
has served as a director, officer, employee or agent or the Registrant
or, at the Registrant's request, has served as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THERMOELASTIC FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by ThermoElastic Technologies, Inc. (hereinafter in this Part II
referred to as the "Company") are estimated to be substantially as
follows:
<TABLE>
Amount
Payable
Item By Company
<S> <C>
S.E.C. Registration Fees $4,077.40
Printing and Engraving Fees $2,500.00
Legal Fees $15,000.00
Accounting Fees and Expenses $10,000.00
Transfer Agent's Fees $1,500.00
Miscellaneous $2,500.00
Total $35,577.40
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
Since ThermoElastic's inception through the date of this registration
statement, ThermoElastic has sold its Common Stock to five (5) persons
listed in the table below in transactions summarized as follows:
Aggregate Purchase
Date of Purchase Price
Name Sale Shares Price per Share
- ---- ---- ---- ------ -----
Patrick R. Lalande(1) 01-30-95 4,000,000 $100 -
Chuck L. Burton(1)(2) 01-30-95 4,000,000 $100 -
William Waters 08-01-95 1,000,000 $10,000 .01
12-15-95 500,000 $5,000 .01
Keith Martz(3) 02-10-96 250,000 $2,500 .01
Steve Banks(3) 02-10-96 250,000 $2,500 .01
___________________
(1) Consideration consisted of services rendered to ThermoElastic
related to investigating and developing ThermoElastic's proposed
business plan, capital structure and completing the organization of
ThermoElastic totaling $200. Officers and Directors met on several
occasions to discuss and formulate the corporate structure and plan.
(2) On March 1, 1995, Mr. Burton gifted and transferred 3,800,000
shares to his wife, Joyce Burton and 200,000 shares to William Waters,
both currently Officers and Directors. Mr. Burton is no longer a
shareholder but may be deemed to be the beneficial owner of all of his
wife's 3,800,000 shares.
<PAGE>49
(3) Total aggregate consideration consisted of services valued by
ThermoElastic's Board of Directors at $5,000.00. Each of the sales
listed above was made for services. All of the listed sales were made
in reliance upon the exemption from registration offered by Section
4(2) of the Securities Act of 1933, as amended and applicable state
private offering exemptions.
Based upon Subscription Agreements completed by each of the
shareholders and the pre-existing relationship between the shareholders
and ThermoElastic, ThermoElastic believes it had reasonable grounds to
believe immediately prior to making an offer to the private investors,
and did in fact believe, when such subscriptions were accepted, that
such purchasers (1) were purchasing for investment and not with a view
to distribution, and (2) had such knowledge and experience in financial
and business matters that they were capable of evaluating the merits
and risks of their investment and were able to bear those risks. The
purchasers had access to pertinent information enabling them to ask
informed questions. The shares were issued without the benefit of
registration. An appropriate restrictive legend is imprinted upon each
of the certificates representing such shares, and stop-transfer
instructions have been entered in ThermoElastic's transfer records. All
such sales were effected without the aid of underwriters, and no sales
commissions were paid.
On July 15, 1999, LPR Cybertek entered into an Agreement and Plan of
Reorganization with ThermoElastic Technologies, Inc., a Delaware
corporation "ThermoElastic". Pursuant to the Agreement and Plan of
Reorganization, ThermoElastic Delaware was merged into the LPR Cybertek.
All shares held by current shareholders of ThermoElastic Delaware were
exchanged for 138,164 Common Shares, 666,400 Class A Warrants, 666,400
Class B Warrant and 100,000 options to purchase Common Shares of the LPR
Cybertek at $1.00 per Common
The issuances pursuant to the merger were made in reliance upon the
exemption from registration offered by Section 4(2) of the Securities
Act of 1933, as amended and applicable state private offering
exemptions.
Based upon the merger documents and the pre-existing relationship
between the shareholders and ThermoElastic, We believe we
had reasonable grounds to believe immediately prior to the merger, and
did in fact believe, when such merger was consummated, that the
shareholders of ThermoElastic Delaware (1) were acquiring for
investment and not with a view to distribution, and (2) had such
knowledge and experience in financial and business matters that they
were capable of evaluating the merits and risks of the merger and were
able to bear those risks. The shareholders of ThermoElastic Delaware
had access to pertinent information enabling them to ask informed
questions. The shares were issued without the benefit of registration.
An appropriate restrictive legend is imprinted upon each of the
certificates representing such shares, and stop-transfer instructions
have been entered in ThermoElastic's transfer records. All such sales
were effected without the aid of underwriters, and no sales commissions
were paid.
<PAGE>50
Item 27. Exhibit Index.
<TABLE>
<S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation incorporated by reference
to Form 10SB filed November 25, 1998
(3.2) Amendment to Articles of Incorporation dated August
25, 1998 incorporated by reference to Form 10SB filed
November 25, 1998
(3.3) Bylaws incorporated by reference to Form 10SB filed
November 25, 1998
(3.4) Articles of Merger between ThermoElastic and LPR
Cybertek, Inc. incorporated by reference to Form 8-K
dated July 30, 1999
(4) Specimen certificate for common stock
(4.1) Specimen Warrant certificate
(5) Consent and Opinion of Jody M. Walker regarding
legality of securities registered under this
Registration Statement and to the
references to such attorney in the prospectus filed
as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Licensing Agreement by and between ThermoElastic and
Apple Dental Ventures dated
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Meeks, Dorman & Company, P.A., Certified
Public Accountants
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule
(28) Not Applicable
</TABLE>
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(I) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the
Registration Statement.
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
<PAGE>51
(b) Delivery of Certificates. The undersigned registrant hereby
undertakes to provide to the Transfer Agent at the closing,
certificates in such denominations and registered in such names as are
required by the Transfer Agent to permit prompt delivery to each
purchaser.
(c) Indemnification. 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 the
provisions set forth in ThermoElastic's Articles of Incorporation 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 of expenses incurred or paid
by a director, officer or controlling person of 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 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 Act
and will be governed by the final adjudication of such issue.
<PAGE>52
SIGNATURES
In accordance with 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 registration statement to be signed on its behalf by the
undersigned, in the City of Blaine, State of Washington on the 8th day
of December, 1999.
ThermoElastic Technologies, Inc.
/s/ Kenneth B. Liebscher
-------------------------------
By Kenneth B. Liebscher
President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
Signature Capacity Date
<S> <C> <C>
/s/Dennis Epstein Director December 8, 1999
- -----------------------
Dennis Epstein
/s/Kenneth B. Liebscher President/Director December 8, 1999
- -----------------------
Kenneth B. Liebscher
/s/Fred J. Heaps CEO/Director December 8, 1999
- -----------------------
Fred J. Heaps
/s/Lawrence Pinkney CFO/Controller December 8, 1999
- ------------------------
/s/Dr. Lorne Berman Director December 8, 1999
- ------------------------
/s/Dr. Stephen Rivers Director December 8, 1999
- ------------------------
Dr. Stephen Rivers
/s/Dr. Ila Berman Director December 8, 1999
- ------------------------
Dr. Ila Berman
/s/Dr. Gregory K. Slater Director December 8, 1999
- ------------------------
Dr. Gregory K. Slater
/s/Dr. Izchak Barzilay Director December 8, 1999
- ------------------------
Dr. Izchak Barzilay
Bonnie D. Walton Director December 8, 1999
- ------------------------
Bonnie D. Walton
</TABLE>
<PAGE>53
NUMBER SHARES
THERMOELASTIC TECHNOLOGIES, INC.
