U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities and Exchange Act of
1934.
DIRECTION TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
Nevada 88-0413417
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 H Street, Suite 723, Blaine, Washington
(Address of principal executive offices)
Issuer's 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
Common Stock Over the Counter Bulletin Board
Securities to be registered pursuant to Section 12(g) of the Act:
None
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.
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, entered into on
January 9, 1999, is attached as Exhibit 10.1 to this Form 10-SB.
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 product
sold by the Company. Payment of the $50,000 sum is evidenced by
a promissory note, which is attached as Exhibit 10.2 to this Form
10-SB.
This license also includes the use of certain assets of
E.T.C. during the term of the agreement. 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. In
spite of the limited capital outlay to initiate this program,
Company management is confident that it can make the project self-
sustaining based on profits from the first phase of its program.
While long acknowledged as a leading contender in resolving
automobile-generated pollution, commercial development of
electric vehicles has been stalled in the 1980's 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 era of the electric car is at hand.
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.
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 restricting sales on
internal combustion engines has led to widespread activity among
all major automakers in Japan, Europe and the U.S. to meet the
electric car challenge. This brings the entire auto industry to
a new crossroads, not dissimilar to the challenges that faced an
established computer industry when powerful minicomputer
technology confronted the world of IBM and established mainframe
technology. And while IBM and many other computer giants have
survived the onslaught of innovation and entrepreneur spirit from
small founding companies, they have lost market share in what has
become a far more fragmented industry.
Many analysts and industry experts expect the same evolution
to occur in the auto industry as an efficient electric power
plant emerges to challenge the standards of auto design. The
bureaucratic nature of major automakers and their established
bias towards the internal combustion engine will make any
transition to electric car manufacturing and distribution
difficult as they confront the emergence of innovative designers
and disciples of alternate technologies intent on gaining a
foothold in the marketplace. However, 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 Ford's 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 1970's 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 an
estimated 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.
To paraphrase an auto industry executive, "the only problem
is that they have legislated that we must offer electric cars,
but there is no law that says anybody must buy one." The
consensus in this regard is that state gasoline taxes will
increase dramatically.
Licensing costs will vary depending upon the power source of
individual cars. State programs will facilitate the recharging
requirements at highway rest stops and other suitable locations.
Fleet owners may be required to utilize electric cars. This
dictate will require that a parallel consumer demand be
incentivized as an after-market for fleet vehicles is critical to
the distribution infrastructure.
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 U.S. Energy Policy 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. The essence of this is that legislators are
intent upon eliminating auto-generated air pollution. Thus,
legislators in North America have virtually assured a growth
market for electric-powered vehicles in the next decade.
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 a Canadian
subsidiary, Advanced Battery Systems of Toronto, 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.
Advanced Battery Systems has announced production plans to
expand availability of this battery to 100,000 units/year by
1995. Mercedes-Benz, BMW, Ford Ghia, and Volkswagen currently
are testing this power source. Other European automakers like
Audi and Opel are also testing hybrid systems that include dual
power sources - gas driven highway engines and electric city
engines.
At Globe'90 in Vancouver, Nissan introduced its Future
Electric Vehicle, the FEV, a 2000-pound aluminum frame design
with fight, quick-charging nickel-cadmium batteries. Using a 440-
volt source (not widely available), FEV batteries can be 40%
recharged in six minutes or fully recharged in fifteen minutes.
In the U.S., Chrysler, G.M. and Ford have formed U.S. Advanced
Battery Consortium to fund battery research in the interest of
expediting electric car development.
General Motors has been the most aggressive developer of the
three, accepting the lead-acid battery as its current power plant
for its first electric car. GM's Impact is a 2,500 pound, 2-seat
coupe with a 114 mile range at 54 miles per hour; top speed is 72
miles per hour and a 0-60 acceleration of eight seconds.
Projected prices for this and similar prototype two-seat vehicles
is $30,000 in mass production. GM announced plans in 1992 to
mass-produce the Impact, then deferred production. Renewed
promises to produce the vehicle in Lansing, Michigan may lead to
GM dealers selectively marketing the Impact by late 1999.
In late 1992, the Advanced Battery Consortium, sponsored by
the major U.S. automakers, granted $18.5 million to Ovionic
Battery Company of Troy, Michigan. This long-life battery is
unaffected by deep discharge, allows for 15-minute recharging and
offers twice the energy capacity of nickel-cadmium.
The expanded emphasis of major manufacturers and the
established demands of U.S. governments in legislating zero-
emission vehicles into existence has created a growing support
network for battery and electric motor development. Electric
cars will soon be a standard part of urban road traffic.
