U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
LUMINART CORP.
(Name of Small Business Issuer in its charter)
Nevada 87-413934
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3245 Grande Vista Drive, Newbury Park, California 91320
(Address of principal executive offices) ( Zip Code)
Issuer's telephone number: (805) 480-9899
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
None
PART I.
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
Luminart Corp., a Nevada corporation ("Company"), was originally organized in
the State of Utah on July 5, 1984 as Past-Tell Limited. Articles of Merger
were filed on March 27, 1987 through which this company changed its domicile
to the State of Nevada. On November 7, 1996 an Amendment to the Articles of
Incorporation were filed changing the name of the Corporation to Chaos Group,
Inc. On April 23, 1998, an Amendment to the Articles of Incorporation was
filed changing the name of the corporation to Luminart Corp. The business
office of the Company is located at 3245 Grande Vista Drive, Thousand Oaks,
California 91320. The Company's fiscal year ends on September 30. Currently,
the Company has three full time and four part time employees. It does not
anticipates adding any further employees in the next twelve months.
During the company's fiscal year ended September 30, 1999, Luminart sold its
interest in Chaos Group, Inc., a wholly-owned subsidiary devoted to the
entertainment industry in order to allow the company to better direct its full
attention to the sign industry. The corporation also divested itself of its
wholly-owned subsidiary, Clear Vision, Inc., as that company generated
continuous losses to the corporation and the Board of Directors felt that such
a move was in the best interest of the corporate shareholders.
(b) Business of the Company.
Luminart Corp. is a sales and marketing company dedicated to the sale of its
proprietary Luminite gel, a flexible compound used in the production of Point
of Purchase advertising signs. When illuminated, Luminite has the eye catching
attractiveness of neon at a fraction of the cost.
(1) The Sign Industry.
The sign industry in North America is represented commercially by approximately
50,000 sign manufacturers, consisting of independent entities, corporate in-
house graphics departments, government agencies, and sub-contractors.
Management believes that more than 95% of such entities
specialize in the manufacture of neon, vinyl, and screen printed
signs and that approximately 50% of vinyl and screen printed
signs are illuminated. Management also believes that demand for
Luminite products also exist within the point-of-purchase
industry as it relates to advertising and displayed media. Total
annual North American sales of the sign industry are believed to
exceed $30 billion The extent of the sign industry internationally is not as
easily determined as that of the North American market; however,
based upon management's research, it believes that exclusive
North America, there are approximately 500,000 sign manufacturers
worldwide. Total worldwide annual revenues in the industry is
approximately $160 billion.
(2) Description of the Company's Products.
The company's principal product is Luminite gel and the necessary dispensing
machines for its application to substrata. On April 30, 1996, the Company was
issued a Compound and Method Patent (US # 005512122A) for the Luminite gel and
the process by which it is applied onto vinyl. On January 4, 1999, the Company
was issued a Compound and Method Patent (Canada # 2,126,104) for
the Luminite gel and the process by which it is applied onto vinyl. The
Company also has been issued patents in Europe (#93922873.0) and in Australia
(#51735/93).
Luminite is a printing compound and method of producing three-dimensional signs
and lettering and Braille reading materials. The printing compound includes an
ultraviolet radiation curable resin and a filler mixed with the resin to form a
paste. The resin can be an acrylated urethane oligomer or an
epoxidized oil. The compound is applied to a substrate manually or by a
computer controlled dispensing apparatus. The compound is subjected to
ultraviolet radiation to cure quickly allowing for mass production. Luminite
is also a bonding agent that adheres to cardboard, paper, vinyl, acrylics, and
mantypes of plastic. It its unpigmented form, :Luminite is translucent and
fairly thixotropic. Luminite is available in a variety of colors
and the Company continues to develop additional colors.
Signs that utilize Luminite have an appearance as comparable to neon but can be
produced less expensively than a similar neon sign. Management believes that
additional benefits of Luminite in comparison with neon include:
reduced operating costs
lower maintenance costs
greater design flexibility
more intricate design potential
ease your shipping and handling
greater durability
Luminite is available in four product groups:
LUMINITE BL (Back Lit) was specifically develop for
traditional indoor backlit applications. With this material,
signs can be created with elevated characters and graphics to
produce a unique glow in radiance and brilliance. Signs created
with LUMINITE BL have the appearance of neon signs, at
approximately one-third the price of comparable neon signs.
LUMINITE BL is available in nine standard colors (red, yellow,
orange, green, white, pink, teal, ice, and blue).
LUMINITE FL (Front Lit) is available in the seventh standard
fluorescent colors (red, yellow, orange, green, white, pink, and
blue) and is used to enhance new and existing printed materials;
e.g., signs, posters, and POP materials, by adding elevated
characters and graphics that illuminate and fluoresce when
exposed to ultraviolet light.
LUMINITE TACTILE was developed solely to create Braille
characters. It is available in neutral see-through material
which can be applied on existing signage in order to conform to
the standards and specifications of the Americans with
Disabilities Act.
LUMINITE CRYSTAL was specifically assigned for traditional
indoor/outdoor backlit applications. The Crystal Series is
available in the same colors as LUMINITE BL.
SYSTEM 4000 is a computer automated Luminite dispensing
system utilizing industry standard Cartesian Robotic Technology
coupled with the liquid/gel dispensing system. The work surface
is 4' by 4' with expansion capability to a maximum of the 12'.
The system includes a custom-designed ultraviolet curing chamber,
pen plotting capabilities, and vinyl cutting tools. SYSTEM 4000
carries a one year parts and labor warranty. Specific features
include:
16 button user control panel with LCD display high precision motor controls
high efficiency gantry drive for maximum accuracy
oversized hardened gateways for ease of operation
industry standard HPGL interface
dispensing bead size from 1/16" to 5/8"
dispensing speed up to 6" per second
vacuum table top
The Signature Series is an entry level Luminite dispensing
system designed and priced to appeal to smaller sign
manufacturers. It can also be used in conjunction with a SYSTEM
4000 to create special effects. The Signature Series is sold
with a custom work station, an integrated light table, pneumatic
control system, and a separate 2' x 2' curing chamber. SYSTEM
2000 is a compact version of System 4000 that has many of the
performance capabilities of the larger system.
LUNINITE DRAW is a proprietary software program that was
developed by the Company to work is a special interface in
conjunction with popular sign making software packages to take
advantage of all SYSTEM 4000 dispensing systems features.
LUMINITE DRAW runs in the Microsoft Windows environment. The
Company includes LUMINITE DRAW with every SYSTEM 4000 at no
additional charge.
The company is currently developing a new dispensing machine
which can be purchased at a much more affordable price than those
currently in existence. This is being done to attract those
people interested in embarking on a career in the industry, but
are currently in a financial position which would not allow them
to get started. In addition, the company has plans to acquire
another sign manufacturer or research and development company
during the next 12 months. In order to accomplish this, the
company may need, depending on the price of the acquisition, to
generate $1 million through debt or equity financing.
(3) Manufacture and Marketing.
All sales of products are accomplished through the company's
wholly-owned subsidiary, Luminart International, Inc., a Nevada
corporation. The parent company, Luminart Corp., devotes its
efforts to research and development, specifically directed toward
improving its products and developing new products and
application methods. The Research and Development Department of
Luminart Corp. directs its attention to the improvement of
existing products and ensuring governmental compliance for all
countries to which the product is marketed. R & D presently adds
approximately $500.00 per month to the corporate administrative
expense. The effect on the product pricing due to this facility
is minimal.
Luminart International, Inc. sells its products to an
existing, albeit expanding, market base comprised of
approximately 210 customers. No single customer comprises more
than 2% of total revenues. The company is presently active in 15
countries worldwide and distributes directly from the company
headquarters from orders placed directly and through the
company's web site, http://www.luminartcorp.com. All shipments
from the company to international destinations is accompanied
with all documentation required by both importing and exporting
countries. Luminite gel is produced in 19 colors and packaged in
6.5 ounce plastic tubes for sale to corporate customers.
Manufacturing of the Luminite gels for the company is done
by PRC-DeSoto Canada, Inc., A PPG Industries Company, 5676
Timberlea Boulevard, Mississauga, Ontario L4W 4M6, Canada,
pursuant to a contract entered into by a predecessor to the
Company in excess of three years ago (the parties are currently
in the process of negotiating a new agreement). All materials
necessary for production are purchased by that company in
compliance with the formulae provided to them by our Research and
Development Department. All materials are freely available to
the manufacturer and are safe both in stand-alone and in combined
form. The company has to-date never experienced any adverse
governmental reaction to its products. The Environmental
Protection Agency (EPA) of the United States government has,
however, produced several studies showing the negative
environmental impact possible, and probable, with the use of the
company's main competition, neon signage. It is understood that
the EPA has presented to Congress proposed acts which may impair
the marketing of the neon signs. If such happens, Luminart's
business is expected to increase dramatically.
Previous promotional efforts have opened many domestic and
international markets for Luminite signs and created a tremendous
product awareness in the $160 billion a year international sign
industry. Between 1994 and 1998, the Company participated in
excess of 60 trade shows. Luminart's corporate clients have
included Coca-Cola of Spain, Motorola, Wal-Mart, Hudson Bay, Jose
Cuervo Tequila and Captain Morgan's Parrot Bay Rum. Luminart will
continue to use the names, logos, packaging and all other
promotional assets to maintain brand identity and consistency.
The Company's management perceived a need in the signage and
POP industries for a less expensive alternative to traditional
neon and molded plastic signs. It believes the Luminite family
of products offers sign manufactures a less-expensive, more
versatile system, capable of handling more intricate graphic
patterns than traditional alternatives. Accordingly, the Company
is marketing Luminite as a unique, new sign medium that allows
sign manufactures to create cost competitive, high impact
illuminated signage not currently possible with any other medium.
The Company's strategy is to create overall awareness and
demand for the Luminite family of products by providing a
marketing support to its distributors in capitalizing on the
perceived benefits of Luminite. The Company intends initially to
build sales volume of Luminite through the sale and installation
of computer automated Luminite dispensing systems by the Company
and third party licensees. If the installed base of SYSTEM
2000/4000 and SIGNATURE SERIES dispensing systems increases, as
to which are to be no assurance.
The company sales and marketing programs include:
Sales representation. Experienced sales and marketing
personnel represent the Company to distributors and assist their
sales representatives in presentations and implementation of
systems larger accounts. Sales personnel also contact major end
users, i.e., sign manufacturers & sign buyers, to create end user
demand for Luminite, which also provides marketing support for
the Company's distributors.
Trade Shows. The Company actively participates in trade
shows, both in North America and internationally, which provide
the Company with constant exposure to distributors, sign makers,
and end users and enables Company personnel to demonstrate
directly the properties and capabilities of Luminite.
Product samples. Sample signs demonstrate Luminite's
versatility, capabilities, spectrum of available colors, and
design effects. The Company distributes samples widely and
provides custom-made displays to its distributors.
Advertising and brochure words. The Company utilizes a
focused print advertising program in various trade publications
generally product awareness and demand among end users. High-
quality sales literature, including product sheets and corporate
brochures, are widely distributed, many of which have been
translated into a variety of languages.
The Company has chosen to sell its products worldwide
primarily through established sign equipment distributors, rather
than focusing its sales efforts on direct sales to end users.
The Company has entered into in excess of 35 distributions
worldwide. Management believes that certain advantages will
accrue to the Company based upon this arrangement:
faster market penetration
immediate access to an established customer base
large existing sales force
minimization of credit administration
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Overview
The following management's discussion and analysis of
financial condition and results of operations reviews the
financial performance of the Company for the years ended
September 30, 1999 and 1998, and should be read in conjunction
with the Company's consolidated financial statements and notes
thereto for the respective periods set forth in this Form 10-SB.
In April 1998, the Company determined to change its fiscal year
end from December 31 to September 30.
Consolidated Results of Operations
(a) Years ended September 30, 1999 and 1998.
Net sales increased to $1,637,683 in 1999 from $765,141 in
1998, an increase of $872,542 or 214.04%, primarily due to
increased selling and marketing activities that the Company was
able to conduct in 1999 as a result of the proceeds from the
Company's private placements of its securities.
Gross profit increased to $1,009,194 in 1999 from $684,820
in 1998, and decreased as a percentage of net sales to 61.62% in
1999 from 89.50% in 1998. The decrease in gross profit margin in
1999 as compared to 1998 was due to increased marketing and
selling expenses.
Selling, general, and administrative expenses increased to
$763,246 in 1999 from $327,947 in 1998, as a result of increased
selling and marketing activities and the Company's efforts to
build a marketing infrastructure. This included penetration of
the Taiwan market.
Depreciation and amortization increased to $186,300 in 1999
from $63,600 in 1998 as a result of decreased depreciation and
amortization recorded relating to property and equipment.
Interest expense increased to $59,938 in 1999 from $18,987 in
1998, as a result of an increase the level of interest-bearing
debt incurred to finance operations.
The Company recorded a provision for bad debts of $5,731 in
1999, as compared with $0 in 1998. This was based on
management's estimate of uncollectible accounts receivable.
