U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities and Exchange Act of
1934.
DIRECTION TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
Nevada 33-0413417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 H Street, Suite 723, Blaine, Washington 98230
(Address of principal executive offices) (Zip Code)
Issuers telephone number: (604) 683-6648
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which
to be so registered each class is to be
registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
None
(Title of Class)
PART I.
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
Direction Technologies, Inc., a Nevada corporation
(Company), was originally organized on April 30, 1998 as Fuji
International, Inc.; the name was changed on December 28, 1998 to
Direction Technologies, Inc. The business office of the Company
is located at 250 H Street, Suite 723, Blaine, Washington, 98230.
The Company operates on the calendar fiscal year. Currently, the
Company has no employees, but anticipates having at least several
employees within the next 12 months.
(b) Business of Issuer.
Statements made, beliefs stated, and figures given for the
electric automobile are taken from a report issued by Roger D.
Touchie B.C., MBA, of Touchie & Associates Ltd. Touchie &
Associates Ltd., an independent business planning consulting
firm,
was commissioned by E.T.C. Industries Ltd. to prepare an
independent report on the electric vehicle in 1993. This report
was based on corporate information supplied by E.T.C. Industries
management and independent industry data gathered from industry
research.
Statements made, beliefs stated, and figures given for the
Qiblah locator were taken from an independent assessment report
prepared by Evans and Evans Inc., a professional evaluation firm.
This report, dated January 31, 1998, was done in compliance with
interim local policy statement 3-17 of the British Columbia
Securities Commission. Qiblah International Industries Ltd.
commissioned the report. This report was completed after Evans
and Evans Inc. had visited and reviewed Qiblah International
Industries Ltd.s business operations in Johannesburg, South
Africa.
1. Electric Automobile.
One of the specific reasons the Company was founded is for
the purpose of entering into a world-wide license agreement with
E.T.C. Industries Ltd. of Vancouver, British Columbia, Canada to
license certain technology, and obtain advice in facilitating the
production of electric vehicles using certain technology
developed
by the licensor and currently licensed in the State of
California.
A copy of the license agreement (License Agreement), entered
into on January 9, 1999, is attached as Exhibit 10.1 to this Form
10-SB/A. Under the terms of the License Agreement, E.T.C.
Industries Ltd. will be paid the sum of $50,000, plus a royalty
of
2% of the Gross Sales Price (as defined in this agreement) on
every electric vehicle sold by the Company. Payment of the
entire
$50,000 sum is evidenced by a promissory note, which is attached
as Exhibit 10.2 to this Form 10-SB/A. There is no minimum
payment
in connection with the 2% royalty.
The term of the License Agreement is for five years (the
Initial Term) and is renewable for another five years under the
same terms and conditions, unless: (1) the licensee is in default
of
this License Agreement; (2) the Licensee or the Licensor elects
not
to renew the License Agreement; or (3) the licensee does not
achieve annual gross sales of CDN$2,000,000 ($1,345,200 with the
exchange rate of 1.49 Canadian Dollars to the U.S. Dollar, as of
April 21, 1999) within the Initial Term. Also, the License
Agreement may be terminated after two years from the commencement
of
the Initial Term if the licensee fails to build 3 prototype
electric
vehicles based on the technology licensed within such two year
period.
This license also includes the use of certain assets of
E.T.C. during the term of the agreement, as follows:
(1) All patents, patents pending, trademarks, copyrights,
title, engineering designs, concepts, models, prototypes, parts,
manufacturing machines and tools, trade secrets, know-how and
show-how, and customer lists associated with the research,
development, manufacturing, distributing and retailing business
of
electric powered vehicles of the Vendor and more particularly:
(2) One 1987 Suburban Truck VIN# CSUBR 1GKGRZ6N1HF576447
(3) One 1993 Pace Trailer VIN# 4PZUB1626SU001744
(4) One prototype MI-5 Electric Car
(5) One prototype MI-6 Electric Car
(6) One complete set of MI-6 Electric Car Moulds
The objective of the Company in this area will be to determine if
it can become a profitable designer, manufacturer and distributor
of zero-emission, electric-powered automobiles based upon the
technology integrated into the prototype MI-6 electromagnetic
automobile.
The growth focus of the Company is to respond to the
environmental concerns surrounding the internal combustion engine
that powers the majority of vehicles in major cities.
Governments
in major automobile markets have issued strict edicts in recent
years that will dictate a major change in acceptable power
sources
for commuter driven automobiles.
The MI-6 was successfully introduced to the public at the
International Electric Vehicle Symposium held at Disneyland
December 3-7, 1994. A parade of electric cars down Main Street
U.S.A. was held with electric cars from all parts of the world
represented, including GM, Ford, Chrysler, Honda, Nissan,
Mitsubishi, Toyota, BMW, and Peugeot. The MI-6 was chosen, along
with the BMW conversion entry to be featured on the front page of
the December 3, 1994 Los Angeles Times business section.
However,
the Company may never generate profits sufficient to sustain the
continued development and production of the electric vehicle.
With only limited cash resources at this time, activity will be
initially limited to the feasibility study as discussed under
Plan of Operation hereafter.
While long acknowledged as a leading contender in resolving
automobile-generated pollution, commercial development of
electric
vehicles has been stalled in the 1980s by the restricted travel
range and limitations of available electric power sources.
However, with significant advances in this field and the growing
social and political pressures to produce zero-emission
automobiles, the development of the electric car may be
encouraged.
Derived from documentation provided by Electric Vehicle
Research, Inc., marketing information provided by management and
independent research, the following discussion is designed to
demonstrate the economic viability of the business program and
provide an overview of the production, marketing and financial
strategies of the Company.
a. The Electric Car Industry.
The information set forth in this section was derived from
the following sources: California Air Resources Board; Public
Power Magazine (May-June 1993); CALSTART Electric Transportation
Infrastructure Update (dated December 28, 1993); Electric Vehicle
Association of the Americas new release (dated December 21, 1995;
and Time magazine science reporter Hill Williams.
Based on limited technical advance and sporadic media
attention in the past decade, the electric car industry has yet
to
earn the respect and acceptance of the general public. It has
been left to legislators in environmentally conscious regions
such
as California, the Northeast U.S. and parts of Europe to force
this development in the interest of smog-free cities. Canadian
provincial legislators in Ontario and British Columbia are
closely
following the programs of their California counterparts.
Government initiatives aimed at encouraging the sales of
electric vehicles, including the Clean Air Act, the 1975 Energy
Policy and Conservation Act (sets fuel efficiency standards for
cars), and California Health and Safety Code, Section 43802
(certification of low emission vehicles), has led to widespread
activity among all major automakers in Japan, Europe and the U.S.
to meet the electric car challenge. Many analysts and industry
experts expect evolution to occur in the auto industry as an
efficient electric power plant emerges to challenge the standards
of auto design. The fact that all major automakers have serious
electric car development programs as part of their development
agenda adds credibility to the future growth of this market
segment.
The evolution of the electric car dates back to the earliest
days of the automobile industry. At the turn of the century 38%
of U.S. cars were powered by electricity, 22% by gasoline and 40%
by steam. The latter succumbed quickly while the electric car
gained popularity, mainly in urban areas. By 1912, there were
34,000 U.S. electric cars produced versus 20,000 internal
combustion models. In Canada, 25 companies made electric cars
before Henry Fords mass production concepts took over.
Ironically, it was electricity, in the form of spark ignition
that
aided this process. By the end of the Depression, internal
combustion ruled the market. It was not until the 1970s and the
growing awareness of air pollution that the potential of the
electric car gained new credibility. Still, the limitations of
power sources and continued reliance on the traditional lead-acid
battery made commercial production impractical.
In recent years, moral persuasion by the federal government
in Washington, and new strong legislative guidelines in a sixteen
states have forced major auto manufacturers to respond to strict
emission standards. Leading this influence on new power-plant
design, California has mandated that all major producers of cars
sold in their state must meet minimum sales requirements starting
in 1998 when 2% of units sold must be zero-emission (i.e.,
electric powered) vehicles. Quotas will increase to 5% in the
year 2000 and 10% or 800,000 cars by 2003. Although these quotas
have been deferred, regulatory intentions remain constant.
Early pricing policies of the major U.S. automakers suggest
that they are discouraging U.S. government programs to buy
electric and jumpstart mass production. Ford and Chrysler mini-
vans, for example are available at a $100,000/unit premium over
their gasoline counterparts. By contrast, one established
eastern
U.S. electric car-maker converts the Geo Metro model to electric
power and is able to sell units for $26,000. Production line
volumes are projected to cut unit costs dramatically.
In 1992 the Energy Policy and Conservation Act specified
that 23,000 government purchased vehicles over the next three
years were required to be alternative production vehicles. In
1993, President Clinton added his endorsement to the program with
an executive order upping this quota to 34,000 vehicles.
Initially, the majority of this went to natural gas and methanol
conversions. However, support of the electric car evolution is a
major part of the Electric and Hybrid Propulsion Division of the
Energy Department. However, even if there are legislative
incentives in place there can be no guarantee that the Company
will be able to increase its sales or become profitable.
The major stumbling block in creating an electric car
suitable to the consumer is the power source. Secondary factors
include the continued refinement of electric motor and AC/DC
adapter controllers. Solar energy research continues to improve
means of recharging to electric power base and recapture of
energy
through shock absorber and/or braking system design is in the
development stage. Power sensitive heating and cooling systems
continue to emerge.
A limited travel range before recharging, time requirements
to recharge spent batteries, and limited power on acceleration
have been the traditional holdback to electric car functionality.
New battery designs featuring lead-acid, sodium-sulphur, nickel-
cadmiun-1, lithium molybdenum disulfide, and nickel-metal hydride
have only gradually resolved these issues. Concerted effort to
meet this challenge continues in Europe, Japan and North America.
Asea Brown Boveri, a German-Swiss consortium and its Canadian
subsidiary, Powerplex Technologies Inc. of Ontario, have used
sodium-sulphur to expand the energy base of a battery pack to
twice the power density of the conventional lead-acid battery.
In
mid-1992 they announced a 340-mile range test averaging 75 mph.
The investments being expended by other companies are
primarily to create a better battery to power the electric car.
The MI-6 automobile, as discussed below, is unique in design
only.
When a better battery is available, the Company intends to use
that technology in the MI-6, if economically feasible. Until
then, the Company will be using what is acknowledged to be the
best weight/power/cost ratio power source, the lead-acid battery.
b. The MI-6 Electric Automobile.
The MI-6 prototype automobile was designed under the
direction of Mr. Ken Liebscher in Washington State in 1994.
Production viability of the MI-6 had to await the impact of
environmental legislation and a consumer education program that
helps change the perception of what a commuter car should be.
This hiatus allowed the MI-6 creator ample time to address
specific pre-production issues and define a product specification
with approximately 10% of the parts common to a traditional
Detroit assembly line product.
The MI-6 model is based on a body configuration using
twenty-two molded parts. The chassis meets auto industry
standards and is built and assembled by Metalcraft Products of
Detroit, Michigan to stated specifications. Its power is
supplied
by 18 multi-ribbed, lead-acid batteries featuring a corrugated
plate design able to recharge and discharge power at the leading
edge of lead-acid technology. This 108 volt system, when run
through a motor controller, powers an advanced 9-inch DC motor.
The system can be recharged from an onboard battery charger that
can be plugged into a household 110-volt source or a 220-volt
system.. The Company remains familiar with other battery options
and will be able to move to a more exotic power source when
reliability, improved output efficiency and recharge capabilities
move beyond the experimental stage.
As weight has an inverse effect on the performance of the
electric vehicle, the MI-6 body parts are manufactured from
Kevlar
rather than fiberglass. Kevlar is a much stronger material and
allows the designer to create body parts that are a fraction of
the thickness as parts manufactured in fiberglass, and, as a
result, the MI-6 is much lighter than conventional automobiles.
All of the parts for the MI-6, with the exception of the body and
chassis, can be bought off the shelf and this was in fact done to
hold down the cost
The names of the companies which are the principal
suppliers
of the parts for the MI-6 are as follows:
Chassis / Metalcraft Products
Body / B&J Fiberglass
Motor / Advanced DC Motors
Transmission / Volkswagen
Adapter / Electro Automotive
Controller / Curtis Instruments Inc.
Wheels / Centerline Magnesium Wheels
Tires / Goodrich Tire Co.
Seats / SCAT Interiors
Converter / Sevcon
Instruments / Westberg and Curtis
Auto Parts / various major manufacturers
According to E.T.C. Industries, Ltd., that firm incurred
costs relating to the electric car project of $134,157 from 1993
to 1995. On a single-vehicle manufacturing basis, the MI-6 has a
manufacturing cost of $40,600. In order to be economically
viable, the cost will have to be lowered to less than $20,00,
which will require a manufacturing run of 100 vehicles at a time.
There can be no assurance that these objectives can be reached.
Such non-performance by the Company could have a material adverse
effect on the Companys ability to execute its business plan, as
well as its profitability.
The MI-5 prototype engine has delivered 85,000 miles of
trouble-free road time in the past ten years. E.T.C. Industries
Ltd. purchased the MI-5 vehicle, and all intellectual property,
from Electric Vehicle Research Inc. in 1993 (the purchase price
was $10,000 plus 100,000 shares of E.T.C. Industries Ltd.
stock.).
A U.S. built, updated version of the original motor and
controller
powers the first production model of the MI-6.
To go into production of the MI-6 in North America would
require a large influx of capital that could be beyond the
capabilities of the Company. That is why, at this time, there
will be only $25,000 spent on a feasibility study to determine if
it would be economically practical to establish manufacturing
off-
shore with marketing efforts channeled to the international
marketplace. The Company is in its initial stages of development
with no revenues or income and is subject to all the risks
inherent in the creation of a new business. Since the Companys
principal activities to date have been limited to organizational
activities, prospect development, and acquisition of interests,
it
has no record of any revenue-producing operations. Consequently,
there is no operating history upon which to base an assumption
that the Company will be able to achieve its business plans. See
Plan of Operation.
c. The Electric Car Marketplace.
General Motors research studies, as quoted by John Dabels,
Director of Market Development of GM Electric Vehicles, show that
84% of urban drivers travel less than 75 miles per day. Mr.
Dabels foresees the need for both fleet and consumer markets,
citing a need for consumer demand for used vehicles to establish
economic viability. GM requires a minimum market size of 100,000
units to make the project profitable and is targeting a $20,000
to
$25,000 price range.
In that electric cars totally shut down when not moving,
and
based upon average rush hour speeds in cities like Los Angeles
and
the New York area, electric cars provide an ideal long term
option
to current car designs. In that legislation is driving the
market
for the electric car, it is expected that peripheral incentives
such as access to car-pooling lanes will be offered drivers of
electric cars in the near future.
d. Marketing Strategy.
The unique body styling of the MI-6 distinguishes it from
other electric car projects. It was designed entirely by Kenneth
Leibscher, one of the principals of the Company, and Walt
Patterson; electronic schematics for the car were designed by
Catherine Rodden, an electronic engineer. The sporty,
convertible
exterior design of the MI-6 is targeted toward a specific
market.
The MI-6 customer profile is the affluent businessperson
who
has both the financial capacity and individual self-image that
demands a vehicle out of the ordinary. This customer is an
established trendsetter, attracted to a sporty, politically
correct, clean car that offers both status and style.
Realistically, most buyers will be multi-car owners with access
to
a traditional car for rural or cross-country driving.
2. Qiblah Locator.
The other specific reason for formation of the Company is
to
purchase certain assets of Qiblah International Industries Ltd. a
British Columbia corporation, of Vancouver, British Columbia,
Canada (a non-operational holding company), as follows:
(1) The exclusive rights to the use of all patents, patents
pending under application No. 972622 registered in South Africa
March 26, 1987, trademarks, copyrights, title, engineering
designs, concepts, models, prototypes, parts, manufacturing
machines and tools, trade secrets, know-how and show-how, and
customer lists associated with the research, development,
manufacturing, distributing and retailing business of the Qiblah
Locator products of the Vendor (subject to the worldwide
manufacturing and certain marketing rights of Qiblah Technologies
Ltd. as set out in an agreement dated October 30, 1997.
(2) 10,000,000 common shares in Qiblah Technologies Ltd. a
duly registered non-reporting, non-listed South African public
corporation.
(3) Tools, Dies and related manufacturing items for
integrated L.C.D.s display units.
(4) Injection molding tools.
(5) 1 set technical drawings.
(6) Inventory comprised of: 5,000 compasses; 4,000
L.C.D.s; and 2,000 Casings
This firm has developed a state-of-the art electronic device
called the Qiblah Locator, a battery-operated hand-held device
that indicates the direction of the Muslim religious center Mecca
from any location in the world. The Qiblah Locator is designed to
be of assistance to the more than 1.5 billion adherents of the
Muslim faith in the performance of their religious observations.
According to the Holy Koran, it is a sin not to face the holy
city
of Mecca or Qiblah during prayers. No Muslim follower wants to
willfully disrespect the Koran. It is therefore important for him
to face the right direction and pray at the right times as set
out
in the Daily Prayer Schedule. Although there are prayer mats
with
compasses and other direction finding devices on the market, it
is
the opinion of management that none has the sophistication, yet
user friendliness, that the Qiblah Locator combines.
A copy of the purchase agreement (Purchase Agreement),
entered into on January 12, 1999, is attached as Exhibit 10.2 to
this Form 10-SB/A. Under the terms of the Purchase Agreement,
Qiblah International Industries Ltd. has been paid 5,000,000
Shares, at the deemed issuance price of $0.10 per Share. This
issuance price was based upon the historical costs of the
prototype (see chart of historical costs, set forth hereafter).
The Purchase Agreement is subject to an agreement dated October
30, 1997 between Qiblah International Industries Ltd. and its
fifty percent owned South African subsidiary, Qiblah Technologies
Ltd. Under the terms of this agreement, Qiblah Technologies Ltd.
was granted the exclusive license to manufacture on a world-wide
basis the Qiblah Locator, and distribute and sell throughout
certain regions and countries this product: Continent of Africa,
Yemen, north and south, United Arab Emirates, Saudi Arabia, Oman,
Syria, Iran, and Jordan.
Audited financial statements on Qiblah Technologies, Ltd.
are contained in Exhibit 99.2 to this Form 10-SB/A. These
financial statements are denominated in the South African Rand.
At the present time, there are no restrictions on the
repatriation
of profits from South Africa to the United States as long as the
nonresident investor own less than 75% of the South African
entity
(as is the case with the Company and Qiblah Technologies, Ltd.).
In the event currency restrictions on this investment were to be
put in place in the future, then this may have a materially
adverse effect on the Companys operations. Such investment by
the Company also has the risk of currency fluctuations, which may
materially affect the Companys financial position and results.
Five year annual exchange rates of the U.S. Dollar to the South
African Rand, to illustrate the fluctuations in this exchange
rate, are set forth in Exhibit 99.3 to this Form 10-SB/A.
The Qiblah Locator is comprised of a compass, a printed
circuit board, a pressure-sensitive membrane, a world map and a
liquid crystal diode face. After the user depresses a stylus
onto
a point on a world map, the devices arrow points towards Mecca.
The weight of the Qiblah Locator is approximately 100 grams. The
Qiblah Locator is designed to function at altitudes between 0 and
39,000 feet and at temperatures from -30C to +80C. The
usefulness
of this device is that a Muslim, when in an unfamiliar location,
will know in which direction to face for his daily prayer ritual.
The instrument comprises a mechanical compass, a specially
designed LCD which has radially configured sections, formed like
an arrow, pointing to the center of the LCD where there is a dot
representing Mecca. Furthermore there is a specially designed two
sided circuit board, one side which has an area of 40 x 80 mm
radially configured array of thin different shaped conductive
lines. The center of the circuit board section described
represents Mecca. A pressure sensitive rubbery membrane conductor
is fitted above this conductive segment. This membrane conductor
has been designed and produced for us, especially for this
application. On one side it is electrically conductive with the
exception of tiny little dots, printed on the conductive surface
at a height of 0.03 mm. They have the ability to keep the
conductive surface away from the circuit board. On the other side
of the membrane conductor, the world map is displayed (for the
Global Qiblah Locator). Using a specially designed stylus and
pressing lightly on the geographical area required on the map,
the
membrane through its conductive underside, touches the circuit
board and transfers the electric current into one of the circuit
board patterns. These patterns are representative to the magnetic
variations, from the north, anywhere in the world, in relation to
the geographic position of Mecca.
The Qiblah Locator determines the true direction of Mecca
by
using the earths magnetic field. When a geographic location on
the map is selected using the stylus, the chip corrects for
magnetic north by taking into account the magnetic deviation for
the particular location. It then sends a signal to the visible
display in the form of a direction arrow on the LCD face. The
display on the LCD represents the true position of Mecca. The
LCD
automatically shuts off after twelve seconds to preserve battery
life.
The design information for the locator has been written and
programmed over many months from a so called Mercator Map which
also has all magnetic variations from north embedded. It is a
Mariners Map - no 5382 The World, Total Magnetic Intensity. By
pointing the compass installed in the Qiblah Locator, north -
there is reference point one for the computer calculations. The
geographic position of Mecca is fixed and is therefore reference
point two. The unknown in order to calculate a triangle with
variables, is the geographic position where the user is. By
pressing slightly on the world map, in the approximate locations
where the user is, the third reference point is created,
inclusive
of the magnetic variation factor for the location in question.
The computer arithmetically works out a position, magnetically
corrected signal in the form of an electrical impulse which is
passed on through an LCD driver to the LCD. The LCD lights up and
shows an indicative arrow, pointing towards the center of the
LCD,
which represents the position of Mecca. If the user now positions
himself to face the direction in which the arrow points, he will
face Mecca, from anywhere in the world, be it on land, sea or
air.
Working prototypes of the Qiblah Locator have been
completed. The accuracy achieved by the prototype is believed to
be comparable to, or better than, the accuracy of competing
devices. Muslim religious leaders have confirmed that the
accuracy achieved by the current version of the Qiblah Locator
provides a sufficiently fair representation of the direction of
Mecca for users needing to face in that direction during prayer
times.
When compared to the devices of Casio and Lockheed Martin,
the Qiblah Locator is, in the opinion of management, easier to
use
and, geographically speaking, more versatile. The Qiblah Locator
can be used from anywhere on earth simply by touching a map with
a
stylus. The competing products require programming. If the user
of a competing product is not in a major city for which settings
are pre-programmed into the unit, he is required to provide
information that may not be readily available to him, such as a
locations latitude and longitude.
The appearance of the Qiblah Locator, when packaged in an
optional casing that is lined with imitation silk, is attractive
as a gift item. The world map and built-in clock, which are
included in the units as central to the Mecca finding and prayer
timer functions, indirectly increase the overall usefulness of
the
unit. For example, a person may keep the unit in his office and
only use the Mecca finding function when he travels. Yet he
still
may use the prayer timer function a few times each day, refer to
the world map on occasion and use the built-in clock instead of a
watch.
Rolf Papsdorf, the Chairman of the Company, conceived the
idea of the Qiblah Locator in the middle of 1995 and first did a
patent search for similar products. After not finding a match,
Mr. Papsdorf commenced product development. By the first half of
1996, Kinetic Technologies Inc.(Kinetic) of Canada was retained
to write the computer program, based on a mathematical model,
that
would read the map and relate it to an LCD display by dividing
the
360 degrees of the globe into 32 sections. Four programmers
worked on this task for five months.
Mr. Papsdorf retained the German office of Seiko Corp. in
March 1997 to design the LCD, while at the same time Kinetic was
designing the printed circuit board. Once the printed circuit
board and LCD were finished, it was possible to design the mold.
Based on the mold, packaging could now be created. The first
mold
was a shell-only acrylic model. Component suppliers were located
and the first working prototype was completed. The Company
showed
this prototype to Muslim religious leaders and to trade show
attendees in order to solicit feedback on appearance and ease of
use. Historical development costs incurred by Qiblah
International Industries Ltd. through October 1998 were $497,296,
consisting of hard costs (e.g. travel expenses, program
development, prototypes, travel expenses) and soft costs (e.g.
unpaid time of Mr. Papsdorf). The total development time for
this
instrument was nearly 21/2 years.
Historical Costs (in U.S. Dollars):
Compass design to fit mould
requirements
$ 9,500
Electronic developments, program
writing
42,000
LCD Designs and prototypes
17,000
Housing design for instrument and
model
16,000
Subsequent first trial moulds for
injection
23,000
Changes and modifications to moulds
7,000
Design and development of membrane
switch
6,500
Development of program to interact
with time of sunrise, worldwide in
relation to our maps, ongoing for
upgraded Qiblah Locator
22,000
(This program will be available in May
99 with inclusion in new model by end
of 99) Map reproduction in required
format, plotting and digital printing
design for printing machines suitable
to print on flexible material with
high resolution in 6 colors
6,000
Advertising material in various
languages and simple user manual
18,000
Patent costs, ongoing
20,000
Trips by the inventor to Germany,
South Africa and Canada during the
development period approximately 12
times
80,000
Approximate travel expenses to various
suppliers, worldwide in order to get
best quality and prices, ensuring to
deal with reputable companies which
will be suppliers for many years
40,000
Consult time for Ralf Papsdorf as per
Evans & Evans Report
159,904
Consult time for Dieter Schindelhauer
as per Evans & Evans Report
15,780
Evans & Evans Due Diligence Report
14,612
TOTAL
$497,296
a. Market Highlights.