Incorporated Under the Laws of the State of Colorado
Common Stock Par Value $.0001 CUSIP
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID and NONASSESSABLE Shares of ThermoElastic Technologies,
Inc., transferable only on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Secretary President
<PAGE>54
WARRANT CERTIFICATE SERIES A
(With Purchase Form)
ThermoElastic Technologies, Inc.
Series A Warrant to Purchase Common Shares at $2.00
Dated: April 30, 2000
VOID AFTER 4:00 PM (EASTERN STANDARD TIME)
ON DECEMBER 31,d 2001
WARRANT A $2.00 Certificate number WA-"Merge Record"
TRANSFER RESTRICTED. -- Except as may be expressly provided in an
applicable legal opinion or in the Offering Memorandum under which
this Warrant Certificate was originally issued, TRANSFER OF THESE
WARRANTS AND OF ANY SHARES ISSUABLE HEREUNDER TS RESTRICTED AND MAY
NOT BE MADE WITHOUT DELIVERY OF A CURRENT PROSPECTUS UNDER A
REGISTRATION STATEMENT. Warrants are immediately detachable and
separately transferable from the common stock with which they were
originally issued. See "Restriction on Exercise and/or Disposition of
warrants or Shares", Section 5 herein.
Certification of Purchase Rights.
ThermoElastic Technologies, Inc., a Colorado corporation (the
"Company"), together with the undersigned Warrant Agent, hereby
certify that "NAME first" "M Last", is the Holder of this Warrant
Certificate, for value received, The Holder is entitled to purchase
from the Company "M Sh" shares of the Company's common stock, $0.0001
par value (the "Shares"), at the exercise price of $2.00 per Share
(the "Exercise Price"). Such exercise must be effectuated by
surrender of this Certificate and the attached Purchase Form actually
received by the Company after April 30, 2000 and before 4:00 PM
(Eastern Standard Time) on December 31, 2001, (the Exercise Period,
subject to the expiration on the business day preceding redemption).
Other Terms of Warrants.
1. Exercise of Warrants. While and to the extent exercisable, upon
presentation and surrender of this original, manually signed
Certificate (with the attached Purchase Form duly manually executed)
to the Office of the Company or any replacement warrant agent,
together with cash or a certified or bank cashier's check (or wire
transfer) payable to the Company in the amount of the Exercise Price
times the number of shares being purchased, the Company shall deliver
to the holder hereof, as promptly as practicable, certificates
representing the number of shares being purchased. This Warrant
Certificate may be exercised in whole or in part; and in case of
exercise hereof in part only, the Company or Transfer Agent, upon
surrender hereof, will deliver to the holder a new Warrant Certificate
or Warrant Certificates of like tenor entitling said holder to
purchase the remaining number of Shares as to which this Warrant
Certificate has not been exercised.
2. Exchange and Transfer. Prior to exercise, expiration or redemption,
this Warrant Certificate upon its presentation and surrender to the
Company may be exchanged, alone or with other Warrant Certificates of
like tenor registered in the name of the same holder, or assigns, for
another Warrant Certificate or Certificates of like tenor in the name
of such holder, or assigns, exercisable for the same aggregate number
of Shares as the surrendered Warrant Certificate(s). This Warrant may
not be sold, transferred, hypothecated, or assigned before the
Exercise Period except to Company officers or members of any broker
dealer selling group participating in the Company's Regulation D, Rule
504 Offering.
3. Rights and Obligations of Warrant Ho1ders. The holder of this
warrant Certificate shall not, by virtue hereof, he entitled to any
rights of a shareholder in the Company, either at law or in equity.
However, upon exercise of some or all of the Warrants represented
hereby, such holder shall, for all purposes, be deemed to have become
the holder of record of such Common Shares on the date on which this
Warrant Certificate, together with a duly executed Purchase Form, was
<PAGE>55
surrendered and payment of the purchase price was made, irrespective
of the date of delivery of any share certificates. The rights of the
holder of the Warrant Certificate are limited to those expressed
herein and the holder of this Certificate, by acceptance hereof,
consents to and agrees to be bound by, and to comply with, all the
provisions of this Warrant Certificate, including without limitation
all the obligations imposed upon the holder hereof by "Restrictions an
Exercise and/or Disposition of Warrants or Shares", Section 5 herein.
In addition, the holder of this Warrant Certificate by accepting same,
agrees that the Company and its Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as mile
absolute, true and lawful owner for all purposes whatsoever.
4. The Shares. The Company covenants and agrees that all Shares
delivered upon exercise of this Warrant will be duly and validly
authorized and issued, fully-paid and non-assessable, and free from
all liens and charges with respect to the purchase thereof. In
addition, the Company agrees at all time to reserve and keep available
an authorized number of Shares sufficient to permit the exercise in
full of all outstanding Warrants represented hereby.
5. Restrictions on Exercise and/or Disposition of Warrants or Shares.
The holder of this Warrant Certificate and Deny transferee hereof, by
their acceptance hereof, hereby agrees that a) no public distribution
of any interest in these Warrants or Shares issuable hereunder will be
made in violation of the provision of the Securities Act of 1933, as
amended, or the Rules and Regulations promulgated thereunder
(collectively referred to as the "Act"), and (b) during the period
transfer is restricted including the Exercise Period of the Warrants,
if delivery of a prospectus with respect to these warrants or the
Shares issuable hereunder may be required by the Act, no-public
distribution of the Warrants or such Shares, or exercise of the
Warrants, will be made in a manner or on terms different from those
set forth in, or without delivery of, prospectus then meeting the
requirements of Section 10 of the Act and in compliance with all
applicable state laws. The holder of this Warrant Certificate and any
such transferee hereof further agree that if any distribution of any
of these Warrants or Shares issuable hereunder is proposed to be made
by them otherwise than by delivery of a prospectus meeting the
requirements of Section 10 of the Act, such action shall be taken only
after submission to the Company of an opinion of counsel, reasonably
satisfactory in form and substance to the Company's counsel, to the
effect that the proposed distribution will not be in violation of the
Act or of applicable state law. Furthermore, it shall be a condition
to the transfer of the warrants and Shares that any transferee thereof
shall deliver to the Company a signed written agreement to accept and
be bound by all of the terms and conditions of the Warrant
Certificate.
6. Redemption of Warrants. The Warrants are redeemable by the Company
during the Exercise Period, upon written notice of not less than 30
days, at a redemption price of $0.01 per Warrant. Warrants are
redeemable, in whole or in part (ratably or on any other bases
determined by the Board of Directors to be reasonable and in the best.
interest of the Company, nonexclusively including based on the size of
Warrant Certificates, the location of holders, the size of Warrant
holdings, or the activity of or responsiveness of Warrant holder).
Warrants expire at the usual close of business on the business day
next proceeding the redemption date,
7. Indemnification and Notification.
(a) The Company will indemnify and hold harmless each holder of these
Warrants or Shares issuable thereunder, and each person, if any, who
controls such holder within the meaning of Section 15 of the Act, from
and against any and all losses, claims, damages, expenses and
liabilities caused by any untrue, statement of material fact contained
in any registration statement, or contained in a prospectus furnished
thereunder or caused by any misleading omission or misleading
misstatement of material fact(s) required to be stated therein or
necessary to make the statements therein not misleading. However, the
foregoing shall not apply insofar as such losses, claims, damages,
expenses and liabilities are caused by such untrue statement or
omission which is based upon information furnished in writing to the
Company by any such holder expressly for use in any registration
statement or prospectus.