The complex infrastructure of major auto makers and the
inherent levels of bureaucracy and overhead present a unique
opportunity for smaller companies to penetrate the electric car
market. Low level entry into this niche market will be a major
dilemma for the likes of GM. GM has recently announced the
production of 50 Impact units for testing by target customers and
has applied to California to have this vehicle certified for
"zero-emission" status. Ford and Chrysler are lagging at this
stage. One distinct possibility is that they will sponsor
smaller entities that offer flexible, low capital cost
alternatives in the early stages of market development. In this
respect, automobile designs such as the MI-6 might well gain the
cooperative support of the industry giants as they pioneer
consumer awareness of the technology. In an effort to gain
credit for sales against their legislated quotas the smaller
companies can offer major auto distributorships anxious to gain a
foothold in the electric car market.
Amongst independents, Solectria Corp. of Arlington Mass. has
gained the most publicity, developing an AC-driven 34-pound
brushless engine and related controller. Unique Mobility Corp.
is promoting a similar AC brushless traction motor and making it
available to interested electric car fabricators.
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 supplied assembled by a major Michigan-based industry supplier
(note: Specific names of suppliers and detailed component
descriptions are excluded from this document for proprietary
reasons). Power is supplied by sixteen multiribbed, lead-acid
batteries featuring a "corrugated plate design" able to recharge
and discharge power at the leading edge of lead-acid technology.
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.
The MI-5 prototype engine has delivered 85,000 miles of
trouble-free road time in the past ten years. A U.S. built,
updated version of the original motor and controller powers the
first production models of the MI-6.
Few, if any, electric car development projects have the
performance track record of the MI-6 prototype. The development
and marketing philosophy of the Company is a straight forward
approach to minimize overhead and build a limited number of MI-6
cars in parallel with customer orders
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. Other
surveys dispel consumer fears that batteries will fail before
they get home. Mr. Dabels foresees the need for both fleet and
consumer markets, citing a need for consumer demand for used
vehicles to establish fall 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.
The primary focus of legislators and urban planners is the
elimination of rush-hour smog from regular commuters to major
city centers. Los Angeles, long identified with this problem has
funded various projects aimed at eliminating emissions. This
includes an $8 million-plus contract with a Swedish electric car
company to supply test vehicles.
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. In California, new
legislation dictates that all new parking meters will include
electric recharging plugs for electric cars.
d. Marketing Strategy.
The unique body styling of the MI-6 distinguishes it from
other electric car projects. This exterior design of the MI-6 is
based upon a specific target 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. The
initial MI-6 customer group, limited to 100 buyers across North
America, will be targeted with two specific objectives in mind.
Realistically, most buyers will be multi-car owners with access
to a traditional car for rural or cross-country driving.
Approximately half of the cars will be earmarked for trend-
setting car buffs to be used strictly for personal driving.
2. Qiblah Locator.
The other specific reason for formation of the Company is to
purchase certain assets of Qiblah International Industries Ltd.
of Vancouver, British Columbia, Canada (as set forth in Schedule
A to the purchase agreement). 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. A copy of the purchase agreement,
entered into on January 12, 1999, is attached as Exhibit 10.2 to
this Form 10-SB. Under the terms of the purchase agreement,
Qiblah International Industries Ltd. will be paid 5,000,000
Shares, at the deemed issuance price of $0.10 per Share.
This purchase agreement is subject to an agreement dated
October 30, 1997 between Qiblah International Industries Ltd. and
its wholly 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 countries this product (those countries specified in a
schedule to this agreement).
After the user depresses a stylus onto a point on a
world map that is placed above a pressure sensitive membrane, the
device's 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 Qiblah Locator determines the true direction of Mecca by
using the earth's 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 Qiblah Locator is comprised of a compass, a
printed circuit board, a pressure-sensitive membrane, a world map
and a liquid crystal diode face.
Working prototypes of the Qiblah Locator have been
completed. The accuracy achieved by the prototype is 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, is 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 location's 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. In contrast, some other compasses or prayer
signalers that are made in the developing world are tacky in
appearance.
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. The initial step was
to locate a Mercator map, which is a world map that displays in
wavy lines the deviations of compass readings from magnetic
north. Then, a compass which could be used from any location in
all conditions (e.g. on airplanes, in the desert) was required,
one which was filled with non-toxic liquid. 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, such as manufacturers of non-magnetic screws, 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.