Muslims are followers of Islam, a religion with
approximately 1.5 billion believers worldwide. The Arabic word
Islam is derived from the Arabic root Salema, meaning peace,
purity, submission and obedience. Islam, literally defined, is
the submission or surrender of ones will to the only true God
worthy of worship, Allah. Followers trace Islam back to the age
of Adam; its message has been conveyed to man by Gods prophets
and messengers including Abraham, Moses and Jesus. Muslims
believe
that Islams message has been restored and enforced in the last
stage of the religious evolution by Gods last prophet and
messenger, Muhammad.
The guidelines of Islam stipulate four major exercises of
faith for Muslims. Some of the exercises must be performed
daily,
while others are required weekly, monthly, annually or a minimum
of once in a lifetime. The four major exercises are prayer,
fasting, charity and pilgrimage. Offering of prayer is
obligatory
upon all Muslims, male or female. Obligatory prayers are five
daily prayers, Fridays noon congregation prayer and the funeral
prayer. Requirements of prayer include the performing of
ablution, purity of the whole body, clothes and ground used for
prayer, dressing properly and facing the Qiblah, which is
literally defined as the direction of, or way to, the holy city
of
Mecca. Muslims are not able practically to attend the mosque for
all prayer sessions and they may be away from their home or
office
at prayer times; therefore, they often may not know in which
direction they must face. The Qiblah Locator is intended to
alert
Muslims when it is prayer time and assist them in identifying the
way to Mecca from wherever they may be.
Islam is the fastest growing religion in the world today,
in
large part due to population growth, which averages 2.6% per year
in Muslim countries. Growth through conversion from other
religions is also a factor, particularly in Africa. Islam rivals
Christianity as the worlds most widely held faith and is the
majority religion in about 50 countries. However, just 2% of the
worlds Muslims live in the West. But in the United Kingdom,
Islam is the fastest growing religion among the Afro-Caribbean
community. There are perhaps 10,000 British converts to Islam,
predominantly white, middle-class women. Islam is growing in
organizational strength, not just numbers, in Britain and has
undergone massive restructuring in the last five years. Mosques
and other institutions are proliferating and Muslims are exerting
their influence in such fields as education and politics. There
are also many Muslims in the U.S. For example, Dearborn Heights,
a suburb of Detroit, has Americas largest Muslim population.
Los
Angeles also has a vigorous, growing Muslim population.
Attempts to serve the market for Mecca finding devices and
prayer timers by large multinational companies such as Seiko and
Lockheed Martin indirectly confirms that the size of this market
opportunity is significant. The market potential for the Qiblah
Locator is unlikely to decrease in the future. Daily prayers will
always be a responsibility of Muslims.
It is the experience of the African Muslin Agency, which
sells a variety of religious books, pictures, posters, prayer
aids
etc., that Muslims spend is disproportionate amount of their
disposable income on religious items, especially at holy times of
the year and at special events such as the Mecca pilgrimage.
This
is true even of low-income earners in low-wealth countries.
The Companys contacts with the African Muslim Agency was
not confined to one meeting. In fact it was this agency which was
very helpful in the final development stages of the Qiblah
Locator. They are situated in Fordsburg, a suburb of Johannesburg
and run a highly sophisticated operation. This includes a radio
station for the Muslim section in Africa, training scholastic
schools for religion, commerce and general education. They also
create their own Internet web pages and stay in close contact
with
the worldwide Muslim organizations. The agency is also involved
with advising, administering and connecting business partners,
investments and other financial transaction on behalf of
investors
who wish to invest in Africa.
Specifically, the Company was dealing with Mr. Bhalm, an
Imam (religious teacher) of international esteem. The Company
also has approval of the Qiblah Locator from the religious
leaders
of this agency. This is a vital point in order to enter the
market successfully, as the approval and subsequent marketing
which will also be done through the agencys web pages lend
absolute credibility to the product. Mr. S. Dedat, a major
Muslim
religious leader, internationally highly respected, author of
religious books and widely traveled, also has endorsed our
product.
The Imams and personnel of the African Muslim Agency,
catering for the needs of some 70 million Muslims in Africa, are
therefore due to their many years of experience, highly qualified
to assess the market potential for a religious product like our
Qiblah Locator. It is in fact the opinion of Mr. Bhalm, that our
product will be the preferred product in the Muslim communities
due to its simplicity of operation.
b. Manufacturing Highlights.
Manufacturing of the Qiblah Locator will be undertaken in
Pretoria, South Africa by Casey Holdings Ltd. to take advantage
of
lower labor costs and the relative proximity to export markets of
the Middle East. Casey Holdings Ltd., a Muslim owned, publicly
traded computer company, is advancing sufficient production
capital to finance production requirements for the initial sales
orders. Casey Holdings Ltd. will provide ordering, stock
control,
assembly, packaging and shipping services for the Qiblah Locator.
The Company and Casey Holdings Ltd. are currently in negotiations
to conclude a manufacturing agreement.
Casey Holdings Ltd. currently manufactures 1,200 computers
per month, has 120 employees and generates annual revenue of
approximately $10.5 million. The names of the South African
companies which will be the principal suppliers of the parts for
the Qiblah Locator are as follows:
Printed circuit boards - Bosco Printed Circuits Pty. Ltd.
Packaging - Q Box and Cartoit Manufacturers
Plastic housing - Gottfert Plastics Pty. Ltd.
Electronic components - Factum Electronics Pty. Ltd.
All South African suppliers have confirmed that the
projected volume of Qiblah Locator units would make the Company
one of their major customers. Accordingly, all have expressed a
willingness to show maximum flexibility on price and scheduling.
Component/Process Unit Cost in
Dollars*
Circuit Board 1.57
Circuit Board Population 1.55
Local Electronic Components 0.08
Injection Molding 0.30
Packaging Material 0.35
Compass 2.46
Chips, Driver and Programming 5.75
Floppy Touch Pad 0.66
Assembly, Packaging 1.01
Local Overheads, Miscellaneous 1.22
Total in U.S. $ 14.95
* Based on an exchange rate of 6.21 South African Rand to the
U.S.
Dollar as of May 18, 1999. These prices are not the result of
signed agreements, but firm price quotes received from suppliers.
The Company will sell the standard, assembled, global versions of
the Qiblah Locator for the equivalent of $25.00 per unit F.O.B.
Johannesburg. This represents a profit margin, excluding North
American overhead costs, of approximately 50%. Due to the weak
Rand, which lost about 20 % of its value in the last year, the
price will still be below the $16 US level. As the Company will
supply all distributors at the same price, we allow them to
create
their own price and markup. It is possible that the prices at
which the product is sold in Germany or Saudi-Arabia could be
higher than in Turkey. This allowance of different prices is
necessary to allow the distributor as much room as possible. The
Company will monitor sales, marketing efforts and performance and
will develop incentive schemes, not yet defined, to entice
maximum
sales.
As the Company views its competitors in the market, the only
real challenge is Casio. They offer their unit at US $80 - in
Germany and Saudi-Arabia. Their unit is, in the opinion of
management of the Company, is difficult to operate, needs a
certain amount of technical understanding, and only works in
preprogrammed geographic locations. That unit has only have 16
segments in a 360 degree radius against the Qiblah Locators 32.
Based
on the above, management does not expect erosion of the price
structure of the Qiblah Locator.
c. Marketing Plan Highlights.
The Companys marketing strategy recognizes the unique,
religious nature of the Qiblah Locator. The Company is seeking
endorsements from Muslim prayer leaders and is emphasizing the
fact that the Qiblah Locator is assembled, marketed and
distributed by Muslims.
The decision by the Company to develop a local version of
the Qiblah Locator has several benefits:
(1) It provides distributors from one country with
territorial protection versus the Companys
distributors from another country. For example, a
consumer in Oman would have no interest in purchasing a
local Saudi version of the Qiblah Locator.
(2) It allows the distributor to structure his own price
for his market. Although all distributors buy from the
Company at the same price, they can justify different
prices by having had to pay more for their programmed
chip for their geological location. As there are vast
different income levels in certain Muslim or other
countries, the local distributor needs the necessary
leeway to place their product into the market. At the
same time our sales potential increases because some
users may buy a Local and a Global unit and the users
who never travel far, have the opportunity to purchase
an accurate, high definition local unit.
(3) Not all Muslims travel extensively and have a need for
a Global Locator.
(4) It makes possible multiple purchases by the same
customer. Conceivably, an individual may desire a
global version of the Qiblah Locator for when he
travels and a local, more precise version of the Qiblah
Locator for when he is in his home country. The map
area displayed on the Qiblah Locator is 40 x 80 mm. In
this area, the whole world map is shown. This makes a
country like Germany or Turkey, miniscule. For Global
positioning this does not matter too much. If the user
however travels within Turkey for example, this would
be problematic. The local Qiblah Locator shows on the
same area of 40 x 80 mm, only Turkey and its close
surrounding area. The resolution becomes excellent -
towns, roads, landmarks and other geographic pointers
are visible. This means that anywhere in Turkey, the
user gets a high reading of accuracy. A further
advantage for the local unit is for the distributor.
His license area is the displayed geographic area. This
means that if he distributes the Turkish territory, a
competitor distributor in Iraq would be no competition
because for the Iraq area, only his country and close
surrounding areas would be displayed.
The Qiblah Locator will be marketed through distributors.
Direct sales by management generally will not be undertaken.
However, management will assist its South African distributor on
local sales and selling units into new markets before
distributors
have been selected. All products will be sold against a letter
of
credit or other acceptable guarantees. The distributor has to
place a minimum order as agreed to from time to time; sales will
not be made on consignment.
The first step of the marketing plan is for the Company to
be represented at Muslim business trade shows in the Middle East
and the rest of the world. Yussuf Saley, International Marketing
Director for the Company, and/or Reinhardt Huebsch, Liaison
Director for the Company, will be the representatives initially,
although in future years it is expected that the local
distributor
will be present at these events. Qiblah International Industries
Ltd. was represented at three shows since 1997: (1) International
Life Style Fair, Jeddah, Saudi Arabia (November 2-7, 1997),
attended by Yussuf Saley (International Marketing Director); 5th
Musiad International Trade Fair and 3rd Business forum, Istanbul,
Turkey (November 18-23, 1997), attended by Mr. Saley and
Reinhardt
Huebsch, Liaison Director; and Third Afro-Arab Trade Fair,
Sharjah, United Arab Emirates (December 6-12, 1997), attended by
Mr. Saley and Mr. Huebsch.
Attendance at the trade shows generated approximately
seventy-five prospects. Within two weeks of returning from a
trade show, a representative of the Company will send a follow-up
letter to each serious prospect, inviting them to apply for their
local distributorship. The serious prospects that reply to this
follow-up letter then receive a second letter in which management
outlines its terms and criteria for distributors. Management
intends to appoint one exclusive distributor per country.
Applicants will be selected based primarily on their distribution
network, as well as on other factors such as their reputations.
The Company at this stage has selected three distributors,
one in Turkey . On-Ce Group of companies in Istanbul, which
intends to place orders of 1000 pieces per month for the first
year. This firm is, in turn, working out arrangements with
Medineks Ltd. Istanbul, which wants 100,000 units. The second
company is Makkah Al- Mukarrama in Mecca, Saudi-Arabia. This firm
has ordered an initial 5,000 units, and have ten shop outlets
inclusive of one in the Hilton Hotel in Mecca. The third company
is Imes GMBH, in Munich-Germany; has 680 agents working across
Germany and is a Turkish company operating also in Belgium and
France, and is well connected to all the Muslim agencies in these
countries. This last firm anticipates placing 50,000 units into
the market on short notice.
Management will offer its agents the right to purchase a
license to a country, with the fee being based on a target market
share of the national population. For example, the license fee
for a country of 2.5 million would be $30,000. Alternatively, an
agent could forego the up front license fee and instead add 10%
to
the quoted cost of the unit for the first year and 5% thereafter.
The end-user prices are expected to range from $50.00 to $100.00,
depending on the margin charged by the distributor, the distance
of the market from South Africa, the packaging style, whether it
is a global or local version and whether a prayer time function
is
included. By comparison, prices of between $80.00 and $150.00
are
charged for the Casio model and prices in the range of $85.00 are
charged for the Lockheed model.
Distribution of the Qiblah Locator must take into account
that it is a religious item and thus cannot be marketed as a
mass-
market item. Tasteful advertising in religious journals will be
considered, but mainstream advertising is not appropriate,
especially in non-Muslim countries. Feedback and/or
recommendations of influential local Imans, who are the prayer
leaders at mosques, has been solicited. Shops that sell
religious
items like the Koran will be a major retail vehicle for the
Qiblah
Locators. Gift shops in hotels and airports in Muslim cities
also
are targeted. Sales are not expected to be seasonal, although
extra marketing efforts will be undertaken during special events
such as the attendance of Muslim pilgrims at Mecca during the
holy
month of Ramadan.
The involvement of Mr. Saley, an active Muslim, and the
alliance with Muslim managed Casey Holdings Ltd., are major
strengths of the Company that represent votes of confidence in
the
Qiblah Locator. Many companies have tried and failed at
marketing
devices similar to the Qiblah Locator. A major cause of failure
in all cases was the inability, or unwillingness, to enlist the
support of the Muslim community or to show adequate cultural
sensitivity. The main reason for business failure amongst other
companies are as follows:
(1) Selling a religiously sensitive item to a Muslim with
the label produced in the USA.
(2) Not obtaining approval from Muslim religious leaders.
(3) Not marketing only with and through the Muslim
community.
(4) Not being aware of different cultural requirements.
Due to the Companys approach, surrounding itself with Muslims of
good standing, studying their culture and involving them with the
development of the product, makes the Company different from all
other competitors.
It is also important to incorporate the religious leaders
and get their endorsement of the product in each distribution
territory as part of the planned activities and let them benefit
as well. It is the Companys belief that the right marketing,
sensitivity to different cultures, flexibility and creativity
plus
lean management, tight cost control and aggressive marketing
through the right channels gives the Company a decisive edge over
the competition.
ITEM 2. PLAN OF OPERATION.
The Company is in its initial stages of development with no
revenues or income and is subject to all the risks inherent in
the
creation of a new business. Since the Companys principal
activities to date have been limited to organizational
activities,
prospect development, and acquisition of interests, it has no
record of any revenue-producing operations. Consequently, there
is no operating history upon which to base an assumption that the
Company will be able to achieve its business plans.
The funds available to the Company from the first two
private offerings (see Part II, Item 4 (Recent Sales of
Unregistered Securities)) will not be adequate for it to be
competitive in the areas in which it intends to operate. The
proceeds from these offerings will not be sufficient for the
Company to proceed with the development of the electric car. In
addition, they will not be sufficient to proceed with even a
feasibility study on the electric car.
The company will need to raise additional funds in order to
implement its business plan. The Companys continued operations
therefore will depend upon its ability to raise additional funds
through bank borrowings, equity or debt financing, or asset
sales.
There is no assurance that the Company will be able to obtain
additional funding when needed, or that such funding, if
available, can be obtained on terms acceptable to the Company.
If
the Company cannot obtain needed funds, it may be forced to
curtail or cease its activities. If additional shares were
issued
to obtain financing, current shareholders may suffer a dilutive
effect on their percentage of stock ownership in the Company.
The Company may experience substantial competition in its
efforts to locate and attract clients. Many competitors in the
areas in which it intends to operate have greater experience,
resources, and managerial capabilities than the Company and may
be
in a better position than the Company to obtain access to
attractive clientele. There are a number of larger companies
which will directly compete with the Company. Such competition
could have a material adverse effect on the Companys
profitability.
1. Electric Automobile.
The following description of this project over the next 12
months and beyond is provided to demonstrate the potential of
this
project based on a number of key elements, including:
(a) How the specifications, performance, and design traits of
the
MI-6 stand up to other known entries in this emerging market;
(b) The MI-6 production program will be based on relatively low
capital costs and operation overheads providing an economic
advantage over major companies;
(c) The MI-6 design, with approximately 10% of the parts
inventory
required for a standard internal combustion engine car, lends
itself to efficient assembly and maintenance;
(d) After a preliminary corporate analysis of the projects
feasibility, $25,000 will be allocated to a feasibility study to
determine what the Company will require to place the MI-6
prototype electric car into production. The source of funds for
this feasibility will be primarily from the two private offerings
of the common stock of the Company. See Recent Sales of
Unregistered Securities. However, additional funds will be
required before the Company can proceed with this feasibility
study (see discussion at the start of this section, above).
(e) Upon receiving a favorable feasibility study, the Company
will
embark on a two-phased marketing program aimed at generating
market exposure and entrepreneurial interest in a decentralized
distribution system. Production, if any, will be focused on
overseas markets. In this process, the Company will be using its
best efforts in the development and production of an electric
vehicle suitable for the commuter market.
2. Qiblah Locator.
(a) Short-Term Development Plan (ending December 31, 1999).
Confirm a distribution network for the Qiblah Locator, with
special emphasis on the Middle East and South Africa.
Complete product enhancements such as the inclusion of a
prayer time function (which activates signals for the five daily
prayer times; when the user touches the map with the stylus,
the Qiblah Locator will adjust for local sunrise and sunset
times,
adjust for the day of the month and calculate the five prayer
periods for the particular position) and development of local
versions of the Qiblah Locator for individual countries.
(b) Medium-Term and Long-Term Development Plan (Beyond 1999).
Expand the distribution network for the Qiblah Locator,
with
increased emphasis on Southeast Asia and the non-Arab world.
Consider additional product enhancements such as utilizing
Global Positioning Technology and applying the patent to other
location-finding applications.
3. Patents.
There is nothing patentable with regard to the electric car
project. The Qiblah Locator is patented per patent application
#972622 in the Republic of South Africa.
ITEM 3. DESCRIPTION OF PROPERTY.
The only property owned by the Company is that acquired
under the purchase agreement with Qiblah International Industries
Ltd., as follows:
(a) The exclusive rights to the use of all patents, patents
pending under application No. 972622 registered in South Africa
March 26, 1987, trademarks, copyrights, title, engineering
designs, concepts, models, prototypes, parts, manufacturing
machines and tools, trade secrets, know-how and show-how, and
customer lists associated with the research, development,
manufacturing, distributing and retailing business of the Qiblah
finders products of the Vendor (subject to the worldwide
manufacturing and certain marketing rights of Qiblah Technologies
Ltd. as set out in an agreement dated October 30, 1997.
(b) 10,000,000 common shares in Qiblah Technologies Ltd. a
duly registered non-reporting, non-listed South African public
corporation.
(c) Tools, Dies and related manufacturing items for
integrated L.C.D.s display units.
(d) Injection molding tools.
(e) 1 set technical drawings.
(f) Inventory comprised of: 5,000 compasses; 4,000
L.C.D.s; and 2,000 Casings
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The owners of 5% or more of the Shares, as well as the
officers and directors who own Shares, are set forth in the
following chart:
Title of
Class
Name of Beneficial
Owner (1)
Amount and Nature of
Beneficial Owner (2)
Percent of
Class
Common
Stock
Rolf Papsdorf
2,000,000
19.94%
Common
Stock
Qiblah
International
Industries Ltd.
5,000,000
49.85%
(1) Mr. Papsdorf owns a majority of the stock of Qiblah
International Industries Ltd. The business address for Mr.
Papsdorf and Qiblah International Industries Ltd. is 1177 West
Hastings Street, Suite 2400, Vancouver, British Columbia, Canada.
Other than these Shares owned beneficially by Mr. Papsdorf, none
of the other officers or directors of the Company own any of the
Shares.
(2) Mr. Papsdorf does not have the right to acquire any amount
of
the Shares within sixty days from options, warrants, rights,
conversion privilege, or similar obligations.
ITEM 5. DIRECTORS, OFFICERS, PROMOTERS, AND CONTROL PERSONS.
The names, ages, and respective positions of the directors,
officers, and significant employees of the Company are set forth
below. All these persons have held their positions since January
15, 1999. There are no other persons which can be classified as
a
promoter or controlling person of the Company.
a. Rolf K. Papsdorf, Director (Chairman)/President.
Mr. Papsdorf, age 54, is the inventor of the Qiblah Locator
and the founder of the Company. Mr. Papsdorf is an inventor and
engineer who has developed a number of patented technologies over
the past 25 years. Prior to beginning development on the Qiblah
Locator in 1995, he founded Sims Technology in Germany in 1993 to
produce products out of polymer concrete. Between 1985 and 1993,
he developed and commercialized a system for making roof tiles
out
of mineral waste in an interlocking system, first through
Eurotile
Manufacturing (B.C.), Ltd. of Vancouver, British Columbia and
then
through a company in Germany which he had acquired from the
privatization authorities of the federal government.
In 1980, Mr. Papsdorf had started development on a keyless
(fingerprint-controlled) access control and security device for
motor vehicles and general lock systems, which he sold to Papsi
Systems S.A. in 1983. From 1973 to 1980, he developed a gas
turbine system that had applications in stationary gas turbine-
driven power plants. He sold the patent for this technology to
Gasturbines S.A. in 1980. Mr. Papsdorf earned his degree in
Mechanical Engineering from the University of South Africa in
1974.
b. Dieter K. Schindelhauer,
Director/Secretary/Treasurer/Controller.
Mr. Schindelhauer, age 63, is based in Vancouver, British,
Columbia, Canada. He is presently the President of Orlon
Resources Ltd. of Vancouver, a private project development
company
that holds patents on gravity separation recovery systems. Since
1983 he has been the President of Chalice Mining Inc. of
Vancouver
, a junior gold exploration company. Other former positions held
since 1986 were President of Gulderand Mining, Director of
Seastar
Resources Ltd. and President of Pala Gem and Mineral Mining.
Between 1976 and 1983 he was the Quality Assurance Manager for
Hawker Siddeley Canada Inc., Canadian Car (Pacific) Division in
Surrey, British Columbia, a supplier of sawmill machinery and
lumber processing equipment. From 1973 to 1976 Mr. Schindelhauer
was the Plant Manager and then the General Plant Manager of Moore
Dry Kiln Company of Canada Limited of Richmond, British Columbia,
which designed and manufactured machinery and process equipment
for the primary and secondary lumber industry.
Positions held at Noranda Metal Industries Limited on
Annacis Island, New Westminster, British Columbia between 1959
and
1973 included Superintendent of Technical Services. From 1953 to
1957, Mr. Schindelhauer studied and trained towards a diploma in
Electrical Mechanical technology. He completed in 1976 a four-
year business course at the University of British Columbia that
was sponsored by the Canadian Institute of Management. Mr.
Schindelhauer holds a professional membership in the Canadian
Institute of Management, of which he was the Education Chairman
for the Education Chapter from 1977 to 1983 and the Program
Director from 1983 to 1985.
c. Kenneth B. Liebscher, Director.
Mr. Liebscher, age 56, is an international businessman with
an extensive background in sales and marketing. In 22 years with
Dentsply International, the worlds largest dental products
manufacturer, he climbed the ranks to become Manager of their
West
Coast Division, headquartered in San Francisco. In February
1990,
Mr. Liebscher was recruited by a major Europe-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 to expand this companys world-
wide
sales to $300,000,000 before retiring.
In May 1992, Mr. Liebscher left his previous position to
became a director of a reporting company called E.T.C.
Industries Ltd. Subsequently, he became president of its wholly
owned subsidiary The Electric Car Company and beginning in 1994,
led a team that developed the MI-6 prototype electric car from
the
ground up. Mr. Liebscher also serves as a director of the
following reporting companies: (a) Belmont Resources Inc.; (b)
Vanadium International Inc.; and Montoro Resources Inc. Mr.
Liebscher has attended the University of British Columbia.
d. Yussuf Saley, International Marketing Director.
Mr. Saley, age 48, will be responsible for developing the
overseas distribution network of the Company and for promoting
the
Qiblah Locator at international trade shows. Mr. Saley joined a
film distribution company within the Jacquesson Enterprises Group
of South Africa in 1972, where he was responsible for purchasing
films from England, France and India and distributing them in
South Africa and throughout Africa. The film distribution
company
then established a chain of cinemas in South Africa and Mauritius
for the distribution of imported films. In 1984, he gained
control of Jaquesson Enterprises, which included an electronics
wholesaler and retailer, a consumer and fashion magazine
publisher, and a financial services company.
In 1987, he was appointed the Chairman and Chief Executive
of Stem Diamond Co., whose business includes jewelry retailing,
packaging manufacturing, insurance and mail order. From 1992
until joining Qiblah International Industries, Ltd. in July 1997,
Mr. Saley was semi-retired, managing personal property and
business investments. Mr. Saley is presently an executive member
of the Islamic Business Chamber of South Africa and the Hajj and
Ummrah Council and he is a member of numerous Islamic
organizations including the Islamic Research Center, the Muslim
Youth Movement (NFYNI) Radio Station, the Muslim Business
Association, Crescent International, the Muslim Institute of UK,
the Islamic Foundation and the Africa Muslim Agency. Mr. Saley
has studied at the London School of Economics.
e. Reinhardt Huebsch, Liaison Director.
Mr. Huebsch, age 41, joined Qiblah International Industries
Ltd. in 1998. He also is currently employed as the National Key
Account Manager for Danone Clover. From January to June 1998,
Mr.
Huebsch served as the Senior Accounts Manager for Amato Foods.
For the period of January 1997 to June 1998, he was a principal
in
the firm Pick n Play Family Store. Prior to that he served as
the National Trade Marketing Manager of the Johannesburg office
of
Nabisco/Royal Beechnut since 1994. Between 1989 and 1994 Mr.
Huebsch was the National Trade Marketing Manager of the
Johannesburg office of Cadbury Schweppes and from 1986 to 1988 he
was the National Key Accounts Manager of Ceres Fruit Juices. Mr.
Huebsch held various positions with Nestle-Rowntree between 1977
and 1986, including Merchandiser, Supermarket Salesman, Retail
Salesman, Wholesale Specialist, Key Accounts Manager and National
Accounts Manager. Mr. Huebsch received his business management
diploma in 1976.