<PAGE>56
(b) Promptly after receipt by any holder of these warrants or Shares
issuable thereunder, of a notice of the commencement of any action,
said holder will, if a claim in respect thereof is to be made against
the Company under this Section, notify the Company in writing of the
commencement thereof but the omission to notify the Company will not
relieve it from any liability which it may have to them otherwise than
under this Section. In case any such action is brought against any
holder of warrants and/or Shares issuable thereunder, and the Company
is notified of the commencement thereof as provided herein, the
Company will be entitled to participate in, and, to the extent that it
may wish, assume the defense thereof, with counsel satisfactory to
such holder, and after notice from the Company to such holder of the
Company's election so to assume the defense thereof, the Company will
not be liable under this Section for any legal or other expenses
subsequently incurred by such holder in connection with the defense
thereof other than reasonable costs of investigation.
(c) Each holder of these Warrants or Shares issuable thereunder,
agrees to cooperate fully with the Company in effecting registration
and qualification of the Warrants or Shares thereunder and of such
distribution, and shall indemnify, defend and hold harmless the
Company and any person who may control the company, each director of
the Company, and each officer who signed any registration statement or
amendment or supplement thereto from and against any and all losses,
claims, in reliance upon information furnished to the Company by any
such holder for inclusion therein.
8. Adjustment of Warrants. The Exercise Price and/or the number of
Shares purchasable upon the exercise of each warrant is subject to
adjustment from time to time upon occurrence of any of the events
enumerated below;
(a) Distribution-of-Shares. In case the Company shall make any
dividend or other distribution on the Shares, payable in common stock
of the Company, then the Exercise Price in effect immediately prior to
making of such distribution shall be adjusted to a price (computed to
the nearest cent) determined by dividing (i) an amount equal to the
product of (A) the number of Shares outstanding immediately prior to
the making of such distribution and multiplied by (B) the Exercise
Price, by (ii) the total number of Shares outstanding immediately
following the making of such Distribution (including as then
outstanding shares, the maximum number of Common Shares necessary to
effect the conversion or exchange of all then outstanding convertible
shares, options, or obligations theretofore issued in distribution on
the Shares).
(c) Subdivision or Combination of Shares. In case the Shares issuable
upon exercise of the Warrants shall be subdivided (stock split) into a
greater, or combined or consolidated (reverse stock split) into a
lesser, number of shares (whether with or without par value), the
Exercise Price shall be decreased or increased, as the case may be, to
an amount which shall bear the same relation to the Exercise Price in
effect immediately prior to such subdivision or combination as the
total number of Shares outstanding immediately after such subdivision
or combination, bears to the number of Shares outstanding previously.
The adjustment in the Exercise Price shall be made as of the effective
date of the applicable event.
(d) Increase in Shares Per Warrant. Upon each adjustment of the
Exercise Price as a result of calculations pursuant to this Section,
each Warrant outstanding prior to the making of an adjustment in the
Exercise price shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, the number of Shares (calculated to the
nearest hundredth) obtained by (i) multiplying the number of Shares
purchasable upon exercise of a Warrant prior to adjustment of the
number of Shares, by the Exercise Price in effect prior to adjustment
of the Exercise Price and (ii ) dividing the product so obtained by
the Exercise Price in effect after such adjustment of the Exercise
Price.
(e) Effect of Sale Merger, Consolidation. In case of any capital
reorganization of the Company, or any reclassification of the Shares,
Or in case Of the consolidation of the Company with or the merger of
the Company into any other corporation, each Warrant after such
capital reorganization, recla5sitication of Shares, consolidation or
merger shall be exercisable, upon the terms and conditions specified
in this Certificate, for the number if common Shares or other
securities of the Company, or of the corporation resulting from such
consolidation or surviving such merger, as the case may bee to which a
<PAGE>57
holder of the Shares issuable (at the time of such capital
reorganization, reclassification of shares, consolidation or merger)
would be entitled if such exercise had taken place prior to the record
date for determination of the rights of such a holder prior to said
event; and in any case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the holders of
the warrants shall be appropriately adjusted so as to be applicable,
as nearly as may reasonable, to any shares of stock or other
securities or property thereafter deliverable on the exercise of the
Warrants, The subdivision or combination of Shares at any time
outstanding into a greater or lesser number of Shares shall not by
itself be deemed to be a reclassification of the shares of the Company
for the purposes of this Section. Anything herein contained to the
contrary notwithstanding, each warrant, following any sale of the
properties and assets of the Company as, or substantially as, an
entirety to any other corporation where such sale is to be followed by
a dissolution or liquidation of the Company, shall remain exercisable
until such dissolution or liquidation is effected, for such securities
or property of the Company or of the corporation to which the sale was
made as would have been issuable if such exercise had taken place
prior to such sale.
(f) Notice to Warrant Holders of Adjustment. Whenever the Exercise
Price is adjusted as herein provided, the Company shall cause to be
mailed to the Warrant holders in accordance with the provisions of
this Section, notice (i) stating that the Exercise Price and the
number of Shares purchasable upon exercise of an Warrant have been
adjusted, (ii) setting forth the adjusted Exercise Price and the
adjusted number of Shares purchasable upon the exercise of a Warrant,
and (iii) showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed received,
upon which the adjustment is based.
(g) Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of Warrants, nor any scrip or
other right, but rather same shall be deemed to expire except to the
extent, if any, of any provision for a cash payment in lieu thereof.
If more than one warrant shall be surrendered for exercise at one time
by the same holder, the number of Shares whi.ch shall be issuable upon
exercise thereof shall be computed on the basis of the aggregate
number of Warrants so exercised. If any fractional interest in a
Share shall be deliverable upon the exercise of any Warrants, the
Company shall make an adjustment therefore in cash equal to such
fraction multiplied by the average closing bid price of the Shares on
the business day next preceding the day of exercise.
9. Survival. The various rights and obligations of the holder hereof
and of the Company shall survive the exercise of the Warrant.
Certificate.
10. Notice. All notices required by this Warrant Certificate to be
given or made by the Company shall be given or made by First Class
Mail, postage prepaid, addressed to the registered holder hereof (or
of Shares issuable hereunder), at the address of such holder as shown
on the books of the Company.
11. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction, or mutilation of this
Warrant Certificate and upon delivery of an indemnity agreement
satisfactory in form and amount to the Company, and in the case of any
such mutilation, upon surrender and cancellation of the remains of
this Warrant Certificate the Company at the holder's expense will
execute and deliver, in lieu thereof, new Warrant Certificate of like
tenor.
ThermoElastic Technologies, Inc.
By:
Name:
Mr. Kenneth B. Liebscher
Title: President
Address: 250 H Street Suite #715, Blaine,
Washington 98230
Off:
Fax:
CORPORATE SEAL:
<PAGE>58
ATTEST:
By:
Name:
Secretary
(Purchase Form appears on next page.)
<PAGE>59
PURCHASE FORM
WARRANT CERTIFICATE, SERIES A
To: Mr. Kenneth B. Liebscher
Title: President
Address: 250 H Street Suite #715, Blaine, Washington 98230,
Off: (905) 760-9266
Fax: (905) 660-0036
The undersigned hereby irrevocably elects to exercise the attached
Warrant Certificate to the extent of "M Sh" Shares of the Company's
authorized but unissued Common Stock, $0.0001 par value per share and
hereby makes payment of $ in payment of the purchase (exercise)
price thereof $2.00.