Total development costs incurred by Qiblah International
Industries Ltd. through October 1998 were greater than $300,000,
consisting of hard costs (e.g. travel expenses, consulting fees)
and soft costs (e.g. unpaid time of Mr. Papsdorf).
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 one's 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 God's prophets
and messengers including Abraham, Moses and Jesus. Muslims
believe that Islam's message has been restored and enforced in
the last stage of the religious evolution by God's 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, Friday's 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 world's most widely held faith and is the
majority religion in about 50 countries. However, just 2% of the
world's 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 America's 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. Unlike a perishable item
or a software program, the Qiblah Locator is unlikely to become
outdated. Even if more advanced versions of Mecca finding
devices are introduced by the Company or by competitors,
inventoried units could be marketed to less developed countries.
An Islamic Research Scholar at the African Muslim Agency
confirmed that Muslims, spend a disproportionate amount of money
on religious items, such as a locator, 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.
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 production capital
of 300,000 Rand through a convertible debenture, which will be
sufficient to finance production requirements for the initial
sales orders. Casey Holdings Ltd. manufactures under license for
Hewlett-Packard and other clients, and will provide turnkey
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. All South African suppliers of the
Company are well established and professionally managed. For
example, Bosco Printed Circuits Pty. Ltd. was established in 1956
and is a multimillion dollar per year company. Factum Electronics
Pty. Ltd., recommended by Bosco, has relationships with trading
houses in the U.S. and Germany, and is planning to triple its
current plant capacity. Q Box and Cartoit Manufacturers has been
established for fifteen years. Gottfert Plastics Pty. Ltd. was
involved in the Qiblah Locator project for much of 1997 and 1998,
making the first mold needed for the units' casings.
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 Rand
Circuit Board 9.58
Circuit Board Population 9.42
Local Electronic Components 0.49
Injection Molding 1.82
Packaging Material 2.12
Compass 15.00
Chips, Driver and Programming 35.00
Floppy Touch Pad 4.00
Assembly, Packaging 6.12
Local Overheads, Miscellaneous 7.45
Total in SAR 91.00
Total in U.S. $ 16.00
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%.
c. Marketing Plan Highlights.
The Company's 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 two benefits. First, 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. Second, it provides
distributors from one country with territorial protection versus
the Company's distributors from another country. For example, a
consumer in Oman would have no interest in purchasing a local
Saudi version of the Qiblah Locator.
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.
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 in
the past year: Jeddah Trade Fair in Jeddah, Saudi Arabia; Musiad
International Trade Fair in Istanbul, Turkey; and Afro-Arab Trade
Fair in Sharjah, United Arab Emirates.
Attendance at the trade shows has generated approximately
seventy-five "serious" 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.
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 up to $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. To date, Qiblah International
Industries Ltd. has secured advance orders for 10,000 units of
the Qiblah Locator from distributors in Turkey, Saudi Arabia, and
United Arab Emirates.
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.
ITEM 2. PLAN OF OPERATION.
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) 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 project's
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.
(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 with attractive economic opportunities in
major North American urban areas; and
(f) The increasing political pressure and legislated
requirements to meet zero-emission standards in California and
other major markets by 2002 will greatly assist consumer
acceptance of the changing priorities in an environment conscious
society.
The funds available to the Company from the first two
private offerings (see Part II, Item 4 (Recent Sales of
Unregistered Securities)) may not be adequate for it to be
competitive in the areas in which it intends to operate. The
proceeds from these offerings will be sufficient for the Company
to become continue operations and development of the electric
car. The Company does not anticipate at this time having within
the next 12 months any cash flow or liquidity problems, assuming
that additional financing, if needed, is forthcoming.
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.
It is not anticipated that additional funding will be needed
in order for the Company to be self-sustaining in the production
and sale of the Qiblah Locator since Casey Holdings Ltd. is
advancing production costs for initial production.
ITEM 3. DESCRIPTION OF PROPERTY
The only property owned by the Company is that acquired
under the purchase agreement with Qiblah International Industries
Ltd. This list is attached as Schedule A to the purchase
agreement (which is attached as Exhibit 10.2 to this Form 10-SB).
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 Name of Amount and Nature Percent of
Class Beneficial of Beneficial Class
Owner (1) Owner (2)
Common Rolf Papsdorf 2,000,000
Stock 19.94%
Common Qiblah 5,000,000
Stock International 49.85%
Industries
Ltd.
(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 world's 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
company's 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 (which relate to the Qiblah Locator). 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. As of the date of this Form 10-
SB, 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 Company's directors.
Dividends.
The Company does not currently intend to pay cash dividends.