Net loss was $160,544 for the year ended September 30, 1999,
as compared to a net profit of $259,269 for the year ended
September 30, 1998.
Liquidity and Capital Resources.
During the fiscal year ended September 30, 1999, the Company
financed its working capital requirements principally from the
private placement of its common stock. During that fiscal year,
gross proceeds from the sale of common stock was $257,750.
During the fiscal year ended September 30, 1998, the Company
financed its working capital requirements from cash reserves, as
well as operations of the Company. Such funds have periodically
been supplemented with short-term borrowings under the Company's
bank line of credit and other private sources.
During the years ended September 30, 1999 and 1998, the
Company's operations utilized cash of $161,076 and $219,729,
respectively.
The Company did not have any capital expenditure commitments
outstanding at September 30, 1999, although the Company
anticipates making capital expenditures in the ordinary course of
business commensurate with an expected increase in the Company's
business operations in subsequent periods.
Risk Factors Connected with Financial Condition and Results of Operations.
(a) History of Losses; Accumulated Deficit; Working Capital Deficiency.
The Company has incurred losses of $999,045, $397,543, and
$160,544 for the fiscal years 1996, 1997, and 1999, respectively
(there was a profit of $259,269 for 1998). The likelihood of the
success of the Company must be considered in the light of the
problems, expenses, difficulties, complications, and delays
frequently encountered in connection with the expansion of a
business and the competitive environment in which the Company
operates. Unanticipated delays, expenses and other problems such
as setbacks in product development, and market acceptance are
frequently encountered in connection with the expansion of a
business. (See "Need for Additional Financing" below.) As a
result of the fixed nature of many of the Company's expenses, the
Company may be unable to adjust spending in a timely manner to
compensate for any unexpected delays in the development and
marketing of the Company's products or any capital raising or
revenue shortfall. Any such delays or shortfalls will have an
immediate adverse impact on the Company's business, operations
and financial condition. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition."
(b) Significant Working Capital Requirements.
The working capital requirements associated with the
manufacture and sale of the Company's products have been and will
continue to be significant. The Company is currently not
generating sufficient cash flow to fund its operations and growth
and is dependent on the proceeds from the sale of its shares to
continue its operations and implement its sales and marketing
strategy. The Company anticipates, based on currently proposed
plans and assumptions relating to its operations (including with
respect to costs and expenditures and projected cash flow from
operations), that it can generate sufficient cash flow from
operations to sustain the business. However, the Company
currently plans one or more acquisitions over the next twelve
months and will need financing of at least $1,000,000 during the
year 2000 in order to pay for these anticipated acquisitions. In
the event that the Company's plans change or its assumptions
change or prove to be inaccurate or if the proceeds from the sale
of its shares or cash flow from operations proves to be
insufficient to fund operations (due to unanticipated expenses,
technical difficulties, problem or otherwise), the Company would
be required to seek additional financing sooner than currently
anticipated or may be required to significantly curtail or cease
its operations.
(c) Limited Assets.
The Company has only limited assets. As a result, there can
be no assurance that the Company will generate significant
revenues in the future; and there can be no assurance that the
Company will operate at a profitable level. If the Company is
unable to obtain customers and generate sufficient revenues so
that it can profitably operate, the Company's business will not
succeed.
(d) Competition.
The Company may experience substantial competition in its
efforts to locate and attract customers for its products. Many
competitors in the sign industry have greater experience,
resources, and managerial capabilities than the Company and may
be in a better position than the Company to obtain access to
attractive clientele. There are a number of larger companies
which will directly compete with the Company. Such competition
could have a material adverse effect on the Company'
profitability or viability. In addition, neon is such an
established sign medium, that the Company often encounters
resistance to introducing its products to established neon
customers.
(e) Influence of External Factors.
The sign industry in general is a speculative venture
necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the Company will
result in commercially profitable business. The marketability of
its products will be affected by numerous factors beyond the
control of the Company. These factors include market
fluctuations, and the general state of the economy (including the
rate of inflation, and local economic conditions), which can
affect companies' spending. Factors which leave less money in
the hands of potential customers of the Company will likely have
an adverse effect on the Company. The exact effect of these
factors cannot be accurately predicted, but the combination of
these factors may result in the Company not receiving an adequate
return on invested capital.
(f) Regulatory Factors.
Possible future consumer legislation, regulations and
actions could cause additional expense, capital expenditures,
restrictions and delays in the activities undertaken in
connection with the business of the Company, the extent of which
cannot be predicted. The exact affect of such legislation cannot
be predicted until it is proposed.
(g) Uncertainty of Market Penetration.
The sign industry is currently dominated by companies that
sell neon signs, which has broad acceptance with businesses. As
a result, the market demand for new products from new companies
is subject to a high level of uncertainty. Achieving significant
market penetration and recognition for the Company's products
will require significant efforts and expenditures by the Company
to inform potential customers about the Company's products.
Although the Company intends to use a substantial portion of its
working capital for marketing and advertising, there can be no
assurance that the Company will be able to penetrate existing
markets on a broad basis, position its products to appeal to a
broad base of customers, or that any marketing efforts undertaken
by the Company will result in any increased demand for or
greater market acceptance of the Company's products. See
"Business of the Company."
(h) Uncertainty Regarding Patents and Proprietary Rights.
The Company seeks patent protection for its proprietary
products and technologies where appropriate. The Company
currently has one United States patents and three international
patents relating to its Luminite gel technology. However, there
can be no assurance that the Company's patent will provide the
Company with significant protection against competitors.
Litigation may be necessary in the future to protect the
Company's patent, and there can be no assurance that the Company
will have the financial or managerial resources necessary to
pursue such litigation or otherwise to protect its patent rights.
In addition to pursuing patent protection in appropriate cases,
the Company also relies on trade secret protection for its
unpatented proprietary technology. However, trade secrets are
difficult to protect. There can be no assurance that other
companies will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access
to the Company's trade secrets, that such trade secrets will not
be disclosed or that the Company can effectively protect its
rights to unpatented trade secrets. The Company pursues a policy
of having its employees and consultants execute non-disclosure
agreements upon commencement of employment or consulting
relationships with the Company, which agreements provide that all
confidential information developed or made known to the
individual during the course of employment shall be kept
confidential except in specified circumstances. There can be no
assurance, however, that these agreements will provide meaningful
protection for the Company's trade secrets or other proprietary
information.
(i) Reliance on Management.
The Company's success is dependent upon the hiring of key
administrative personnel. Only two of the officers or directors,
and one of the other key personnel, has any employment agreement
with the Company. Therefore, there can be no assurance that
these personnel will remain employed by the Company. Should any
of these individuals cease to be affiliated with the Company for
any reason before qualified replacements could be found, there
could be material adverse effects on the Company's business and
prospects. In addition, management has no experience is managing
companies in the same business as the Company.
In addition, all decisions with respect to the management of
the Company will be made exclusively by the officers and
directors of the Company. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Company. The success of the Company,
to a large extent, will depend on the quality of the directors
and officers of the Company. Accordingly, no person should
invest in the Shares unless he is willing to entrust all aspects
of the management of the Company to the officers and directors.
(j) Control of the Company by Officers and Directors.
The Company's officers and directors beneficially own
approximately 6% of the outstanding shares of the Company's
common stock. As a result, such persons, acting together, have
the ability to exercise significant influence over all matters
requiring stockholder approval. Accordingly, it could be
difficult for the investors hereunder to effectuate control over
the affairs of the Company. Therefore, it should be assumed that
the officers, directors, and principal common shareholders who
control the majority of voting rights will be able, by virtue of
their stock holdings, to control the affairs and policies of the
Company.
(k) Limitations on Liability, and Indemnification, of
Directors and Officers.
The Company's Articles of Incorporation include provisions
to eliminate, to the fullest extent permitted by the Nevada
Revised Statutes as in effect from time to time, the personal
liability of directors of the Company for monetary damages
arising from a breach of their fiduciary duties as directors.
The Bylaws include provisions to the effect that the Company may,
to the maximum extent permitted from time to time under
applicable law, indemnify any director, officer, or employee to
the extent that such indemnification and advancement of expense
is permitted under such law, as it may from time to time be in
effect. Any limitation on the liability of any director, or
indemnification of directors, officer, or employees, could result
in substantial expenditures being made by the Company in covering
any liability of such persons or in indemnifying them.
(l) Conflicts of Interest.
The officers and directors have other interests to which
they devote time, either individually or through partnerships and
corporations in which they have an interest, hold an office, or
serve on boards of directors, and each will continue to do so
notwithstanding the fact that management time may be necessary to
the business of the Company. As a result, certain conflicts of
interest may exist between the Company and its officers and/or
directors which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities which cannot be resolved through arm's
length negotiations. All of the potential conflicts of interest
will be resolved only through exercise by the directors of such
judgment as is consistent with their fiduciary duties to the
Company. It is the intention of management, so as to minimize
any potential conflicts of interest, to present first to the
Board of Directors to the Company, any proposed investments for
its evaluation.
(m) No Assurance of Continued Public Trading Market; Risk of Low
Priced Securities.
Since May 28, 1998, there has been only a limited public
market for the common stock of the Company. The common stock of
the Company is currently quoted on the Over the Counter Bulletin
Board. As a result, an investor may find it difficult to dispose
of, or to obtain accurate quotations as to the market value of
the Company's securities. In addition, the common stock is
subject to the low-priced security or so called "penny stock"
rules that impose additional sales practice requirements on
broker-dealers who sell such securities. The Securities
Enforcement and Penny Stock Reform Act of 1990 ("Reform Act")
requires additional disclosure in connection with any trades
involving a stock defined as a penny stock (generally, according
to recent regulations adopted by the U.S. Securities and Exchange
Commission, any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including
the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the
risks associated therewith. The regulations governing low-
priced or penny stocks sometimes limit the ability of broker-
dealers to sell the Company's common stock and thus, ultimately,
the ability of the investors to sell their securities in the
secondary market.
(n) Effects of Failure to Maintain Market Makers.
If the Company is unable to maintain a National Association
of Securities Dealers, Inc. member broker/dealers as market
makers, the liquidity of the common stock could be impaired, not
only in the number of shares of common stock which could be
bought and sold, but also through possible delays in the timing
of transactions, and lower prices for the common stock than might
otherwise prevail. Furthermore, the lack of market makers could
result in persons being unable to buy or sell shares of the
common stock on any secondary market. There can be no assurance
the Company will be able to maintain such market makers.
(o) Cash Dividends Unlikely.
The Company has never declared or paid dividends on its
common stock and currently does not anticipate or intend to pay
cash dividends on its common stock in the future. The payment of
any such cash dividends in the future will be subject to
available retained earnings and will be at the discretion of the
Board of Directors.
(p) Potential Status as a Pseudo California Corporation.
Section 2115 of the California General Corporation Law
subjects certain foreign corporations doing business in
California to various substantive provisions of the California
General Corporation Law in the event that the average of its
property, payroll and sales is more than 50% in California and
more than one-half of its outstanding voting securities are held
of record by persons residing in the State of California. Some
of the substantive provisions include laws relating to annual
election of directors, removal of directors without cause,
removal of directors by court proceedings, indemnification of
officers and directors, directors standard of care and liability
of directors for unlawful distributions. The aforesaid Section
does not apply to any corporation which, among other things, has
outstanding securities designated as qualified for trading as a
national market security on NASDAQ if such corporation has at
least eight hundred holders of its equity securities as of the
record date of its most recent annual meeting of shareholders.
It is currently anticipated that the Company may be subject to
Section 2115 of the California General Corporation Law which, in
addition to other areas of the law, will subject the Company to
Section 708 of the California General Corporation Law which
mandates that shareholders have the right of cumulative voting at
the election of directors.
(q) Forward-Looking Statements.
This Registration Statement contains "forward looking
statements" within the meaning of Rule 175 under the Act, and
Rule 3b-6 under the Securities Act of 1934, as amended, including
statements regarding, among other items, the Company's business
strategies, continued growth in the Company's markets,
projections, and anticipated trends in the Company's business and
the industry in which it operates. The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and
similar expressions identify forward-looking statements. These
forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control.
The Company cautions that these statements are further qualified
by important factors that could cause actual results to differ
materially from those in the forward looking statements,
including those factors described under "Risk Factors" and
elsewhere herein In light of these risks and uncertainties,
there can be no assurance that the forward-looking information
contained in this Prospectus will in fact transpire or prove to
be accurate. All subsequent written forward-looking
statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
(r) Uncertainty Due to Year 2000 Problem.
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 the Company's ability to conduct normal business
operations. This creates potential risk for all companies, even
if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
The Company currently believes that its systems are Year
2000 compliant in all material respects. Although management is
not aware of any material operational issues or costs associated
with preparing its internal systems for the Year 2000, the
Company may experience serious unanticipated negative
consequences (such as significant downtime for one or more of
its suppliers) or material costs caused by undetected errors or
defects in the technology used in its internal systems.
Furthermore, the purchasing patterns of customers may be affected
by Year 2000 issues. The Company does not currently have any
information about the Year 2000 status of its potential material
suppliers. The Company's Year 2000 plans are based on
management's best estimates.