ITEM 6. EXECUTIVE COMPENSATION.
(a) No officer or director of the Company is receiving any
remuneration at this time.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
corporation in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed
to
by the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be in the future
directly or indirectly by the corporation to any officer or
director under any plan which is presently existing.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than as set forth in this Item 7, there are no
relationships, transactions, or proposed transactions to which
the
registrant was or is to be a party, in which any of the named
persons set forth in Item 404 of Regulation SB had or is to have
a
direct or indirect material interest.
As indicated under Description of Business, the Company on
January 9, 1999 entered into a license agreement with ETC
Industries, Ltd. of Vancouver, British Columbia, Canada. Ken
Liebscher, one of the Directors of the Company, is a director of
ETC Industries Ltd.; also, Mr. Liebscher owns stock in that firm.
Under the terms of this agreement, E.T.C. Industries Ltd. will be
paid the sum of $50,000, plus a royalty of 2% of the Gross Sales
Price (as defined in this agreement) on every product sold by the
Company.
As indicated under Description of Business, the Company on
January 12, 1999 entered into a purchase agreement with Qiblah
International Industries Ltd. to purchase all the assets of this
firm. Rolf Papsdorf, a Director and President of the Company, is
a majority owner of Qiblah International, Industries Ltd. Under
the terms of the purchase agreement, Qiblah International
Industries Ltd. was paid 5,000,000 Shares, at the deemed issuance
price of $0.10 per Share.
ITEM 8. DESCRIPTION OF SECURITIES.
General Description.
The Articles of Incorporation authorize the issuance of
50,000,000 shares of common stock, with a par value of $0.001.
The
holders of the Shares: (a) have equal ratable rights to dividends
from funds legally available therefore, when, as, and if declared
by the Board of Directors of the Company; (b) are entitled to
share ratably in all of the assets of the Company available for
distribution upon winding up of the affairs of the Company; (c)
do
not have preemptive subscription or conversion rights and there
are no redemption or sinking fund applicable thereto; and (d) are
entitled to one non-cumulative vote per share on all matters on
which shareholders may vote at all meetings of shareholders.
These
securities do not have any of the following rights: (a)
cumulative
or special voting rights; (b) preemptive rights to purchase in
new
issues of Shares; (c) preference as to dividends or interest; (d)
preference upon liquidation; or (e) any other special rights or
preferences. In addition, the Shares are not convertible into
any
other security. There are no restrictions on dividends under any
loan other financing arrangements or otherwise. See a copy of the
Articles of Incorporation, and an amendment thereto, and Bylaws
of
the Company, attached as Exhibit 3.1, Exhibit 3.2, and Exhibit
3.3, respectively, to this Form 10-SB/A. As of the date of this
Form 10-SB/A, the Company had 10,031,000 shares of common stock
outstanding.
Non-Cumulative Voting.
The holders of Shares of Common Stock of the Company do not
have cumulative voting rights, which means that the holders of
more than 50% of such outstanding Shares, voting for the election
of directors, can elect all of the directors to be elected, if
they so choose. In such event, the holders of the remaining
Shares
will not be able to elect any of the Companys directors.
Dividends.
The Company does not currently intend to pay cash dividends.
The Companys proposed dividend policy is to make distributions
of
its revenues to its stockholders when the Companys Board of
Directors deems such distributions appropriate. Because the
Company does not intend to make cash distributions, potential
shareholders would need to sell their shares to realize a return
on their investment. There can be no assurances of the projected
values of the shares, nor can there be any guarantees of the
success of the Company.
A distribution of revenues will be made only when, in the
judgment of the Companys Board of Directors, it is in the best
interest of the Companys stockholders to do so. The Board of
Directors will review, among other things, the investment quality
and marketability of the securities considered for distribution;
the impact of a distribution of the investees securities on its
customers, joint venture associates, management contracts, other
investors, financial institutions, and the companys internal
management, plus the tax consequences and the market effects of
an
initial or broader distribution of such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
The Companys authorized but unissued capital stock
consists
of 39,969,000 Shares of common stock and 10,000,000 shares of
preferred stock. One effect of the existence of authorized but
unissued capital stock may be to enable the Board of Directors to
render more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy
contest, or otherwise, and thereby to protect the continuity of
the Companys management. If, in the due exercise of its
fiduciary
obligations, for example, the Board of Directors were to
determine
that a takeover proposal was not in the Companys best interests,
such shares could be issued by the Board of Directors without
stockholder approval in one or more private placements or other
transactions that might prevent, or render more difficult or
costly, completion of the takeover transaction by diluting the
voting or other rights of the proposed acquiror or insurgent
stockholder or stockholder group, by creating a substantial
voting
block in institutional or other hands that might undertake to
support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the
takeover, or otherwise.
Transfer Agent.
The Company has engaged the services of Pacific Stock
Transfer Company, 3690 South Eastern, Suite 218, Las Vegas,
Nevada
89109, to act as transfer agent and registrar.
PART II.
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Shares have not previously been traded on any
securities
exchange. At the present time, there are no assets available for
the payment of dividends on the Shares.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Companys first fiscal year and up to the
present
time, the principal independent accountant for the Company has
neither resigned (or declined to stand for reelection) nor been
dismissed. The independent accountant for the Company is Amisano
Hanson, Chartered Accountants. This firm was engaged on or about
January 15, 1999.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On January 1, 1999, the Company commenced an offering of
5,000,000 shares of its $.001 par value common stock at an
offering price of $0.001 per Share pursuant to the terms of a
confidential private offering memorandum dated January 1, 1999
for
the purpose of providing start-up capital for the Company. The
minimum investment required was $250.00. No discounts or
commissions were paid in connection with this offering. All
5,000,000 shares were subscribed, resulting in proceeds to the
Company, before costs of the offering, of $5,000.
On January 12, 1999 the Company purchased certain assets of
Qiblah International Industries Ltd. of Vancouver, British
Columbia, Canada. Under the terms of the Purchase Agreement,
Qiblah International Industries Ltd. has been paid 5,000,000
Shares, at the deemed issuance price of $0.10 per Share. This
issuance price was based upon the historical costs of the
prototype of the Qiblah Locator. See Description of Business -
Qiblah Locator.
On January 15, 1999, the Company commenced an offering of
550,000 shares of its $.001 par value common stock at an offering
price of $0.50 per Share pursuant to the terms of a confidential
private offering memorandum dated January 15, 1999 for the
purpose
of providing additional working and development capital for the
Company. The minimum investment required was $500.00. No
discounts or commissions were paid in connection with this
offering. On March 11, 1999, this offering was closed, resulting
in the sale of 31,000 Shares and proceeds to the Company, before
costs of the offering, of $15,500.
Both of these offerings were undertaken pursuant to the
limited offering exemption from registration under the Securities
Act of 1933 as provided in Rule 504 under Regulation D as
promulgated by the U.S. Securities and Exchange Commission.
These
offerings met the requirements of Rule 504 in that: (a) the total
of funds raised in the two offerings does not exceed $1,000,000;
and (b) the offer and sale of the Shares was not accomplished by
means of any general advertising or general solicitation.
The class of persons that these offering were made were
sophisticated investors. As a result, offers were made only to
persons that the Company believed, and had reasonable grounds to
believe, either (a) have such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of the proposed investment, or (b) can bear the
economic risks of the proposed investment (that is, at the time
of
investment, could afford a complete loss). Additionally, sales
were made only to persons whom the Company believed, and had
reasonable ground to believe immediately prior to such sale and
upon making reasonable inquiry, (a) are capable of bearing the
economic risk of the investment, and (b) either personally
possess
the requisite knowledge and experience, or, together with their
offeree representative, have such knowledge and experience.
These sale of unregistered securities were made to the
following firms and individuals (all residents outside the United
States):
Vista Developments Ltd.
Kim Sileski
Irina Herrmann
The Excalibur Group A.G.
Angela Kirkby
Donna Terrill
Rolf Papsdorf
Kelly Brown
Gisela Nagel
Fraser Rieche
Reinhardt Huebsch
Rolf Harms
Constance E. Riepe
Qiblah Intl Industries Ltd.
Orlon Resources Inc.
Susan Walker
C. David Crawford
Irmgard E. Low
John Pickard
Vojtech Agyagos
Roger Agyagos
Karen Schindelhauer
Elke Lund
Thomas OConnor
Herbert Wasserman
Josef Ebert
Michael Dietrich
Sonja Schweiger
Alexander Agyagos
Juraj Agyagos
Franktisek Agyagos
Julia Cakoci
Carolyn Tansi Wingate
Gabriela Varsanyi
Joseph Jaquesson
Barbara Jaquesson
Michel Jaquesson
Dominique Jaquesson
Fransior Besweathriek
Paul Besweathriek
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
No director of the Company will have personal liability to
the Company or any of its stockholders for monetary damages for
breach of fiduciary duty as a director involving any act or
omission of any such director since provisions have been made in
the Articles of Incorporation limiting such liability. The
foregoing provisions shall not eliminate or limit the liability
of
a director (i) for any breach of the directors duty of loyalty
to
the Company or its stockholders, (ii) for acts or omissions not
in
good faith or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the Nevada
Revised Statutes, (iv) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes or, (v) for any
transaction from which the director derived an improper personal
benefit.
The By-laws provide for indemnification of the directors,
officers, and employees of the Company in most cases for any
liability suffered by them or arising out of their activities as
directors, officers, and employees of the Company if they were
not
engaged in willful misfeasance or malfeasance in the performance
of his or her duties; provided that in the event of a settlement
the indemnification will apply only when the Board of Directors
approves such settlement and reimbursement as being for the best
interests of the Corporation. The Bylaws, therefore, limit the
liability of directors to the maximum extent permitted by Nevada
law (Section 78.751).
The officers and directors of the Company are accountable to
the Company as fiduciaries, which means they are required to
exercise good faith and fairness in all dealings affecting the
Company. In the event that a shareholder believes the officers
and/or directors have violated their fiduciary duties to the
Company, the shareholder may, subject to applicable rules of
civil
procedure, be able to bring a class action or derivative suit to
enforce the shareholders rights, including rights under certain
federal and state securities laws and regulations to recover
damages from and require an accounting by management..
Shareholders who have suffered losses in connection with the
purchase or sale of their interest in the Company in connection
with such sale or purchase, including the misapplication by any
such officer or director of the proceeds from the sale of these
securities, may be able to recover such losses from the Company.
PART F/S.
An audited Report and Financial Statement, as of December
31, 1998 (the end of the first fiscal year of the Company), is
set
forth in Exhibit 99.1 to this Form 10-SB/A. In accordance with
Item 310-3(c)(3) of Regulation SB, an audited Report and
Financial
Statement for Qiblah Technologies Ltd. for the first two fiscal
years of that company (1998 and 1999) are contained in Exhibit
99.2 to the Form 10-SB/A. A Financial Data Schedule on the
Company is set forth in Exhibit 99.3 to this Form 10-SB/A.
PART III.
ITEMS 1 and 2. INDEX TO EXHIBITS; DESCRIPTION OF EXHIBITS.
The Exhibits required by Item 601 of Regulation S-B, and an
index thereto, are attached.
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities
Exchange Act of 1934, the Registrant caused this registration
statement to be signed on its behalf by the undersigned,
thereunto
duly authorized.
DIRECTION TECHNOLOGIES, INC.
Date: May 18, 1999. By:/s/__Dieter K. Schindelhauer
Dieter K. Schindelhauer,
Secretary/Treasurer
Special Power of Attorney
The undersigned constitute and appoint Dieter K.
Schindelhauer their true and lawful attorney-in-fact and agent
with full power of substitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Form 10-
SB/A Registration Statement, and to file the same with all
exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission, granting such attorney-
in-
fact the full power and authority to do and perform each and
every
act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorney0in-fact may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1934,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Rolf K. Papsdorf
Rolf K. Papsdorf
President, Director
May 18, 1999
/s/ Dieter K.
Schindelhauer
Dieter K.
Schindelhauer
Secretary, Treasurer (Principal
Financial and Accounting Officer),
Director
May 18, 1999
/s/ Kenneth B.
Liebscher
Kenneth B. Liebscher
Director
May 18, 1999
EXHIBIT INDEX
Exhibit
Number
Description
Method
of
Filing
3.1
Articles of Incorporation
See
Below
3.2
Certificate of Amendment of Articles of Incorporation
See
Below
3.3
Bylaws
See
Below
10.1
License Agreement
See
Below
10.2
Promissory Note
See
Below
10.3
Purchase Agreement
See
Below
24
Special Power of Attorney
See
Signatur
e Page
27
Direction Technologies, Inc. - Financial Data Schedule
See
Below
99.1
Direction Technologies, Inc. - Report and Financial
Statements (Dated December 31, 1998)
See
Below
99.2
Qiblah Technologies Ltd. - Report and Financial
Statements (Dated February 28, 1998 and February 28, 1999
See
Below
99.3
Five Year Historical Exchange Rates: U.S. Dollar to Rand
See
Below
<PAGE>
ARTICLES OF INCORPORATION
OF
FUJI INTERNATIONAL INC.
Know all men by these present that the undersigned have this
day voluntarily associated ourselves together for the purpose of
forming a corporation under and pursuant to the provisions of
Nevada Revised Statutes 78.010 to Nevada Revised Statues 78.090
inclusive as amended and state and certify that the articles of
incorporation are as follows:
First: Name
The name of the corporation is Fuji International Inc.
(Corporation).
Second: Registered Office and Agent
The address of the registered office of the Corporation in
the State Of Nevada is 1600 E. Desert Inn Rd. #102, in the city
of
Las Vegas, County of Nevada. The name and address of the
corporations registered agent in the State of Nevada is Shawn F.
Hackman, Esq., at said address, until such time as another agent
is duly authorized and appointed by the Corporation.
Third: Purpose and Business
The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may now or hereafter be
organized under the Nevada Revised Statutes of the State of
Nevada, including, but not limited to the following:
(a) The Corporation may at any time exercise such
rights, privileges, and powers, when not
inconsistent with the purposes and object for
which this corporation is organized;
(b) The Corporation shall have power to have
succession by its corporate name in
perpetuity, or until dissolved and its
affairs wound up according to law;
(c) The Corporation shall have power to sue and
be sued in any court of law or equity;
(d) The Corporation shall have power to make
contracts;
(e) The Corporation shall have power to hold,
purchase and convey real and personal estate
and to mortgage or lease any such real and
personal estate with its franchises. The
power to hold real and personal estate shall
include the power to take the same by devise
or bequest in the State of Nevada, or in any
other state, territory or country;
(f) The Corporation shall have power to appoint
such officers and agents as the affairs of
the Corporation shall requite and allow them
suitable compensation;
(g) The Corporation shall have power to make
bylaws not inconsistent with the constitution
or laws of the United States, or of the State
of Nevada, for the management, regulation and
government of its affairs and property, the
transfer of its stock, the transaction of its
business and the calling and holding of
meetings of stockholders;
(h) The Corporation shall have the power to wind
up and dissolve itself, or be wound up or
dissolved;
(i) The Corporation shall have the power to adopt
and use a common seal or stamp, or to not use
such seal or stamp and if one is used, to
alter the same. The use of a seal or stamp by
the corporation on any corporate documents is
not necessary. The Corporation may use a seal
or stamp, if it desires, but such use or non-
use shall not in any way affect the legality
of the document;
(j) The Corporation shall have the power to
borrow money and contract debts when
necessary for the transaction of its
business, or for the exercise of its
corporate rights, privileges or franchises,
or for any other lawful purpose of its
incorporation; to issue bonds, promissory
notes, bills of exchange, debentures and
other obligations and evidence of
indebtedness, payable at a specified time or
times, or payable upon the happening of a
specified event or events, whether secured by
mortgage, pledge or otherwise, or unsecured,
for money borrowed, or in payment for
property purchased, or acquired, or for
another lawful object;
(k) The Corporation shall have the power to
guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise
dispose of the shares of the capital stock
of, or any bonds, securities or evidence in
indebtedness created by any other corporation
or corporations in the State of Nevada, or
any other state or government and, while the
owner of such stock, bonds, securities or
evidence of indebtedness, to exercise all the
rights, powers and privileges of ownership,
including the right to vote, if any;
(l) The Corporation shall have the power to
purchase, hold, sell and transfer shares of
its own capital stock and use therefor its
capital, capital surplus, surplus or other
property or fund;
(m) The Corporation shall have to conduct
business, have one or more offices and hold,
purchase, mortgage and convey real and
personal property in the State of Nevada and
in any of the several states, territories,
possessions and dependencies of the United
States, the District of Columbia and in any
foreign country;
(n) The Corporation shall have the power to do
all and everything necessary and proper for
the accomplishment of the objects enumerated
in its articles of incorporation, or any
amendments thereof, or necessary or
incidental to the protection and benefit of
the Corporation and, in general, to carry on
any lawful business necessary or incidental
to the attainment of the purposes of the
Corporation, whether or not such business is
similar in nature to the purposes set forth
in the articles of incorporation of the
Corporation, or any amendment thereof;
(o) The Corporation shall have the power to make
donations for the public welfare or for
charitable, scientific or educational
purposes;
(p) The Corporation shall have the power to enter
partnerships, general or limited, or joint
ventures, in connection with any lawful
activities.
Fourth: Capital Stock
1. Classes and Number of Shares. The total number of shares of
all
classes of stock, which the corporation shall have authority to
issue is Sixty Million (60,000,000), consisting of Fifty
Million (50,000,000) shares of Common Stock, par value of
$0.001 per share (The Common Stock) and Ten Million
(10,000,000) shares of Preferred Stock, which have a par value
of $0.001 per share (the Preferred Stock).
2. Powers and Rights of Common Stock
(a) Preemptive Right. No shareholders of the Corporation
holding Common Stock shall have any preemptive or
other right to subscribe for any additional un-issued
or treasury shares of stock or for other securities of
any class, or for rights, warrants or options to
purchase stock, or for scrip, or for securities of any
kind convertible into stock or carrying stock purchase
warrants or privileges unless so authorized by the
Corporation;
(b) Voting Rights and Powers. With respect to all matters
upon which stockholders are entitled to vote or to
which stockholders are entitled to give consent, the
holders of the outstanding shares of the Common Stock
shall be entitled to cast thereon one (1) vote in
person or by proxy for each share of the Common Stock
standing in his/her name;
(c) Dividends and Distributions
(i) Cash Dividends. Subject to the rights of
holders of Preferred Stock, holders of
Common Stock shall be entitled to receive
such cash dividends as may be declared
thereon by the Board of Directors from
time to time out of assets of funds of the
Corporation legally available therefor;
(ii) Other Dividends and Distributions. The
Board of Directors may issue shares of the
Common Stock in the form of a distribution
or distributions pursuant to a stock
dividend or split-up of the shares of the
Common Stock;
(iii) Other Rights. Except as otherwise required
by the Nevada Revised Statutes and as may
otherwise be provided in these Articles of
Incorporation, each share of the Common
Stock shall have identical powers,
preferences and rights, including rights
in liquidation;
3. Preferred Stock The powers, preferences, rights,
qualifications, limitations and restrictions pertaining to the
Preferred Stock, or any series thereof, shall be such as may be
fixed, from time to time, by the Board of Directors in its sole
discretion, authority to do so being hereby expressly vested in
such board.
4. Issuance of the Common Stock and the Preferred Stock. The
Board
of Directors of the Corporation may from time to time authorize
by resolution the issuance of any or all shares of the Common
Stock and the Preferred Stock herein authorized in accordance
with the terms and conditions set forth in these Articles of
Incorporation for such purposes, in such amounts, to such
persons, corporations, or entities, for such consideration and
in the case of the Preferred Stock, in one or more series, all
as the Board of Directors in its discretion may determine and
without any vote or other action by the stockholders, except as
otherwise required by law. The Board of Directors, from time to
time, also may authorize, by resolution, options, warrants and
other rights convertible into Common or Preferred stock
(collectively Securities.) The Securities must be issued for
such consideration, including cash, property, or services, as
the Board or Directors may deem appropriate, subject to the
requirement that the value of such consideration be no less
than the par value if the shares issued. Any shares issued for
which the consideration so fixed has been paid or delivered
shall be fully paid stock and the holder of such shares shall
not be liable for any further call or assessment or any other
payment thereon, provided that the actual value of such
consideration is not less that the par value of the shares so
issued. The Board of Directors may issue shares of the Common
Stock in the form of a distribution or distributions pursuant
to a stock divided or split-up of the shares of the Common
Stock only to the then holders of the outstanding shares of the
Common Stock.
5. Cumulative Voting. Except as otherwise required by applicable
law, there shall be no cumulative voting on any matter brought
to a vote of stockholders of the Corporation.
Fifth: Adoption of Bylaws.
In the furtherance and not in limitation of the powers
conferred by statute and subject to Article Sixth hereof, the
Board of Directors is expressly authorized to adopt, repeal,
rescind, alter or amend in any respect the bylaws of the
Corporation (Bylaws).
Sixth: Shareholder Amendment of Bylaws.
Notwithstanding Article Fifth hereof, the Bylaws may also
be
adopted, repealed, rescinded, altered or amended in any respect
by
the stockholders of the Corporation, but only by the affirmative
vote of the holders of not less than fifty-one percent (51%) of
the voting power of all outstanding shares of voting stock,
regardless of class and voting together as a single voting class.
Seventh: Board of Directors
The business and affairs of the Corporation shall be
managed
by and under the direction of the Board of Directors. Except as
may otherwise be provided pursuant to Section 4 or Article Fourth
hereof in connection with rights to elect additional directors
under specified circumstances, which may be granted to the
holders
of any class or series of Preferred Stock, the exact number of
directors of the Corporation shall be determined from time to
time
by a bylaw or amendment thereto, providing that the number of
Directors shall not be reduced to less that two (2). The
directors
holding office at the time of the filing of these Articles of
Incorporation shall continue as directors until the next annual
meeting and/or until their successors are duly chosen.
Eighth: Term of Board of Directors.
Except as otherwise required by applicable law, each
Director shall serve for a term ending on the date of the third
Annual Meeting of Stockholders of the Corporation (Annual
Meeting) following the Annual Meeting at which such Director was
elected. All Directors, shall have equal standing.
Not withstanding the foregoing provisions of this Article
Eighth each Director shall serve until his successor is elected
and qualified or until his death, resignation or removal; no
decrease in the authorized number of Directors shall shorten the
term of any incumbent Director; and additional Directors, elected
pursuant to Section 4 or Article Fourth hereof in connection with
rights to elect such additional Directors under specified
circumstances, which may be granted to the holders of any class
or
series of Preferred Stock, shall not be included in any class,
but shall serve for such term or terms and pursuant to such other
provisions as are specified in the resolution of the Board or
Directors establishing such class or series
Ninth: Vacancies on Board of Directors
Except as may otherwise be provided pursuant to Section 4
of
Article Fourth hereof in connection with rights to elect
additional Directors under specified circumstances, which may be
granted to the holders of any class or series of Preferred Stock,
newly created directorships resulting from any increase in the
number of Directors, or any vacancies on the Board of Directors
resulting from death, resignation, removal, or other causes,
shall
be filled solely by the quorum of the Board of Directors. Any
Director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of Directors in
which the new directorship was created or the vacancy occurred
and
until such Directors successor shall have been elected and
qualified or until such Directors death, resignation or removal,
whichever first occurs.
Tenth: Removal of Directors
Except as may otherwise be provided pursuant to Section 4
or
Article Fourth hereof in connection with rights to elect
additional Directors under specified circumstances, which may be
granted to the holders of any class or series of Preferred Stock,
any Director may be removed from office only for cause and only
by the affirmative vote of the holders of not less than fifty-one
percent (51%) of the voting power of all outstanding shares of
voting stock entitled to vote in connection with the election of
such Director, provided, however, that where such removal is
approved by a majority of the Directors, the affirmative vote of
a
majority of the voting power of all outstanding shares of voting
stock entitled to vote in connection with the election of such
Director shall be required for approval of such removal. Failure
of an incumbent Director to be nominated to serve an additional
term of office shall not be deemed a removal from office
requiring
any stockholder vote.
Eleventh: Stockholder Action
Any action required or permitted to be taken by the
stockholders of the Corporation must be effective at a duly
called
Annual Meeting or at a special meeting of stockholders of the
Corporation, unless such action requiring or permitting
stockholder approval is approved by a majority of the Directors,
in which case such action may be authorized or taken by the
written consent of the holders of outstanding shares of voting
stock having not less than the minimum voting power that would be
necessary to authorize or take such action at a meeting of
stockholders at which all shares entitled to vote thereon were
present and voted, provided all other requirements of applicable
law these Articles have been satisfied.
Twelfth: Special Stockholder Meeting
Special meetings of the stockholders of the Corporation for
any purpose or purposes may be called at any time by a majority
of
the Board of Directors or by the Chairman of the Board or the
President. Special meeting may not be called by any other person
or persons. Each special meeting shall be held at such date and
time as is requested by the person or persons calling the
meeting,
within the limits fixed by law.
Thirteenth: Location of Stockholder Meetings.
Meetings of stockholders of the Corporation may be held
within or without the State of Nevada, as the Bylaws may provide.
The books of the Corporation may be kept (subject to any
provision
of the Nevada Revised Statutes) outside the State of Nevada at
such place or places as may be designated from time to time by
the
Board of Directors or in the Bylaws.
Fourteenth: Private Property of Stockholders.
The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever
and the stockholders shall not be personally liable for the
payment of the Corporations debts.
Fifteenth: Stockholder Appraisal Rights in Business
Combinations.