(Calculation of payment; number of shares x warrant price per share
i.e.: 1000 shares x $2.00 = $ 2,000.00 payment)
Warrant Certificate: WA-"Merge Record#" "M Sh", Shares
Name:
(please typewrite or print in block letters the name on the warrant
Certificate or a transferee. If a transferee is named, then the
registered owner(s)signature(s) below must be guaranteed by a bank,
below or in a separate letter or for in.
Address:
City/ST/zip
Telephone:
Date: Signature:
Name:
Title:
(if officer, trustee, etc.)
All other Joint Owners must sign:
Signature:
Name:
<PAGE>60
WARRANT CERTIFICATE, SERIES B
(with Purchase Form)
ThermoElastic Technologies, Inc.
Series B Warrant to Purchase "M-Sh)" Common Shares at $3.00
Dated: April 30, 2000
VOID AFTER 4:00 PM (EASTERN STANDARD TIME)
ON DECEMBER 31, 2001
WARRANT A $3.00 Certificate number WA-"Merge Record#"
TRANSFER RESTRICTED. - - Except as may be expressly provided in an
applicable legal opinion or in the offering Memorandum under which
this Warrant Certificate was originally issued, TRANSFER OF THESE
WARRANTS AND OF ANY SHARES ISSUABLE HEREUNDER IS RESTRICTED AND MAY
NOT BE MADE WITHOUT DELIVERY OF A CURRENT PROSPECTUS UNDER A
REGISTRATION STATEMENT. Warrants are immediately detachable and
separately transferable from the common stock with which they were
originally issued, See "Restriction on Exercise and/or Disposition of
Warrants or Shares", Section 5 herein.
Certification of Purchase Rights.
ThermoElastic Technologies, Inc., a Colorado corporation (the
"Company"), together with the undersigned Warrant Agent, hereby
certify that "NAME first" "M Last", is the Holder of this warrant
Certificate, for value received, The Holder is entitled to purchase
from the Company "M Sh" shares of the Company's common stock, $0.0001
par value (the "Shares"), at the exercise price of $3.00 per Share
(the "Exercise Price"). Such exercise must be effectuated by
surrender of this Certificate and the attached Purchase Form actually
received by the Company after April 30, 2000 and before 4:00 PM
(Eastern Standard Time) on December 31, 2001, (the Exercise Period,
subject to the expiration on the business day preceding redemption).
Other Terms and Warrants.
1. Exercise of Warrants. While and to extent exercisable, upon
presentation and surrender of this original, manually signed
Certificate (with the attached Purchase Form duly manually executed)
to the office of the Company or any replacement warrant agent,
together with cash or a certified or bank cashier's check (or wire
transfer) payable to the Company in the amount of the Exercise Price
times the number of shares being purchased, the Company shall deliver
to the holder hereof, as promptly as practicable, certificates
representing the number of Shares being purchased. This Warrant
Certificate may be exercised in whole or in part; and in case of
exercise hereof in part only, the Company or Transfer Agent, upon
surrender hereof, will deliver to the holder a new Warrant Certificate
or warrant certificates of ilk e tenor entitling said holder to
purchase the remaining number of Shares as to which this Warrant
Certificate has not been exercised,
2. Exchange and Transfer. Prior to exercise, expiration or
redemption, this Warrant Certificate upon its presentation and
surrender to the Company may be exchanged alone or with other warrant
certificates of like tenor registered in the name of the same holder,
or assigns, for another Warrant Certificate or Certificates of like
tenor in the name of such holder, or assigns, exercisable for the same
aggregate number of Shares as the surrendered Warrant Certificate(s).
This Warrant may not be sold, transferred, hypothecated, or assigned
before the Exercise Period except to Company officers or members of
any broker dealer selling group participating in the Company's
Regulation D, Rule 504 Offering.
3. Rights and Obligations of Warrant Holders. The holder of this
warrant Certificate shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or in equity.
However, upon exercise of some or all of the Warrants represented
hereby, such holder shall, for all purposes, be deemed to have become
the holder of record of such Common Shares on the date on which this
Warrant Certificate, together with a duly executed Purchase Form, was
<PAGE>61
surrendered and payment of the purchase price was made, irrespective
of the date of delivery of any share certificates. The rights of the
holder of the Warrant Certificate are limited to those expressed
heroin and the holder of this Certificate, by acceptance hereof,
consents to and agrees to be bound by, and to comply with, all the
provisions of this warrant Certificate, including without limitation
all the obligations imposed upon the holder hereof by "Restrictions on
Exercise and/or Disposition of Warrants or Shares", Section 5 herein.
In addition, the holder of this Warrant Certificate by accepting same,
agrees that the Company and its Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as the
absolute, true and lawful owner for all purposes whatsoever.
4. The Shares. The company covenants and agrees, that all Shares
delivered upon exercise of this Warrant will be duly and validly
authorized and issued, fully-paid and non-assessable, and free from
all liens and charges with respect to the purchase thereof. In
addition, the Company agrees at ail time to reserve and keep available
an authorized number of Shares sufficient to permit the exercise in
full of all outstanding Warrants represented hereby.
5. Restrictions On Exercise and/or Disposition of Warrants or Shares.
The holder of this Warrant Certificate and any transferee hereof, by
their acceptance hereof, hereby agrees that (a) no public distribution
of any interest in these Warrants or Shares issuable hereunder will be
made in violation of the provision of the Securities Act of 1933, as
amended, or the Rules and Regulations promulgated thereunder
(collectively referred to as the "Act"), and (b) during the period
transfer is restricted including the Exercise Period of the Warrants,
if delivery of a prospectus with respect to these Warrants or the
Shares issuable hereunder may be required by the Act, no public
distribution of the Warrants or such Shares, or exercise of the
warrants, will be made in a manner or an terms different from those
set forth in, or without delivery of, a Prospectus then meeting the
requirements of section 10 of the Act and in compliance with all
applicable state laws. The holder of this Warrant Certificate and any
such transferee hereof further agree that if any distribution of any
of these Warrants or Shares issuable hereunder is proposed to be made
by them otherwise than by delivery of a prospectus meeting the
requirements of Section 10 of the Act, such action shall be taken only
after submission to the Company of an opinion of counsel, reasonably
satisfactory in form and substance to the Company's counsel, to the
effect that the proposed distribution will not be in violation of the
Act or of applicable state law, Furthermore, it shall be a condition
to the transfer of the Warrant; and Shares that any transferee thereof
shall deliver to the Company a signed written agreement to accept and
be bound by all of the terms and conditions of the Warrant
Certificate.
6. Redemption of Warrants. The Warrants are redeemable by the Company
during the Exercise Period, upon written notice of not less than 30
days, at a redemption price of $0.01 per Warrant. Warrants are
redeemable, in whole or in part (ratably or on any other basis
determined by the Board of Directors to be reasonable and in the best
interest of the Company, nonexclusively including based on the size of
Warrant Certificates, the location of holders, the size of Warrant
holdings, or the activity of or responsiveness of Warrant holders).
Warrants expire at the usual close of business on the business day
next proceeding the redemption date.
7. Indemnification and Notification.
(a) The Company will indemnify and hold harmless each holder of these
warrants or Shares issuable thereunder, and each person, if any, who
controls such holder within the meaning of Section 15 of the Act, from
and against any and all losses, claims, damages, expenses and
liabilities caused by any untrue statement of material fact contained
in any registration statement, or contained in a prospectus furnished
thereunder or caused by any misleading omission or misleading
misstatement of material fact(s) required to be stated therein or
necessary to make the statements therein not misleading. However, the
foregoing shall not apply insofar as such losses, claims, damages,
expenses and liabilities are caused by such untrue statement or
omission which is based upon information furnished in writing to the
Company by any such holder expressly for use in any registration
statement or prospectus.