ITEM 3. DESCRIPTION OF PROPERTY.
The following is a schedule of the property and equipment
current owned by the Company (all of this property and equipment
is in good to excellent condition):
Trans Acquired Sold Cost Dep Prior Method Life Rate Curnt
Portation Basis Dep Dep
Equipment
Truck &
Trailer 9/11/95 18000.00 18000.00 8295 S/L HY 5 0.2 3600
VW of
Witt 6/1/98 19115.89 19115.89 8295 S/L HY 5 0.2 3823
Truck,
Dooley 10/1/98 15737.16 15737.16 0 S/L HY 5 0.2 3147
Total 52853.05 16590 10571
Furniture & Equipment
F & F 7/7/95 10303.98 10303.98 4416 S/L HY 7 0.142857 1472
F & F 8/15/99 4065.87 4065.87 0 S/L HY 7 0.142857
Total 14369.85 14369.85 4416
Machinery & Equipment
Vinyl
Cutter 3/9/95 769 769 275 S/L HY 7 0.142857 110
Copy
Machine 3/22/95 1200 1200 428 S/L HY 7 0.142857 171
Luminart
System
4000 6/21/95 52087 52087 18603 S/L HY 7 0.142857 7441
Misc.
Equipment 8/15/95 24996 24996 8928 S/L HY 7 0.142857 3571
Equipment 8/1/95 88351 88351 11555 S/L HY 7 0.142857 12622
Table
Screen
Print 2/13/96 23473 23473 5029 S/L HY 7 0.142857 3353
Router 9/18/95 2545 2545 910 S/L HY 7 0.142857 364
Luminart MS
40-110-1 12/1/95 17670 17670 6311 S/L HY 7 0.142857 2524
Compressor 6/13/95 1200 1200 428 S/L HY 7 0.142857 171
Lathe &
Drill
Press 4/11/96 3500 3500 750 S/L HY 7 0.142857 500
Digital
Color
Station
5442 3/15/96 6/30/99 0 0 0 S/L HY 7 0.142857 0
Pro Tech
Laminator 2/13/96 23473 23473 5029 S/L HY 7 0.142857 3353
Misc
Equip. 3/14/97 118587 118587 16964 S/L HY 7 0.142857 16941
Printer 10/20/97 2000 2000 48 S/L/HY 7 0.142857 286
Recycling
Equipment 2/15/95 189183 189183 0 S/L HY 7 0.142857 0
Music
Equipment 4/1/96 74000 74000 18500 S/L HY 7 0.142857 10571
Video
Equipment 1/27/97 5600 5600 800 S/L HY 7 0.142857 800
Piano 9/20/97 34097 34097 5377 S/L HY 7 0.142857 4871
Total 662731 662731 99935 67650
Computer Equipment
Laser Master
Printer 12/1/95 28032 28032 14015 S/L HY 5 0.2 5606
4 SCANVEC
Programs 8/18/95 13514 13514 6757 S/L HY 5 0.2 2703
Byte
Computer 3/29/95 3041 3041 1520 S/L HY 5 0.2 608
Mac
Computers 8/9/95 5000 5000 2500 S/L HY 5 0.2 1000
Apple II
Software 7/24/95 2000 2000 1000 S/L HY 5 0.2 400
Computer 7/11/95 1072 1072 535 S/L HY 5 0.2 214
PC
Computer 8/15/95 1668 1668 835 S/L HY 5 0.2 334
Misc.
Computer
Equip. 8/15/95 35865 35865 16263 S/L HY 5 0.2 7173
Computer 2/4/96 1127 1127 338 S/L HY 5 0.2 225
Printer 10/20/97 2000 2000 48 S/L HY 5 0.2 400
Computer 7/1/97 460 460 46 S/L HY 5 0.2 92
Computer Equipment
Raster
Machine 7/11/95 6/30/99 0 0 0 S/L HY 5 0.2 0
Computer
for
Raster 2/28/96 8500 8500 2550 S/L HY 5 0.2 1700
Misc.
Computer
Equip. 5/13/96 31744 31744 22433 S/L HY 5 0.2 6349
Total 134023 134023 68840 26805
Total
Depreciable 906918 191852 11192
6
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information regarding the
beneficial ownership of shares of the Company's Common Stock as
of November 10, 1999 (17,006,167 issued and outstanding) by (i)
all stockholders known to the Company to be beneficial owners of
more than 5% of the outstanding Common Stock; and (ii) all
officers and directors of the Company (each person has sole
voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them):
Title of Name and Address of Amount of Percent of
Class Beneficial Owner Beneficial Class
Ownership
Common Chinex 2,539,805 14.93%
Stock International
c/o 1785 West 2300 South
Salt Lake City, Utah 84119
Common Armstrong, Perkins, 2,500,000 14.70%
Stock Hudson Trustee
1600 Canadian Pl.
407 2nd St.
Calgary, Alberta T2P 2Y3
Common Beverly Hills 310 Inc. 1,650,949 9.71%
Stock c/o 1785 West 2300 South
Salt Lake City, Utah 84119
Common John L. Patton 1,000,000 5.88%
Stock 5 Saddle Hill Road
Far Hills, New Jersey 07931
Common Wm. Michael Reynolds 960,000 5.64%
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common Labranda, Inc. 942,857 5.54%
Stock 426 South 500 East
Salt Lake City, Utah 84119
Common Thomas Maher 45,000 0.26
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common Ronnie Case 40,000 0.23%
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common George Jones 5,600 0.03%
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common Eric Lewis 0 0%
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common James V. Crestani 0 0%
Stock 3245 Grande Vista Drive
Newbury Park, California 91320
Common Shares of all directors and 1,050,600 6.18%
Stocj executive officers as a group
(6 persons)
(1) Other than as footnoted, none of these security holders has
the right to acquire any amount of the Shares within sixty
days from options, warrants, rights, conversion privilege,
or similar obligations.
(2) Consists entirely of options granted in January 1997 to
purchase 960,000 of shares of common stock at an exercise
price of $0.25 per share; there is no expiration time on
these options.
(3) Consists entirely of options granted in January 1997 to
purchase 40,000 of shares of common stock at an exercise
price of $0.25 per share; there is no expiration time on
these options.
ITEM 5. DIRECTORS, OFFICERS, PROMOTERS, AND CONTROL PERSONS.
The names, ages, and respective positions of the directors
and officers of the Company are set forth below. These persons
have held their respective positions since May 20, 1999. There
are no other persons which can be classified as a promoter or
controlling person of the Company.
(a) Wm. Michael Reynolds, President/Chief Executive
Officer/Chairman.
Mr. Reynolds, age 54, started with the Company in 1996. He
served as President/CEO of a combined group of financial
companies which became a holding company (J.B. Oxford Holding
Co.) with annual revenues rising from $3 million to $45 Million
under his 4 year leadership, which ended in 1996. From 1988 to
1992, Mr. Reynolds served as Chairman of J.P. Michael Co., a
regional broker/dealer located in Burbank, California. During
the period of 1986 to 1988, Mr. Reynolds held the position of
President/CEO of G.I. Industries, a waste management company
between 1986-1988. He has served as President/ Chairman of the
American Lung Association for 10 years.
(b) Ronnie Case, Secretary/Treasurer and Director.
Mr. Case, age 23, started with the Company in 1994. He
attended the California Lutheran University where he graduated
with Honors in Business Management and Accounting. Mr. Case had
been employed by Clear Vision, Inc. from 1994 until this company
was closed down in June 1999, and currently serves as a Director
and Secretary/Treasurer of the Company.
(c) Thomas W. Maher, Chief Financial Officer.
Mr. Maher, age 56, started with the Company in 1998. He earned
an M.B.A. both in Finance and Economics from the University of
Detroit, and a B.S. degree in 1969 in marketing from the same
school. From 1995 to 1998, Mr. Maher served as the Chief
Financial Officer and Chief Operating Officer of Internet
Business Broadcasting, Inc. Prior to that time, beginning in
1987, he held the position of Chief Financial Officer of On-Tel,
Inc. His responsibilities in these positions have extended past
the scope of finance and into such areas as project management,
personnel, administration and legal functions.
(d) Eric Lewis, M.D., Director.
Dr. Lewis, age 52, started with the Company in 1996. He
served as President of Clear Vision, Inc. from 1995 until its
close, and member of the Board of Directors of Chaos Group, Inc.
prior to its sale in August 1999. Dr. Lewis has maintained a
cosmetic surgery practice in Beverly Hills California for the
past 20 years. Dr. Lewis graduated from the University of
California at Los Angeles in 1976.
(e) James V. Crestani, Director.
Mr. Crestani, age 50, started with the Company in 1996. He
has served as CEO of Southland Title Company in San Diego,
California for in excess of fifteen years. In this position, he
is active in all areas of real property finance and title
insurance.
(f) George A. Jones, Director.
Mr. Jones, age 50, started with the Company in 1996. He is
a member of the Board of Directors and General Chairman of
Brotherhood of Railroad Signalman (BRS). Mr. Jones is also Vice
Chairman, Board of Directors, Rio Grande Employees Hospital
Association. He also serves as Utah State Legislative
Representative, and is a member of the Public Law Board. Mr.
Jones has held these paid positions for in excess of five years.
ITEM 6. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term compensation
Awards Payouts
Name and Year Salary Bonus Other Restricted Securities LTIP All Other
principal ($) ($) Annual Stock Under- Payouts Compen-
position Compen- Award(s) lying ($) sation
sation ($) options/ ($)
($) SAR/s
($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Wm
Michael
Reynolds
President
CEO 1999 120,000 0 0 0 0 0 0
1998 120,000 0 0 0 0 0 0
Ronnie
Case,
Sec./Tre
Sr. VP 1999 36,000 0 0 0 0 0 0
1998 36,000 0 0 0 0 0 0
Thomas
W.
Maher,
Chief
Fin Off. 1999 48,000 0 0 0 0 0 0
1998 48,000 0 0 0 0 0 0
OPTION/SAR GRANTS IN LAST FISCAL YEAR
[Individual Grants]
Name Number of Percent of Total Exercise or Base Expiration Date
Securities options/SARs price ($/Sh)
Underlying granted to
Options employees in
SARs fiscal year
Granted (#)
(a) (b) (c) (d) (e)
Wm
Michael
Reynolds
President
CEO 0 - - -
Ronnie
Case,
Sec./Tre
/Sr. VP 0 - - -
Thomas
W.
Maher,
Chief
Fin Off. 0 - - -
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. Finally, 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.
There are no relationships, transactions, or proposed
transactions to which the Company was or is to be a party, in
which any of the named persons set forth in Item 5 had or is to
have a direct or indirect material interest.
ITEM 8. DESCRIPTION OF SECURITIES.
General Description.
The Articles of Incorporation authorize the issuance of
100,000,000 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; and (c) 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) special voting rights; (b) preference as to
dividends or interest; (c) preemptive rights to purchase in new
issues of Shares; (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 amendments thereto, and Bylaws of the Company,
attached as Exhibits to this Form 10-SB. As of November 17,
1999, the Company had 17,006,167 shares of common stock issued
and outstanding. There are no preferred shares authorized in the
Articles of Incorporation.
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 82,993,833 Shares of common 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 has engaged the services of Interwest Transfer,
1981 East 4800 South, Salt Lake City, Utah 84117, to act as
transfer agent and registrar for the Company.
PART II.
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information.
The Company's Shares are traded in the Over-the-Counter
Bulletin Board (symbol LUMP) and the range of closing bid prices
shown below is as reported by this market. The quotations shown
reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on September 30, 1999
High Low
First Quarter 0.28 0.06
Second Quarter 0.29 0.00
Third Quarter 0.31 0.21
Fourth Quarter 0.27 0.14
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended September 30, 1998
High Low
Third Quarter * 0.50 0.25
Fourth Quarter 1.19 0.26
* The Shares commenced trading on the Bulletin Board on May 28,
1998.
(b) Holders of Common Equity.
As of November 17, 1999, there were 74 shareholders of record of the Company's
common stock.
(c) Dividend Information.
The Company has not declared or paid a cash dividend to
stockholders since it became a "C" corporation on March 25,
1987. The Board of Directors presently intends to retain any
earnings to finance Company operations and does not expect to
authorize cash dividends in the foreseeable future. Any payment
of cash dividends in the future will depend upon the Company's
earnings, capital requirements and other factors.
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 two most recent fiscal years, 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 Kurt D. Saliger,
C.P.A., 5000 West Oakey Boulevard, Suite A-4, Las Vegas, Nevada 89146.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
From November 6, 1998 to February 25, 1999, the Company
raised a total of $257,750 in gross offering proceeds from two
private offerings. Under the first offering in November 1998, a
total of 3,100,000 were issued for a total consideration of
$3,100 ($0.01 per share). Under the second offering, a total of
1,411,667 shares were sold for a total consideration of $226,750
(average of $0.16 per share).
All these shares were offered and sold only to sophisticated
investors under Rule 504 of Regulation D. There were no
commissions or discounts paid in connection with these offerings;
only normal offering expenses.
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.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Luminart Corp.