To the maximum extent permissible under the Nevada Revised
Statutes of the State of Nevada, the stockholders of the
Corporation shall be entitled to the statutory appraisal rights
provided therein, with respect to any business Combination
involving the Corporation and any stockholder (or any affiliate
or
associate of any stockholder), which required the affirmative
vote
of the Corporations stockholders.
Sixteenth: Other Amendments.
The Corporation reserves the right to adopt, repeal,
rescind, alter or amend in any respect any provision contained in
these Articles of Incorporation in the manner now or hereafter
prescribed by applicable law and all rights conferred on
stockholders herein granted subject to this reservation.
Seventeenth: Term of Existence.
The Corporation is to have perpetual existence.
Eighteenth: Liability of Directors.
No Director of this Corporation shall have personal
liability to the Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a Director or
officer involving any act or omission of any such Director or
officer. The foregoing provision shall not eliminate or limit the
liability of a Director (i) for any breach of the Directors duty
of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the payment of
dividends in violation of Section 78.300 of the Nevada Revised
Statutes or, (v) for any transaction from which the director
derived an improper personal benefit. Any repeal or modification
of this Article by the stockholders of the Corporation shall be
prospective only and shall not adversely affect any limitation on
the personal liability of a Director or officer of the
Corporation
for acts or omissions prior to such repeal or modification.
Nineteenth: Name and Address of first Directors and
Incorporators.
The name and address of the incorporators of the
Corporation
and the first Directors of the Board of Directors of the
Corporation which shall be one (1) in number is as follows:
Incorporator/Director:
Shawn F. Hackman, Esq.
1600 E. Desert Inn Road Suite 102
Las Vegas, Nevada 89109
I, Shawn F. Hackman, Esq., being the Incorporator/Director
herein before named, for the purpose of forming a corporation
pursuant to the Nevada Revised Statues of the State of Nevada, do
make these Articles, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true and
accordingly have hereunto set my hand this 22nd day of April,
1998.
By: /s/ Shawn F.
Hackman
Shawn F. Hackman, Esq.
Verification
State Of Nevada
SS
County Of Clark
On this 22nd day of April 1998, before me, the undersigned,
a Notary Public in and for said State, personally appeared Shawn
F. Hackman, Esq. personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person who subscribed
his name to the Articles of Incorporation and acknowledged to me
that he executed the same freely and voluntarily and for the use
and purposes therein mentioned.
By:
/s/__________________
_________
Notary Public in and
for said
County and State
Acceptance of Resident Agent
I, Shawn F. Hackman, Esq., hereby accept the position as
resident agent for Fuji International Inc., effective this date:
April 22nd , 1998
/s/ Shawn F.
Hackman
Shawn F.
Hackman,Esq
<PAGE>
CERTIFICATE OF AMENDMENT OF AMENDMENT
TO ARTICLES OF INCORPORATION
OF
FUJI INTERNATIONAL, INC.
I, Shawn F. Hackman, Esq., certifies that:
1. The original articles were filed with the Office of the
Secretary of State on April 30, 1998
2. As of this date, there is no issued or outstanding stock.
3. Pursuant to a Board of Directors meeting at which in
excess of two-thirds voted in favor of the following
amendment, the company hereby adopts the following
amendments to the amendment of the Articles of Incorporation
of this Corporation:
First: Name of Corporation.
The name of the corporation is Direction
Technologies,
Inc.
(the Corporation)
/s/ Shawn F.
Hackman_________________
Shawn F. Hackman,
Incorporator/Sole Director
Verification
State Of Nevada
SS
County Of Clark
On December 28, 1998, personally appeared before me, a
Notary Public, Shawn F. Hackman, Esq. who acknowledged that he
executed the above instrument.
By:
/s/__________________
_________
Notary Public in and
for said
County and State
<PAGE>
BYLAWS
OF
DIRECTION TECHNOLOGIES, INC.
ARTICLE I: OFFICES
The principal office of the Corporation in the Sate of
Nevada shall be located in Las Vegas, County of Clark, the
Corporation may have such other offices, either within or without
the State of Nevada, as the Board of Directors my designate or as
the business of the Corporation may require from time to time.
ARTICLE II: SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the
shareholders shall be held on the 15th day in the month of
January
in each year, beginning with the transaction of such other
business as my come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the Sate of Nevada,
such meeting shall be held on the next succeeding business day.
If the election of Directors shall be held on the day designated
herein for any annual meeting of the shareholders or at any
adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as
soon thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meeting of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President or by the
Board of Directors, and shall be called by the President at the
request of the holders of not less than ten percent (10%) of all
the outstanding shares of the Corporation entitled to vote at the
meeting.
SECTION 3. Place of Meeting. The Board of Directors my
designate any place, either within our without the State of
Nevada, unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting. A
waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within our without the
State of Nevada, unless otherwise prescribed by statute, as the
place for the holding of such meeting. If no designation is
made,
the place of meeting shall be the principal office of the
Corporation.
SECTION 4. Notice of Meeting. Written notice stating the
place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called,
shall unless otherwise prescribed by statute, be delivered not
less than ten (10) nor more than sixty (60) days before the date
of the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States Mail, addressed to
the shareholder at his address as it appears on the stock
transfer
books of the Corporation, with postage thereon prepaid.
SECTION 5. Closing of Transfer Books or Fixing of Record.
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be
closed for a stated period, but not to exceed in any case fifty
(50) days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for
at least fifteen (15) days immediately preceding such meeting.
In
lieu of closing the stock transfer books, the board of Directors
may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not
more than thirty (30) days and, in case of a meeting of
shareholders, not less than ten (10) days, prior to the date on
which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not
closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or
the
date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 6. Voting Lists. The officer or agent having
charge of the stock transfer books for shares of the corporation
shall make a complete list of shareholders entitled to vote at
each meeting of shareholders or any adjournment thereof, arranged
in alphabetical order, with the address of and the number of
shares held by each. Such lists shall be produced and kept open
at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the
meeting
for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares
of
the Corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders.
If
less than a majority of the outstanding shares are represented at
a meeting, a majority of the shares so represented may adjourn
the
meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The
shareholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
the shareholder or by his or duly authorized attorney-in-fact.
Such proxy shall be filed with the secretary of the Corporation
before or at the time of the meeting. A meeting of the Board of
Directors my be had by means of telephone conference or similar
communications equipment by which all persons participating in
the
meeting can hear each other, and participation in a meeting under
such circumstances shall constitute presence at the meeting.
SECTION 9. Voting of Shares by Certain Holders. Shares
standing in the name of another corporation may be voted by such
officer, agent or proxy as the Bylaws of such corporation may
prescribe or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or
conservator my be voted by him either in person or by proxy,
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him, either in person or
by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into his name, if authority to do so be contained in an
appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled
to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall
not be voted directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding
shares at any given time.
SECTION 11. Informal Action by Shareholders. Unless
otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be
taken at a meeting of the shareholders, may be taken without a
meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to
vote
with respect to the subject matter thereof.
ARTICLE III: BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number
of directors of the Corporation shall be fixed by the Board of
Directors, but in no event shall be less than one ( 1 ). Each
Director shall hold office until the next annual meeting of
shareholder and until his successor shall have been elected and
qualified.
SECTION 3. Regular Meetings. A regular meeting of the
Board of Directors shall be held without other notice than this
Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional
regular meetings without notice other than such resolution.
SECTION 4. Special Meetings. Special meetings of the
Board
of Directors may be called by or at the request of the President
or any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix the place for
holding any special meeting of the Board of Directors called by
them.
SECTION 5. Notice. Notice of any special meeting shall be
given at least one (1) day previous thereto by written notice
delivered personally or mailed to each director at his business
address, or by telegram. If mailed, such notice shall be deemed
to be delivered when deposited in the United Sates mail so
addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any directors
may
waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. Quorum. A majority of the number of directors
fixed by Section 2 of the Article III shall constitute a quorum
for the transaction of business at any meeting of the Board of
Directors, but if less than such majority is present at a
meeting,
a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 8. Action Without a Meeting. Any action that may
be taken by the Board of Directors at a meeting may be taken
without a meeting if a consent in writing, setting forth the
action so to be taken, shall be signed before such action by all
of the directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board
of Directors may be filled by the affirmative vote of a majority
of the remaining directors though less than a quorum of the Board
of Directors, unless otherwise provided by law. A director
elected to fill a vacancy shall be elected for the unexpired term
of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors may be filled by
election by the Board of Directors for a term of office
continuing
only until the next election of directors by the shareholders.
SECTION 10. Compensation. By resolution of the Board of
Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be
paid a stated salary as a director or a fixed sum for attendance
at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation thereof.
SECTION 11. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be
presumed
to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof, or shall
forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
ARTICLES IV: OFFICERS
SECTION 1. Number. The officers of the corporation shall
be a President, one or more vice Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of
Directors, including a Chairman of the Board. In its discretion,
the Board of Directors may leave unfilled for any such period as
it may determine any office except those of President and
Secretary. Any two or more offices may be held by the same
person. Officers may be directors or shareholders of the
Corporation.
SECTION 2. Election and Term of Office. The officers of
the Corporation to be elected by the board of Directors shall be
elected annually by the board of Directors at the first meeting
of
the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified,
or until his death, or until he shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent may be removed by
the Board of Directors whenever, in its judgement, the best
interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if
any,
of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights, and such
appointment shall be terminable at will.
SECTION 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may
be
filled by the Board of Directors for the unexpired portion of the
term.
SECTION 5. President. The president shall be the
principal executive officer of the Corporation and, subject to
the
control of the Board of Directors, shall in general supervise and
control all of the business and affairs of the Corporation. He
shall, when present, preside at all meetings of the shareholders
and of the Board of Directors, unless there is a Chairman of the
Board, in which case the Chairman shall preside. He may sign,
with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for
shares of the Corporation, any deed, mortgages, bonds, contract,
or other instruments which the Board of Directors has authorized
to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or
by there Bylaws to some other officer or agent of the
Corporation,
or shall be required by law to be otherwise signed or executed;
and in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board
of Directors from time to time.
SECTION 6. Vice President. In the absence of the president
or in the event of his death, inability or refusal to act, the
Vice President shall perform the duties of the President, and
when
so acting, shall have all the powers of and be subject to all the
restrictions upon the President. The Vice President shall
perform
such other duties as from time to time may be assigned to him by
the President or by the Board of Directors, If there is more
than
one Vice President, each Vice President shall succeed to the
duties of the President in order of rank as determined by the
Board of Directors. If no such rank has been determined, then
each Vice President shall succeed to the duties of the President
in order of date of election, the earliest date having the first
rank.
SECTION 7. Secretary. The Secretary shall: (a) keep the
minutes of the Board of Directors in one or more minute books
provided for the purpose; (b) see that all notices are duly
given
in accordance with the provisions of the Bylaws or as required
by
law; (c) be custodian of the corporate records and of the seal
of
the Corporation and see that the seal of the Corporation is
affixed to all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which
shall be furnished to the Secretary by such shareholder; (e)
sign
with the President certificates for share of the Corporation, the
issuance of which shall have been authorized by resolution of the
Board of Directors; (f) have general charge of the stock transfer
books of the Corporation, and (g) in general perform all duties
incident to the office of the Secretary and such other duties as
from time to time may be assigned to him by the President or by
the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts for
moneys due and payable to the Corporation in such banks, trust
companies or other depositories as shall be selected in
accordance
with the provisions of Article VI of these Bylaw; and (c) in
general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
If
required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and
with
such sureties as the Board of Directors shall determine.
SECTION 9. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer
shall be prevented from receiving such salary by reason of the
fact that he is also a director of the Corporation.
ARTICLE V: INDEMNITY
The Corporation shall indemnify its directors, officers and
employees as follows:
(a) Every director, officer, or employee of the Corporation
shall be indemnified by the Corporation against all expenses and
liabilities, including counsel fees, reasonable incurred by or
imposed upon him in connection with any proceeding to which he
may
become involved, by reason of his being or having been a
director,
officer, employee or agent of the Corporation or is or was
serving
at the request of the Corporation as a director, officer,
employee
or agent of the corporation, partnership, joint venture, trust or
enterprise, or any settlement thereof, whether or not he is a
director, officer, employee or agent at the time such expenses
are
incurred, except in such cases wherein the director, officer, or
employee is adjudged guilty of willful misfeasance or malfeasance
in the performance of his duties; provided that in the event of a
settlement the indemnification herein shall apply only when the
Board of Directors approves such settlement and reimbursement as
being for the best interests of the Corporation.
(b) The Corporation shall provide to any person who is or
was a director, officer, employee, or agent of the Corporation or
is or was serving at the request of the Corporation as director,
officer, employee or agent of the corporation, partnership, joint
venture, trust or enterprise, the indemnity against expenses of
suit, litigation or other proceedings which is specifically
permissible under applicable law.
(c) The Board of Directors may, in its discretion, direct
the purchase of liability insurance by way of implementing the
provisions of the Article V.
ARTICLE VI: CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize
any office or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and
on behalf of the Corporation, and such authority may be general
or
confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf
of the Corporation and no evidences of indebtedness shall be
issued in its name unless authorized by a resolution of the Board
of Directors. Such authority may be general or confined to
specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or
other orders for the payment of money, notes or other evidences
of
indebtedness issued in the name of the Corporation, shall be
signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositories as the Board of Directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates
representing shares of the Corporation shall be in such form as
shall be determined by the Board of Directors. Such certificates
shall be signed by the President and by the Secretary or by such
other officers authorized by law and by the Board of Directors so
to do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer
shall
be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been
surrendered and cancelled, expect that in case of a lost,
destroyed or mutilated certificate a new one may be issued
therefore upon such terms and indemnity to the Corporation as the
Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the certificate
for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes, Provided, however, that upon
any action undertaken by the shareholder to elect S Corporation
status pursuant to Section 1362 of the Internal Revenue Code and
upon any shareholders agreement thereto restricting the transfer
of said shares so as to disqualify said S Corporation status,
said
restriction on transfer shall be made a part of the Bylaws so
long
as said agreements is in force and effect.
ARTICLE VIII: FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st
day of January and end on the 31st day of December of each year.
ARTICLE IX: DIVIDENDS
The Board of Directors may from time to time declare, and
the Corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and condition provided by law and
its Articles of Incorporation.
ARTICLE X: CORPORATE SEAL
The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the
name of the Corporation and the state of incorporation and the
words, Corporate Seal.
ARTICLE XI: WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the
Corporation under the provision of the Articles of Incorporation
or under the provisions of the applicable Business Corporation
Act, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII: AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors.
The above Bylaws are certified to have been adopted by the
Board of Directors of the Corporation on the 30th day of
December,
1998.
/s/ Malcolm Fraser
Malcom Fraser, President
/s/ Nicodemo Zavaglia
Nicodemo Zavaglia,
Secretary/Treasurer
<PAGE>
LICENSE AGREEMENT PRIVATE
This License Agreement made this 9th day of January , 1999.
BETWEEN:
E.T.C. INDUSTRIES LTD.
1180 - 666 Burrard Street
Vancouver, B.C.
V6C 2X8
(the Licensor)
OF THE FIRST PART
AND:
DIRECTION TECHNOLOGIES INC.
#723 - 250 H Street
Blaine, WA 98230
(the Licensee)
OF THE SECOND PART
WHEREAS:
A. The Licensor is engaged in the research, development,
manufacturing and marketing of proprietary electric vehicle
technology and holds 100% of the beneficial and legal title in
respect of such technology including without limitation: common
law
trademarks and copyrights; the sole right to make application for
patents, trademarks, and copyrights in respect of the Technology;
engineering designs; concepts; models; prototypes; parts;
manufacturing machines and tools; trade secrets; know-how and
show-
how associated with electric vehicles (collectively, the
Technology).
B. The Licensor is willing to disclose to the Licensee, its
agents and employees, the Technology and such other production
knowledge and technical knowledge and technical experience, and
generally to advise and assist the Licensee and its technical
staff
at reasonable times and in reasonable ways to facilitate the
Licensees objective of producing electric vehicles embodying the
Technology (the Products).
NOW THEREFORE IN CONSIDERATION of one (1) dollar (the
receipt
and sufficiency of which is hereby acknowledged), the premises,
other good and valuable consideration and of the covenants and
agreements herein contained, the parties hereto covenant and
agree
as follows:
I. LICENSE
The Licensor hereby grants to the Licensee, a license for
the
exclusive rights to manufacture and market the Products
(collectively, the Rights) world-wide (collectively, the
Territory)
Upon any termination or cancellation of this License
Agreement for any reason, the license shall terminate.
II. CONDITION PRECEDENTS
The obligations in this License Agreement shall be subject
to
the final approval of all regulatory authorities having
jurisdiction
over the transactions contemplated hereunder, including the
Vancouver Stock Exchange.
III. LICENSE FEE, ROYALTY AND TERM
A. As used in this section Net Sales Price means the
price paid for a Product to the Licensee by a customer of the
Licensee less: any applicable sales, excise, customs or other tax
on
sales of the Products by the Licensee and transportation, freight
and delivery expenses.
B. In consideration of:
1. $50,000 USD
2. royalties of 2% of the Gross Sales Price as
recorded by the Licensee on every product sold,
to be paid payable monthly on the first day of
the month; and
3. the Licensee agreeing to use its best efforts
in
the development and production of a multi-
passenger, short haul, commercial vehicle
suitable for hotel, resort and high traffic local
markets
and subject to fulfilment of the terms and conditions
contained herein, the Licensor shall license the Rights
to the Licensee free and clear of all liens, claims,
charges and encumbrances whatsoever.
C. Each payment made pursuant to the provisions of this
License Agreement shall be accompanied by a statement signed by
the
Licensee, stating in detail the aggregate amount of the
Licensees
Gross Sales Prices for the Products sold during the period in
respect of which the royalty is payable hereunder.
D. The term of this License Agreement shall be five (5)
years (the Initial Term) commencing from the date of approval
of
the regulatory authorities and shall be renewable for another
five
(5) years under the same terms and conditions, unless:
1. the Licensee is in default of this License
Agreement
2. the Licensee or the Licensor elects not to
renew
this License Agreement; or
3. the Licensee does not achieve annual gross
sales
of CDN$2,000,000 within the Initial Term:
E. Notwithstanding any provision herein, this License
Agreement may be terminated after two years from the commencement
of
the Initial Term if the Licensee fails to build 3 prototype
electric
vehicles based on the Technology within such two year period.
IV. ASSIST IN ESTABLISHING PRODUCTION FACILITIES
The Licensor will advise and assist the Licensee in
establishing and installing such production facilities and
procuring
and installing such equipment therefor as the Licensee may need
for
the manufacture of the Products, and thereafter will advise the
Licensee in the operation of such production facilities and
equipment as hereinafter provided.
V. PROVISION OF INFORMATION
During the term of this License Agreement, the Licensor
shall
make available to the Licensee full and complete technical
information from time to time possessed by the Licensor relating
to
the Products, and the use of all assets as outlined in Schedule
A.
VI. NON-DISCLOSURE OF TECHNICAL INFORMATION
The Licensee shall not disclose any information received
from
the Licensor under this License Agreement to any person except
the
Licensees employees or agents to whom it shall be necessary in
the
Licensees opinion to make such disclosure to enable the Licensee
to
obtain the benefit of such information in the manufacture of the
Products. The foregoing restrictions on disclosure of
information
shall apply so long as the Products has not become a matter of
public knowledge, by disclosure in issued patents, development of
such knowledge in the industry or otherwise.
VII. REPRESENTATIONS AND WARRANTIES
1. the Company is duly incorporated and validly
existing pursuant to the laws of the Province of
British Columbia;
2. there are no options, warrants, rights or
agreements outstanding with respect to the
purchase of any of the Rights.
3. there are no agreements existing or
contemplated,
written or oral of any nature or kind whatsoever
to which the Licensor is a party except as have
been in writing disclosed to and approved by the
Licensee;
4. the Licensor has all corporate power and
authority to carry on its business as presently
carried on;
5. the making of the License Agreement and the
completion of the transactions contemplated
hereby does not conflict with or result in the
breach of or the acceleration of any indebtedness
under any terms, provisions or conditions of or
constitute default under the Articles of
Incorporation or any amendment thereto or the By-
laws of the Licensor or any indenture, mortgage,
deed of trust, agreement, lease, franchise,
certificate, consent, permit, licence, authority
or other instrument or obligation to which the
Licensor is a party or is bound or any judgement,
which the Licensor is bound or, to the knowledge
of the Licensor, any statute or regulation
applicable to the Licensor.
A. The Licensee covenants, represents and warrants to
the
Licensor that:
1. the Company is duly incorporated and validly
existing pursuant to the laws of the State of
Nevada;
2. the Licensee has all corporate power and
authority to carry on its business as presently
carried on;
3. the making of the License Agreement and the
completion of the transactions contemplated
hereby does not conflict with or result in the
breach of or the acceleration of any indebtedness
under any terms, provisions or conditions of or
constitute default under the Articles of
Incorporation or any amendment thereto or the By-
laws of the Licensee or any indenture, mortgage,
deed of trust, agreement, lease, franchise,
certificate, consent, permit, licence, authority
or other instrument or obligation to which the
Licensee is a party or is bound or any judgment,
which the Licensee is bound or, to the knowledge
of the Licensee, any statute or regulation
applicable to the Licensee.
VIII. ADVISORY CAPACITY
In providing the technical information and technological
assistance, the Licensor and its employees are acting in an
advisory
capacity only and nothing herein contained shall be construed as
creating a relationship between the Licensor and the Licensee as
a
partnership or joint venture. Further, it is understood that
legal
and beneficial ownership of the Technology shall at all times
belong
to the Licensor.
IX. TERMINATION
A. This License Agreement shall be in force provided
that:
1. if at any time either party to this License
Agreement shall have defaulted in the performance
of its obligations hereunder, the other party may
give written notice of such default, and if such
default shall continue for a period of 30 days
after such notice, the party who has so given
notice of default may thereupon terminate this
License Agreement forthwith by giving to the
other party written notice of termination;
2. if any proceedings in bankruptcy or for the
appointment of a receiver-manager or trustee or
any other proceedings under any law for the
relief of debtors shall be instituted by or
against the Licensee or the Licensor, or if
either of such parties shall make an assignment
for the benefit of creditors, this License
Agreement shall, at the option of the other party
exercisable by notice in writing to that effect,
forthwith terminate; or
B. In the event of termination of this License
Agreement:
1. the Licensee shall pay to the Licensor the
royalty fees calculated hereunder to the date of
termination as if that date were the end of the
month;
2. paragraph VI and VII of this License Agreement
shall survive the termination of this License
Agreement; and
3. the Licensee agrees that it shall not for a
period of 2 years, either directly or indirectly,
be associated with the business of research,
development, manufacturing, distributing and
retailing business of electric vehicles in the
Territory.
X. NOTICE
Any notice given by either party hereto to the other party
shall be deemed to have been sufficiently given if sent by
registered mail, to the address of the other party set forth on
page
one hereof, unless and until another address shall have been
designated in writing by such other party for that purpose. Any
notice so given shall be deemed to have been received five
business
days following the day that it was sent.
XI. SEVERABILITY
Should any part of this License Agreement, for any reason,
be
declared or held invalid, such invalidity shall not affect the
validity of any remaining portion, which remaining portion shall
remain in force and effect as if this License Agreement had been
executed with the invalid portion thereof eliminated, and it is
hereby declared the intention of the parties hereto that they
would
have executed the remaining portion of this License Agreement
without including therein any such part, parts or portion which
may,
for any reason, be hereafter declared invalid.
XII. FURTHER DOCUMENTS
The parties shall execute such of the documents and do such
other things that may be reasonably necessary to give full effect
to
the transactions contemplated hereby.
XIII. GOVERNING LAW
This License Agreement shall be subject to and governed in
accordance with the laws of the Province of British Columbia,
Canada, and the parties hereto do attorn to the exclusive
jurisdiction of the Courts of the Province of British Columbia.
XIV. COUNTERPARTS
This License Agreement may be executed in counterpart and
the
counterparts altogether shall constitute a fully executed License
Agreement, and any facsimile signature shall be taken as an
original.
IN WITNESS WHEREOF the parties hereto have duly executed
this License Agreement as of the day and year first above
written.
E.T.C. INDUSTRIES LTD. )
)
)
/s/ )
Per: Authorized Signatory )
DIRECTION TECHNOLOGIES INC. )
)
)
/s/ )
Per: Authorized Signatory )
SCHEDULE A
Assets Inventory
All patents, patents pending, trademarks, copyrights, title,
engineering designs, concepts, models, prototypes, parts,
manufacturing machines and tools, trade secrets, know-how and
show-how, and customer lists associated with the research,
development, manufacturing, distributing and retailing business
of
electric powered vehicles of the Vendor and more particularly:
One 1987 Suburban Truck VIN# CSUBR 1GKGRZ6N1HF576447
One 1993 Pace Trailer VIN# 4PZUB1626SU001744
One MI-5 Electric Car
One MI-6 Electric Car
One complete set of MI-6 Electric Car Moulds
<PAGE>
Promissory Note
$ 50,000.00 U.S.D.
For value received, the undersigned promises to pay E.T.C.
Industries Ltd. (Payee) or order on demand the sum of Fifty
Thousand U.S. dollars, plus interest from this date at the rate
of 0%, both before and after default, until paid in full. Term
is
two years.
Signed at Vancouver, B.C. on January 9, 1999.
/s/ /s/
Witness Promissor:
Direction
Technologies, Inc.
<PAGE>
PURCHASE AGREEMENT PRIVATE
This License Agreement made this 12th day of January 1999.
BETWEEN:
DIRECTION TECHNOLOGIES INC.