<PAGE>62
(b) Promptly after receipt by any holder of these Warrants or Shares
issuable thereunder, of a notice of the commencement of any action,
said holder will, if a claim in respect thereof is to be made against
the Company under this Section, notify the Company in writing of the
commencement thereof but the omission to notify r-he Company will not
relieve it from any liability which it may have to them otherwise than
under this Section. In case any such action is brought against any
holder of Warrants and/or Shares issuable thereunder, and the Company
is notified of the commencement thereof as provided herein, the
Company will be entitled to participate in, and, to the extent that it
may wish, assume the defense thereof, with counsel satisfactory to
such holder, and after notice from the Company to such holder of the
Company's election so to assume the defense thereof, the Company will
not be liable under this Section for any legal or other expenses
subsequently incurred by such holder in connection with the defense
thereof other than reasonable costs of investigation.
(C) Each holder of these Warrants or Shares issuable thereunder,
agrees to cooperate fully with the Company in effecting registration
and qualification of the Warrants or Shares hereunder, and of such
distribution, and shall indemnify, defend and hold harmless the
Company and any person who may control the Company, each director of
the Company, and each officer who signed any registration statement or
amendment or supplement thereto, from and against any and all losses,
claims, in reliance upon information to the Company by any such holder
for inclusion therein.
8. Adjustment of Warrants. The Exercise Price and/or the number of
Shares purchasable upon the exercise of each Warrant is subject to
adjustment from time to time upon occurrence of any of the events
enumerated below:
(a) Distribution of Shares. In the case the Company shall make any
dividend or other distribution on the Shares, payable in common stock
of the Company, then the Exercise Price in effect immediately prior to
making of such distribution shall be adjusted to a price (computed to
the nearest cent) determined by dividing (i) an amount equal to the
product of (A) the number of Shares outstanding immediately prior to
the making of such distribution and multiplied by (B) the Exercise
Price, by (ii) the total number of Shares outstanding immediately
following the making of such distribution (including as then
outstanding shares, the maximum number of Common Shares necessary to
effect the conversion or exchange of all then outstanding convertible
shares, options, or obligations theretofore issued in distribution on
the Shares).
(c) Subdivision or Combination of shares. In case the shares issuable
upon exercise of the Warrants shall be subdivided (stock split) into a
greater, or combined or consolidated (reverse stock split) into a
lesser, number of Shares (whether with or without par value), the
Exercise Price shall be decreased or increased, as the case may be, to
an amount which shall bear the same relation to the Exercise Price in
effect immediately prior to such subdivision or combination as the
total number of Shares outstanding immediately after such subdivision
or combination, bears to the number of Shares outstanding previously.
The adjustment in the Exercise Price shall be made as of the effective
date of the applicable event.
(d) Increase in Share Per Warrant. Upon each adjustment of the
Exercise Price as a result of calculations pursuant to this section,
each Warrant outstanding prior to the making of an adjustment in the
Exercise price shall thereafter evidence the right to purchase, at the
adjusted Exercise -Price, the number of Shares (calculated to the
nearest hundredth) obtained by (i) multiplying the number of shares
purchasable upon exercise of a Warrant prior to adjustment of the
number of Shares, by the Exercise Price in effect prior to adjustment
of the Exercise Price and (ii) dividing the product so obtained by the
Exercise Price in affect after such adjustment of the Exercise Price.
(e)Effect of Sale, Merger, or Consolidation. In case of any capital
reorganization of the Company, or any reclassification of the Shares,
or in case of the consolidation of the Company with other merger of
the Company into any other corporation, each Warrant after such
capital reorganization, reclassification of Shares, consolidation or
merger shall be exercisable, upon the terms and conditions specified
in this Certificate, for the number of Common Shares or other
securities of the Company, or of the corporation; resulting from such
consolidation or surviving such merger, as the case may be, to which a
holder of the Shares issuable (at the time of such capital
<PAGE>63
reorganization, reclassification of Shares, consolidation or merger)
would be entitled if such exercise had taken place prior to the record
date for determination of the rights of such a holder prior to said
event; and in any case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the holders of
the warrants shall be appropriately adjusted so as to be applicable,
as nearly as may reasonable, to any shares of stock or other
securities or property thereafter deliverable on the exercise of the
Warrants. The subdivision or combination of Shares at any time
outstanding into a greater or lesser number of Shares shall not by
itself be deemed to be a reclassification of the shares of the Company
for the purposes of this Section. Anything herein contained to the
contrary notwithstanding, each Warrant, following any sale of the
properties and assets of the Company as, or substantially as, an
entirety to any other corporation where such sale is to be followed by
a dissolution or liquidation of the Company, shall remain exercisable
until such dissolution or liquidation is effected, for such securities
or, property of the Company or of the corporation to which the sale
was made as would have been issuable if such exercise had taken place
prior to such sale.
(f) Notice to Warrant Holders of Adjustment. Whenever the Exercise
Price is adjusted as herein provided, the company shall cause to be
mailed to the Warrant holders in accordance with the provisions of
this Section, notice (i) stating that the Exercise Price and the
number of Shares purchasable upon exercise of an Warrant have been
Adjusted, (ii) setting forth the adjusted Exercise Price and the
adjusted number of Shares purchasable upon file exercise of a warrant,
and (iii) showing in reasonable detail the computations and the facts,
including the amount of consideration received or deemed received,
upon which the adjustment is based.
(g) Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of warrants, nor any scrip or
other right, but rather same shall be deemed to expire except to the
extent, if any, of any provision for a cash payment in lieu thereof.
If more than one Warrant shall be surrendered for exercise at one time
by the same holder, the number of Shares which shall be issuable upon
exercise thereof shall be completed on the basis of the aggregate
number of warrants so exercised. If any fractional interest in a Share
shall be deliverable upon the exercise of any Warrants, the Company
shall make an adjustment, therefor in cash equal to such fraction
multiplied by the average closing bid price of the Shares an the
business day next preceding the day of exercise.
9. Survival. The various rights and obligations of the holder hereof
and of the Company shall survive the exercise of the warrant
Certificate.
10. Notice. All notices required by this Warrant Certificate to be
given or made by the Company shall be given or made by First Class
Mail, postage prepaid, addressed to the registered holder hereof (or
of Shares issuable hereunder), at the address of such holder as shown
on the books of the Company.
11 Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and upon delivery of air indemnity agreement satisfactory
in form and amount to the Company, and in the case of any such
mutilation, upon surrender and cancellation of the remains of this
Warrant Certificate, the Company at the holder's expense will execute
and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
ThermoElastic Technologies, Inc.
By:
Name: Mr. Kenneth B. Liebscher
Title: President
Address: 250 H Street Suite #715, Blaine, Washington 98230@
Off:
Fax:
CORPORATE SEAL:
<PAGE>64
ATTEST:
By:
Name:
Secretary
(Purchase Form appears on next page.)
<PAGE>65
PURCHASE FORM
WARRANT CERTIFICATE, SERIES B
TO: Mr. Kenneth B. Liebscher
Title: President
Address: 250 R Street Suite 0715, Blaine, Washington 98230,
Off: (905) 760-9266
Fax: (905) 660-0036
The undersigned hereby irrevocably elects to exercise the attached
Warrant Certificate to the extent of "M Sh", Shares of the Company's
authorized but unissued Common Stock, $0.0001 par value per share and
hereby makes payment of $ in payment of the purchase (exercise)
price thereof $3.00.