Thousand Oaks, California
I have audited the accompanying consolidated balance sheet
of Luminart Corp. and subsidiaries (the "Company") as of
September 30, 1999, and the related consolidated statement of
operations, changes in shareholders' equity and cash flows for
the year in the period ended September 30, 1999. These financial
statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Luminart Corp. as of September 30, 1999 in
conformity with generally accepted accounting principles.
Kurt D. Saliger, C.P.A. (Nevada State License No. 2335)
Las Vegas, Nevada
December 27, 1999
LUMINART CORP.
CONSOLIDATED BALANCE SHEET
September 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 7,472
Receivables 140,442
Inventories 801,319
Other Current Assets 15,962
TOTAL CURRENT ASSETS 965,195
PROPERTY AND EQUIPMENT, NET 603,140
COST IN EXCESS OF NET ASSETS OF
BUSINESS ACQUIRED, NET 83,833
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET 205,700
ORGANIZATION COSTS, NET 70,365
DEFERRED TAXES 82,805
TOTAL ASSETS $2,010,938
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 29,364
Accrued Liabilities 142,885
Current Portion of long-term debt 0
TOTAL CURRENT LIABILITIES 172,249
LONG-TERM DEBT 180,000
SHAREHOLDERS' EQUITY
Preferred Stock 685,000
Common Stock, $0.001 par value
Authorized 100,000,000 shares, issued
17,006,167 17,006
Additional Paid In Capital 3,054,167
Retained Earnings (Deficit) (2,097,435)
TOTAL SHAREHOLDERS' EQUITY 1,658,689
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,010,938
See accompanying notes to consolidated financial statements.
LUMINART CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
October 1, 1998 to September 30, 1999
Revenue $1,637,683
Cost of Revenue:
Cost of Goods Sold 628,489
Gross Profit 1,009,194
Operating Costs and Expenses:
Amortization and Depreciation 186,300
Selling, General and Administrative 763,246
Other Operating Costs 242,959
Total Operating Costs and Expenses 1,192,505
Operating Income (183,311)
Interest Expense 59,938
Income Before Taxes (243,249)
Income Tax Expense (Benefit) (82,705)
Net Income (160,544)
BASIC INCOME PER SHARE (0.01)
DILUTED INCOME PER SHARE (0.01)
AVERAGE SHARES USED IN PER SHARE COMPUTATIONS:
BASIC 17,006,167
DILUTED 18,056,167
See accompanying notes to consolidated financial statements.
LUMINART CORP.
CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY
September 30, 1999
Number Par Additional Retained
Of Value Paid In Earnings
Shares $0.001 Capital (Deficit)
Balance October 1, 1998 11,804,215 $11,804 $2,731,258 (1,936,891)
November 6, 1998 3,100,000 3,100 27,900
Issued for Cash
December 10, 1998 300,000 300 59,700
Issued for Cash
January 1, 1999 100,000 100 9,900
Issued per Consulting
Agreement
January 15, 1999 111,667 112 17,892
Issued for Cash
February 25, 1999 1,000,000 1,000 149,000
Issued for Cash
February 26, 1999 and 590,285 590 58,438
March 19, 1999 Issued per
Consulting Agreement
Net (Loss) October 1, 1998
To September 30, 1999 (160,544)
Balance September 30, 1999 17,006,167 17,006 $3,054,167 (2,097,435)
Preferred Stock
October 1, 1998 1,840,000 $685,000
Preferred Stock
September 30, 1999 1,840,000 $685,000
Total Shareholders' Equity
September 30, 1999 $1,658,689
See accompanying notes to consolidated financial statements.
LUMINART CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
October 1, 1998 to September 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (160,544)
Adjustments to reconcile net income
To net cash provided by (used for)
Operating activities:
Amortization and Depreciation 186,300
Changes in Operating Assets and Liabilities
Increase in Accounts Receivable (149,652)
Increase in Inventories (102,952)
Decrease in Accounts Payable (47,727)
Increase in Accrued Liabilities 13,499
Net Cash Used In Operating Activities (161,076)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (180,489)
Increase in Deferred Taxes (82,705)
Net Cash Used in Investing Activities 263,194
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Long-Term Debt 159,000
Proceeds from Sale of Common Stock 259,004
Net Cash Provided By Financing Activities 418,004
NET INCREASE (DECREASE) IN CASH (6,266)
Cash, October 1, 1998 13,738
Cash, September 30, 1999 7,472
See accompanying notes to consolidated financial statements.
LUMINART CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Luminart Corp. (the "Company") is a technology company which
is a designer, developer, manufacturer, and marketer of
proprietary sign making products for the worldwide marketplace.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reporting amounts
in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements of the Company include
the accounts of the Company and all its wholly-owned
subsidiaries. All significant intercompany transactions and
balances are eliminated.
Revenue Recognition
Revenue is generally recognized when the Company has
completed substantially all manufacturing and/or sign development
to customer specifications, factory testing has been completed
and the product has been shipped. Additionally, for sign systems
where installation requirements are the responsibility of the
Company and payment terms are related to installation completion,
revenue is generally recognized when the system has been shipped
to the customer's final site for installation.
Inventories
Inventories are valued at the lower of average cost or
market. Inventories consisted of the following at September 30, 1999:
Raw Material $ 592,594
Work in Process 0
Finished Goods 208,725
$ 801,319
Property and Equipment
Property and equipment are recorded at cost and depreciated
on a straight-line basis over their estimated useful lives as
follows:
Leasehold improvements 15 years
Manufacturing equipment 7 years
Computer equipment, office
furniture and other 5-7 years
Cost in Excess of Net Assets of Business Acquired, Net
Cost in excess of net assets of business acquired is
amortized on a straight-line basis over 15 years. This
represents the excess of the cost of acquiring the Ecosphere
Environmental Systems business over the fair value of net assets
received as of the acquisition date by $100,000, net of the
accumulated amortization of $16,667 at September 30, 1999.
Capitalized Software Development Costs
Certain software development costs are capitalized when
incurred. Capitalization of software development costs begins
upon the establishment of technological feasibility. The
establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development
costs require considerable judgment by management with respect to
certain external factors, including, but not limited to,
anticipated future revenues, estimated economic life and changes
in software and hardware technologies. The capitalized software
development costs would be adjusted to fair market value if
significant facts and circumstances altered the Company's
original assumptions and rationale.
Unamortized capitalized software development costs
determined to be in excess of the net realizable value of the
product are expensed immediately.
Amortization of capitalized software costs is provided by
the straight-line method over the remaining estimated economic
life of the product. An original estimated economic life of 15
years is assigned to capitalized software development of
$239,651, net of accumulated amortization of $33,951 at September
30, 1999.
Organization Costs
Organization costs are capitalized when incurred and are
amortized on a straight-line basis over a sixty (60) month
period. Organization costs are $86,017, net of accumulated
amortization of $15,832 at September 30, 1999.
Income Taxes
The liability method as prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes" ("FAS 109"), is used in accounting for income taxes.
At September 30, 1999 income tax expense was zero due to net
operating loss carryforwards available for tax purposes.
Income Per Share
In February 1997, the Financial Accounting Standards Board
issued SFAS 128, "Earnings Per Share" ("FAS 128"), which replaces
the presentation of primary and fully diluted earnings per share
with the presentation of basic and diluted earnings per share.
Basic income per share is computed by dividing net income
available to common shareholders by the weighted average common
shares outstanding for the period. Diluted income per share is
computed giving effect to all potentially dilutive common shares.
Potentially dilutive common shares may consist of incremental
shares issuable upon the exercise of stock options adjusted for
the assumed repurchase of the Company's common stock at the
average market price.
NOTE 2 - PROPERTY AND EQUIPMENT
The Company's property and equipment consisted of the
following at September 30, 1999:
Leasehold improvements $ 81,860
Manufacturing equipment 662,731
Computer equipment, office furniture
and other 162,327
906,918
Less: Accumulated depreciation (303,778)
$ 603,140
NOTE 3 - ACCRUED LIABILITIES
The Company's accrued liabilities consisted of the following at September 30,
1999:
Payroll and related $ 82,947
Accrued interest 59,938
$ 142,885
NOTE 4 - COMMON AND PREFERRED STOCK
Description and Dividends
At September 30, 1999 the Company was authorized to issue
100,000,000 shares of common stock, $0.001 par value. The common
stock is a publicly traded Over the Counter Bulletin Board Stock
with the symbol LUMP. As of September 30, 1999, 17,006,167
shares of common stock were issued and outstanding of which
5,868,863 are restricted and the remaining 11,137,304 are free
trading.
At September 30, 1999 the Company was authorized to issue
10,000,000 shares of preferred stock, $0.001 par value. The
preferred stock issued at September 30, 1999 consists of
1,840,000 preferred shares outstanding for consideration of
$685,000 bearing interest at the rate of seven percent (7%) per
annum.
Since inception, the Company has not declared or paid a cash dividend.
Stock Options
The Company has stock option plans that provide for the issuance of up to
1,000,000 shares of common stock to directors and consultants.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases certain facilities which require future
rental payments. These rental arrangements do not impose any
financing restrictions on the Company or contain contingent
rental provisions.
Future minimum rental commitments under operating leases
with noncancelable lease terms in excess of one year were as
follows at September 30, 1999:
2000 $ 82,171
2001 89,635
2002 0
2003 0
2004 0
Thereafter 0
$ 171,806
Operating lease rental expense was $108,924 for the twelve
month period ended September 30, 1999.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Luminart Corp.
Oxnard, California
I have audited the accompanying consolidated balance sheet
of Luminart Corp. and subsidiaries (the "Company") as of
September 30, 1998, and the related consolidated statement of
operations, changes in shareholders' equity and cash flows for
the period January 1, 1998 to September 30, 1998. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Luminart Corp. as of September 30, 1998 and
the consolidated results of its operations and its cash flows for
the period January 1, 1998 to September 30, 1998 in conformity
with generally accepted accounting principles.
Kurt D. Saliger, C.P.A. (Nevada State License No. 2335)
Las Vegas, Nevada
November 26, 1998
LUMINART CORP.
CONSOLIDATED BALANCE SHEET
September 30, 1998
ASSETS
Current Assets:
Cash in Banks $ 13,738
Accounts Receivable 9,210
Inventory 698,367
Other Current Assets 24,071
Total Current Assets 745,386
Other Assets:
Property and Equipment, Net 485,862
Cost in Excess of Net Assets of
Business Acquired, Net 92,500
Capitalized Software Development
Costs, Net 221,677
Organization Costs, Net 73,223
Total Assets $1,618,648
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 77,091
Accrued Liabilities 29,386
Current Portion of Long Term Debt 0
Total Current Liabilities 106,477
Long Term Liabilities:
Note Payable (Noncurrent) 21,000
Total Long Term Liabilities 21,000
Shareholders' Equity:
Preferred Stock 685,000
Common Stock
11,804
Additional Paid-In Capital 2,731,258
Accumulated Deficit (1,936,891)
Total Shareholders' Equity 1,491,171
Total Liabilities & Shareholders' Equity $1,618,648
See accompanying Notes to Consolidated Financial Statements
LUMINART CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
January 1, 1998 to September 30, 1998
Revenue $765,141
Cost of Goods Sold 80,321
Gross Profit 684,820
Operating Costs & Expenses:
Amortization and Depreciation 63,600
Selling, General & Administrative 327,947
Other Operating Costs 15,017
Total Operating Costs and Expenses 406,564
Operating Income 278,256
Interest Expense 18,987
Income Before Income Taxes 259,269
Income Tax Expense 0
Net Income $259,269
Basic Income Per Share 0.02
Diluted Income Per Share 0.02
Average Shares Used in Per Share Calculations:
Basic 11,804,215
Diluted 11,804,215
See accompanying Notes to Consolidated Financial Statements
LUMINART CORP.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
September 30, 1998
Number Par Additional Retained
Of Value Paid In Earnings
Shares $0.001 Capital (Deficit)
Balance January 1, 1998 9,354,215 $9,354 $2,378,708 ($2,196,160)
April 28, 1998 Asset
Purchase Agreement 1,100,000 $1,100 $ 218,900
July 10, 1998 Consulting
Agreement 500,000 $ 500 $ 49,500
July 15, 1998 Consulting
Agreement 650,000 $ 650 $ 64,350
September 15, 1998
Consulting Agreement 200,000 $ 200 $ 19,800
Net Income January 1,
1998 to September 30,
1998 $259,269
Balance September 30,
1998 11,804,215 $ 11,804 $2,731,258 ($1,936,891)
Preferred Stock
January 1, 1998 1,840,000 $685,000
Preferred Stock
September 30, 1998 1,840,000 $685,000
Total Shareholders'
Equity
September 30, 1998 $1,491,171
See accompanying Notes to Consolidated Financial Statements
LUMINART CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
January 1, 1998 to September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 259,269
Adjustments to reconcile net income to net
cash provided for (used by) operating activities:
Amortization and Depreciation 63,600
Changes in operating Assets and Liabilities:
Decrease in Accounts Receivable 119,162
Increase in Inventories (631,017)
Increase in Accounts Payable (6,221)
Decrease in Accrued Liabilities (24,522)
Net Cash (Used For) Operating Activities $(219,729)
CASH FLOWS FROM INVESTING ACTIVITIES 0
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Long-Term Debt (225,084)
Proceeds from Sale of Common Stock 355,000
Net Cash Provided By Financing Activities 129,916
Net Increase (Decrease) in Cash $ (89,813)
Cash, January 1, 1998 103,551
Cash, September 30, 1998 13,738
See accompanying Notes to Consolidated Financial Statements
LUMINART CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Luminart Corp. (the "Company") is a technology company
which is a designer, developer, manufacturer, and marketer of
transparent and translucent sign making products for the
worldwide marketplace.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
Principles of Consolidation:
The consolidated financial statements of the Company include
the accounts of the Company and all its wholly-owned
subsidiaries. All significant intercompany transactions and
balances are eliminated.