The Company's proposed dividend policy is to make distributions
of its revenues to its stockholders when the Company's 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 Company's Board of Directors, it is in the best
interest of the Company's 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 investee's securities on its
customers, joint venture associates, management contracts, other
investors, financial institutions, and the company's 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 Company's 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 Company's 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 Company's
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 intends to engage 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 Company's 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 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.
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 director's 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 shareholder's 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 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. An interim unaudited balance
sheet on the Company, dated January 15, 1999, is set forth in
Exhibit 99.2 to this Form 10-SB.
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: March 11, 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 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. President, Director March 11, 1999
Papsdorf
Rolf K. Papsdorf
/s/ Dieter K. Secretary, Treasurer March 11, 1999
Schindelhauer (Principal Financial and
Dieter K. Accounting Officer), Director
Schindelhauer
/s/ Kenneth B. Director March 11, 1999
Liebscher
Kenneth B.
Liebscher
EXHIBIT INDEX
Exhibit Description Method
Number of
Filing
3.1 Articles of Incorporation See Below
3.2 Certificate of Amendment of Articles of See Below
Incorporation
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
Signature
Page
99.1 Report and Financial Statements (Dated December See Below
31, 1998)
99.2 Balance Sheet at January 15, 1999 (unaudited) See Below
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., (The
"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
corporation's 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.
Forth: 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 (the "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 Forth
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 (the "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 Forth 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 Forth 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 director's successor shall have been elected and
qualified or until such director's 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 kelp (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 corporation's 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 Corporation's 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
officers 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 director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law, (iii) 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
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
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
LICENSE AGREEMENT
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 Licensee's 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
Licensee's 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 Licensee's employees or agents to whom it shall be
necessary in the Licensee's 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
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.
PURCHASE AGREEMENT
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 Purchaser's 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) and more particularly:
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
AOwner@
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 AManufacturer@
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 "Know-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 "Net 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 "Patents" shall refer to the Patent Application set out in
Schedule "B" and shall include patents for improvements and
modifications thereof and applications for patents for
improvements and modifications thereof;
1.4 "Products" 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 "Trade 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 "Territory" 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 "D" 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 Owner's 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 Owner's technical
personnel and such additional technical personnel as may be
mutually agreed upon between the parties, to the Manufacturer's
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
Manufacturer's 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 Owner's 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 Manufacturer's 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 Manufacturer's 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 Owner's 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 Manufacturer's 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 Manufacturer's breach of this term of the
agreement in one or more specific instances of the
Manufacturer's 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 Owner's 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 Manufacturer's methods and procedures of
processing, manufacturing, storage, display and marketing of the
Products.
9.0 Manufacturer's 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 Owner's 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 Owner's 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 Owner's 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 Manufacturer's Indemnity of Owner -- Insurance
16.1 Manufacturer agrees to indemnify and hold the Owner harmless
against any liability, damage or expense (including costs and
attorney's 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 Manufacturer's 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 Manufacturer's 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
Manufacturer's 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 Owner's
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 supplier's 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 Manufacturer's 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 Manufacturer's organization, which change
shall be unacceptable to the Owner, in the Owner's 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 Manufacturer's 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 party's 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 20.0
convention countries
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
Iron
Jordan
SCHEDULE "E" TO THE AGREEMENT DATED 30TH OCTOBER, 1997
BETWEEN QIBLAH INTERNATIONAL INDUSTRIES LTD.
AND QIBLAH TECHNOLOGIES LTD.
TRADE MARKS
NONE
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 1998
(Stated in US Dollars)
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 /s/
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 /s/
Amisano Hanson
February 5, 1999
Chartered Accountants
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
(Stated in US Dollars)
<TABLE>
<S> <C>
ASSETS
1998
Current
Prepaid expenses $ 650
LIABILITIES
Current
Accounts payable $1,500
STOCKHOLDERS' EQUITY
Deficit accumulated during the ( 850)
development stage
$650
Nature and Continuance of Operations - Note 1
Commitments - Note 6
</TABLE>
SEE ACCOMPANYING NOTES
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
(Stated in US Dollars)
<TABLE>
<S> <C>
April 30,
1998
(Date of
Incorporation) to
December
31,
1998
Expenses
Legal and accounting $ 850
Net loss for the period and deficit
accumulated during the $ 850
development stage
Loss per share $ -
Weighted average number of shares -
outstanding
</TABLE>
SEE ACCOMPANYING NOTES
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
for the period April 30, 1998 (Date of Incorporation) to December
31, 1998
(Stated in US Dollars)
<TABLE>
<S> <C>
April 30,
1998
(Date of
Incorporation) to
December
31,
1998
Cash Flows from Operating Activities
Net loss for the period $ (850)
Changes in non-cash working capital
balances related to
operations:
Prepaid expenses ( 650)
Accounts payable 1,500
Net increase in cash during the period -
Cash, beginning of the period -
Cash, end of the period $ -
</TABLE>
SEE ACCOMPANYING NOTES
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)
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Common Par Additional During the
Shares Value Paid-in Development Stage Total
Net loss for the - $ - $ - $ (850) $ (850)
period
Balance, as at
December 31, 1998 - $ - $ - $ (850) $ (850)
</TABLE>
SEE ACCOMPANYING NOTES
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.