(Calculation of payment: number of shares x warrant price per share
i.e.: 1000 shares x $3.00 = $3,000.00 payment)
Warrant Certificate; WA-"Merge Record#" "M-Sh" Shares
Name:
(Please typewrite or print in block letters the name on the Warrant
Certificate or a transferee, If a transferee is named, then the
registered owner(s) signature(s) below must be guaranteed by a bank,
below or in a separate letter or form.)
Address:
City/ST/zip
Telephone
Date: Signature:
Name
Title:
(if officer, trustee, etc.)
All other Joint Owners must sign;
Signature:
Name:
<PAGE>66
Jody M. Walker
7841 South Garfield Way
Littleton, Colorado 80122
Telephone (303) 850-7637
Facsimile (303) 220-9902
December 8, 1999
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Dear Sirs:
Re: OPINION RE: LEGALITY AND CONSENT OF COUNSEL TO USE OF NAME IN
THE REGISTRATION STATEMENT ON FORM SB-2 OF THERMOELASTIC TECHNOLOGIES,
INC.
I am securities counsel for the above mentioned Company and I have
prepared the registration statement on Form SB-2. I hereby
consent to the inclusion and reference to my name in the
Registration Statement on Form SB-2 for ThermoElastic Technologies,
Inc.
It is my opinion that the securities of ThermoElastic Technologies,
Inc. and those which are registered with the Securities and Exchange
Commission pursuant to Form SB-2 Registration Statement of
ThermoElastic Technologies, Inc. have been legally issued and will be,
when sold, legally issued, fully paid and non-assessable.
Yours very truly,
/s/ Jody M. Walker
---------------------
Jody M. Walker
<PAGE>67
TO: APPLE DENTAL VENTURES
BOB HUYBRECHTS, RD.-
FAX: 905 775 5558
FROM; HOWARD E. KERBEL
GRITELL INTERNATIONAL LTD.
GRITELL INTERNATIONAL LIMITED
FAX: 416 968 3424
416 934 9998
MOB: 416 407 4925
DATE: FEBRUARY 2,1999
RE: BIOOCOMPATIBLE INTRAORAL THERMO ELASTIC MATERIAL (BITEM)
MOULDABLE ACRYLIC COMPOSITION
AMENDMENTOF AGREEMENT DATED DECEMBER 28,1998
Dear Bob:
Further to your meeting of January 29, 1999, at which time we advised
you of the need to restructure our planned public raising as a result
of recent changes in 'the Regulations governing Rule 504 transactions,
I wish to confirm that we have agreed upon the following changes to
the Agreement of December 28,1998, as follows:
1 Paragraph 2 (b) shall be amended to provide as follows:
"a one time payment of USD 230,000.00. payable USD 50,000.00 upon our
receiving the first USD 200,000.00 of our financing or capital
investment, no later than February 28, 1999, USD 105,000.00 payable in
three (3) installments of USD 35,000.00 each payable every two (2)
months, the first of such payments to be made on May 1, 1999, and the
balance of USD 75,000.00 to be paid no later than one (1) year from
the payment of the initial USD 50.000.00 payment referred to above;"
2. Paragraph 2(d) shall be amended by deleting therefrom all reference
to " you shall be entitled to purchase from the Company 100,000
common shares at USD 0.20 per share" and which shall be replaced by:
"you shall be entitled to purchase from the Company 100,000 common
shares at USD 0.0001 per share"
3. Paragraph 2(d) shall be further amended by deleting therefrom
"These 200,000 shares represent approximately fifteen (15) percent of
the shares sold to false the first USD 1,000,000.00 for the publicly
traded company (approximately 3,000,000 shares); and
4. Wherever the name Gritell International Ltd. appears in the
Agreement of December 28, 1998, it shall be deleted and replaced with
the name "Gritell International Limited" and the Agreement of December
28, 1998 shall be deemed to have been entered into with Gritell
International Limited ab initio.
All other provisions of the Agreement of December 28, 1998, shall
remain unchanged and of full force and effect.
You acknowledge being advised by Howard E. Kerbel that he is a
Barrister and Solicitor licensed to carry on the practice of law in
Ontario and that he has advised you to obtain independent legal advice
with respect to this Agreement and that you have either obtained such
advice or waive the right to do so. You further acknowledge that
Howard E Kerbel has never provided you with any advice, legal or
otherwise, in connection with this Agreement, the transaction
underlying it or any other matter whatsoever.
Please execute the Acknowledgement at the end of this letter and
return two originally signed copies to us.
Regard
HOWARD E. KERBEL
GRITELL INTERINATIONAL LTD.
GRITELL INTERNATIONAL LIMIITED
Encl.,
BITEMIO.WRI
<PAGE>68
ACKNOWLEDGEMENT
The undersigned by the execution of this Acknowledgement hereby
acknowledges his agreement with the terms of the above Letter of
Agreement and agrees to be bound by its terms and to take all actions
and to execute all documents reasonably required by Gritell
International Limited. to give effect to the substance of the
Agreement. The undersigned also agrees that this Letter of Agreement
replaces the Letter of Agreement dated April 29, 1998, which is no
longer of any force or effect.
DATED at Toronto, this the 3rd day of February, 1999.
BOB HUYBRECHTS, RDT on his own behalf and on behalf of APPLE DENTAL
VENTURES
<PAGE>69
TO: APPLE DENTAL VENTURES
BOB HUYBRECHTS. RDT
FAX: 905 775 5558
FROM: HOWARD E. KERSEL
GRITELL INTERNATIONAL LTD.
FAX: 416 968 3424
TEL: 416 934 9998
MOB: 416 407 4925
DATE: DECEMBER 28.1998
RE: BIOCOMPATIBLE INTRAORAL THERMO ELASTIC MATERIAL (BITEM) MOULDABLE
ACRYLIC COMPOSITION
Dear Bob:
Further to our meeting of December 21, 1998, with Dennis Epstein and
Dr. Berman, I wish to confirm the terms of the amended transaction
discussed with you for the acquisition by us of the exclusive rights
to manufacture, market, distribute and sell BITEM worldwide:
1. You will grant to Gritell International Ltd., or as it may direct,
by way of licence, the exclusive rights to manufacture, market,
distribute and sell by retail and wholesale, by any and all methods,
the SITEM products developed by you and protected by U.S. Patent No.
5,431,663, Canadian Patent No. 2,111,789 and European Patent No.