Revenue Recognition:
Revenue is generally recognized when the Company has
completed substantially all manufacturing and/or sign development
to customer specifications, factory testing has been completed
and the product has been shipped. Additionally, for sign
systems where installation requirements are the responsibility of
the Company and payment terms are related to installation
completion, revenue is generally recognized when the system has
been shipped to the customer's final site for installation.
Inventories:
Inventories are valued at the lower of average cost or
market. Inventories consisted of the following at September 30, 1998:
Raw Material $530,163
Work In Progress 0
Finished Goods 168,204
$698,367
Property and Equipment:
Property and equipment are recorded at cost and depreciated
on a straight-line basis over their estimated useful lives as
follows:
Leasehold Improvements 15 years
Manufacturing Equipment 7 years
Computer Equipment, Office Furniture and
Other 5-7 years
Cost in Excess of Net Assets of Business Acquired, Net:
Cost in excess of net assets of business acquired is
amortized on a straight-line basis over 15 years. This
represents the excess of the cost of acquiring the Echosphere
Environmental Systems business over the fair value of net assets
received as of the acquisition date by $100,000, net of
accumulated amortization of $7,500 at September 30, 1998.
Capitalized Software Development Costs:
Certain software development costs are capitalized when
incurred. Capitalization of software development costs begins
upon the establishment of technological feasibility. The
establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development
costs require considerable judgment by management with respect to
certain external factors, including, but not limited to,
anticipated future revenues, estimated economic life and changes
in software and hardware technologies. The capitalized software
development costs would be adjusted to fair value if significant
facts and circumstances altered the Company's original
assumptions and rationale.
Unamortized capitalized software development costs
determined to be in excess of the net realizable value of the
product are expenses immediately.
Amortization of capitalized software costs is provided by
the straight-line method over the remaining estimated economic
life of the product. An original estimated economic life of 15
years is assigned to capitalized software development costs of
$239,651, net of accumulated amortization of $17,974 at September
30, 1998.
Organization Costs:
Organization Costs are capitalized when incurred and are
amortized on a straight-line basis over a sixty (60) month
period. Organization costs are $86,017, net of accumulated
amortization of $12,794 at September 30, 1998.
Income Taxes:
The liability method as prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes" ("FAS 109"), is used in accounting for income taxes.
At September 30, 1998 income tax expense was zero due to net
operating loss carryforwards available for tax purposes.
Income Per Share:
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings Per Share" ("FAS 128"), which
replaces the presentation of primary and fully diluted earnings
per share with the presentation of basic and diluted earnings per
share. Basic income per share is computed by dividing net income
available to common shareholders by the weighted average common
shares outstanding for the period. Diluted income per share is
computed giving effect to all potentially dilutive common
shares. Potentially dilutive common shares may consist of
incremental shares issuable upon the exercise of stock options
adjusted for the assumed repurchase of the Company's common stock
at the average market price.
NOTE 2 - PROPERTY AND EQUIPMENT
The Company's property and equipment consisted of the following at September
30, 1998:
Leasehold Improvements $ 81,437
Manufacturing Equipment 506,864
Computer Equipment, Office Furniture and Other 159,944
748,245
Less: Accumulated Depreciation (262,383)
$ 485,862
NOTE 3 - ACCRUED LIABILITIES
The Company's accrued liabilities consisted of the following
at September 30, 1998:
Payroll and Related $10,399
Accrued Interest 18,987
$29,386
NOTE 4 - COMMON AND PREFERRED STOCK
Description and Dividends:
At September 30, 1998 the Company was authorized to issue
50,000,000 shares of common stock, $0.001 par value. The common
stock is a publicly traded Over The Counter Bulletin Board Stock
with the symbol LUMP. As of September 30, 1998, 11,804,215
shares of common stock were issued and outstanding of which
7,223,955 are restricted and the remaining 4,580,260 are free
trading.
At September 30, 1998 the Company was authorized to issue
10,000,000 shares of preferred stock, $0.001 par value. The
preferred stock issued at September 30, 1998 consists of
1,840,000 preferred shares outstanding for considerations of
$685,000 bearing interest at the rate of seven percent (7%) per
annum.
Since inception, the Company has not declared or paid a cash
dividend.
Stock Options:
The Company has stock option plans that provide for the
issuance of up to 1,000,00 shares of common stock to directors.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments:
The Company leases certain facilities which require future
rental payments. These rental arrangements do not impose any
financing restrictions on the Company or contain contingent
rental provisions.
Future minimum rental commitments under operating leases
with noncancelable lease terms in excess of one year were as a
follows at September 30, 1998:
1999 $ 98,844
2000 42,684
2001 24,899
2002 0
2003 0
Thereafter 0
$166,427
Operating lease rental expense was $103,241 for the nine month
period ended September 30, 1998.
Litigation:
On September 8, 1998 the Company was sued by Linda Lampenius
aka Linda Brava ("Plaintiff") in Los Angeles Superior Court for
the County of Los Angeles. The lawsuit claims breach of
contract, breach of implied covenant of good faith and fair
dealing, fraud, breach of fiduciary duty, claim and delivery,
conversion, declaratory relief and accounting. Plaintiff is
claiming damages collectively in excess of $750,000. The
Company is in the process of preparing a counterclaim against the
Plaintiff with causes of action sounding in contract and tort.
The Company intends to defend and prosecute the lawsuit
vigorously. Given the fact that the case is in its infancy, the
prediction of the outcome is unavailable as discovery has not yet
commenced.
The Company is also party to other routine legal proceedings
incidental to its business.
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.
LUMINART CORP.
Date: December 28, 1999 By: /s/ Wm. Michael Reynolds
Wm. Michael Reynolds, President
Special Power of Attorney
The undersigned constitute and appoint Wm. Michael Reynolds
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 U.S. 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
attorney-in-fact may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange 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/ Wm. Michael Reynolds President, Chief Executive December 28, 1999
Wm. Michael Reynolds Officer, Chairman of the
Board
/s/ Ronnie Case Secretary, Treasurer, December 28, 1999
Ronnie Case Director
/s/ James Crestani Director December 28, 1999
Frank X. McGarvey
/s/ George A. Jones Director December 28, 1999
Parker Smith
EXHIBIT INDEX
Exhibit Method of
Number Description Filing
2.1 Plan and Agreement of Merger See Below
2.2 Agreement and Plan of Reorganization See Below
3.1 Articles of Incorporation See Below
3.2 Articles of Amendment to the Articles of
Incorporation See Below
3.3 Certificate of Amendment to Articles of
Incorporation See Below
3.4 Certificate of Amendment of Amendment to
Articles of Incorporation See Below
3.5 Certificate of Amendment to Articles of
Incorporation See Below
3.6 Bylaws See Below
10.1 Management Contract (Wm. Michael Reynolds) See Below
10.2 Management Contract (Ronnie Case) See Below
21 Subsidiaries of the Registrant See Below
24 Special Power of Attorney See
Signature
Page
27 Financial Data Schedules See Below
99 Patent Abstract See Below
PLAN AND AGREEMENT OF MERGER
BETWEEN
PAST-TELL LIMITED
(A Nevada Corporation)
and
PAST-TELL LIMITED
(A Utah Corporation)
This plan and agreement of merger made and entered into this
25th day of March, 1987, by and between Past-Tell Limited, a
Nevada corporation (herein sometimes referred to as the "Nevada
Corporation" or Surviving Corporation"), and Past-Tell Limited, a
Utah corporation (herein sometimes referred to as the "Utah
Corporation"), said corporations hereinafter sometimes referred
to jointly as the "Constituent Corporations".
WITNESSETH:
Whereas, the Nevada Corporation is a corporation organized
and existing under the laws of the State of Nevada, its
Certificate of Incorporation having been filed in the office of
the Secretary of State of the State of Nevada on March 24, 1987,
and the registered office of the Nevada corporation being located
at One Fast First Street, Reno, Nevada 89501, County of Washoe,
and the name of its registered agent in charge thereof being The
Corporation Trust Company; and
Whereas, the total number of shares of stock which the
Nevada Corporation has authority to issue is 25,000,000 of which
375,000 shares are now issued and outstanding, all of which are
owned by the Utah Corporation; and
Whereas, the sole purpose of the merger agreed to herein is
to change the domicile of the Utah Corporation to Nevada; and
Whereas, the Utah Corporation is a corporation organized and
existing under the laws of the State of Utah, its Articles of
Incorporation having been filed in the office of the Secretary of
State of the State of Utah on the 5th day of July, 1984, and a
Certificate of Incorporation having been issued by said Secretary
of State on that date; and
Whereas, the aggregate number of shares which the Utah
Corporation has authority to issue is 25,000,000 of which
3,335,000 shares are presently issued and outstanding and
entitled to vote on the Plan and Agreement of Merger; and
Whereas, the Board of Directors of each of the Constituent
Corporations deems it advisable that the Utah Corporation be
merged into the Nevada Corporation on the terms and conditions
hereinafter set forth, in accordance with the applicable
provisions of the statues of the States of Nevada and Utah
respectively, which permit such merger;
Now therefore, in consideration of the promises and of the
agreements, convenants and provisions hereinafter contained, the
Nevada Corporation and the Utah Corporation, by their respective
Boards of Directors have agreed and do hereby agree, each with
the other as follows:
ARTICLE I
The Utah Corporation and the Nevada Corporation shall be
merged into a single corporation, in accordance with applicable
provision of the laws of the State of Utah and of the State of
Nevada, by the Utah Corporation merging into the Nevada
Corporation, which shall be the Surviving Corporation. Such
merger shall be effective upon the according of a certificate of
Ownership and Merger with the Secretary of State of Nevada.
ARTICLE II
Upon the merger becoming effective as provided by the
applicable laws of the State of Utah and of the State of Nevada
(the time when the merger shall so become effective being
sometimes herein referred to as the "effective date of the
merger"):
1. The two Constituent Corporations shall be a single
corporation, which shall be the Nevada Corporation as the
surviving corporation, and the separate existence of the
Utah Corporation shall cease except to the extent provided
by the laws of the State of Utah applicable to a corporation
after its merger into another corporation.
2. The Nevada Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities and
franchises, of a public or a private nature, of each of the
Constitute Corporations. All property, real or personal,
and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and
all and every other interest of, or belonging to, or due to
each of the Constituent Corporations, shall be taken and
deemed to be vested in the Surviving Corporation without
further act or deed; and the title to all real estate, or
any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by
reason of the merger.
3. The Nevada Corporation shall thenceforth be responsible
and liable for all of the liabilities and obligations of
each of the Constituent Corporations. Any claim existing or
action or proceeding pending by or against either of the
Constituent Corporations may be prosecuted to judgment as if
the merger had not taken place, or the Surviving Corporation
may be substituted in its place, and neither the rights or
creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by the merger.
4. The aggregate amount of the net assets of the
Constituent Corporations which was available for the payment
of dividends immediately prior to the merger, to the extent
that the value thereof is not transferred to stated capital
by the issuance of shares of otherwise, shall continue to be
available for the payment of dividends by the Surviving
Corporation.
5. The By-Laws of the Nevada Corporation as existing and
constituted immediately prior to the effective date of
merger shall by and constitute the By-Laws are attached
hereto as Exhibit A and by this reference made a part
hereof.
6. The Board of Directors and the members thereof, and the
officers of the Nevada Corporation or Surviving Corporation
shall be as follows: Lee Perking-President and Director,
Don Schroader-Vice President and Director, and C. Patrick
Reynolds-Secretary/Treasurer and Director, and Dale
Robertson-Director; immediately prior to the effective date
of merger shall be and constitute the Board of Directors,
and the members thereof, and the officers of the Surviving
Corporation.
ARTICLE III
The Certificate of Incorporation of the Nevada Corporation
shall not be amended in any respect, by reason of this Plan and
Agreement of Merger, and said Certificate of Incorporation, as
filed in the office of the secretary of State of the State of
Nevada on March 24, 1987, shall constitute the Certificate of
Incorporation of the Surviving Corporation, until further amended
in the manner provided bylaw, and is set forth in Exhibit B
attached hereto and by this reference made a part hereof. The
Certificate of Incorporation as set forth in said Exhibit B and
separate and apart from this Plan and Agreement of Merger, may be
certified separately as the Certificate of Incorporation of the
Surviving Corporation.