#723 - 250 H Street
Blaine, WA 98230
(the Purchaser )
OF THE FIRST PART
AND:
QIBLAH INTERNATIONAL INDUSTRIES LTD.
#2400 - 1177 W. Hastings Street
Vancouver, B.C.
(the Vendor)
OF THE SECOND PART
WHEREAS:
A. The Vendor is engaged in the research, development,
manufacturing and marketing of proprietary Qiblah direction
finding
technology and holds 100% of the beneficial and legal title in
respect of such technology including without limitation: common
law
trademarks and copyrights; the sole right to make application for
patents, trademarks, and copyrights in respect of the Technology;
engineering designs; concepts; models; prototypes; parts;
manufacturing machines and tools; trade secrets; know-how and
show-
how associated with Qiblah direction finding (collectively, the
Technology).
B. The Vendor is willing to disclose to the Purchaser, its
agents and employees, the Technology and such other production
knowledge and technical knowledge and technical experience, and
generally to advise and assist the Purchaser and its technical
staff
at reasonable times and in reasonable ways to facilitate the
Purchasers objective of producing Qiblah direction finders
embodying the Technology (the Products).
NOW THEREFORE IN CONSIDERATION of one (1) dollar (the
receipt
and sufficiency of which is hereby acknowledged), the premises,
other good and valuable consideration and of the covenants and
agreements herein contained, the parties hereto covenant and
agree
as follows:
I. THE ASSETS PURCHASE
The Vendor hereby agrees to sell and the Purchaser hereby
agrees to buy all of the assets, undertaking and goodwill
relating
to Qiblah direction finders of the Vendor, including but not
limited
to the assets and technology as described in the attached
Schedule
A (the Assets).
II. THE PURCHASE PRICE
In order to conclude the purchase and sale transaction
contemplated by this Agreement, the Purchaser shall allot and
issue
5,000,000 common shares in the capital stock of the Purchaser
(the
Shares) to the Vendor at the deemed issuance price of $0.10 on
Closing and subject to fulfilment of the terms and conditions
contained herein, the Technology shall be free and clear of all
liens, claims, charges and encumbrances whatsoever.
III. REPRESENTATIONS AND WARRANTIES
1. the Vendor is duly incorporated and validly
existing pursuant to the laws of the Province of
British Columbia;
2. there are no options, warrants, rights or
agreements outstanding with respect to the
purchase of any of the Rights.
3. there are no agreements existing or
contemplated,
written or oral of any nature or kind whatsoever
to which the Vendor is a party except as have
been in writing disclosed to and approved by the
Purchaser;
4. the Vendor has all corporate power and
authority
to carry on its business as presently carried on;
5. the making of the Purchase Agreement and the
completion of the transactions contemplated
hereby does not conflict with or result in the
breach of or the acceleration of any indebtedness
under any terms, provisions or conditions of or
constitute default under the Articles of
Incorporation or any amendment thereto or the By-
laws of the Vendor or any indenture, mortgage,
deed of trust, agreement, lease, franchise,
certificate, consent, permit, licence, authority
or other instrument or obligation to which the
Vendor is a party or is bound or any judgement,
which the Vendor is bound or, to the knowledge of
the Vendor, any statute or regulation applicable
to the Vendor.
A. The Purchaser covenants, represents and warrants to
the
Vendor that:
1. the Company is duly incorporated and validly
existing pursuant to the laws of the State of
Nevada;
2. the Purchaser has all corporate power and
authority to carry on its business as presently
carried on;
3. the making of the Purchase Agreement and the
completion of the transactions contemplated
hereby does not conflict with or result in the
breach of or the acceleration of any indebtedness
under any terms, provisions or conditions of or
constitute default under the Articles of
Incorporation or any amendment thereto or the By-
laws of the Purchaser or any indenture, mortgage,
deed of trust, agreement, lease, franchise,
certificate, consent, permit, licence, authority
or other instrument or obligation to which the
Purchaser is a party or is bound or any
judgement, which the Purchaser is bound or, to
the knowledge of the Purchaser, any statute or
regulation applicable to the Purchaser.
IV. TERMINATION
This agreement shall terminate at the option of the
Purchaser
forthwith if Closing shall not have taken place by January 15,
1999
or such later date as the parties may agree to in writing. In the
event of a default by either party of its obligations pursuant
hereto, the obligations of the other party shall, at its opinion,
terminate forthwith.
V. NOTICE
Any notice given by either party hereto to the other party
shall be deemed to have been sufficiently given if sent by
registered mail, to the address of the other party set forth on
page
one hereof, unless and until another address shall have been
designated in writing by such other party for that purpose. Any
notice so given shall be deemed to have been received five
business
days following the day that it was sent.
VI. SEVERABILITY
Should any part of this Purchase Agreement, for any reason,
be declared or held invalid, such invalidity shall not affect the
validity of any remaining portion, which remaining portion shall
remain in force and effect as if this Purchase Agreement had been
executed with the invalid portion thereof eliminated, and it is
hereby declared the intention of the parties hereto that they
would
have executed the remaining portion of this Purchase Agreement
without including therein any such part, parts or portion which
may,
for any reason, be hereafter declared invalid.
VII. FURTHER DOCUMENTS
The parties shall execute such of the documents and do such
other things that may be reasonably necessary to give full effect
to
the transactions contemplated hereby.
VIII. GOVERNING LAW
This Purchase Agreement shall be subject to and governed in
accordance with the laws of the Province of British Columbia,
Canada, and the parties hereto do attorn to the exclusive
jurisdiction of the Courts of the Province of British Columbia.
IX. COUNTERPARTS
This Purchase Agreement may be executed in counterpart and
the counterparts altogether shall constitute a fully executed
Purchase Agreement, and any facsimile signature shall be taken as
an
original.
IN WITNESS WHEREOF the parties hereto have duly executed
this Purchase Agreement as of the day and year first above
written.
QIBLAH INTERNATIONAL INDUSTRIES LTD. )
)
)
/s/
)
Per: Authorized Signatory )
DIRECTION TECHNOLOGIES INC. )
)
)
/s/
)
Per: Authorized Signatory )
SCHEDULE A TO THE AGREEMENT DATED 12TH JANUARY, 1999
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND DIRECTION TECHNOLOGIES INC.
Assets Inventory
The exclusive rights to the use of all patents, patents pending
under application No. 972622 registered in South Africa March 26,
1987, trademarks, copyrights, title, engineering designs,
concepts, models, prototypes, parts, manufacturing machines and
tools, trade secrets, know-how and show-how, and customer lists
associated with the research, development, manufacturing,
distributing and retailing business of the Qiblah finders
products
of the Vendor (subject to the worldwide manufacturing and certain
marketing rights of Qiblah Technologies Ltd. as set out in an
agreement dated October 30, 1997 per Schedule B attached
hereto).
10,000,000 common shares in Qiblah Technologies Ltd. a duly
registered non-reporting, non-listed South African public
corporation.
Tools, Dies and related manufacturing items for integrated
L.C.D.s display units.
Injection molding tools.
1 set technical drawings.
Inventory comprised of:
5,000 compasses
4,000 L.C.D.s
2,000 Casings
SCHEDULE B TO THE AGREEMENT DATED 12TH JANUARY, 1999
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND DIRECTION TECHNOLOGIES INC.
This Agreement is dated for reference the 30th Day of October,
1997
BETWEEN
QIBLAH INTERNATIONAL INDUSTRIES LTD., a British
Columbia corporation having its registered offices at
Suite 1710, 1177 West Hastings Street, Vancouver,
British Columbia, Canada V6E 2KE, hereinafter called
Owner
AS PARTY OF THE FIRST PART
AND
QIBLAH TECHNOLOGIES LTD., a South African corporation
having its executive offices at 46 Stander Street,
Brackenhurst, Alberton 1449, South Africa, hereinafter
called Manufacturer
AS PARTY OF THE SECOND PART
WHEREAS
1. Kurt Rolf Papsdorf, Inventor, made the Patent Application
972622 in his name, which Application was duly registered
with the South African Registrar of Patents, Designs, Trade
Marks and Copyright on the 26th day of March, 1997, a copy
of which Application is attached to and forms part of this
Agreement as Schedule AA@;
2. By Agreement dated the 29th day of October, 1997, the
Inventor, Kurt Rolf Papsdorf did assign to the Owner the
whole of the benefits of the said Patent Application,
including the right to the issue in the name of the Owner
any Patents granted in pursuance of such Application, a copy
of which Agreement is attached to and forms part of this
Agreement as Schedule AB@ hereto;
3. The subject matter of the said Patent Application is a
electronic mechanism by which the Holy City of Makkah,
center of the Muslim faith and birthplace of the Prophet
Muhammad, founder of Islam, may be accurately located from
any location on the face of the earth. This mechanism has
been incorporated into a fully designed and operational unit
called the Global Qiblah Locator (AGQL@);
4. Manufacturer was incorporated in South Africa to be
responsible for the manufacturing and primary distribution
of the GQL.
NOW THIS AGREEMENT WITNESSES that in consideration of the sum of
Ten dollars, United States currency ($US 10.00), the legal
sufficiency whereof and the receipt by each party hereto is
acknowledged and accepted, the parties hereto are agreed as
follows:
1.0 Definitions
In this Agreement,
1.1 AKnow-How@ includes all technical information, procedures,
processes, trade secrets, methods, practices, techniques,
information, bills of parts, diagrams, drawings, specifications,
blue-prints, lists of materials, labor and general costs,
production manuals and data relating to the design, manufacture,
production, inspection and testing of the Products, which are
from
time to time in the Owner=s possession with free right of
disposal;
1.2 ANet Sales@ shall mean in respect of any particular
period,
the net invoiced sales of Products sold by the Manufacturer or on
behalf of the Manufacturer, excluding returns, discounts, value
added or sales taxes or other similar taxes payable on the
amounts
so charged, freight, insurance, external packaging of Products
and
credits, provided, however, that with respect of any Products
disposed by any of the Manufacturer to third persons in any
manner
other than a regular competitive sales transaction, the net
invoice price of any item which is sold in such manner shall be
deemed to be an amount equal to the amount which would have been
the net invoice price of such item had it been sold in the same
market for cash in a regular competitive transaction;
1.3 APatents@ shall refer to the Patent Application set out in
Schedule AB@ and shall include patents for improvements and
modifications thereof and applications for patents for
improvements and modifications thereof;
1.4 AProducts@ shall be deemed to be those items to be
manufactured according to the Patents and Know-How as generally
disclosed in the in the Application for the Patents and Know-How
and shall refer to and include the GQL, as more specifically set
out in Schedule AC@, and to all items associated with such
Products, such as advertising, packaging and informational
information, whether in electronic or printed format;
1.5 ATrade Marks@ shall refer to those Trade Marks set out in
Schedule AD@ and shall include all trade marks and trade names
that may in the future be adopted by the Manufacturer in
connection with the Products manufactured by the Manufacturer;
1.6 ATerritory@ shall mean and refer to the geographical area
for which a license is created by this Agreement for the
distribution and sale of Products, comprising the independent
nations, principalities and other self-governing areas listed in
Schedule AD@ hereto, whose geographical boundaries are comprised
and defined by the laws of same .
2.0 Grant of License
2.1 The Owner grants to the Manufacturer the exclusive license
under the Patents and Trade Marks to:
1. manufacture on a world-wide basis, the Products
covered by the Patents;
2. distribute, use and sell throughout the Territory, the
Products covered by the Patents so manufactured; and
3. use the Trade marks in conjunction with the Products
throughout the Territory.
2.2 Owner grants to the Manufacturer the exclusive rights to
use
and exploit the Know-How in the manufacture of the Products.
2.3 Manufacturer acknowledges that some or all of the Know-How
has been disclosed and delivered to Manufacturer in confidence
prior to and in contemplation of the execution of this Agreement.
The remainder of the Know-How shall be furnished to the
Manufacturer as soon as possible after the date of execution of
the Agreement but not later than ninety days (90) from the date
of
execution of this Agreement.
2.4 The obligation to furnish Know-How shall extend to Know-How
existing at the date of this Agreement and to any Know-How
defined
in this Agreement which later becomes the possession of the Owner
during the term of this Agreement.
2.5 Owner warrants that there are no other subsisting licenses
under the Know-How in the Territory and covenants that no further
disclosure to third parties will be made by it of the Know-How in
the Territory while this Agreement is in force.
2.6 Owner warrants that the Know-how will be sufficient and
suitable for the manufacture of the Products to a quality
comparable to the quality of the sample Products furnished to the
Manufacturer by the Owner, provided that the Manufacturer at all
times conforms strictly with the Know -How.
2.7 Owner reserves the right to make and enter into other
agreements for the licensing of the rights of sale and
distribution of the GQL in other geographical areas of the world
not licensed herein to the Manufacturer on such terms and
conditions as to the Owner are acceptable, and further that such
terms and conditions may be different than the terms and
conditions of this agreement.
2.8 Owner reserves the right to license other persons or
corporations to manufacture the Products and to use the Know-How
for such purposes of manufacture under terms and conditions,
similar to those herein, in the event that the Manufacturer, for
any reason, is either unwilling or unable to supply sufficient
Products at the times or at the prices or to the quality
specified
by the Owner, to meet the requirements of the market place and
the
various Manufacturers created by the Owner.
3.0 Sub-licenses
The Manufacturer may, with the prior written consent of the
Owner, appoint sub-licensors for the Products within the
Territory
provided that:
Any such sub-Manufacturers be at arm=s length with the
Manufacturer and that any such sub-Manufacturers enter into an
agreement with the Manufacturer which is satisfactory to the
Owner. The Owner shall be a party of any such sub-license
agreement.
Any such sub-license agreement shall include terms imposing
on
the sub-Manufacturer all of the obligations of the Manufacturer
pursuant to this Agreement and shall reserve to the Owner and
the Manufacturer severally all of the rights of the Owner. The
Owner shall have the right to enforce and terminate such
agreement without the consent of the Manufacturer.
Any agreement appointing a sub-Manufacturer shall be
terminable
at the option of the Owner by the Owner in the event of the
termination of this Agreement (for whatever reason) and shall
provide that if it is not terminated by the Owner on the
termination of this Agreement, it may at the option of the
Owner continue in force as a license agreement between the
Owner and the sub-Manufacturer.
4.0 Term of the Agreement
4.1 Subject to the provisions for early termination as set out
in this Agreement, this Agreement shall remain in full force and
effect for a period of ten years (10) and shall expire on the
30th
day of October, 2007.
4.2 This Agreement shall be automatically renewed on its expiry
for a further term of ten (10) years. Upon any such renewal,
whether automatic or otherwise, the terms and conditions shall
remain the same with the exception of the minimum production
quotas as set out in Schedule AE@, which shall be renegotiated by
the parties. In the event that the parties are unable to agree on
a new minimum production or market quota, the minimum production
or marketing quota shall be 100% of the minimum quota then
existing for the previous year of this Agreement, In the event
that the Owner does not wish to renew this Agreement, it may
terminate the same at the end of any two year period, by giving
120 days of prior written notice to the Owner.
5.0 Improvements
5.1 Each party agrees to promptly disclose to the other any and
all technical data and information relating to any and all
developments or improvements of the Patents or the Products
(whether or not patentable) and of the Know-how that it may
develop or acquire during the term of this Agreement to the
extent
that such disclosure is not restricted or prohibited by law, or
any undertaking given to, or any conditions, restriction or
restraint imposed by third parties, or by considerations relating
to the validity of any Patent in respect of which applications is
about to be made.
5.2 The Manufacturer covenants and agrees that it shall not
make
or manufacture any design changes or modifications to the
Products
without the prior written consent of the Owner. Manufacturer
further covenants and agrees that any modifications, design
changes or improvements made to the Products, whether same can be
the subject of further patent applications or not, shall be
disclosed to the Owner and that such disclosures shall be made
sufficiently promptly so that the Owner can file whatever
applications for letters patent it wishes. Manufacturer agrees
that Owner shall have the sole right to make such patent
applications. Manufacturer further covenants and agrees to
execute
promptly and without compensation any and all papers and
documents
and to perform whatever lawful acts may be deemed necessary or
desirable to effect and maintain the Owner=s licensed rights in
the Patents and Know-How and improvements and applications for
letters patent and in all letters patent issuing from
applications
for letters patent.
5.3 Owner shall grant to Manufacturer an exclusive license to
manufacture, market and sell the Products in the Territory under
all improvements and all developments to be furnished to Owner,
together with an ancillary grant of the right to use any
associated Trade marks and any associated Know-How, provided that
in the case of any such improvement or development the disclosure
of which by the Owner is subject to any restrictions, legal
prohibitions, undertakings given to or conditions, restrictions
or
restraints imposed by third parties or considerations relating to
the validity of any patent in respect of which application is
about to be made, any grant by the Owner to the Manufacturer
under
this provision shall be limited accordingly.
5.4 Under all developments or improvements of the Patents or
the
Products to be furnished by the Manufacturer to the Owner, the
following additional terms shall apply:
1. Outside the Territory, the Owner shall have the
exclusive royalty-free license on any such
improvements on the Patents or Products now owned or
hereafter made or acquired by Manufacturer during the
life of this Agreement. Manufacturer further covenants
and agrees to notify Owner of any improvements and to
execute promptly and without compensation any and all
papers and documents and to perform whatever lawful
acts may be reasonably deemed necessary or desirable
to effect and maintain the Owner=s licensed rights or
the rights of any of the Owner=s sub-Manufacturers in
said improvements and applications for letters patent
and in all letters patent issuing from said
applications for letters patent.
2. Inside the Territory, Manufacturer shall have the
exclusive license to manufacture and sell the products
incorporating or constituting such developments or
improvements as approved by the Owner; provided that
in the case of any such improvement or development the
disclosure of which by the Manufacturer is subject to
any restriction, legal prohibitions, undertakings
given to or conditions, restrictions or restraints
imposed by third parties , or considerations relating
to the validity of any patent in respect of which
application is about to be made, any grant by the
Manufacturer to the Owner shall be limited
accordingly.
5.5 Where technical data and information relating to any
developments or improvements of the Products is legally obtained
or obtainable from an unrelated party only upon payment, there
shall be no obligation on either party to make such payment in
order to obtain such technical data and information for
disclosure
to the other party provided, however, that is the party does not
make such payment, such technical data and information shall be
disclosed to the other party.
6.0 Obligations of the Owner.
6.1 The Owner shall provide to the Manufacturer sample
marketing
information and standard information such as installation
instructions, technical data and manuals as are necessary to
promote the sale of the Products, and including trade
advertisements and promotional literature, if requested by the
Manufacturer. The Manufacturer shall obtain the prior written
approval of the Owner to use any such information which is not
simply a translation or a copy of that provided by Owner.
Manufacturer shall provide a translation in the English language
of such promotional material at the time of applying for such
approval.
6.2 The Owner agrees to use its best efforts to provide the
Manufacturer with accurate technical assistance under this
agreement, but the Owner does not assume any responsibility for
any Products produced and sold by the Manufacturer; nor shall the
Owner be deemed to make, or have made, any warranties of any
nature whatsoever with respect to such technical assistance or
with respect to the Products.
6.3 Upon the written request of the Manufacturer, the Owner
shall render all Know-How, training and technical assistance
necessary to be provided by the Owner under this agreement at
times and places mutually agreed upon and subject to the
availability of the Owners personnel and facilities. The Owner
does not warrant or agree that any of its personnel to be
furnished or to be made available to the Manufacturer under this
agreement will speak any language other than English. The
Manufacturer shall obtain any and all necessary visas, work
permits, residence permits or other permits or approvals
necessary
for the entry into and working in the Territory of all technical
personnel who are to be provided by the Owner under the terms of
this agreement.
.
6.4 Upon the written request of the Manufacturer during the
term
of this agreement, the Owner agrees to send at such reasonable
intervals and times as may be mutually acceptable to the Owner
and
the Manufacturer at least one of the Owners technical personnel
and such additional technical personnel as may be mutually agreed
upon between the parties, to the Manufacturers plant in the
Territory, to provide such technical assistance as may be
reasonably necessary to produce Products of a quality at least
equal to those being produced by the Owner. Such assistance shall
include the training of a reasonable number of the Manufacturers
personnel. The Manufacturer shall reimburse the Owner for the
costs with respect to any employees sent to and maintained in the
Territory under this paragraph. Such reimbursement shall be made
by the Manufacturer in Canadian currency and shall be in the
amount of the total of the following:
(a) the expenses of the personnel in traveling to and from
Territory; and
(b) the ordinary living expenses of the personnel while in
the Territory.
The Manufacturer further agrees to advance to the Owner the
cost of one or more round-trip air fares, as the case may be,
from
the Territory simultaneously with its request for such technical
personnel. The Manufacturer further agrees to reimburse the Owner
for the aforementioned costs and expenses within thirty days
following receipt of the Owners invoice therefor after deduction
of the air fare referred to above. It is understood, however,
that
all ordinary living expenses of such technical personnel relating
to the initial set-up and installation of equipment under this
agreement, excluding the cost of food and accommodation, are to
be
paid by the Owner. The Owner does not warrant or agree that any
of
its personnel to be furnished or to be made available to the
Manufacturer under this agreement will speak any language other
than English.
7.0 Manufacturers Duties -- Exploitation of Patents
7.1 The Manufacturer shall within the limits of its reasonable
ability, promote the sales of the Products in the Territory, and
conduct its business in a manner so as to enhance the reputation
of the Products and Trade Marks.
7.2 The Manufacturer shall manufacture the Products to the
highest standards and use the best quality of available materials
and sub-assemblies that are economically possible and available,
having regard to the nature of the Products and the use to which
they are to be put.
7.3 The Manufacturer shall maintain the standards of design,
materials, quality control, production and safety testing and
inspection at least equal to the standards specified by the Owner
and shall permit the Owner, at its own expense to inspect the
production line while in operation and to call for and inspect
samples of the Products manufactured by the Manufacturer, and to
inspect the Manufacturers operations generally, in order to
determine if the Manufacturer has adhered to such standards. In
the event that the Manufacturer fails to adhere substantially to
such standards, the Owner may give the Manufacturer thirty days
written notice of demand to comply, and if the Manufacturer fails
to comply (or if compliance by its nature requires a period
longer
than thirty days, then if the Manufacturer fails to commence
complying and thereafter continues the process of correcting the
non-compliance), then the Owner, in addition to its other
remedies, may terminate this agreement by notice in writing.
7.4 The Manufacturer agrees diligently to promote the sale of
the Products under this agreement. The Manufacturer further
agrees
that its advertising expenditures for the promotion of the
Products during the course of every quarter during the term of
this agreement, and any extensions thereof, shall be in an amount
equal to Three (3%) percent of the Net Sales of such Products
sold
by the Manufacturer during the quarter preceding. A detailed
report concerning such advertising shall be made to the Owner
within fifteen days after the end of each quarter.
7.5 The Manufacturer shall ensure that any registration or
notification required by the laws of the Territory shall have
been
carried out. The Manufacturer shall comply with all laws and
regulations as may apply with the Territory, as applicable to
this
agreement and all transactions and activities contemplated or to
be performed under this agreement. The Manufacturer shall procure
and maintain all approvals, licenses, permissions and permits
necessary to the performance of its business and conduct its
business in a manner so as to not bring discredit upon the
reputation of the Products or the Owner. The Manufacturer shall
keep the Owner informed of any laws or regulations of the
Territory which may affect the promotion, sales, services or
maintenance of the Products in order that the Owner will not
breach any such laws or regulations through lack of awareness
thereof.
7.6 The Manufacturer acknowledges that the essence of this
agreement is that the Owners present and future Products will
receive priority attention from the Manufacturer. Accordingly,
the
Manufacturer undertakes and agrees that during the term of this
agreement the Manufacturer will not sell any products which may,
in any way, compete with the promotion and sale of the Products
or
have any financial or other interest, either directly or
indirectly, and either as shareholder, officer, director,
adviser,
lender, owner, manager or agent, in any corporation, partnership
or other entity whose business is the sale or manufacture of
products which may in any way compete with the manufacture,
promotion and / or sale of the Products without the written
consent of the Owner. Nothing in this agreement shall prevent the
Manufacturer from continuing to carry on the business of products
other than Products of the Owner.
7.7 The Manufacturer must keep the Owner informed of the
locations of its production facilities in a timely manner.
8.0 Marketing and Production of Products
8.1 The Manufacturer agrees that it shall commence selling the
Products on or before December 1st, 1997.
8.2 The Manufacturer agrees that it shall manufacture and sell
the minimum number of Products as set out in Schedule E forming
part of this agreement. In the event that the Manufacturer fails
to meet the minimum quotas as set out in Schedule E, the Owner,
at its sole option may:
(a) terminate this agreement with thirty days notice in
writing to the Manufacturer;
(b) revoke the Manufacturers exclusive license for the
Territory and grant the same or lesser licenses to third
parties within the Territory;
(c) attempt to renegotiate the terms of this agreement with
the Manufacturer;
(d) waive the Manufacturers breach of this term of the
agreement in one or more specific instances of the
Manufacturers failure to meet the minimum annual marketing
and production quotas, but this action shall not be deemed
to relieve the Manufacturer from its obligations to
otherwise meet the minimum marketing and production quotas
and shall not constitute a waiver of the Owners right
thereafter to insist upon performance of the Marketing and
production quota covenant of the Manufacturer.
8,3 Any authorized representative of the Owner shall have the
right to enter at any time during business hours into the plant
or
plants of the Manufacturer for the purpose of inspecting and
supervising the Manufacturers methods and procedures of
processing, manufacturing, storage, display and marketing of the
Products.
9.0 Manufacturers Prohibitions
9.1 The Manufacturer shall not advertise the Products outside
the Territory except where advertisements are included in
international publications.