0605912, all Divisional Patent* for all non-dental application along
with all Improvements and changes to the these Patents and any and all
Patents which may be Issued In respect of this material or any
variation of the material for the entire world for a term which is the
longer of 25 years or the life of the Patents or any extension or
amendments of the Patents along with the exclusive right to make use
of BITEM In connection with the manufacturing, marketing, distribution
and sale of the SITEM products throughout the world;
2. You will receive for the granting of this exclusive Licence the
following:
(a) a Royalty calculated as follows:
(i) 5% of the first $ 25,000,000.00 in gross income from the sale
BITEM products sold In each year;
(ii) 3.5% of the next $25,0000,000.00 in gross income from the sale
of Bitem products sold in each year;
(iii) 2.5% of all sales exceeding $ 50,000,000.00 of gross sales
from the sale of Bitem product sold in each year;
(b) a one time payment of USD 250,000,00, payable USD 50.000,00 upon
our receiving the first USD 200,000.00 of our financing or Capital
investment, no later than February 28, 1999 and USD 200,000.00 payable
to you from the sale of the USD 1.00 Units in connection with the Rule
504 raising, provided that twenty-five (25) percent of each USD
100,000.00 raised shall be paid to you as such monies are raised by
us, on the understanding that the Rule 504 raising shall be completed
no later than one (1) year from the payment to you of the one time
payment of USD 50,000.00 referred to above;
(c) a Consulting Agreement for a term of 3 years to engage in research
and development of further products, including additional applications
of BITEM, and to plan, supervise and carry out a comprehensive
promotion, marketing and training program as instructed by Gritell,
for which you will receive a fee of a maximum of CDN 60,000.00 based
upon CDN 400.00 per day for a minimum of 150 days per year. This
agreement shall be renewable on mutual consent for 2 successive
periods of two years each upon the same terms and conditions as the
original agreement save and accept for this renewal provision. All
inventions and new products developed as a result of such research and
development shall be the exclusive property of Gritell. The costs
associated with the filing of such Patent Applications and all costs
of maintaining such Patents, Including legal fees, shall be paid for
by Gritell, In addition to the above Consulting Fees, which shall be
paid monthly, you shall be paid all reasonable expenses incurred by
you in the performance of you duties under the Consulting Agreement,
provided that all such expenses have been approved, in writing by
Gritell in advance;
<PAGE>70
(d) should Gritell raise the monies needed to fund this acquisition or
at any subsequent time raise money from the ,public through a publicly
traded company, you will have the right to acquire, either by way of
options or performance bonuses, a number of shares of the public
company to be formed in an amount to be agreed upon. These shares
shall be subject to certain trading restrictions to ensure the
stability of the market. In the event that such a raising is done via
a Rule 504, Regulation "D" transaction through the NASDAQ Electronic
Bulletin Board, you shall be entitled to purchase from the Company
100,000 common shares at USD 0.20 per share and to an option to
purchase 100,000 common shares at 1.00 per share at any time during
the twenty-four (24) month period following the commencement of
trading of the Company's shares. These 200,000 shares represent
approximately fifteen (1 5) percent of the shares sold to raise the
first USD 1,000,000.00 for the publicly traded company (approximately
3,000,000 common shares);
(e) With respect to the Agreement entered into by you with Austenal,
these Royalties shall not be included in the calculation of gross
sales in each year and you shall be entitled to receive as a Royalty
forty (40) percent of the Royalty paid by Austenal pursuant to your
Agreement with Austenal for the term of that Agreement, subject to our
approval of your Agreement with Austenal and the assignment by you to
us or as we may direct; and
(f) all royalties provided for herein shall be calculated quarterly
and paid to you within thirty (30) days of the end of each quarter.
3. The grant of the Licences provided for in this Letter of Agreement
shall take effect as of the date upon which the initial payment of the
USD 50,000.00 referred to above has been paid, in any event no
later then February 28, 1999. Further, in the event that the payments
to you provided for in paragraph 2(b) hereof are not made as provided
for herein, the Licence shall be, at your sole discretion, null and
void, in which event all monies paid to you shall be forfeited to you
and you shall have no further claim against us for failure to pay
these monies or for the breach of this Agreement. Provided however,
that the Licencee shall have the option, exercisable at its sole
discretion, of extending the time for the payment of the balance by
paying to you the sum of USD 10,000.00 in respect of the first
calendar month of any default in payment of any payment due hereunder
and USD 15,000.00 for every calendar month thereafter while such
default continues. In the events that such payments are made, the
Licence shall remain in good standing and shall not be null and void
provided that such default shall not continue for more then six (6)
calendar months from the occurrence of the original default.
4. In consideration for the granting to Gritell of the worldwide
rights referred to in Paragraph I above, Gritell agrees that in the
event that the gross income from the sale of Bitem products is less
than CDN 5,000,000-00, on an annualized basis, by December 31, 2003,
based upon the sales of Bitem products during the last three (3)
months of 2003, then Gritell shall pay to you, commencing January
1,2004 and every year thereafter in which the gross income from the
sale of Bitem products, on an annualized basis, does not exceed CDN
5,000,000.00. for a maximum of five (5) years, a sum equal to five (5)
percent of the difference between the actual gross sales income from
the sale of Bitem products and CDN 5,000,000.00, in addition to the
Royalties provided for in Paragraph 2(a) hereof
5. Deleted.
6. Deleted.
7. It is acknowledged that Gritell International Ltd. is acting only
in the capacity of a Trustee for a Company or Companies to be
incorporated and shall have the right at it sole option of assigning
this or any subsequent Agreement(s) to any one or more of such
Companies, either in their entirety or otherwise. Upon such
assignment Gritell shall cease to have any liability to you.
8. You shall, upon the execution of the Acknowledgment at the end
hereof, provide to Gritell a schedule of all payments required to
maintain all Patents currently, or in the future, held by you, in
connection with the Bitem products, in good standing setting out the
amounts due, the dates due and the person or persons to whom payments
must be made (the "Schedule"). Gritell shall, for the full term or
<PAGE>71
any extension of the Agreement, make all payments as indicated in the
Schedule referred to above, as from time to time amended, required to
maintain the said Patents in good standing in accordance with the
Schedule.
9. Gritell shall, in consideration for your agreeing to the amendment
of the Agreement made between the Parties hereto dated September 23,
1998, as reflected herein, pay the sum of approximately CDN 8,000.00
required to maintain the Patents set out in the Schedule in good
standing, no later than January 6, 1999.
10. Any monies, advanced to you, from time to time, shall be deducted
from the one time payment of USD 50,000.00 referred to in Paragraph
1 above.
Please execute the Acknowledgement at the end of this letter and
return two originally signed copies to us.
Regards,
HOWARD E. KERBEL
GRITELL INTERNATIONAL LTD.
Encl.
BITEM8.WORD
ACKNOWLEDGEMENT
The undersigned by the execution of this Acknowledgement hereby
acknowledges his agreement with the terms of the above Letter of
Agreement and agrees to be bound by its terms and to take all actions
and to execute all documents reasonably required by Gritell
International Ltd. to give effect to the substance of the Agreement.
The undersigned also agree that this Letter of Agreement replaces the
Letter of Agreement dated April 29, 1998 and amends the Letter
Agreement of September 23, 1998, which are no longer of any force or
effect.
The undersigned also acknowledge:
(a) That Howard E. Kerbel has advised them that he is a Barrister &
Solicitor licensed to carry on the practice of law in the Province of
Ontario:
(b) That Howard E. Kerbel has advised them to obtain independent legal
advise with respect to this Agreement and the transaction referred to
in this Agreement;
(c) That the Undersigned have either obtained such independent legal
advise or have made the deliberate decision to ignore Mr. Kerbel's
advise and have not obtained such independent legal advise; and
(d) That the Undersigned have not sought from Mr. Kerbel, nor has he
given them, any legal advice with respect to this Agreement or the
transaction referred to therein.
DATED at Toronto, this the 4th day of January, 1999.
BOB HUYBRECHTS, RDT on his own half and on behalf of APPLE DENTAL VENTURES
<PAGE>72
TO: APPLE DENTAL VENTURES
BOB HUYBRECHTS, RDT
FAX: 905 775 5558
FROM: HOWARD E. KERBEL
Counsel
GRITELL INTERNATIONAL LTD.