ARTICLE IV
The manner and basis of converting the shares of each of the
Constituent Corporations into shares of the Surviving Corporation
is as follows:
1. The 375,000 shares of stock of the Nevada Corporation
now owned and held by the Utah Corporation shall be
cancelled and no shares of stock of the Nevada Corporation
shall be issued in respect, thereof, and the capital of the
Nevada Corporation shall be deemed to be reduced by the
amount of Three Hundred Seventy-Five Dollars ($375), the
amount represented by said 375,000 shares of stock.
2. Each share of the Utah Corporation shall be converted
into one fully paid and nonassessable share of capital stock
of the Nevada Corporation. After the effective date of the
merger, each owner of an outstanding certificate or
certificates theretofore representing shares of the Utah
Corporation shall be entitled, upon surrendering such
certificate or certificates to the Surviving Corporation, to
receive in exchange therefor a certificate or certificates
representing the number of shares of stock of the Surviving
Corporation into which the shares to the Utah Corporation
theretofore represented by the surrendered certificate or
certificates shall have been converted as hereinbefore
provided. Until so surrendered; each outstanding
certificate which, prior to the effective date of the
merger, represented shares of the Utah Corporation shall be
deemed for all corporate purposes, to represent the
ownership of the common stock of the Surviving Corporation
on the basis hereinbefore provided.
ARTICLE V
The Utah Corporation shall pay all expenses of carrying this
agreement of merger into effect and accomplish the merger herein
provided for.
ARTICLE VI
If at any time the Surviving Corporation should consider or
be advised that any further assignment or assurance in law is
necessary or desirable to vest in the Surviving Corporation the
title to any property or rights of the Utah Corporation, the
proper officers and directors of the Utah Corporation shall, and
will execute and make all such proper assignments and assurances
in law and do all things necessary or proper to thus vest such
property or rights in the Surviving Corporation, and otherwise to
carry out the purposes of this Plan and Agreement of Merger.
ARTICLE VII
This Plan and Agreement of Merger has been submitted to and
approved by the shareholders of each of the Constituent
Corporations, as provided by law, and shall take effect upon the
filing of the Certificate of Ownership and Merger with the
Secretary of State of the State of Nevada. Anything herein or
elsewhere to the contrary notwithstanding, this Plan and
Agreement of Merger may be abandoned by either of the constituent
corporations by an appropriate resolution of its board of
directors at any time prior to its approval or adoption by the
shareholders and stockholders thereof, or by the mutual consent
of the Constituent Corporations evidenced by appropriate
resolutions of their respective boards of directors, at any time
prior to the effective date of the merger.
In witness whereof, the Nevada Corporation and the Utah
Corporation pursuant to the approval and authority duly given by
resolutions adopted by their respective boards of directors have
caused this Plan of Agreement of Merger to be executed by the
President and Attested by the secretary of each party hereto, and
the corporate seal affixed.
PAST-TELL LIMITED PAST-TELL LIMITED
A Utah Corporation A Nevada Corporation
By: /s/ Lee Perkins By: /s/ Lee Perkins
Lee Perkins, President Lee Perkins, President
By: /s/ C. Patrick Reynolds By: /s/ C. Patrick Reynolds
C. Patrick Reynolds, Secretary C. Patrick Reynolds, Secretary
State of Utah )
) ss.
County of Salt Lake City )
On the 12th day of March, 1987 personally appeared before
me, a Notary Public, Lee Perkins, the President of Past-Tell
Limited, a Utah Corporation, and Past-Tell Limited, a Nevada
Corporation, who duly acknowledged to me that he executed this
Agreement pursuant to a Resolution of the Board of Directors of
said Corporations and shareholder approval thereof.
/s/
Notary Public
State of Utah )
) ss.
County of Salt Lake City )
On the 12th day of March, 1987, personally appeared before
me, a Notary Public, C. Patrick Reynolds, the Secretary of Past-
Tell Limited, a Utah Corporation, and Past-Tell Limited, a Nevada
Corporation, who duly acknowledged to me that he executed this
Agreement pursuant to a Resolution of the Board of Directors of
said Corporations and shareholder approval thereof.
/s/
Notary Public
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made
this 10th day of January, 1997, among Chaos Group, Inc., a Nevada
corporation ("Chaos"); Clear Vision, Inc., a Nevada corporation,
any and all its subsidiaries and fictitious names (hereinafter
collectively referred to as "CVI" and its shareholders
(hereinafter "Shareholders").
Chaos wishes to acquire all the issued and outstanding stock
of CVI for and in exchange for stock of Chaos, in a stock for
stock transaction intending to qualify as a tax-free exchange
pursuant to 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended. The parties intend for this Plan to represent the
terms and conditions of such tax-free reorganization, which Plan
the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the
Shareholders of CVI agree to assign, transfer, and deliver to
Chaos, free and clear of all liens, pledges, encumbrances,
charges, restrictions or known claims of any kind, nature or
description, all of their shares of CVI stock, and Chaos agrees
to acquire such shares on the date thereof, or as soon as
practicable thereafter, by issuing and delivering in exchange
therefore solely common shares of Chaos's stock, par value
$0.001, in the aggregate of 6,985,415 shares, subject to the
provisions of this Plan, which shall represent, as a result
thereof, approximately eighty seven percent (87%) of the then
issued and outstanding shares of Chaos. Subsequent to the date
hereof, the Shareholders shall, upon the surrender of the CVI
certificates representing their respective beneficial and record
ownership of all of the issued and outstanding shares of CVI to
Chaos, as soon as practicable hereafter, and further provided an
exemption from the registration provisions of Section 5 of the
Securities Act of 1933 is available for the issuance thereof, the
Shareholders shall be entitled to receive a certificate(s)
evidencing shares of the exchanged Chaos stock as provided for
herein. Upon the consummation of the transaction contemplated
herein, Chaos shall be the beneficial and record owner of all of
the issued and outstanding stock of CVI.
1.2 Anti-Dilution. For all relevant purposes of this Plan,
the number of Chaos shares to be issued and delivered pursuant to
this Plan shall be appropriately adjusted to take into account
any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in Chaos common stock, which
may occur between the date of the execution of this Plan and the
date of the delivery of such shares.
1.3 Delivery of Certificates. The Shareholders shall
transfer to Chaos at the closing provided for in Section 2 (the
""losing"" the shares of common stock of CVI listed opposite
their respective names on Exhibit A hereto (the "CVI shares") in
exchange for shares of the common stock of Chaos as outlined
above in Section 1.1 hereof (the "Chaos Stock"). All of such
shares of Chaos of Chaos as outlined above in Section 1.1 hereof
(the "Chaos Stock"). All of such shares of Chaos stock shall be
issued at the closing to the Shareholders, in the numbers shown
opposite their respective names in Exhibit "A". The transfer of
CVI shares by the Shareholders shall be effected by the delivery
to Chaos at the Closing of certificates representing the
transferred shares endorsed in blank or accompanied by stock
powers executed in blank, with all signatures guaranteed by a
national bank and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution
hererof, and from time to time thereafter, the Shareholders shall
execute such additional instruments and take such other action as
Chaos may request in order to more effectively sell, transfer and
assign clear title and ownership in the CVI shares to Chaos.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall
be held at the law offices of Daniel W. Jackson, Esq. On or
before February 28, 1997 or at such other time or place as may be
mutually agreed upon in writing by the parties. The Closing may
also be accomplished by wire, express mail or other courier
service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized
representatives. In any event, the closing of the transactions
contemplated by this Plan shall be effected as soon as
practicable after all of the conditions contained herein have
been satisfied.
2.2 Closing Events. At the Closing, each of the respective
parties hereto shall execute, acknowledge and deliver (or shall
cause to be executed, acknowledged, and delivered) any
agreements, resolutions, rulings, or other instruments required
by this Plan to be so delivered at or prior to Closing, together
with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to
effectuate or evidence the transaction contemplated hereby.
Section 3
Representations, Warranties and Covenants of Chaos
Chaos represents and warrants to, and covenants with, the
Shareholders and CVI as follows:
3.1 Corporate Status. Chaos is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada. Chaos has full corporate power and is
duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry
on its business on all material respects as it is now being
conducted, and there is no jurisdiction in which the character
and location of the assets owned by it, or the nature of the
business transacted by it, requires qualification. Included in
the Chaos schedules (defined below) are complete and correct
copies of its Articles of Incorporation and By-Laws as in effect
on the date hereof. The execution and delivery of this Plan does
not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Chaos' Articles of
Incorporation or By-Laws. Chaos has taken all action required by
law, its Articles of Incorporation, its By-Laws, or otherwise, to
authorize the execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of Chaos
as of the date hereof consists of 20,000,000 common shares, par
value $0.001. The common shares of Chaos issued and outstanding
are fully paid, non-assessable shares. There are no outstanding
options, warrants, or calls or any understanding, agreements,
commitments, contracts or promises with respect to the issuance
of Chaos's common stock or with regard to any options, warrants
or other contractual rights to acquire any of Chaos's authorized
but unissued common shares.
3.3 Financial Statements.
(a) Chaos hereby warrants and covenants to CVI that
the audited financial statements for its period ended July
31, 1996, fairly and accurately represent the financial
condition of Chaos and that the same will be prepared along
with the period ended as of the date of Closing, for
consolidation by an independent public accountant, which
shall be prepared in accordance with generally accepted
accounting principles consistently applied, on or before the
expiration of forty-five days from the date of Closing.
(b) Chaos hereby warrants and represents that the
audited financial statements for the periods set forth in
subparagraph (a) supra, fairly and accurately represent the
financial condition of Chaos as submitted heretofore to CVI
for examination and review.
3.3 Conduct of Business. Chaos is a development stage
company and has not engaged in any operational activities prior
to the date hereof.
3.4 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of Chaos,
threatened by or against or effecting Chaos at law or in equity,
or before any governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind; Chaos does not
have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.5 Books and Records. From the date hereof, and for any
reasonable period subsequent thereto, Chaos and its present
management will (I) give to the Shareholders and CVI, or their
duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other
corporate documents and properties so that the Shareholders and
CVI, or their duly authorized representatives, may inspect them;
and (ii) furnish such information concerning the properties and
affairs of Chaos as the Shareholders and CVI, or their duly
authorized representatives, may reasonably request. Any such
request to inspect Chaos's books shall be directed to Chaos'
counsel, Daniel W. Jackson, at the address set forth herein under
Section 10.4 Notices.
3.6 Confidentiality. Until the Closing (and thereafter if
there is no Closing), Chaos and its representatives will keep
confidential any information which they obtain from the
Shareholders or from CVI concerning its properties, assets and
the proposed business operations of CVI. If the terms and
conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on February 28, 1997 or
otherwise waived or extended in writing to a date mutually
agreeable to the parties hereto, Chaos will return to CVI all
written matter with regard to CVI obtained in connection with the
negotiations or consummation of this Plan.
3.7 Conflict with Other Instruments. The transactions
contemplated by this Plan will not result in the breach of any
term or provision of, or constitute a default under any
indenture, mortgage, deed of trust, or there material agreements
or instrument to which Chaos was or is a party, or to which any
of its assets or operations are subject, and will not conflict
with any provision of the Articles of Incorporation or By-Laws of
Chaos.
3.8 Corporate Authority. Chaos has full corporate power
and authority to enter into this Plan and to carry out its
obligations hereunder and will deliver to the Shareholders and
CVI, or their respective representatives, at the Closing, a
certified copy of resolutions of its Board of Directors
authorizing execution of this Plan by its officers and
performance thereunder.
3.9 Consent of Shareholders. Chaos hereby warrants and
represents that the Shareholders of Chaos, being the owners of a
majority of the issued and outstanding stock of the Corporation
consented in writing to the authorization to execute an Agreement
and Plan of Reorganization as between Chaos and CVI pursuant to a
stock-for-stock transaction in which Chaos would acquire all of
the issued and outstanding shares of CVI in exchange for the
issuance of a total of 6,985,415 common shares of Chaos.
3.10 Special Covenants and Representations Regarding the
Exchanged Chaos Stock. The consummation of this Plan and the
transactions herein contemplated include the issuance of the
exchanged Chaos shares to the Shareholders, which constitutes an
offer and sale of securities under the Securities Act of 1933, as
amended, and applicable states' securities laws. Such
transaction shall be consummated in reliance on exemptions from
the registration and prospectus requirements of such statues
which depend interlace on the circumstances under which the
Shareholders acquire such securities. In connection with the
reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing,
Shareholders shall cause to be delivered to Chaos a Letter(s) of
Investment Intent in the form attached hereto as Exhibit C and
incorporated herein by reference.
3.11 Undisclosed or Contingent Liabilities. Chaos hereby
represents and warrants that it has no undisclosed or contingent
liabilities which have not been disclosed to CVI.
3.12 Information. The information concerning Chaos set
forth in this Plan, and the Chaos schedules attached hereto, are
complete and accurate in all material respects and do not
contain, or will not contain, when delivered, any untrue
statement or a material fact or omit to state a material fact the
omission of which would be misleading to CVI in connection with
this Plan.