9.2 The Manufacturer shall not seek customers, establish any
branch or maintain any office or depot in relation to the
Products
anywhere outside the Territory.
10.0 Consideration
10.1 The Manufacturer agrees to pay the Owner the amounts by way
of initial payment the total of Ten Million shares (10,000,000),
issued as fully paid and non-assessable voting common shares, in
the capital of Manufacturer at a nominal value of One (1.00)
South
African Rand, per share. At the date of this Agreement, One South
African Rand is equivalent to $0.25 Canadian currency.
10.2 As consideration for the license granted under the licensed
Patents and licensed Trade Marks, the Manufacturer agrees to pay
the Owner during the term of this Agreement an ongoing royalty
equal to Ten (10.0%) percent of the Net Sales of any Product
manufactured and sold by or on behalf of the Manufacturer (the
Royalties). Such Royalties shall be payable to the branch and
account designated by the Owner.
10.3 Within thirty days of the end of each quarter in each year,
the Manufacturer shall deliver to the Owner a report setting out
the numbers, description (including description of end use and
customer name) and value of the sales of each Product
manufactured
by or on behalf of the Manufacturer and sold by it (whether
separately or as part of any larger unit or product) during such
preceding quarter. Concurrently with the making of each such
report, the Manufacturer shall remit the Royalties then due to
the
Owner in respect of the Products sold by or on behalf of the
Manufacturer in the preceding quarter.
10.4 No Royalties shall be payable in respect of Products sold
or
otherwise disposed of by the Manufacturer for the purpose of
samples or bona fide tests on such Products.
10.5 All payments to the Owner under this agreement shall be
made
without any deduction of any kind except for withholding taxes,
if
any, eligible on the payments. The Manufacturer undertakes to
take
all reasonable steps to assist the Owner to obtain the benefit of
any double taxation agreement which may apply to any of the
payments under this agreement and to minimize the impact of any
taxation in respect of such payments.
10.6 In the event that withholding taxes are eligible on any
payments under this Agreement, the Manufacturer shall withhold
the
withholding taxes required and shall promptly remit such taxes to
the appropriate taxing authority in the Territory. Upon any such
remittance, the Manufacturer shall promptly provide the Owner
with
documentation evidencing the payment of such taxes, and any other
documentation that the Owner shall reasonably require so as to
obtain a foreign tax credit in Canada.
10.7 Interest on all late royalties and any other sums or
payments due to the Owner under this agreement shall be charged
at
the average of London Interbank Offering Rate (ALIBOR@) for the
month containing the due date for the late royalty or other late
sum or payment plus 2.0% per annum from the due date until such
overdue royalty, sum or other payment is received.
11.0 Currency of Payment
11.1 Except as otherwise specified in this agreement, all
payments required to be made by or on behalf of the Manufacturer
under this agreement shall be converted to and paid in United
States dollars, based on the prevailing buying foreign
exchange
rate for United States dollars on the date any such payment is
due, and shall be paid to the Owner or to such account or
accounts
at such bank or banks as the Owner may in its sole discretion
designate from time to time and the Owner shall give the
Manufacturer thirty days written notice of any such change in
place of payment. In the event that the Manufacturer is late in
making any payment due pursuant to this agreement, then, in
addition to any interest charges that may accrue thereon in
accordance with this agreement, the exchange rate to be applied
to
any such late payment shall be the Owners most favorable
buying
foreign exchange rate at the Royal bank of Canada at any time
during the period commencing on the date that the payment was due
and the date such payment was actually made.
11.2 If any law or regulation is imposed in the Territory
restricting or limiting the right of the Manufacturer to make
payment to the Owner as provided in this agreement, the
Manufacturer shall immediately notify the Owner of any such
restrictions or limitations and shall use its best efforts to
register or qualify this agreement under any such law or
regulation in order to allow the Manufacturer to make full
payment
to the Owner as provided in this agreement. The Manufacturer
agrees to modify any terms or conditions of this agreement which
would not unreasonably interfere with its utilization of the
rights granted under this agreement, if such modifications are
necessary in order to allow the Manufacturer to make full payment
to the Owner. If the agreement cannot be modified to the
satisfaction of both parties so as to allow the Manufacturer to
obtain sufficient exchange to make its required payments under
this agreement, then in that event the Owner shall have the
option
of accepting payment in any other authorized currency acceptable
to the Owner and designated by the Owner to the Manufacturer in
writing or the Owner may terminate this agreement on sixty days
notice thereof to the Manufacturer.
12.0 Warranty re Patents and Trade Marks
12.1 The Owner warrants that it has the right to grant the
rights
granted in this agreement and that it has granted no other rights
or licenses which would derogate from the rights granted in this
agreement.
12.2 The Manufacturer acknowledges the validity and ownership of
the Patents in the Territory. The Manufacturer further
acknowledges the validity of the Trade Marks and agrees that the
Trade Marks are and shall remain the property of the Owner.
12.3 The Manufacturer shall not in any way do anything to
infringe upon, harm, or contest the validity of the Patents or
Trade Marks.
12.4 The Manufacturer shall maintain, in such manner as may be
requested by the Owner, a watch service to detect machines,
apparatus, methods or processes in the Territory relating to the
Products and particularly those that infringe the Patents or
Trade
Marks and shall report any infringements of the Patents or Trade
Marks to the Owner.
12.5 Each party shall advise the other promptly of any instances
of infringements, imitations, illegal use or misuse, of any
Patent
or Trade Mark. The Manufacturer shall have the right to commence
legal action for the enforcement of any such Patents and Trade
Marks in the Territory, but prior to the commencement of any such
action by the Manufacturer, the Manufacturer shall advise the
Owner by notice in writing of its intention to do so. The Owner
shall have the option to be exercised by delivery of notice in
writing to the Manufacturer to assume carriage of any such action
and appoint counsel of its choice at any time during the action
provided that the Owner reimburses the Manufacturer for all
reasonable legal costs incurred by the Manufacturer from the date
of commencement of the action. The Owner and Manufacturer shall
cooperate fully in the prosecution of any such action free of
charge, and each agrees that it shall be joined as a party
plaintiff to the action and authorizes such joinder. Each shall
have the right at its own expense to retain independent counsel
who shall be kept fully informed of all issues in the action, who
shall be advised in advance of each new step in the action, and
who shall be entitled promptly to receive copies of all
pleadings,
documents and correspondence regarding the action. In the event
that any such action is successfully prosecuted against an
infringer, any damages, accounting of profits, award of legal
costs or other recovery shall be applied first to reimburse the
party having carriage of the action for its reasonable legal
expenses, including any amounts paid by the Owner to the
Manufacturer in assuming carriage of the action, and any
remaining
amounts shall then be divided between the Owner and the
Manufacturer in proportion to the damages suffered by the
Manufacturer and the Royalties lost by the Owner with respect to
the infringing conduct, subject to arbitration as hereinafter set
out if the parties are unable to agree upon such proportion. In
the event that any such action is unsuccessful, the one of the
Owner and the Manufacturer having carriage of the action shall be
responsible in equal shares for paying any legal costs which may
be awarded to the successful defendant.
13.0 Indemnity for Patent and Trade Mark Actions
13.1 The Owner will defend the Manufacturer against a claim that
the sale of any of the Products infringes Patents or Trade Marks
in the Territory and the Owner will pay resulting costs, damages
and legal fees finally awarded, provided that the Manufacturer
promptly notifies the Owner in writing of the claim; and the
Owner
has sole control of the defense and all related settlement
negotiations.
13.2 The Manufacturer shall have the right to terminate this
agreement by notice in writing, effective immediately upon
receipt, in the event that the Owners applications for Patents
referred to in Schedule A do not issue from the patent
applications within Five years from the date of execution of this
agreement.
l 4.0 Registrations, Maintenance and Filings
14.1 The Manufacturer shall be responsible for maintaining the
Patents and Trade Marks in full force and effect throughout the
term of this agreement. Further, the Manufacturer agrees to
obtain
any registration or any approvals or authorizations in connection
with this license and its supplementary agreements that, in the
opinion of the Owner, may be necessary or desirable to be
obtained
from any government or governmental agency or instrumentality in
the Territory and the obtaining thereof shall be a condition to
this entire agreement. The Manufacturer shall be responsible for
obtaining a certified translation of the document, if required,
for the scrutiny of such government, agency or instrumentality
and
shall bear all costs of compliance with regulations or
requirements thereof.
14.2 The Owner agrees that, at the expense of the Manufacturer,
the Owner shall follow up and pay all renewal fees and otherwise
maintain the Patents and rights in the Patents and the Trade
Marks
provided, however, that the parties agents and attorneys
retained
for such purpose shall be jointly appointed by the Owner and the
Manufacturer. Each party further agrees to notify the other at
the
time it makes an application for a patent or trade mark or
acquires any right in a patent or trade mark which is or becomes
subject to the terms of this agreement, such notice to include
the
expiration dates of any period during which a related patent or
trade mark application must be filed in any other country.
14.3 In the event that either the Owner or the Manufacturer
decides not to file for patent protection for any invention or
discovery relating to the Products, it agrees to notify the other
party within thirty days after such decision in order to allow
such other party to pursue any rights to such invention or
discovery.
14.4 If either the Owner or the Manufacturer intends to dispose
of or abandon any of the Patents, rights in the Patents, patent
application or the right to file under the Paris Convention for a
foreign patent (the Patent Interest) which would be covered by
this agreement, it shall promptly notify the other party of such
intention and give such other party sufficient notice to permit
it
to take all steps necessary to preserve such Patent Interest.
Such
other party shall then have the right during a sixty-day period
commencing with such notification to assume any such Patent
Interest which the notifying party intends to dispose of or
abandon and to undertake the procuring or preserving of such
Patent Interest to itself. The notifying party will co-operate
with the other party in such endeavor (including making an
assignment of full right, title and interest in the Patent
Interest) provided that such other party shall bear all costs
(including any tax liability) in connection therewith. Nothing in
this agreement shall prevent the Manufacturer from assigning or
selling its rights to receive Royalties or its reversionary
rights
in anticipation of termination of the license granted by this
agreement.
14.5 Each of the Manufacturer and the Owner shall render all
reasonable assistance free of charge if so requested by the other
in the prosecution of any present or future Patent applications
in
the Territory and shall do all things in its power towards
maintaining the validity and enforcement of any Patents which may
have issued or which may issue in respect of such Patent
applications. The Manufacturer shall at the cost of the Owner
render all practicable assistance, if so requested by the Owner,
in connection with and in support of any application by the Owner
for the extension of the terms of any Patent.
15.0 Trade Marks and Other Proprietary Marks
15.1 The Manufacturer is authorized, but not obligated to
describe, refer to and advertise itself as a Manufacturer of the
Owner for the manufacture of the Products in the Territory.
15.2 The Manufacturer agrees to display prominently on all of
the
packaging and containers for Products manufactured and offered
for
sale, the trade name Global Qiblah Locator@, including any
additions or modifications thereof. Below this identification and
/ or any trade mark owned or developed for Owner, the
Manufacturer
may affix an additional mark showing that the manufacture has
been
made in the workshops of the Manufacturer. Text and size,
however,
shall not exceed one-half the above trade name . The Manufacturer
agrees to use only the packaging, containers, labels, designs,
advertising and descriptive material which have been approved by
the Owner prior to their use. The Manufacturer shall be diligent
in submitting such materials to the Owner for approval, and the
Owner agrees to respond within a reasonable period. As far as
possible, standard programs, outlines and procedures shall be
established for advertising, promotion work and packaging.
Routine
minor matters handled in accordance with accepted and approved
outlines and plans need not be submitted to the Owner for
specific
approval, except that all advertising copy must be approved by
the
Owner. The Owner agrees to provide the Manufacturer with
appropriate designs for labels and containers.
15.3 The Manufacturer agrees that its right to use the trade
name
and trade mark shall be conditional upon its selling only
Products
of a quality equal to those being produced at any given time by
the Owner, or at the Owners discretion, in accordance with the
reasonable standards of quality specified from time to time by
the
Owner.
15.4 In the event that the Owner decides to apply for
registration of any one or more of the Trade Marks and/or Patents
in connection with the Products in the Territory, the Owner shall
notify the Manufacturer in writing and may request and obtain the
Manufacturer=s advice and assistance if required, and keep the
Manufacturer informed of pertinent developments and / or the
issuance of registration. The cost of any such registration of
trade marks and/or patents shall be for the account of the Owner
and all such registrations shall be applied for and issue in the
name of and as the sole property rights of the Owner.
15.5 If any Trade Marks of the Owner are used by the
Manufacturer, alone or in combination with other trade marks of
the Owner or the Manufacturer, in such manner as to be
distinctive
by reason of design, color, format or any other reason, such
distinctive features and associated good will shall become the
property of and enure to the benefit of the Owner, and the
Manufacturer agrees that it will, without any payment or other
consideration, sign and execute such documents as are necessary
to
transfer and assign all rights thereto to the Owner.
15.6 Should the law or regulations of any part of the Territory
invest the Manufacturer with any property rights to any of the
Trade Marks or Patents, the Manufacturer shall promptly, freely
and co-operatively relinquish to the Owner any and all such
rights
upon termination of this agreement for any reason, without
recourse or cost to the Owner and shall thereafter refrain from
any further usage of the said Trade Marks or Patents.
15.7 Following termination of this agreement for any reason
whatsoever, the Manufacturer agrees not to register or use any of
the Trade Marks, or any trade marks or trade names which are the
same as or confusingly similar to the Trade Marks. This
obligation
shall survive the termination of this agreement for a period of
time not exceeding three years..
16.0 Manufacturers Indemnity of Owner -- Insurance
16.1 Manufacturer agrees to indemnify and hold the Owner
harmless
against any liability, damage or expense (including costs and
attorneys fees and expenses) by reason, or arising out of or
relating to any acts, duties or obligations or omissions of the
Manufacturer or of any personnel employed or otherwise engaged by
the Manufacturer to perform the Manufacturers obligations and
duties under this Agreement, and the Manufacturer shall, at the
request of the Owner assume the defense of any demand, claim,
action, suit or proceeding brought against the Owner by reason
thereof and pay any and all damages assessed against or that are
payable by the Owner as the result of the disposition of any such
demand, claim, action, suit or proceeding. Notwithstanding the
foregoing, the Owner may be represented in any such action, suit
or proceeding at its own expense and by its own counsel.
16.2 For the carrying out of the covenant contained above, but
without limiting the generality thereof, the Manufacturer shall
procure and maintain, in full force and effect, a comprehensive
general liability insurance policy or policies with personal
injury liability blanket, contractual liability and completed
operations liability insurance endorsements protecting the
Manufacturer and the Owner and their officers and employees
against any loss, liability or expense due to personal injury,
death or property damage or otherwise arising out of or occurring
in connection with the business of the Manufacturer. The Owner
shall be an additional insured in such policy or policies which
shall be written by a responsible insurance company or companies
licensed to do business in the Territory and meeting with the
reasonable approval of the Owner, with a combined single limit of
not less than Two million dollars for bodily injury or death and
for property damage. Such policy or policies shall provide that
they will not be canceled or altered without at least sixty days
prior written notice to the Owner. Within ten days after
execution
of the agreement, the Manufacturer shall furnish the Owner with a
certificate or certificates of such insurance, together with
evidence that the premiums therefor have been paid. Maintenance
of
such insurance and the performance by the Manufacturer of its
obligations under this paragraph shall not relieve the
Manufacturer of liability under the indemnity provisions set
forth
in this agreement.
17.0 Confidentiality
17.1 All information, including the Know-How, other than
information generally known in plastic injection molding industry
or information made known by a third party to the Manufacturer
other than as a consequence of the Manufacturers relationship
with the Owner (Confidential Information) supplied by or on
behalf of the Owner pursuant to this agreement shall be treated
as
confidential by the Manufacturer and shall be used solely to
enable the Manufacturer to manufacture, use, sell and develop a
market for the Products in accordance with this agreement, and
all
documents containing or disclosing such Confidential Information
shall at all times be and remain the property of the Owner;
provided, however, that the Owner shall not during the
continuance
of this agreement demand the delivery of such documents from the
Manufacturer.
17.2 The Manufacturer covenants and agrees that no Confidential
Information given to it by or on behalf of the Owner in the
manner
described or otherwise shall be disclosed to anyone outside the
organization of the Manufacturer without the prior written
consent
of the Owner.
17.3 The Manufacturer agrees to use all reasonable efforts to
take such action as may be appropriate to prevent the
unauthorized
use and disclosure of, and to keep confidential all such
Confidential Information, including:
(a) ensuring that such Confidential Information is
disclosed only to responsible employees of the Manufacturer
who have first been properly instructed to maintain such
Confidential Information in confidence;
(b) not disclosing to any third party the terms and
conditions of this agreement;
(c) not disclosing methods of manufacture or sale of the
Products including production and marketing plans; and
(d) safeguarding all documents against theft, damage or
access by unauthorized persons.
17.4 Permitted Disclosure: Nothing contained in this agreement
shall prevent the Owner or the Manufacturer from making
disclosure
of any of the Confidential Information to:
(a) any authorized body for the sole purpose of obtaining
registration of any Patent for any invention or discovery
which is the subject of this agreement; or
(b) any other person, firm or corporation for the purpose of
promoting the sale or use of Products by the Owner and any
of its other Manufacturers or by the Manufacturer and any of
its permitted sub-Manufacturers, provided that the
Manufacturer shall obtain from the persons to whom such
disclosure is made a covenant of non-disclosure in favor of
both the Owner and the Manufacturer.
18.0 Books and Records
18.1 The Manufacturer shall keep at its principal place of
business, clear and proper books of account showing production
and
sales of Products subject to royalties under this agreement and
agrees that within thirty days following the last days of March,
June, September and December, it will submit a written statement
giving the total sales of the Products for the quarter being
reported.
18.2 The Owner shall have access to the books and records of the
Manufacturer at all reasonable times to check all relevant
figures
and information affecting or relating to the Manufacturers
operations under this agreement, including the amount of sales of
the Products made hereunder by the Manufacturer and the amount of
royalties payable under this agreement; provided, however, that
if
both the Owner and the Manufacturer agree upon an independent
agency such as a firm of chartered accountants to represent them,
either the Owner or the Manufacturer may at its election
substitute for the Owners examination a certificate of the
mutually agreed-upon firm of accountants as to the amount of
sales
and the amount of royalties payable under this agreement and as
to
any other information and figures that determine or relate to the
operations of the Manufacturer under this agreement. The
Manufacturer shall supply the Owner with a statement of its
regular auditors at the time of its regular yearly audit,
certifying the number of Products manufactured and the amount of
sales thereof and other figures and information necessary or
helpful in determining production or sales of the Products and
the
amount of royalties payable under this agreement.
18.3 The Owner shall be entitled to appoint {chartered
accountants] to audit the production records for the production
of
the Product, and the Manufacturer shall give access to such
records and supporting documentation and otherwise reasonably
assist in such audit so that the Owner may obtain independent
verification of the written statements referred to above. In the
event that such audit reveals an error in favor of the
Manufacturer in excess of 3% of the amount stated in the
production statements for the year in question, then, in addition
to any other remedies the Owner may have, the Owner may terminate
this agreement forthwith.
18.4 Notwithstanding termination of this agreement, the
Manufacturer shall permit such examinations to continue to take
place until all outstanding claims have been settled to the
satisfaction of the Owner.
19.0 Excusable Delay
19.1 In case of force majeure preventing or hindering either
party from performing its obligations under this agreement, the
affected party may give written notice to the other containing
reasonable particulars of the force majeure in question and the
effect of such force majeure as it relates to the obligations of
the affected party and such force majeure shall not constitute a
default under this agreement, provided that the party affected by
the delay makes reasonable efforts to correct the reason for such
delay. Such notice shall entitle the affected party to suspend
deliveries or payments, as the case may be. For the purpose of
this agreement, force majeure shall mean any of the following
events beyond the control of the parties:
(a) lightning, storms, earthquakes, landslides, floods,
washouts and other acts of God;
(b) substantial or material fires, explosions, breakage of
or accidents to plant, machinery, equipment and storage of
the supplier;
(c) strikes, lockouts or other industrial disturbances of
the supplier;
(d) civil disturbances, sabotage, war, blockades,
insurrections, vandalism, riots, epidemics,
(e) inability to obtain supplies necessary to manufacture
and package the Products at the suppliers plants, if
inability is industry-wide among similar manufacturers or
inability to obtain electric power, water, fuel or other
utilities, or services necessary to operate the plants; and
(f) any other material event that could reasonably be
considered to be force majeure by reason that it is beyond
the control of the party affected; but shall not include the
inability of either party to obtain financing or any other
financial inability on the part of either party.
20.0 Warranty
20.1 The Manufacturer warrants to the Owner that the Products
shall be of merchantable quality. The Manufacturer, at its
option,
and at its cost, shall replace any Products which fail to comply
with such warranty or shall refund the purchase price paid to the
Manufacturer therefor. The period of the warranty shall extend
for
a period of six months after the date of sale of the Products to
a
customer and for a period of ninety days from the date of sale of
replacement or spare parts to a customer.
20.2 The aforesaid warranty shall be the only warranty made by
the Manufacturer with respect to the Products and is in lieu of
all obligations or liabilities on the part of the Manufacturer
for
damages including, but not limited to, consequential damages
arising out of or in connection with the sale, use or performance
of Products.
20.3 The Manufacturer shall not make any representation or
warranty to customers which shall differ from or exceed in any
way
those made by the Owner in its published literature or in its
terms and conditions of sale.
21.0 Manufacturers Status
The relationship between the Manufacturer and the Owner is
intended to be and shall be that of buyer and seller, and the
Manufacturer and its employees, agents and representatives shall
under no circumstances be considered agents, partners, joint
venturers or representatives of the Owner. The Manufacturer shall
not act or attempt to act, or represent itself, directly or by
implication, as agent, joint venturer, partner or representative
of the Owner or in any manner assume or attempt to assume or
create any obligation or liability of any kind, nature or sort,
express or implied, on behalf of or in the name of the Owner.
21.2 The relationship created by this agreement does not
constitute the granting of a franchise to the Manufacturer by the
Owner and no federal or provincial franchise statute, law,
regulation or rule is intended to or has been applied by the
parties, nor shall any such franchise, statute, law, regulation
or
rule be deemed or construed to apply to the formation, operation,
administration or termination of this agreement.
22.0 Term and Termination
22.1 Either party may terminate this agreement without notice
or
other act if,
(a) the other party is in default in any material respect in
the performance of any of its obligations under this
agreement or otherwise commits any material breach of this
agreement, and such default continues after thirty days
written notice from the non-defaulting party to the
defaulting party stating the particulars of such default
(for the purposes herein, any failure to make any payment
due under this agreement shall be a material default);
(b) bankruptcy or insolvency proceedings are instituted by
or against the other party, which the other party does not
defend or which it is not successful in defending, or the
other party is adjudicated a bankrupt, becomes insolvent,
makes an assignment for the benefit of creditors or proposes
or makes any arrangements for the liquidation of its debts
or a receiver or receiver and manager is appointed with
respect to all or any part of the assets of the other party;
(c) if any sovereign entities or political subdivisions in
the Territory enact legislation relating to the relationship
created by this agreement which grants rights to the
Manufacturer which are not granted by this agreement, this
agreement shall terminate automatically one day prior to the
date such legislation becomes effective; or
(d) in the event an excusable delay fails to permit either
party to fulfil its obligations after a delay of six months
after the date the obligation would have been required to
have been fulfilled but for the occurrence of the excusable
delay.
22.2 The Owner may terminate this agreement without notice or
other act if,
(a) the whole or substantially the whole of the assets of
the Manufacturer are sold or conveyed;
(b) the Manufacturer assigns or purports to assign this
agreement without the prior written consent of the Owner;
(c) the Manufacturer attempts to change the control and/or
management of the Manufacturers organization, which change
shall be unacceptable to the Owner, in the Owners sole
discretion;
(d) the Manufacturer states in writing that it intends to
cease manufacturing, marketing or selling the Products; or
(e) the Manufacturer shall have failed to substantially meet
market demand for the Products.
22.3 For greater certainty, if the Manufacturer is a
corporation,
partnership or other business entity which offers its shares,
units or other evidence of equity ownership to the public, a
change in effective control in fact shall be deemed to have
occurred when at least 20% of such equity ownership has been
transferred and if the Manufacturer does not offer its shares,
units or other evidence of equity ownership to the public, a
change in effective control in fact shall be deemed to have
occurred when at least 40% of such equity ownership has been
transferred.
23.0 Events Upon Termination
23.1 Upon termination of this agreement for any cause
whatsoever,
(a) all Royalties, including Royalties on the Products then
on hand or in the course of manufacture, distribution or
sale shall immediately become due and payable;
(b) the Manufacturer shall forthwith, and not later than
thirty days thereafter, return free of any charge to the
Owner, all written information of whatever kind, including
graphic and electronically or magnetically recorded
documents furnished by the Owner or created by the
Manufacturer in relation to the Products including, without
limitation, notes, memoranda, diaries, records, drawings,
prints, sketches, plans, specifications and other technical
information made by the Manufacturer or its agents,
affiliates or employees and copies of any kind made thereof
by anybody, and derived from the technology of the Patents,
Know-How, Trade Marks, Products or the manufacture thereof;
further, the Manufacturer agrees that it will forthwith
discontinue the use of and refrain from using, disclosing or
exploiting the Know-How and any technical data and
information pertaining thereto or any improvement or
development in respect thereof disclosed to it under this
agreement by the Owner and from manufacturing or selling the
Products and the Owner shall forthwith have the right to
institute proceedings for infringement of any of its Patent
and Trade Mark rights then in force;
(c) the Manufacturer shall turn over to the Owner all sales
inquiries and unfilled orders and the parties shall
negotiate the amount of compensation, if any, which the
Manufacturer may receive therefor; and
(d) the Manufacturer shall cease trading in the Products and
shall notify all dealers and other interested parties of the
termination. The Manufacturer shall further cease to make
any representations to the public that it is an authorized
manufacturer, marketer or dealer of the Products.