FAX: 416 968 3424
TEL: 416 934 9998
MOB: 416 407 4925
DATE: SEPTEMBER 23,1998
RE: BIOCOMPATIBLE INTRAORAL THERMO ELASTIC MATERIAL (DITEM) MOULDABLE
ACRYLIC COMPOSITION
Dear Bob:
Further to your meeting of April 29, 1 998. with Dr. Berman, I wish to
confirm the terms of the transaction discussed with you for the
acquisition by us of the exclusive, tights to manufacture, market,
distribute and sell BITEM for all of North America, South America and
the Caribbean:
1. You will grant to Gritell International Ltd., or as it may direct,
by way of licence, the exclusive, rights to manufacture,
market, distribute and sell by retail and wholesale, by any and all
methods, the BITEM products developed by you and protected by U.S.
Patent No. 5,431,563, Canadian Patent No. 2,111,789 and European
Patent No. 0605912, all Divisional Patents for all non-dental
application along with all improvements and changes to the these
Patents and any and all Patents which may be Issued in respect of this
material or any variation of the material for all of North America,
South America and the Caribbean for a term which is the longer of 25
years or the life of the Patents or any extension or amendments of the
Patents along with the exclusive right to make use of BITEM in
connection with the manufacturing, marketing, distribution and sale of
the BITEM products throught North America, South America and the
Caribbean;
2. You will receive for the granting of this exclusive licence the
following:
(a) a Royalty calculated as follows:
(i) 5% of the first $ 25,000,000.00 in gross income from the sale
BITEM products sold in each year;
(ii) 3.5% of the next $25,0000,000.00 in gross income from the sale
of Bitem products sold in each year;
(iii) 2.5% of all sales exceeding $ 50,000,000.00 of gross sales
from the sale of Bitem product sold in each year;
(b ) a one time payment of UDS 250,000.00, payable USD 50,000.00 upon
our receiving the first USD 200,000.00 of financing or capital
investment no later then December 31, 1998, USD 125,000-00 no later
than March 31, 1 999, and USD 75,000.00 no later then May 31st, 1999.
(c) a consulting agreement for a term of 3 years to engage in research
and development of further products, Including additional applications
of BITEM, and to plan, supervise and carry out a comprehensive
promotion, marketing and training program as Instructed by Gritell for
which you will receive a fee of a maximum of CND 60,000.00 based upon
CND 400.00 per day for a minimum of 150 days per year. This agreement
shall be renewable on mutual consent for 2 successive periods of two
years each upon the same terms and conditions as the original
agreement save and accept for this renewal provision. All inventions
and new products developed as a result of such research and
development shall be the exclusive property of Gritell. The costs
associated with the filing of the Patent Applications and all costs of
maintaining the Patents, including lehal fees. In addition to the
above Consulting Fees, you shall be paid all reasonable expenses
Incurred by you in the performance of you duties under the Consulting
Agreement; and
<PAGE>73
(d) should Gritell raise the monies needed to fund this acquisition or
at any subsequent time raise money from the public through a publicly
traded company, you will have the right to acquire, either by way of
options or performance bonuses. a number of shares of the public
company to be formed in an amount to be agreed upon. These shares
shall be subject to certain trading restrictions to ensure the
stability of the market. In the event that such a raising Is done via
a Rule 504, Regulation "D" transaction through the NASDAQ Electronic
Bulletin Board, you shall be entitled to purchase from the Company
100,000 common shares at USD 0.20 per share and to an option to
purchase 100,000 common shares at 1.00 per share at any time during
the twenty-four (24) month period following the commencement of
trading of the Company's shares. These 200,000 shares represent
approximately fifteen (I 5) percent of the shares sold to raise the
first USD 1,000,000.00 for the publically traded company
(approximately 3,000,000 common shares).
(e) With respect to the Agreement entered Into by you with Austenal,
these Royalties shall not be Included in the calculation of gross
sales In each year and you shall be entitled to receive as a Royalty
forty (40) percent of the Royalty paid by Austenal persuant to your
Agreement with Austenal for the term of that Agreement, subject to our
approval of your Agreement with Austenal and the assignment by you to
us or as we may direct.
3. The grant of the Licences provided for in this Letter of Agreement
shall take effect as of the date upon which the initial payment of the
USD 50,000.00 referred to above has been paid as provided for above,
Further, in the event that the payments to you provided for in
paragraph 2(b) hereof are not made as provided for herein, the Licence
shall be, at your sole discretion, null and void, in which event all
monies paid to you shall be forfeited to you and you shall have no
further claim against us for failure to pay these monies or for the
breach of this Agreement. Provided however, that the Licencee shall
have the option, exerciseable at Its sole discretion, of extending the
time for the making of such payments by paying to you the sum of USD
10,000.00 in respect of the first calender month of any default in
payment of any payment due hereunder and USD I 5,000.00 for every
calender month thereafter while such default continues. In the events
that such payments are made, the Licence shall remain in good standing
and shall not be null and void provided that such default shall not
continue for more then six (6) calender months from the occurrence of
the the original default.
4. Provided that gross income from the sales of Bitem Products amounts
to at least CDN 6,000,000.00 as of October 1, 2001, then we shall have
the first right to acquire the balance of the exclusive worldwide
rights to manufacture, market, distribute and sell, by retail and
wholesale, by any and all methods for the Bitem Products which are the
subject of the above Licence for North America, South America and the
Caribbean at no cost. In the event that gross income from the sales
of the Bitem Products do not reach CDN 8,000.000.00 by October 1,
2001, we shall have a first light of refusal in respect of these
worldwide rights or the rights to other areas upon the same terms and
conditions as are contained in any arms length, third party of which
is accepted by you.
5. In the event that gross income from the sales of the Bitem Products
is less than at least CDN 6,000,000 by October 1, 2001, then you shall
be entitled to receive, in lieu of lost Royalties, an amount equal to
five (5) percent of the difference between CDN 6,000,000.00 and the
actual gross income from the sales of Bitem Products as of that date.
6. You will refrain from entering into any agreements whatsoever for
the sale, marketing and distribution of the BITEM products without our
approval in writing, which approval shall not be unreasonably
withheld.
7. It Is acknowledged that Gritell International Ltd. is acting only
in the capacity of a Trustee for a Company or Companies to be
Incorporated and shall have the right at it sole option of assigning
this or any subsequent Agreement(s) to any one or more of such
Companies, either in their entirety or otherwise. Upon such
assignment Gritell shall cease to have any liability to you.
Please execute the Acknowledgement at the end of this letter and
return two originally signed copies to us.
Regards,
HOWARD E. KERBEL
Counsel
GRITELL INTERNATIONAL LTD.
Encl.
BITEM6.WRI
<PAGE>74
ACKNOWLEDGEMENT
The undersigned by the execution of this Acknowledgement hereby
acknowledges his agreement with the terms of the above Letter of
Agreement and agrees to be bound by its terms and to take all actions
and to execute all documents reasonably required by Gritell
International Ltd. to give effect to the substance of the Agreement.
The undersigned also agree that this Letter of Agreement replaces the
Letter of Agreement dated April 29, 1998, which is no longer of any
force or effect.
DATED at Toronto, this the 31 day of September, 1998.
BOB HUYBRECHTS, RDT on his own behalf and an behalf of APPLE DENTAL
VENTURES
<PAGE>75
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of ThermoElastic
Technologies, Inc. (a Colorado corporation) on Form SB-2 of our report
dated August 26, 1999 on the financial statements of ThermoElastic
Technologies, Inc. (a Denver corporation) appearing in the Prospectus,
which is part of such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
/s/ Meeks, Dorman & Company, P.A.
Meeks, Dorman & Company, P.A.
Longwood, Florida
December 8, 1999
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