3.13 Title and Related Matters. Chaos has good and
marketable title to all of its properties, interests in
properties, and assets, real and personal, which are reflected,
or will be reflected, in the Chaos balance sheets, free and clear
of any and all liens and encumbrances.
3.14 Contracts or Agreements. Chaos is not bound by any
material contracts, agreements or obligations which it has not
already disclosed to CVI.
3.15 Governmental Authorizations. Chaos has all licenses,
franchises, permits and other government authorizations that are
legally required to enable it to conduct its business in all
material respects as conducted on the date hereof.
3.16 Compliance with Laws and Regulations. Chaos has
complied with all applicable statutes and regulations of any
federal, state, or other applicable jurisdiction or agency
thereof, except to the extent that noncompliance would not
materially and adversely effect the business, operations,
properties, assets, or condition of chaos or except to the extent
that noncompliance would not result in the occurrence of any
material liability, not otherwise disclosed to CVI.
3.17 Approval of Plan. The Board of Directors of Chaos has
authorized the execution and delivery of this Plan by Chaos and
have approved the Plan and the transactions contemplated hereby.
Chaos has full power, authority, and legal right to enter into
this Plan and to consummate the transactions contemplated hereby.
3.18 Investment Intent. Chaos is acquiring the CVI shares
to be transferred to it under this Plan for investment and no
with a view to the sale or distribution thereof, and Chaos has no
commitment or present intention to liquidate CVI or to sell or
otherwise dispose of the CVI shares.
3.19 Unregistered Shares and Access to Information. Chaos
understands that the offer and sale of the CVI shares have not
been registered with or reviewed by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or with
or by any state securities law administrator, and no federal,
state securities law administrator has reviewed or approved any
disclosure or other material concerning CVI or the CVI shares.
Chaos has been provided with and reviewed all information
concerning CVI, the CVI shares as it has considered necessary or
appropriate as a prudent and knowledgeable investor to enable it
to make an informed investment decision concerning the CVI
shares. Chaos has made an investigation as to the merits and
risks of its acquisition of the CVI Shares and has had the
opportunity to ask questions of, and has received satisfactory
answers from, the officers and directors of CVI concerning CVI,
the CVI shares and related matters, and has had an opportunity to
obtain additional information necessary to verify the accuracy of
such information and to evaluate the merits and risks of the
proposed acquisition of the CVI shares.
3.20 Chaos Schedules. Chaos has delivered to CVI the
following items listed below, hereafter referred to as the "Chaos
Schedules", which is hereby incorporated by reference and made a
part hereof. A certification executed by a duly authorized
officer of Chaos on or about the date within the Plan is executed
to certify that the Chaos Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and By-
Laws
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officer's Certificate as required under Section 6.2 of
the Plan;
(f) Opinion of counsel as required under Section 6.4 of the
Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of CVI
CVI represents and warrants to, and covenants with, the
Shareholders and Chaos as follows:
4.1 Corporate Status. CVI is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Nevada incorporated on February 22, 1995. CVI has full
corporate power and is dully authorized, qualified, franchised,
and licensed under all applicable laws, regulations, ordinances,
and orders of public authorities to own all of its properties and
assets and to carry on its business on all material respects as
it is now being conducted, and there is no jurisdiction in which
the character and location of the assets owned by it, or the
nature of the business transacted by it, requires qualification.
Included in the CVI schedules (defined below) are complete and
correct copies of its Articles of Incorporation and By-Laws as in
effect on the date hereof. The execution and delivery of this
Plan does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of CVI's
Articles of Incorporation or By-Laws. CVI has taken all action
required by law, its Articles of Incorporation, its By-Laws, or
otherwise, to authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of CVI as
of the date hereof consists of 20,000,000 common shares. As of
the date hereof all common shares of CVI issued and outstanding
are fully paid, non-assessable shares. There are no outstanding
options, warrants, or calls or any understanding, agreements,
commitments, contracts or promises with respect to the issuance
of CVI's common stock or with regard to any options, warrants or
other contractual rights to acquire any of CVI's authorized but
unissued common shares.
4.3 Conduct of Business. CVI has been in the business of
CVI as organized for the purpose of manufacturing and selling
advertising materials which employ a patented "luminite" gel
technology. CVI has acquired the non-exclusive right to market
signs and signage type products that employ this patented
technology. In addition, CVI has acquired a large format digital
printer that allows it to produce other forms of advertising
signage.
It is the management's intent to develop CVI into a source
for a variety of advertising signs, banners, posters, etc. The
company plans to provide both source materials and operations,
the Company's wholly owned subsidiary would provide teams of
advertising specialists to retailers for consultation, advice and
promotional planning with the expectation that CVI's product will
be employed by the retailer in the execution of the advertising
promotion.
The centerpiece for CVI's products is the "luminite" gel
signs. These signs employ a translucent sign that is illuminated
by means of a back-lit light box. The resulting sign provides a
brilliant visual presentation. The company hopes that this
"luminite" gel technology will compete successfully with neon
signs and other similar products.
The company plans eventually to establish a leasing division
or wholly owned subsidiary that would work in conjunction with
CVI. This leasing operation would purchase the hardware required
for the use of "luminite" gel signs. These light boxes would be
leased to the retailers by the new leasing company. Management
believes that by offering hardware leases with the "luminite" gel
signs, the Company will be able to compete more successfully
against existing alternative signage products.
CVI will use its best efforts to maintain and preserve its
business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of Chaos,
enter into any material commitments except in the ordinary course
of business.
CVI agrees that CVI will conduct itself in the following
manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change
will be made in the Certificate of Incorporation or Bylaws
of CVI.
(b) Capitalization, etc. CVI will not make any change in
its authorized or issued shares of any class, declare or pay
any dividend or other distribution, or issue, encumber,
purchase or otherwise acquire any of its shares of any
class.
4.4 Options, Warrants and Rights. Although CVI intends to
enact and put into effect various management and employee benefit
plans in the near future, as of the date hereof, CVI has no
options, warrants or stock appreciation rights related to the
authorized but unissued CVI common stock. There are no existing
options, warrants, calls, or commitments or any character
relating to the authorized and unissued CVI common stock, except
options, warrants, calls, or commitments, if any, to which CVI is
not a party and by which it is not bound.
4.5 Title to Property. CVI has good and marketable title
to all of its properties and assets, real and personal,
proprietary or otherwise, as will be reflected in the balance
sheets of CVI, and the properties and assets of CVI are subject
to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
4.8 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of CVI,
threatened by or against of effecting CVI at law or in equity, or
before any governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind; CVI does not have
any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
4.9 Books and Records. From the date hereof, and for any
reasonable period subsequent thereto, CVI and its present
management will (i) give to the Shareholders and CVI, or their
duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts, and
other corporate documents and properties so that the Shareholders
and CVI, or their duly authorized representatives, may inspect
them; (ii) furnish such information concerning the properties and
affairs of CVI as the Shareholders and CVI, or their duly
authorized representatives, may reasonably request. Any such
request to inspect CVI's books shall be directed to CVI's
representative, at the address set forth herein under Section
10.4 Notices.
4.10 Confidentiality. Until the Closing (and thereafter if
there is no Closing), CVI and its representatives will keep
confidential any information which they obtain from the
Shareholders or from CVI concerning its properties, assets and
the proposed business operations of CVI. If the terms and
conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on February 28, 1997 or
otherwise waived or extended in writing to a date mutually
agreeable to the parties hereto, CVI will return all written
matter with regard to Chaos obtained in connection with the
negotiations or consummation of this Plan.
4.11 Investment Intent. The Shareholders represent and
covenant that they are acquiring the unregistered and restricted
common shares of Chaos to be delivered to them under this Plan
for investment purposes and not with a view to the subsequent
sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns agree to execute and
deliver to Chaos on the date of Closing or no later than the date
on which the restricted shares are issued and delivered to the
Shareholders, their assigns, or designees, and Investment Letter
similar in form to that attached hereto as Exhibit C.
4.12 Unregistered Shares and Access to Information. CVI and
the Shareholders understand that the offer and sale of Chaos
shares to be exchanged for the CVI shares have not been
registered with or reviewed by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or with
or by any state securities law administrator, and no federal or
state securities law administrator has reviewed or approved any
disclosure or other material facts concerning Chaos or Chaos
stock. CVI and the Shareholders have been provided with and
reviewed all information concerning Chaos and Chaos shares, to be
exchanged for the CVI shares as they have considered necessary or
appropriate as prudent and knowledgeable investors to enable them
to make informed investment decisions concerning the Chaos
shares, to be exchanged for the CVI shares. CVI and the
Shareholders have made an investigation as to the merits and
risks of their acquisition of the Chaos shares, to be exchanged
for the CVI shares and have had the opportunity to ask questions
of, and have received satisfactory answers from, the officers and
directors of Chaos concerning Chaos shares to be exchanged for
CVI shares and related matters, and have had an opportunity to
obtain additional information necessary to verify the accuracy of
such information and to evaluate the merits and risks of the
proposed acquisition of the Chaos shares to be exchanged for the
CVI shares.
4.13 Title to Shares. The Shareholders are the beneficial
and record owners, free and clear of any liens and encumbrances,
of whatever kind or nature, of all of the shares of CVI of
whatever class or series, which the Shareholders have contracted
to exchange.
4.14 Contracts.
(a) Set forth in the CVI Schedules are copies or
descriptions of all material contracts which written or
oral, all agreements, franchises, licenses, or other
commitments to which CVI is a party or by which CVI or its
properties are bound.
(b) Except as may be set forth in the CVI Schedules, CVI is
not a party to any contract, agreement, corporate
restriction, or subject to any judgment, order, writ,
injunction, decree, or award, which materially and adversely
effect the business, operations, properties, assets, or
conditions of CVI.
(c) Except as set forth in the CVI Schedules, CVI is not a
party to any material oral or written (i) contract for
employment of any officer which is not terminable on 30 days
(or less) notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended, or
otherwise covered; (iii) agreement providing for the sale,
assignment or transfer of any of its rights, assets or
properties, whether tangible or intangible, except sales of
its property in the ordinary course of business with a value
of less than $2,000; or (iv) waiver of any right of any
value which in the aggregate is extraordinary or material
concerning the assets or properties scheduled by CVI, except
for adequate value and pursuant to contract. CVI has not
entered into any material transaction which is not listed in
the CVI Schedules or reflected in the CVI financial
statements.
4.15 Material Contract Defaults. CVI is not in default in
any material respect under the terms of any contract, agreement,
lease or other commitment which is material to the business,
operations, properties or assets, or condition of CVI, and there
is no event of default or event which, with notice of lapse of
time or both, would constitute a default in any material respect
under any such contract, agreement, lease, or other commitment in
respect of which CVI has not taken adequate steps to prevent such
default from occurring, or otherwise compromised, reached a
satisfaction of, or provided for extensions of time in which to
perform under any one or more contract obligations, among others.
4.16 Conflict with Other Instruments. The consummation of
the within transactions will not result in the breach of any term
or provision of, or constitute a default under any indenture,
mortgage, deed of trust, or material agreement or instrument to
which CVI was or is a party, or to which any of its assets or
operations are subject, and will not conflict with any provision
of the Articles of Incorporation of CVI.
4.17 Governmental Authorizations. CVI has all licenses,
franchises, permits and other government authorizations that are
legally required to enable it to conduct its business in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities laws, no
authorization, approval, consent or order of, or registration,
declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by CVI
of this Plan and the consummation by CVI of the transactions
contemplated hereby.
4.18 Compliance with Laws and Regulations. CVI has complied
with all applicable statutes and regulations of any federal,
state, or other applicable jurisdiction or agency thereof, except
to the extent that noncompliance would not materially and
adversely effect the business, operations, properties, assets, or
condition of CVI or except to the extent that noncompliance would
not result in the occurrence of any material liability, not
otherwise disclosed to Chaos.
4.19 Approval of Plan. The Board of Directors of CVI have
authorized the execution and delivery of this Plan by CVI and
have approved the Plan and the transactions contemplated hereby.
CVI has full power, authority, and legal right to enter into this
Plan and to consummate the transactions contemplated hereby.
4.20 Information. The information concerning CVI set forth
in this Plan, and the CVI Schedules attached hereto, are complete
and accurate in all material respects and do not contain, or will
not contain, when delivered, any untrue statement of a material
fact or omit to state a material fact the omission of which would
be misleading to Chaos in connection with this Plan.
4.21 CVI Schedules. CVI has delivered to Chaos the
following items listed below, hereafter referred to as the "CVI
Schedules", which is hereby incorporated by reference and made
part hereof. A certification executed by a duly authorized
officer of CVI on or about the date within the Plan is executed
to certify that the CVI Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements;
(c) Resolution of Board of Directors approving Plan;
(d) Consent of Shareholders approving Plan;
(e) A list of key employees, including current
compensation, with notation as to job description and
whether or not such employee is subject to written contract,
and if subject to a contract or employment agreement, a copy
of the same;
(f) A schedule showing the name and location of each bank
or other institution with which CVI has an account and the
names of the authorized persons to draw thereon or having
access thereto;
(g) A schedule setting forth the shareholders, together
with the number of shares owned beneficially or of record by
each (also attached as Exhibit A);
(h) Officer's Certificate as required by Section 7.2 of the
Plan;
(i) Certificate of Good Standing.