23.2 Notwithstanding any such termination:
(a) all warranties set out in this agreement and all
obligations of indemnification shall survive and continue to
bind the parties for the earlier of six months after the
date of termination of this agreement or the expiry date
expressly warranted for any specific item;
(b) the Manufacturer shall honor any remaining payment
obligations set out in this agreement;
(c) the Manufacturer shall be permitted to sell all Products
manufactured prior to the termination, provided such sales
are completed by delivery of goods and receipt of payment
therefor within three months of the date of such termination
and are subject to the payment obligations as set out in
this agreement.
24.0 Damages
If the Owner unilaterally terminates this agreement for any
reason other than those set forth in this agreement, then the
Owner shall pay to the Manufacturer as liquidated damages the sum
of $US 25,000.00 The payment shall not be made in the event that
the Owner terminates this agreement due to the fact that the
Manufacturer has failed to perform any of its obligations or
duties under this agreement.
25.0 Conformity with Local Laws
25.1 The rights and obligations of the parties under this
agreement shall be subject to all applicable laws, orders,
regulations, directions, restrictions and limitations of the
governments having jurisdiction of the parties. In the event,
however, that any law, order, regulation, direction, restriction
or limitation, expropriation, seizure or interpretation thereof
shall in the judgment of either party substantially alter the
relationship between the parties under this agreement, or the
advantages derived from such relationship, either party may
request the other party to modify this agreement, and if, within
fifteen days subsequent to making such request, the parties are
unable to agree upon a mutually satisfactory modification hereof,
then the adversely affected party may terminate this agreement on
fifteen days notice given to the other party, not later than
thirty days following the end of such thirty day period.
25.2 The parties shall each at its own expense in its own
countries, take such steps as may be required to satisfy the laws
and requirements of the respective countries with respect to
declaring, recording or otherwise rendering this agreement valid.
26.0 Disclosure
26.1 This agreement may be filed with any governmental agency or
official as determined to be appropriate by either party.
27.0 Dispute Resolution
27.1 All disputes, controversy or claims arising out of or in
connection with or in relation to the contract, including any
question regarding its existence, validity or termination, shall
be submitted to and be subject to the jurisdiction of the courts
of the Province of British Columbia (including the Supreme Court
of Canada) which shall have exclusive jurisdiction in the event
of
any dispute under this agreement. The parties irrevocably submit
to the jurisdiction of such courts to finally adjudicate or
determine any suit, action or proceedings arising out of or in
connection with this agreement. In the alternative, the parties
may agree to submit the matter to arbitration in accordance with
the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in
accordance with the said Rules.
28.0 Assignment
28.1 Neither this agreement nor any of the rights or duties of
the Manufacturer shall be assigned, transferred or conveyed by
the
Manufacturer, by operation of law or otherwise, nor shall this
agreement or any rights of the Manufacturer enure to the benefit
of any trustee in bankruptcy, receiver, creditor, trustee or
successor of the Manufacturers business or of its property,
whether by operation of law or otherwise, or to a purchaser of
all
of the shares of the Manufacturer or to a purchaser of the entire
business or substantially all of the assets of the Manufacturer,
without the prior written consent of the Owner. The Manufacturer
acknowledges that the Owner may assign this agreement to an
affiliate or subsidiary.
29.0 Language
29.1 Upon execution, this agreement may be translated into the
language of the Territory provided, however, that in the event of
any diversion between the English language version and any other
version, the English language version shall prevail.
30.0 Extended Meanings
30.1 Words importing the singular number include the plural and
vice versa and words importing gender include all genders.
31.0 Interpretation not affected by Headings
31.1 The division of this agreement into paragraphs and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
32.0 Applicable Law
32.1 This Agreement is made, executed, and delivered in
Vancouver, British Columbia Canada, and any controversy arising
hereunder or in relation to this Agreement shall be governed by
and construed in accordance with the domestic laws of the
Province
of British Columbia, Canada. The parties hereto hereby agree that
the application of the United Nations Convention on Contracts for
the International Sale of Goods to this Agreement does not apply
and is strictly excluded.
33.0 Entire Agreement
33.1 This agreement constitutes the entire agreement of all the
parties with respect to the subject-matter hereof and, except as
stated in this agreement and in the instruments and documents to
be executed and delivered pursuant to it, contains all of the
representations, undertakings and agreements of all parties
respecting the subject-matter hereof. There are no
representations, undertakings or agreements of any kind between
all the parties respecting the subject-matter hereof except those
contained in this agreement.
34.0 Severability
34.1 The invalidity or unenforceability of any provision of this
agreement shall not affect the validity or enforceability of any
other provision.
35.0 Currency
35.1 Unless otherwise specifically provided in this agreement,
all references to dollar amounts or other money amount are
expressed in terms of lawful money of the United States of
America.
36.Notices
36.1 Any notice or other documents required or permitted to be
given under this agreement shall be in writing and shall be
delivered, mailed by prepaid registered mail, return receipt
requested or sent by facsimile transmission addressed to the
party
or parties to whom it is to be given at the address shown below
or
at such other address or addresses as the party or parties to
whom
such writing or document is to be given shall have last notified
all other parties in accordance with the provisions of this
paragraph:
(a) if to the Manufacturer at: Qiblah Technologies Ltd.
46 Stander Street
Brackenhurst
Alberton 1449, South Africa
(b) if to the Owner at: Qiblah International
Industries Ltd.
Suite 1710, 1177 West Hastings
Street
Vancouver, British Columbia, Canada
V6E 2L3
36.2 Any such notice or other document shall:
(a) if delivered, be deemed to have been given and received
at the place of receipt on the date of delivery, provided
that if such date is a day other than a business day in the
place of receipt, such notice or document shall be deemed to
have been given and received at the place of receipt on the
first business day in the place of receipt, thereafter;
(b) if transmitted by facsimile transmission, be deemed to
have been given and received at the place of receipt on the
next business day in the country of receipt, following the
day of sending, provided that the sender has received
telephone confirmation from the recipient of receipt of same
on or before the date transmission is deemed to have been
received as above, and
(c) if mailed, be deemed to have been given and received at
the place of receipt on the date of actual receipt.
36.3 In the event of postal disruption, such notices or
documents
must either be delivered personally or sent by facsimile
transmission.
37.0 Amendment of Agreement
37.1 None of the terms, conditions or provisions of this
agreement shall be held to have been changed, waived, varied,
modified or altered by any act or knowledge of either party,
their
respective agents, servants or employees unless done so in
writing
signed by both parties.
38.0 Waiver of Breach
38.1 No waiver on behalf of any part of any breach of the
provisions shall be effective or binding on such party unless the
same shall be expressed in writing and any waiver so expressed
shall not limit or affect such partys rights with respect to any
future breach of any of the provisions of this agreement.
39.0 Further Assurances
39.1 Each of the parties covenants and agrees that he, his
heirs,
executors, administrators, successors and permitted assigns will
execute such further documents and do and perform or cause to be
done and performed such further and other acts as may be
necessary
or desirable from time to time in order to give full effect to
the
provisions of this agreement.
40.0 Successors and Assigns
40.1 This agreement shall be binding on and enure to the benefit
of the successors and assigns of both parties and all persons or
corporations succeeding to or acquiring the business now carried
on by the Owner or the Manufacturer. The Manufacturer shall not
be
entitled to assign this agreement in whole or in part without the
consent in writing of the Owner, which consent shall not be
unreasonably withheld.
41.0 Time
41.1 When calculating the period of time within which or
following which any act is to be done or step taken the date
which
is the reference day in calculating such period shall be
excluded.
42.0 Time of the Essence
42.1 Time shall be of the essence of this agreement.
In witness whereof the parties have duly executed this agreement
as of the date first above written.
The Common Seal of
QIBLAH TECHNOLOGIES LTD.
was hereunto affixed in the presence of c/s
By: /s/___________________________
Authorized Signatory
The Common Seal of
QIBLAH INTERNATIONAL INDUSTRIES LTD.
was hereunto affixed in the presence of c/s
By: /s/___________________________
Authorized Signatory
SCHEDULE A TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
Patent of March 26, 1998
This one page exhibit, which is unable to be placed in
electronic media, is a patent issued by the South Africa patent
office on March 26, 1997 in the name of Rolf K. Papsdorf. This
patent (Application No. 972622) covers a direction locating
device
and bears the official stamp of the Registrar of Patents,
Designs,, Trade Marks, and Copyright.
SCHEDULE B TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
This Agreement is dated for reference the 2 9th Day of October,
1997
BETWEEN
ROLF K.. PAPSDORF, Businessman, in care of G. Nagel,
Wittelsbacherstrasse 42, 82110 Germering, Germany, or his
lawfully designated nominee, hereinafter called Owner
AS PARTY OF THE FIRST
PART
AND
QIBLAH INTERNATIONAL INDUSTRIES LTD., a private corporation
pursuant to the laws of the Province of British Columbia,
with its executive offices at Suite 2400, 1177 West Hastings
Street, Vancouver, BC, V6E 2K3, and its lawfully appointed
nominee(s) hereafter called Qiblah
AS PARTY OF THE SECOND PART
WHEREAS:
A. Owner is the inventor and developer of an personal use
portable electronic device, as described as Direction
Finder in Patent Application 97/2622, Registered 26th
March, 1997 by Patent Attorneys Adams & Adams, Pretoria,
Republic of South Africa, a copy of which Application is
attached hereto as Schedule A to this Agreement,
hereinafter called the Patent; the purpose of which device
is to locate from any place in the world, the true direction
of the City of Makkah, the birthplace of Mohammed; and
B. The Patent Application empowers the Owner to register the
Patent in each country which is a subscriber to the
International Patent Protection Treaty, of which Treaty
South Africa is a signatory; and
C. The Owner wishes to assign to Qiblah the whole of the
Patent
rights existing under the Patent Application.
NOW THIS AGREEMENT WITNESSES that in consideration of the sum of
Ten dollars of lawful currency of Canada ($10.00) now paid by
each
Party to the other, the receipt and sufficiency of which is by
each Party to the other hereby acknowledged and other good and
valuable consideration, the Parties hereto are agreed as follows:
1. Assignment.
Owner hereby assigns, sets over and transfers to Qiblah,
absolutely, and Qiblah does hereby accept such assignment,
effective from the date hereof, of the legal and beneficial
rights
of registration and ownership of the Patent Application and
Patent
subsequently pursuant to the Patent Application appealing in
Schedule A hereto.
2. Purposes of Agreement
This agreement is made to secure to Qiblah absolutely, from the
date of this Agreement, the Patent rights for the countries
described in paragraph 1 and to permit Qiblah to deal with the
licensing of such rights without further or other enquiry by the
party or parties acquiring such rights as Qiblah may license, as
to the ownership of Qiblah of the Patent rights or the right of
Qiblah to deal with such rights in any manner and upon such terms
and conditions as Qiblah may in its sole and arbitrary
discretion.
3. License Fees
The license fees and other terms and conditions existing between
the Owner and Qiblah under an Agreement dated 12 September, 1997
between the Owner and Qiblah shall remain unaltered by this
agreement and in the event of any conflict, either in
interpretation or in effect of law, the provisions of this
agreement shall have precedence.
4. Qiblah Right of Assignment
Qiblah shall have the right at any time and from time to time to
assign, contract or otherwise deal with the Patents assigned to
Qiblah under this Agreement, with any person or corporation, on
such terms and conditions as to Qiblah, in its sole and arbitrary
discretion may deem necessary or advisable, subject to the
performance by Qiblah of its obligations under paragraph 3
5. Representations and Warranties of the Owner
The Owner hereby represents and warrants to Qiblah that:
(a) The Owner is the recorded and sole beneficial owner of
all of the Patent Application appearing in Schedule
B hereto and any other rights titles and interest in
and to the Direction Finder; and
(b) The Owner, at the expense of Qiblah, shall register in
the name of Qiblah the Patent for each and every of
the Countries for which Qiblah set out in paragraph 2
of this Agreement and shall provide to Qiblah timely
written notice of such registration; thereafter Qiblah
shall be solely responsible for the maintenance of the
Patent and all associated fees and expenses; and
(c) Entering into this Agreement does not conflict with
any applicable law of the Republic of Germany or of
the Republic of South Africa nor does it conflict
with, or result in a breach of or accelerate the
performance required under any contract or other
commitment to which he is a party or by which he is
bound; and
(d) Owner has the exclusive and unencumbered right to
enter into this Agreement and possesses all necessary
authority to assign to Qiblah all of the rights,
titles and interests of the Owner in and to the Patent
and intellectual property rights appurtenant thereto
for all of the countries described in paragraph 2
hereof in accordance with the terms and conditions of
this Agreement; and
The representations and warranties hereinbefore set out are
conditions upon which Qiblah has relied in entering into this
Agreement and same shall survive the term of this Agreement and
the Owner hereby contracts and agrees to forever indemnify and
hold harmless Qiblah from all loss, damage, costs, actions and
suits arising out of or in connection with any breach of any
representation or warranty made by him and contained in this
Agreement.
6. Representations and Warranties of Qiblah
Qiblah represents and warrants to the Owner that:
(a) It is a company in good standing under the laws of the
Province of British Columbia, one of the Provinces of
Canada and that it has full corporate power and
authority to enter into this Agreement; and
(b) Execution of this Agreement by Qiblah does not
conflict with any applicable law or with its charter
nor does it conflict with, or result in a breach of,
or accelerate the performance required by any contract
or other commitment to which it is a part, or by which
it is bound; and
The representations and warranties hereinbefore set out are
conditions upon which the Owner has relied on entering into
this agreement and shall survive the term of this Agreement
and Qiblah hereby contracts and agrees to indemnify and
hold harmless the Owner from all loss, damage costs,
actions and suits arising out of or in connection with any
breach of any representations or warranty made by them and
contained in this Agreement.
7. Notices
(a) Any notice, election, consent or other writing
required or permitted to be given hereunder shall be
deemed to be sufficiently given if delivered or if
mailed by registered air mail or by telegram or fax,
addressed as follows:
In the case of the Qiblah:
Qiblah International Industries Ltd.
2400 - 1177 West Hastings Street
Vancouver, BC V6E 2K3
In the case of the Owner:
Mr. Kurt Rolf Papsdorf
c/o G. Nagel
82110-Germering
Wittelsbacher Str. 42
Germany
and any such notice given as aforesaid shall be deemed to have
been given to the parties hereto if delivered, when delivered, or
if mailed, on the tenth business day following the date of
mailing, or, if telegraphed or faxed, on the next succeeding day
following the telegraphing or faxing thereof PROVIDED HOWEVER
that
during the period of any postal interruption in either the
country
of mailing or the country of delivery, any notice given hereunder
by mail shall be deemed to have been given only as of the date of
actual delivery of the same. Any party may from time to time by
notice in writing change its address for the purposes of this
paragraph.
8. General Terms and Conditions
(a) The parties hereto hereby covenant and agree that they
will execute such further agreements, conveyances and
assurances as may be requisite, or which counsel for
the parties may deem necessary to effectively carry
out the intent of this Agreement.
(b) No changes, alternations. or modifications of this
Agreement shall be binding upon either party until and
unless a memorandum in writing to such effect shall
have been signed by all parties hereto.
(c) The titles to the articles to this Agreement shall not
be deemed to form part of this Agreement but shall be
regarded as having been used for convenience of
reference only.
(d) The schedules to this Agreement shall be construed
with and as an integral part of this Agreement to the
same extent as if they were set forth verbatim herein.
(e) This Agreement shall be governed by and interpreted
in
accordance with the laws in effect from time to time
in the Province of British Columbia, Canada, and the
parties hereto attorn to the courts of British
Columbia for the resolutions of any disputes arising
out of this Agreement.
(f) This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective
heirs, successors and assigns.
(g) All references to the masculine case shall include the
feminine case and the plural case where the context
may so indicate; reference to he when referring to
the Owner or to the Owner directly, shall mean the
owners collectively, jointly and severally.
IN WITNESS WHEREOF this Agreement has been executed by the
parties hereto as of the day and year first above written.
Signed, Sealed and Delivered by
/s/
Rolf K. Papsdorf
ROLF K. PAPSDORF Rolf
K. Papsdorf
in the presence of the following witness:
/s/Lee Tupper
Lee Tupper
Vancouver, BC, Canada V6G IN6
The Common Seal of
QIBLAH INTERNATIONAL INDUSTRIES LTD.
Was affixed by its duly authorized signatories
Corporate Seal
/s/ Dieter K. Schindelhauer
/s/Malcolm B. Fraser
Dieter K. Schindelhauer
Malcolm B. Fraser
President, Director
Secretary, Director
SCHEDULE A TO THE AGREEMENT DATED 29TH OCTOBER, 1997
BETWEEN ROLF K. PAPSDORF AND
QIBLAH INTERNATIONAL INDUSTRIES LTD.
Patent of March 26, 1998
This one page exhibit, which is unable to be placed in
electronic media, is a patent issued by the South Africa patent
office on March 26, 1997 in the name of Rolf K. Papsdorf. This
patent (Application No. 972622) covers a direction locating
device
and bears the official stamp of the Registrar of Patents,
Designs,, Trade Marks, and Copyright.
SCHEDULE B TO THE AGREEMENT DATED 29TH OCTOBER, 1997
BETWEEN ROLF K. PAPSDORF AND
QIBLAH INTERNATIONAL INDUSTRIES LTD.
COUNTRIES OF ISLAM
COUNTRY
POPULATION* (Millions)
Algeria
27.0
Egypt
57.0
India
873.0
Indonesia
186.0
Iran
60.0
Iraq
19.0
Jordan
3.5
Liberia
2.8
Libya
4.5
Kuwait
2.4
Malaysia
18.6
Morocco
27.0
Oman
1.6
Syria
14.0
Saudi Arabia
16.0
Tunisia
8.0
Turkey
58.0
Pakistan
123.0
United Arab Emirates
2.5
Yemen / South Yemen
12.0
Canada and 80 other
convention countries
20.0
Total
1536.3 (1,536,300,000)
* Basis 1993 World Atlas; Published by Rand McNally, 1995
SCHEDULE C TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
PRODUCTS
The Global Qiblah Locator, comprising the following manufactured
and sub-contracted
parts:
1. Compass
2. Top Housing (Injection molded plastic
3. Bottom Housing (Injection molded plastic)
4. Printed circuit Board
5. Liquid Crystal Display and contacts
6. Circuit Board electronic components (Population)
7. Micro Chip and liquid crystal display driver
8. Battery holder
9. Membrane Touch Control
10. Map
11. Screws
12. Assembly jigs
13. Advertising materials
SCHEDULE D TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
TERRITORIES
Continent of Africa
Yemen, north and south
United Arab Emirates
Saudi Arabia
Oman
Syria
Iran
Jordan
SCHEDULE E TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
TRADE MARKS
NONE
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 1998
(Stated in US Dollars)
<PAGE>
AUDITORS' REPORT
To the Directors,
Direction Technologies Inc.
We have audited the balance sheet of Direction Technologies Inc. (A Development
Stage Company) as at December 31, 1998 and the statement of loss and deficit
accumulated during the development stage, stockholders' equity and cash flows
for the period April 30, 1998 (Date of Incorporation) to December 31, 1998.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1998 and the
results of its operations and its cash flows for the period April 30, 1998 (Date
of Incorporation) to December 31, 1998, in accordance with generally accepted
accounting principles in the United States.
Vancouver, Canada "AMISANO HANSON"
February 5, 1999 Chartered Accountants
Comments by Auditors for U.S. Readers on Canada - U.S. Reporting Conflict
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there is
substantial doubt about a company's ability to continue as a going concern. The
accompanying financial statements have been prepared on the basis of accounting
principles applicable to a going concern which assumes the realization of
assets and discharge of liabilities in the normal course of business. As
discussed in Note 1 to the accompanying financial statements in respect of the
developmental nature of the company and its losses from operations, substantial
doubt about the company's ability to continue as a going concern exists. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Our report to the shareholders dated February 5, 1999 is expressed in accordance
with Canadian reporting standards, which do not permit a reference to such
uncertainty in the auditors' report when the uncertainty is adequately disclosed
in the financial statements.
Vancouver, Canada "AMISANO HANSON"
February 5, 1999 Chartered Accountants
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998 (Audited)
and January 15, 1999, Consolidated Pro-forma (Unaudited)
(Stated in US Dollars)
ASSETS
(Note 3)
(Unaudited)
Consolidated
Pro-forma
January 15, December 31,
1999 1998
----------- ------------
Current
Prepaid expenses $ 1,385 $ 650
Inventory 21,065 -
------- -------
22,450 650
License fees 50,000 -
Technology rights 519,679 -
Capital assets 825 -
--------- -------
$ 592,954 $ 650
--------- -------
LIABILITIES
Current
Bank indebtedness $ 3,225 $ -
Accounts payable 78,218 1,500
------- -------
81,443 1,500
Due to related parties 14,550 -
------- -------
95,993 1,500
------- -------
../Con'd
SEE ACCOMPANYING NOTES
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998 (Audited)
and January 15, 1999, Consolidated Pro-forma (Unaudited)
(Stated in US Dollars)
STOCKHOLDERS' EQUITY
(Note 3)
(Unaudited)
Consolidated
Pro-forma
January 15, December 31,
1999 1998
----------- ------------
Share capital
Authorized:
50,000,000 common shares, $0.001 par value
10,000,000 preferred shares, $0.001 par value
Issued:
5,000,000 common shares, $0.001 par value 5,000 -
Contributed surplus 495,000 -
Deficit accumulated during the development stage ( 3,039) ( 850)
--------- -------
496,961 $ 850
--------- -------
$ 592,954 $ 650
--------- -------
Nature and Continuance of Operations - Note 1
Commitments - Note 7
APPROVED BY THE DIRECTORS:
/S/ Kenneth B. Liebscher, Director /S/ Dieter Schindelhauer, Director
SEE ACCOMPANYING NOTES
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENT OF LOSS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
for the period April 30, 1998 (Date of Incorporation) to December 31, 1998
(Audited)
and the period January 1, 1999 to January 15, 1999
Consolidated Pro-forma (Unaudited)
(Stated in US Dollars)
(Note 3)
(Unaudited)
Consolidated
Pro-forma April 30, 1998
January 1,1999 (Date of
to Incorporation)
January 15, December 31,
1999 1998
----------- ------------
Expenses
Legal and accounting $ - $ 850
Office 733 -
Foreign exchange 1,456 -
----- -----
Net loss for the period 2,189 850
Deficit, beginning of period 850 -
----- -----
Deficit, end of period $ 3,039 $ 850
----- -----
Loss per share $ - $ -
----- -----
Weighted average number of shares outstanding - -
----- -----
SEE ACCOMPANYING NOTES
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
ACCUMULATED DURING THE DEVELOPMENT STAGE
for the period April 30, 1998 (Date of Incorporation) to December 31, 1998
(Audited)
and the period January 1, 1999 to January 15, 1999
Consolidated Pro-forma (Unaudited)
(Stated in US Dollars)
(Note 3)
(Unaudited)
Consolidated
Pro-forma April 30, 1998
January 1,1999 (Date of
to Incorporation)
January 15, December 31,
1999 1998
----------- ------------
Cash Flows from Operating Activities
Net loss for the period $ (..2,189) $ ( 850)
Changes in non-cash working capital
balances related to operations:
Prepaid expenses ( 735) ( 650)
Inventory ( 21,065) -
Accounts payable 76,718 1,500
--------- -------
52,729 -
--------- -------
Investing Activity
Acquisition of license fees ( 50,000) -
Acquisition of technology rights ( 19,679) -
Acquisition of capital assets ( 825) -
Due to related parties 14,550 -
--------- -------
( 55,954) -
--------- -------
Financing Activity
Proceeds from issuance of common shares - -
--------- -------
Net decrease in cash during the period ( 3,225) -
Cash, beginning of the period - -
--------- -------
Cash (bank indebtedness), end of the period $ ( 3,225) $ -
--------- -------
SEE ACCOMPANYING NOTES
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
for the period April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)
Deficit
Accumulated
Additional During the
Common Shares Paid-in Development
# Par Value Capital Stage Total
Net loss for the period - $ - $ - $ ( 850) $ ( 850)
------ ------ ------ -------- -------
Balance, as at
December 31,1998 - $ - $ - $ ( 850) $ ( 850)
------ ------ ------ -------- -------
SEE ACCOMPANYING NOTES
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
for the period April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)
Note 1 Nature and Continuance of Operations
The company currently is in the business of developing the Qiblah Locator
direction finding technology. In addition, the company has a license for the
exclusive rights to manufacture and market a proprietary electric vehicle
technology on a world-wide basis.
These financial statements have been prepared on a going concern basis. The
company has accumulated a deficit of $850 since incorporation. Its ability to
continue as a going concern is dependent upon the ability of the company to
generate profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due.
The company was incorporated in Nevada on April 30, 1998 as Fuji International,
Inc. and on December 28, 1998 the company changed its name to Direction
Technologies Inc.
Note 2 Summary of Significant Accounting Policies
The financial statements of the company have been prepared in accordance with
generally accepted accounting principles in the United States. Because a
precise determination of many assets and liabilities is dependent upon future
events, the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgement.
Actual results may differ from these estimates.