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".
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 maturity of that instrument.
Note 3 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 assts 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:
<TABLE>
<S> <C>
Total
Deferred Tax Assets
Non-capital loss carryforwards $ 850
Gross deferred tax assets $ 425
Valuation allowance for deferred tax asset ( 425)
$ -
</TABLE>
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 4 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 5 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 totalling $850, the
tax benefit of which has not been recorded in the
financial statements.
Note 6 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 a
multi-passenger, short-haul, commercial vehicle suitable for
hotel, resort and high traffic local markets.
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 CDN$2,000,000
within the initial term.
(iv) On January 12, 1999, the company entered into a purchase
agreement to acquire all the assets of Qiblah Technologies Ltd.
("Qiblah"), Qiblah is a South African 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.
Note 7 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.
DIRECTION TECHNOLOGIES INC.
BALANCE SHEET
at January 15, 1999
(unaudited)
ASSETS
<TABLE>
<S> <C <C> < <C>
> C
>
Current Assets
Cash $ 2,500
Term deposit ---
Accounts receivable ---
Prepaid expenses
--- $ 2,500
Capital Assets - net
Technology rights
- Electric Power 50,000
Vehicle 500,000 $
- Qiblah locators 550,000
$
552,500
</TABLE>
LIABILITIES
<TABLE>
<S> < <C> < <C>
C C
> >
Current Liabilities
Accounts payable $
51,562
Management fees payable ---
Shareholder loans $ 51,562
---
Long-term Liabilities --
-
$ 51,562
</TABLE>
SHAREHOLDERS' EQUITY
<TABLE>
<S> < <C> < <C>
C C
> >
Share Capital $
(60,000,000 Authorized) 505,000
(10,000,000 Issued)
Subscriptions Receivable ---
Deficit
(4,062)
500,938
$
552,500
</TABLE>
DIRECTION TECHNOLOGIES INC.
NOTES TO BALANCE SHEET
NATURE OF OPERATIONS
The Company was originally incorporated on April 30, 1998 in the
State of Nevada under the name Fuji International Inc. On
December 28, 1998 the Company changed its name to Direction
Technologies Inc.
The Company is engaged in the field of technology research and
development, and expects to manufacture and market the
technologies they acquire. The continued operations of the
Company are dependent upon the ability of the Company to obtain
necessary financing, and future profitable production from the
technology.
TECHNOLOGY
1. On January 9, 1999 the Company entered into a License
Agreement with E.T.C. Industries Ltd. (the "Licensor") of
Vancouver, B.C. Canada whereby the Licensor grants to the Company
the exclusive rights to manufacture and market world-wide a multi-
passenger, short haul, commercial vehicle suitable for hotel,
resort and high traffic markets. Consideration to the Licensor
is:
1. $50,000 USD
2. Royalties of 2% of the Gross Sales Price. Term of the
Agreement is for five (5) years commencing from the date of
approval of the regulatory authorities and other matters as
detailed in the agreement.
2. On January 12, 1999 the Company entered into a purchase
agreement with QIBLAH INTERNATIONAL INC., to purchase the
exclusive rights to all patents, patents pending, trademarks,
copyrights, title, engineering designs, concepts, models,
prototypes, parts, manufacturing machines and tools, know how and
show how associated with the research, development,
manufacturing, distributing, and retail business of the QIBLAH
locator products of the Vendor. Consideration to the vendor is
5,000,000 common shares of the Company.
SHARE CAPITAL
The authorized share capital of the Company is 60,000,000 shares
at $0.001 value of which:
10,000,000 preferred
50,000,000 common
The Company has issued common shares of its capital stock as
follows:
Number of Deemed Price Amount
Shares per Share $
Common
For cash 5,000,000 $0.001 5,000
For technology 5,000,000 $0.10 500,000
10,000,000 505,000