The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:
Development Stage Company
The company is a development stage company as defined in Statement of Financial
Accounting Standards No. 7. The company is devoting substantially all of its
present efforts to the business of developing the Qiblah Locator direction
finding technology and manufacturing and marketing a proprietary electric
vehicle technology. All losses accumulated since inception have been considered
as part of the company's development stage activities.
Income Taxes
The company uses the liability method of accounting for income taxes pursuant to
Statement of Financial Accounting Standards, No. 109 "Accounting for Income
Taxes".
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)- Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
Loss Per Share
Loss per share has not been calculated as there were no shares outstanding
during the period.
Fair Value of Financial Instrument
The carrying value of accounts payable approximates fair value because of the
short term maturity of that instrument.
Note 3 Unaudited Consolidated Pro-forma Financial Statements
The unaudited consolidated pro-forma financial statements for Direction
Technologies Inc. gives effect to the Qiblah Technologies Limited acquisition,
based on a preliminary allocation of the total purchase cost. The historical
financial information has been derived from the respective historical financial
statements of Direction Technologies Inc. and Qiblah Technologies Limited and
should be read in conjunction with these financial statements and the related
notes incorporated by reference in Form 10-SB.
The unaudited consolidated pro-forma balance sheet assumes the acquisition took
place as of January 15,1999 and allocates the total purchase costs of the fair
values of assets and liabilities of Qiblah Technologies Limited based on a
preliminary valuation. The total estimated purchase cost of the Qiblah
Technologies Limited acquisition has been allocated on a preliminary basis to
assets and liabilities based on management's estimates of their fair value with
the excess of the purchase costs over the net assets acquired allocated to
technology rights.
The unaudited consolidated pro-forma statements of operations combines Direction
Technologies Inc. historical statements of operations for the period ended
December 31, 1998 and Qiblah Technologies Limited historical statements of
operations for the year ended February 28, 1999 and gives effect to the
acquisition as if it occurred on January 15, 1999.
The unaudited consolidated pro-forma financial statements are presented for
illustrative purposes only and are not necessarily indicative of the operating
results or financial position that would have occurred if the transaction has
been consummated at the dates indicated, nor is it necessarily indicative of
future operating results or financial position of the combined companies.
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)- Page 3
Note 3 Unaudited Consolidated Pro-forma Financial Statements - (cont'd)
DIRECTION TECHNOLOGIES INC.
UNAUDITED CONSOLIDATED PRO-FORMA BALANCE SHEET
as of January 15, 1999
Direction Qiblah Consolidated
Technologies Technologies Pro-forma
Inc. Limited Combined Adjustments Pro-forma
Current Assets
Prepaid expenses $ 650 $ 735 $ 1,385 $ - $ 1,385
Inventory - 21,065 21,065 - 21,065
------- ------- -------- -------- --------
650 21,800 22,450 - 22,450
License fees 50,000 - 50,000 - 50,000
Technology rights 500,000 17,330 517,330 2,349 519,679
Capital assets - 825 825 - 825
------- -------- ------- -------- -------
Total Assets $550,650 $ 39,955 $590,605 $ 2,349 $592,954
------- -------- ------- -------- -------
Current Liabilities
Bank indebtedness $ - $ 3,225 $ 3,225 $ - $ 3,225
Accounts payable 51,500 26,718 78,218 - 78,218
------- ------- ------- ------ -------
51,500 29,943 81,443 - 81,443
Due to related
parties - 14,550 14,550 - 14,550
------- ------ ------ ------ -------
51,500 44,493 95,993 - 95,993
------- ------ ------ ------ -------
Share Capital
Common stock 5,000 29,317 34,317 (29,317) 5,000
Contributed
surplus 495,000 6,920 501,920 ( 6,920) 495,000
Deficit ( 850) ( 40,775) ( 41,625) 38,586 (3,039)
--------- ---------- --------- -------- --------
Total Stockholders
Equity 499,150 4,538 494,612 2,349 496,961
------- --------- ------- ------ -------
Total Liabilities
and Stockholders
Equity $550,650 $ 39,955 $590,605 $ 2,349 $592,954
------- ------- ------- ------ -------
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)- Page 4
Note 3 Unaudited Consolidated Pro-forma Financial Statements - (cont'd)
DIRECTION TECHNOLOGIES INC.
UNAUDITED CONSOLIDATED PRO-FORMA STATEMENT OF LOSS
for the period January 1, 1999 to January 15, 1999
Direction Qiblah Consolidated
Technologies Technologies Pro-forma
Inc. Limited Combined Adjustments Pro-forma
Expenses
Office $ - $ 733 $ 733 $ - $ 733
Foreign exchange - 1,456 1,456 - 1,456
------- -------- -------- -------- --------
$ - $ 2,189 $ 2,189 $ - $ 2,189
------- -------- -------- -------- --------
Note 4 Deferred Tax Assets
The Financial Accounting Standards Board issued Statement Number 109 in
Accounting for Income Taxes ("FAS 109") which is effective for fiscal years
beginning after December 15, 1992. FAS 109 requires the use of the asset and
liability method of accounting of income taxes. Under the assets and liability
method of FAS 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settles.
The following table summarizes the significant components of the company's
deferred tax assets:
Total
Deferred Tax Assets
Non-capital loss carryforwards $ 850
Gross deferred tax assets $ 425
Valuation allowance for deferred tax asset ( 425)
-------
$ -
-------
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)- Page 5
Note 4 Deferred Tax Assets - (cont'd)
The amount taken into income as deferred tax assets must reflect that portion of
the income tax loss carryforwards which is likely to be realized from future
operations. The company has chosen to provide an allowance of 100% against all
available income tax loss carryforwards, regardless of their time of expiry.
Note 5 Share Capital
Authorized:
50,000,000 common shares with a par value of $0.001 per share
10,000,000 preferred shares with a par value of $0.001 per share
Note 6 Income Taxes
No provision for income taxes has been provided in these financial statements
due to the net loss. At December 31, 1998, the company has net operating loss
carryforwards, which expire in 2008 totaling $850, the tax benefit of which has
not been recorded in the financial statements.
Note 7 Subsequent Events
(i) The company received $5,000 as consideration for 5,000,000 common shares
issued at a price of $0.001 per share.
(ii) The company has offered, pursuant to an offering memorandum, up to
550,000 shares at a price of $0.50 per share. The offering is not
subject to any minimum subscription level.
(iii) On January 9, 1999, the company entered into a license agreement
whereby the company shall have the exclusive rights to manufacture and
market a proprietary electric vehicle technology. To secure this license
the company is required to:
a) Pay $50,000 to the licensor;
b) Pay a royalty of 2% of the gross sales price on each unit sold to the
licensor; and
c) Use its best efforts in the development and production of an electric
vehicle suitable for the commuter market.
<PAGE>
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 1998 (Date of Incorporation) to December 31, 1998
(Stated in US Dollars)- Page 6
Note 7 Subsequent Events - (cont'd)
The initial term of this agreement is for five years from the date of approval
by the regulatory authorities and is renewable for another five years unless the
company does not achieve annual sales of US$1,345,200 within the initial term.
(i) On January 12, 1999, the company entered into a purchase agreement to
acquire certain of the assets of Qiblah International Industries Ltd.
("Qiblah"). Qiblah is a British Columbia corporation which is engaged in the
research, development, manufacturing and marketing of the Qiblah Locator, a
proprietary direction finding technology. The company is required to issue
5,000,000 common shares at a deemed price of $0.10 per share to acquire the
technology. The cost of this acquisition will be amortized over a four year
period.
Note 8 Uncertainty Due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
the year 2000 date is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or
after January 1, 2000 and if not addressed, the impact on operations and
financial reporting may range from minor errors to significant system failure
which could affect an entity's ability to conduct normal business operations.
It is not possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of customers,
suppliers or other third parties, will be fully resolved.
<PAGE>
QIBLAH TECHNOLOGIES LIMITED
Registration No. 97/16605/06
FINANCIAL STATEMENTS
for the period ended 28 February 1998
APPROVAL OF FINANCIAL STATEMENTS
The financial statements for the period ended 28 February 1998
was approved by the directors on 4 May, 1999 and signed by:
DIRECTOR DIRECTOR
/S/ Mr R Hubsch /S/ Mr A G Jacquesson
Mr R Hubsch Mr A G Jacquesson
CONTENTS PAGE
1. Report of the Auditor 2
2. Report of the Director 3
3. Income Statement 4
4. Balance Statement 5
5. Cashflow Statement 6
6. Notes to the Financial Statements 7
<PAGE>
NICO VAN DER SMIT
Geoktrooieerde Rekenmeester (S.A.) Chartered Accountant
(S.A.)
Openbare Rekenmeester en Ouditeur Public Accountant and Auditor
38 Rissik Str. 38 TEL: +27 (0)11 660-1604 P O Box /Posbus 399
KRUGERSDORP FAX: +27 (0)11 660-5608 KRUGERSDORP
1739 e-mail [email protected] 1740
- - -------------------------------------------------------------------------------
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
QIBLAH TECHNOLOGIES LIMITED
Registration No. 97/16605/06
We have audited the annual financial statements set out on pages three to nine.
These financial statements are the responsibility of the company's directors.
Our responsibility is to report on these financial statements.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance that, in all material respects, fair presentation is achieved in the
financial statements. An audit includes an evaluation of the appropriateness of
the accounting policies, an examination, on a test basis, of the evidence
supporting the amounts and disclosures included in the financial statements, an
assessment of the reasonableness of significant estimates and a consideration of
the appropriateness of the overall financial statements presentation. We
consider that our audit procedures were appropriate in the circumstances to
express our opinion presented below.
In our opinion these financial statements fairly present the financial position
of the company for the period 1 July 1997 to 28 February 1998, and the results
of its operations for the year then ended in accordance with South African
generally accepted accounting practices and in the manner required by the
Companies Act.
/S/ Nico Van Der Smit
NICO VAN DER SMIT
4 May 1999
<PAGE>
Page 3
QIBLAH TECHNOLOGIES LIMITED
Reg. Nr. 97/16605/06
REPORT OF THE DIRECTORS FOR THE PERIOD 1 JULY 1997 TO 28 FEBRUARY 1998
(ALL CURRENCIES STATED ARE SOUTH AFRICAN RAND)
BUSINESS AND OPERATIONS
Manufacture, assembly, distribution and sale of electronic components.
FINANCIAL SITUATION
The financial position of the Company is clearly stated in the financial
statements attached.
SHARE CAPITAL
The total Share Capital of the Company is as follows:
Ordinary Share Capital Authorised 20,000,000 @ ZAR0-01 ZAR200,000-00
Ordinary Share Capital Issued: 15,713,000 @ ZAR0.01 ZAR157,130-00
Share Premium ZAR 21,870-00
DIRECTORS
Directors who served throughout the financial period under review:
Andre Ghalib Jacquesson
R. Hubsch
Z Tayob
J.S. Wilson
SECRETARY
There was no secretary appointed for the year.
EVENTS AFTER YEAR-END
The directors are not aware of any significant occurrence, fact or circumstance
concerning the company, between the accounting date and the date hereof which
requires specific mention or disclosure.
TRADING PRIOR TO INCORPORATION
The Company was incorporated on 2 October 1997 but financial statements include
pre-incorporation transactions.
<PAGE>
QIBLAH TECHNOLOGIES LIMITED
Registration No. 97/16605/06
FINANCIAL STATEMENTS
for the period ended 28 February 1999
APPROVAL OF FINANCIAL STATEMENTS
The financial statements for the period ended 28 February 1999
was approved by the directors on 4 May, 1999 and signed by:
DIRECTOR DIRECTOR
/S/ Mr R Hubsch /S/ Mr A G Jacquesson
Mr R Hubsch Mr A G Jacquesson
CONTENTS PAGE
1. Report of the Auditor 2
2. Report of the Director 3
3. Income Statement 4
4. Balance Statement 5
5. Cashflow Statement 6
6. Notes to the Financial Statements 7
<PAGE>
NICO VAN DER SMIT
Geoktrooieerde Rekenmeester (S.A.) Chartered Accountant
(S.A.)
Openbare Rekenmeester en Ouditeur Public Accountant and Auditor
38 Rissik Str. 38 TEL: +27 (0)11 660-1604 P O Box /Posbus 399
KRUGERSDORP FAX: +27 (0)11 660-5608 KRUGERSDORP
1739 e-mail [email protected] 1740
- - -------------------------------------------------------------------------------
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
QIBLAH TECHNOLOGIES LIMITED
Registration No. 97/16605/06
We have audited the annual financial statements set out on pages three to nine.
These financial statements are the responsibility of the company's directors.
Our responsibility is to report on these financial statements.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance that, in all material respects, fair presentation is achieved in the
financial statements. An audit includes an evaluation of the appropriateness of
the accounting policies, an examination, on a test basis, of the evidence
supporting the amounts and disclosures included in the financial statements, an
assessment of the reasonableness of significant estimates and a consideration of
the appropriateness of the overall financial statements presentation. We
consider that our audit procedures were appropriate in the circumstances to
express our opinion presented below.
In our opinion these financial statements fairly present the financial position
of the company for the year 28 February 1999, and the results of its operations
for the year then ended in accordance with South African generally accepted
accounting practices and in the manner required by the Companies Act.
/S/ Nico Van Der Smit
NICO VAN DER SMIT
4 May 1999
<PAGE>
Page 3
QIBLAH TECHNOLOGIES LIMITED
Reg. Nr. 97/16605/06
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 28 FEBRUARY 1999
(ALL CURRENCIES STATED ARE SOUTH AFRICAN RAND)
BUSINESS AND OPERATIONS
Manufacture, assembly, distribution and sale of electronic components.
FINANCIAL SITUATION
The financial position of the Company is clearly stated in the financial
statements attached.
SHARE CAPITAL
The total Share Capital of the Company is as follows:
Ordinary Share Capital Authorised 20,000,000 @ R0-01 R200,000-00
Ordinary Share Capital Issued: 16,917,000 @ R0.01 R169,170-00
Share Premium R39,930-00
DIRECTORS
Directors who served throughout the financial period under review:
Andre Ghalib Jacquesson
R. Hubsch
Z Tayob -Resigned on 1 April 1998
J.S. Wilson -Resigned on 1 May 1998
SECRETARY
There was no secretary appointed for the year.
EVENTS AFTER YEAR-END
The directors are not aware of any significant occurrence, fact or circumstance
concerning the company, between the accounting date and the date hereof which
requires specific mention or disclosure.
<PAGE>
Page 4
QIBLAH TECHNOLOGIES LTD.
Registration No.97/16605/06
INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 1999
(All Currencies stated are in South African Rands = ZAR)
NOTES 1999 1998
ZAR ZAR
INCOME - -
LESS: COST OF SALES - -
Opening Stock 121,021.18 -
Production Cost
Purchases - 99,939.46
Consulting Fees - 14,240.00
Freight & Delivery - 4,527.20
Packaging - 1,083.32
Research & Development Costs 531.43 1,231.20
121,552.61 121,021.18
Closing Stock 121,552.61 121,021.18
OTHER INCOME
Interest 112.36 -
---------- ----------
TOTAL INCOME 112.36 -
LESS: EXPENSES 58,351.78 134,222.16
Auditing Fees 4,425.00 1,060.00
Advertising - Trade - 7,147.64
Advertising - Investor - 1,083.67
Bank Charges 594.16 1,548.64
Bank Interest 4,389.55 965.31
Depreciation 8,708.63 3,469.45
Director renumeration - 12,500.00
Donations - 34.00
Fuel & Oil 115.29 1,674.63
Legal Fees - 10,342.11
Loss on Foreign Exchange 24,970.81 1,032.29
Marketing Fees - 10,000.00
Motor Vehicles Expenses - 92.70
Other Expenses - 590.93
Overseas Traveling Expenses - 34,039.56
Printing & Stationery 2,293.38 7,601.77
Promotional Expenses - 6,694.42
Rent 600.00 1,500.00
Repairs & Maintenance 1,500.00 250.00
Software 628.94 71.05
Subscriptions 1,042.08 359.52
Telephone & Postage 9,083.94 13,410.81
Traveling & Subsistence - 18,753.66
---------- ----------
NET PROFIT/(LOSS) FOR THE YEAR -58,239.42 -134,222.16
TAXATION 8 - -
---------- ----------
NET PROFIT/(LOSS) AFTER TAXATION -58,239.42 -134,222.16
RETAINED INCOME/(ACCUMULATED LOSS)
BEGINNING OF THE YEAR -134,222.16 -
----------- ----------
RETAINED INCOME/(ACCUMULATED LOSS)
AT THE END OF THE YEAR -192,461.58 -134,222.16
----------- ----------
<PAGE>
Page 5
QIBLAH TECHNOLOGIES LTD.
Registration No.97/16605/06
BALANCE SHEET AT 28 FEBRUARY 1999
(All Currencies stated are in South African Rands = ZAR)
NOTES 1999 1998
ZAR ZAR
ASSETS
FIXED ASSETS 2 47,588.00 40,219.00
OTHER ASSETS 3 100,000.00 100,000.00
CURRENT ASSETS 127,191.20 123,930.82
Debtors, deposits & prepayments 4,240.67 1,624.08
Call Account 1,397.92 1,285.56
Stock 4 121,552.61 121,021.18
---------- ----------
TOTAL ASSETS 274,779.20 264,149.82
---------- ----------
LIABILITIES
LONG TERM LIABILITIES 5 83,955.97 94,682.81
CURRENT LIABILITIES 174,184.81 124,689.17
Creditors 154,175.63 106,506.27
Bank Overdraft 20,009.18 18,182.90
---------- ----------
TOTAL LIABILITIES 258,140.78 219,371.98
---------- ----------
NET ASSETS (LIABILITIES) 16,638.42 44,777.84
---------- ----------
CAPITAL & RESERVES
SHARE CAPITAL 6 169,170.00 157,130.00
SHARE PREMIUM 6 39,930.00 21,870.00
ACCUMULATED LOSS 7 -192,461.58 -134,222.16
---------- ----------
SHAREHOLDERS FUND 16,638.42 44,777.84
---------- ----------
<PAGE>
Page 6
QIBLAH TECHNOLOGIES LTD.
Registration No.97/16605/06
CASH FLOW STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 1999
(All Currencies stated are in South African Rands = ZAR)
NOTES 1999 1998
ZAR ZAR
CASHFLOW FROM OPERATING ACTIVITIES
Net Profit/(Loss) Before Taxation
and Dividend -58,239.42 -134,222.16
Adjustments:
Depreciation 8,708.63 3,469.45
Interest Paid 4,389.55 965.31
--------- ----------
CASHFLOW BEFORE WORKING CAPITAL MOVEMENTS -45,141.24 -129,787.40
WORKING CAPITAL MOVEMENTS 44,521.34 -16,138.99
Decrease/(Increase) in Debtor -2,616.59 -1,624.08
(Decrease)/Increase in Creditor 47,669.36 106,506.27
Decrease/(Increase) in Stock -531.43 121,021.18
--------- ----------
CASHFLOW FROM OPERATING ACTIVITIES -619.90 -145,926.39
Interest Paid -4,389.55 -965.31
--------- ----------
NET CASHFLOW FROM OPERATING ACTIVITIES -5,009.45 -146,891.70
NET CASHFLOW FROM
INVESTMENT ACTIVITIES -16,077.63
- - -143,688.45
Additions to Fixed Assets -16,077.63 -43,688.45
Additions to Other Assets 0.00 -100,000.00
--------- ----------
NET CASHFLOW FROM BUSINESS ACTIVITIES -21,087.08 -290,580.15
CASHFLOW FROM FINANCE ACTIVITIES 21,199.44 291,865.71
Cashflow from Share Capital 30,100.00 179,000.00
Cashflow from Long-term Liabilities -10,726.84 94,682.81
Cashflow from Bank Overdraft 1,826.28 18,182.90
Cash and Cash equivalents for the year 112.36 1,285.56
Cash and Cashequivalents at beginning of
the year 1,285.56 -
--------- ------------
Cash and Cashequivalents at end of the year 1,397.92 1,285.56
--------- ------------
<PAGE>
Page 7
QIBLAH TECHNOLOGIES LTD.
Registration No.97/16605/06
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 1999
(All Currencies stated are in South African Rands = ZAR)
1. ACCOUNTING POLICIES
The most important accounting policies employed by the company are detailed
below. Except where otherwise indicated the policies are consistent with those
employed in previous years.
1.1 PRESENTATION
The financial statements of the company are prepared on the historical
cost basis
1.2 FIXED ASSETS AND DEPRECIATION
Fixed assets are reflected at cost less accumulated depreciation.
Depreciation is provided on the straight line basis at rates which
will reduce the cost of the assets to estimated residual values over
their expected useful lives.
The most important rates of depreciation
are:
Furniture & Fittings - 10%
Office Equipment - 20%
Computer & Printer - 33.33%
1.3 STOCK
Stock is valued at the lower of cost price or net realisable value
on the first in first out basis. Unfinished goods are valued at cost
price, relative to the stage of completion.
1.4 FOREIGN CURRENCIES
Transactions in foreign currencies during the year are translated at
the rate ruling on the transaction date, or forward cover rate, where
forward cover contracts are considered to be integral to the
transactions. Assets and liabilities in foreign currencies are
translated at the rate ruling at year end, except where they are
subject to forward cover contracts.
1.5 DEFERRED TAX
Deferred tax is provided for using the comprehensive liability method
after taking into account assessed or estimated tax losses. Provision
is made for the future income tax liability on timing differences
which arise when income and expense items are recognised in different
periods for accounting and tax purposes.
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Page 8
QIBLAH TECHNOLOGIES LTD.
Registration No.97/16605/06
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 1999(Continue)
(All Currencies stated are in South African Rands = ZAR)
1999 1998
ZAR ZAR
2. FIXED ASSETS
DESCRIPTION Cost Opening Accumulated Closing
Price Book Value Depreciation Book Value
ZAR ZAR ZAR ZAR
- - -------------------------------------------------------------------------------
Electronic equipment 29,005.70 11,150.00 6,608.70 22,397.00
Furniture & Fittings 1,800.00 1,740.00 240.00 1,560.00
Office Equipment 8,020.95 7,352.00 2,272.95 5,748.00
Trade Fair Display Panels 5,149.95 4,977.00 687.95 4,462.00
Trial Mould for Qiblah Locator 15,789.48 15,000.00 2,368.48 13,421.00
------------------------------------------------
59,766.08 40,219.00 12,178.08 47,588.00
------------------------------------------------
FIXED ASSETS RECONCILIATION
Computer Furniture Office Trade Fair Trial Mold
& Printer & Fittings Equipment Display Panels Q. Locator
--------------------------------------------------------------
Book Value 11,150.00 1,740.00 7,352.00 4,977.00 15,000.00
Plus:
Purchases 16,077.63 - - - -
Less:
Depreciation 4,830.63 180.00 1,604.00 515.00 1,579.00
Book Value 28/2/99 22,397.00 1,560.00 5,748.00 4,462.00 13,421.00
------------------------------------------------------------
TOTAL 47,588.00
---------
3. OTHER ASSETS 100,000.00 100,000.00
Intellectual Property for the Licensing rights to
develop and manufacture Qiblah Locators.
---------- ----------
4. STOCK 121,552.61 121,021.18
Stock consists of components for the
assembly of Qiblah Locators.
---------- ----------
5. LONG TERM LIABILITIES
5.1 Loan account Maurice Jacquesson 2,498.57 2,498.57
5.2 Loan account R. Hubsch 1,489.95 -723.82
5.3 Loan account R. Papsdorf 79,967.45 92,908.06
---------- ----------
83,955.97 94,682.81
---------- ----------
Unsecured , interest free loans with no fixed terms of
repayment
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Page 9
(All Currencies stated are in South African Rands = ZAR)
6. SHARE CAPITAL
AUTHORISED
20,000,000 Ordinary Shares of R0-01 each 200,000.00 200,000.00
---------- ----------
ISSUED
16,917,000 Ordinary Shares of R0-01 each 169,170.00 157,130.00
---------- ----------
SHARE PREMIUM 39,930.00 21,870.00
Balance Previous year 21,870.00 -
24,000 Ordinary Shares @ R0.49 11,760.00 -
70,000 Ordinary Shares @ R0.09 6,300.00 -
100,000 Ordinary Shares @ R0.09 - 9,000.00
13,000 Ordinary Shares @ R0.99 - 12,870.00
All the shares were issued to share holders but
the statutory requirements were not complied with
as registration of the allotments at the Registrar
of Companies are still in progress.
7. DISTRIBUTABLE RESERVES/(ACCUMULATED LOSSES)
Distributable Reserves/(Accumulated losses
beginning of the year) -134,222.16 -
Profit/(Loss) for the Year 58,239.42 -134,222.16
---------- ----------
Distributable Reserves/(Accumulated losses)
at the end of the year -192,461.58 -134,222.16
---------- ----------
8. TAXATION
Net profit/(loss) for the year -58,239.42 -134,222.16
Plus: Donations - 34.00
Advertising - Investor - 1,083.67
Legal Fees - 10,342.11
---------- ----------
CALCULATED PROFIT/(LOSS) FOR THE YEAR -58,239.42 -122,762.38
PROFIT/(LOSS) FOR THE PREVIOUS YEAR -122,762.38 -
---------- ----------
CALCULATED PROFIT/(LOSS) AT
THE END OF THE YEAR -181,001.80 -122,762.38
---------- ----------
Therefore no tax is provided for.
9. CAPITAL COMMITMENTS
The directors are not aware of any material capital commitments outside the
ordinary course of business
10. CONTINGENT LIABILITIES
The directors are not aware of any contingent liabilities incurred by the
company.
11. CURRENCY RESTRICTIONS
South African authorities has certain currency restrictions with foreign
countries Every foreign transaction must be approved by the SA Reserve bank via
the commercial banks.