Section 5
Special Covenants
5.1 CVI Information Incorporated in Chaos' Reports. CVI
represents and warrants to Chaos that all of the information
furnished under this Plan shall be true and correct in all
material respects and that there is no omission of any material
fact required to make the information stated not misleading. CVI
agrees to indemnify and hold Chaos harmless, including each of
its Directors and Officers, and each person, if any, who controls
such party, under any applicable law from and against any and all
losses, claims, damages, expenses, or liabilities to which any of
them may become subject under applicable law, or reimburse them
for any legal or other expenses reasonable incurred by them in
connection with investigating or defending any such actions,
whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or
are based on any untrue statement, alleged untrue statement, or
omission of a material fact contained in such information
delivered hereunder.
5.2 Special Covenants and Representations Regarding the
Exchange of Chaos Stock . The consummation of this Plan and the
transactions herein contemplated, including the issuance of the
Chaos shares in exchange for all of the issued and outstanding
shares of CVI to the Shareholders constitutes the offer and sale
of securities under the Securities Act and the applicable state
statutes, which depend, inter alia, on the circumstances under
which the Shareholders acquire such securities. Chaos intends to
rely on the exemption of the registration provision of Section 5
of the Securities Act as provided for under Section 4.2 of the
Securities Act of 1933, which states "transactions not involving
a public offering", among others. Each Shareholder upon
submission of his CVI shares and the receipt of the Chaos shares
exchanged therefor, shall execute and deliver to Chaos a letter
of investment to indicate, among other representations, that the
Shareholder is exchanging the CVI shares for Chaos shares for
investment purposes and not with a view to the subsequent
distribution thereof. A proposed Investment Letter is attached
hereto as Exhibit B and incorporated herein by reference for the
general use by the Shareholders, as they may determine.
5.3 Action Prior to Closing. Upon the execution hereof
until the Closing date, and the completion of the consolidated
audited financials,
(a) CVI and Chaos will (i) perform all of its obligations
under material contracts, leases, insurance policies and/or
documents relating to its assets an business; (ii) use its
best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to
maintain its relationship with existing potential customers
and clients; and (iii) fully comply with and perform in all
material respects all duties and obligations imposed on it
by all federal and state laws and all rules, regulations,
and orders imposed by all federal or state government
authorities.
(b) Neither CVI nor Chaos will (i) make any change in its
Articles of Incorporation or Bylaws except and unless as
contemplated pursuant to Section 3 of this Plan; (ii) enter
into or amend any contract, agreement, or other instrument
of the types described in the parties' schedules, except
that a party may enter into or amend any contract or other
instrument in the ordinary course of business involving the
sale of goods or services, provided that such contract does
not involve obligations in excess of $10,000.
Section 6
Conditions Precedent to Obligations of
CVI and the Shareholders
All obligations of CVI and the Shareholders under this Plan
are subject to the satisfaction, on or before the Closing date,
except as otherwise provided for herein, or waived or extended in
writing by the parties hereto, of the following conditions:
6.1 Accuracy of Representations. The representations and
warranties made by Chaos in this Plan were true when made and
shall be true as of the Closing date (except for changes therein
permitted by this Plan) with the same force and effect as if such
representations and warranties were made at and as of the Closing
date; and Chaos shall have performed and complied with by Chaos
prior to the Closing, unless waived or extended in writing by the
parties hereto. CVI shall have been furnished with a
certificate, signed by a duly authorized executive officer of
Chaos and dated the Closing date, to the foregoing effect.
6.2 Officers' Certificate. CVI and the Shareholders shall
have been furnished with a certificate dated the Closing date and
signed by a duly authorized executive officer of Chaos, to the
effect that no litigation, proceeding, investigation, or inquiry
is pending, or to the best knowledge of Chaos, threatened, which
might result in an action to enjoin or prevent the consummation
of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties,
business, or operations of Chaos.
6.3 No Material Adverse Change. Prior to the Closing date,
there shall have not occurred any material adverse change in the
final condition, business or operations of Chaos, nor shall any
event have occurred which, with lapse of time or giving of notice
or both, may cause or create any material adverse change in the
financial condition, business or operations of Chaos, except as
otherwise disclosed to CVI.
6.4 Opinion of Counsel of Chaos. Chaos shall furnish to
CVI and the Shareholders an opinion dated as of the Closing date
and in form and substance satisfactory to CVI and the
Shareholders to the effect that:
(a) Chaos is a corporation duly organized, validly
existing, and in good standing under the laws of the State
of Nevada, and with all requisite corporate power to perform
its obligations under this Plan.
(b) The business of Chaos, as presently conducted,
including, upon the consummation hereof, the ownership of
all of the issued and outstanding shares of CVI, does not
require it to register it to do business as a foreign
corporation on any jurisdiction other than under the
jurisdiction of its Articles of Incorporation or Bylaws and
Chaos has complied to the best of its knowledge in all
material respects with all laws, regulations, licensing
requirements and orders applicable to its business
activities and has filed with the proper authorities,
including the Department of Commerce, Division of
Corporations, and Secretary of State for the State of
Nevada, all statements and reports required to be filed.
(c) The authorized and outstanding capital stock of Chaos
as set forth in Section 3.2 above, and all issued and
outstanding shares have been duly and validly authorized and
issued and are fully paid and non-assessable.
(d) There are no material claims, suits or other legal
proceedings pending or threatened against Chaos of any court
or before or by any governmental body which might materially
effect the business of Chaos or the financial condition of
Chaos as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities
against Chaos.
(e) To the best knowledge of such counsel, the consummation
of the transactions contemplated by this Plan will not
violate or contravene the provisions of the Certificate of
Incorporation or Bylaws of Chaos, or any contract,
agreement, indenture, mortgage, or order by which Chaos is
bound.
(f) This Plan constitutes a legal, valid and binding
obligation of Chaos enforceable in accordance with its
terms, subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, or similar law effecting
creditors' rights generally and general principles of equity
(regardless of whether such principles are considered in a
proceeding in equity or law).
(g) The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have
been ratified by a majority of the Shareholders of Chaos and
have been duly authorized by its Board of Directors.
6.5 Good Standing. CVI shall have received a Certificate
of Good Standing from the State of Nevada, dated within sixty
(60) days prior to Closing, but in no event later than ten (10)
days subsequent to the execution hereof certifying that Chaos is
in good standing as a corporation in the State of Nevada.
6.6 Other Items. CVI and the Shareholders shall have
received such further documents, certifications or instruments
relating to the transactions contemplated hereby as CVI and the
Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of Chaos
All obligations of Chaos under this Plan are subject, at its
option, to the fulfillment, before Closing, or each of the
following conditions:
7.1 Accuracy of Representations. The representations and
warranties made by CVI and the Shareholders under this Plan were
true when made and shall be true as of the Closing date (except
for changes therein permitted by this Plan) with the same force
and effect as if such representations and warranties were made at
and as of the Closing date; and, Chaos shall have performed and
complied with by CVI prior to the Closing, unless waived or
extended in writing by the parties hereto. Chaos shall have been
furnished with a certificate, signed by a duly authorized
executive officer of CVI and dated the Closing date, to the
foregoing effect.
7.2 Officers' Certificate. Chaos shall have been furnished
with a certificate dated the Closing date and signed by a duly
authorized executive officer of CVI, to the effect that no
litigation, proceeding, investigation, or inquiry is pending, or
to the best knowledge of CVI, threatened, which might result in
an action to enjoin or prevent the consummation of the
transactions contemplated by this Plan, or which might result in
any material adverse change in the assets, properties, business,
or operations of CVI.
7.3 No Material Adverse Change. Prior to the Closing date,
there shall have not occurred any material adverse change in the
final condition, business or operations of Chaos, nor shall any
event occurred which, with lapse of time the giving of notice or
both, may cause or create any material adverse change in the
financial condition, business or operations of CVI, except as
otherwise disclosed to Chaos.
7.4 Good Standing. Chaos shall have received a Certificate
of Good Standing from the State of Nevada, dated within sixty
(60) days prior to Closing, but in no event later than ten (10)
days subsequent to the execution hereof certifying that CVI is in
good standing as a corporation in the State of Nevada.
7.5 Dissenters' Rights Waived. The Shareholders of CVI,
and each of them, have agreed and hereby waive any dissenters'
rights, if any, under the laws of the State of Nevada in regards
to any objection to this Plan as outlined herein and otherwise
consent to and agree and authorize the execution and consummation
of the within Plan in accordance to the terms and conditions of
this Plan by the management of CVI.
7.6 Other Items. Chaos shall have received such further
documents, certifications or instruments relating to the
transactions contemplated hereby as Chaos may reasonably request.
7.7 Registration of CVI Shares. In connection with the
exchange of Chaos shares for CVI shares, Chaos agrees, if
practicable, and subject to the consent of an underwriter(s) in
the event Chaos undertakes to file a Registration Statement under
the Securities Act of 1933, as amended, for the purpose of
raising money from the public through the sale of its equity, to
ensure that the Chaos shares issued in connection with the within
Plan will be included as part of a general Registration Statement
and "piggy back" any such offering for the purpose of registering
the same for sale by the Shareholders, as they may determine.
Chaos shall execute and deliver to the Shareholders the
Registration Rights Agreement in form attached hereto as Exhibit
B.
7.8 Execution of Investment Letter. The Shareholders shall
have executed and delivered copies of Exhibit C to Chaos.
Section 8
Termination
8.1 Termination by CVI or the Shareholders. This Plan may
be terminated at any time prior to the Closing date by action of
CVI or the Shareholders, if Chaos shall fail to comply in any
material respect with any of the covenants or agreements
contained in this Plan, or if any of its representations or
warranties contained herein shall be inaccurate in any material
respect.
8.2 Termination by Chaos. This Plan may be terminated at
any time prior to the Closing date by action of Chaos if CVI
shall fail to comply in any material respect with any of the
covenants or agreements contained in this Plan, or if any of its
representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent.
(a) This Plan may be terminated at any time prior to the
Closing date by mutual consent of Chaos, expressed by action
of its Board of Directors, CVI or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this
Plan shall be of no further force and effect and no
obligation, right or liability shall arise hereunder. Each
party shall bear its own costs in connection herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint
David Peterson of Haynie & Co., 1785 West 2300 South, Salt Lake
City 84119 as their agent and attorney in fact (the
"Shareholders' Representative") with full power and authority
until the Closing to execute, deliver and receive on their behalf
all notices, requests and other communications hereunder; to fix
and alter on their behalf the date, time and place of the
Closing; to waive, amend or modify any provisions of this Plan
and to take such other action on their behalf in connection with
this Plan, the Closing and the transactions contemplated hereby
as such agent deems appropriate; provided, however, that no such
waiver, amendment or modification may be made if it would
decrease the number of shares to be issued to the Shareholders
under Section 1 hereof or increase the extent of their obligation
to Chaos hereunder, unless agreed in writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to
time, after the Closing date, each party will execute such
additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the
intent and purpose of the Plan.
10.2 Payments of Estimated Costs and Fees. Chaos and CVI
mutually determine and agree that CVI shall pay the estimated
costs and fees incurred in connection with the execution and
consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the
date of Closing, or as soon thereafter as practicable, CVI and
the Shareholders shall cause to have promptly prepared and
disseminated a news release concerning the execution and
consummation of the Plan, such press release and communication to
be released promptly and within the time required by the laws,
rules and regulations as promulgated by the United States
Securities and Exchange Commission, and concomitant therewith to
cause to be prepared a full and complete letter to Chaos'
shareholders which shall contain information required by
Regulation 240.14f-1 as promulgated under Section 14(f) as
mandated under the Securities and Exchange Act of 1934, as
amended.
10.4 Notices. All notices and other communications required
or permitted hereunder shall be sufficiently given if personally
delivered, sent by registered mail, or certified mail, return
receipt requested, postage prepaid, or by facsimile transmission
addressed to the following parties hereto or at such other
addresses as follows:
If to Chaos: Chaos Group, Inc.
Attention: Michael Reynolds
345 Mandle Drive
Beverly Hills, California 90210
With a copy to: Daniel W. Jackson, Esq.
215 South State Street, Suite 1100
Salt Lake City, Utah 84111
If to CVI: Clear Vision Inc.
548 Diaz Avenue
Oxnard, California 93030
If to the Shareholders: David Peterson
Haynie & Co.
1785 West 2300 South
Salt Lake City, Utah 84119
Or at such other addresses as shall be furnished in writing by
any party in the manner for giving notices hereunder, and any
such notice or communication shall be deemed to have been given
as of the date so delivered, mailed, sent by facsimile
transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire
agreement between the parties relating to the subject matter
hereof, including any previous letters of intent, understandings,
or agreements between Chaos, CVI and the Shareholders with
respect to the subject matter hereof, all of which are hereby
merged into this Plan, which alone fully and completely expresses
the agreement of the parties relating to the subject matter
hereof. Excepting the foregoing agreement, there are no other
courses of dealing, understandings, agreements, representations,
or warranties, written or oral, except as set forth herein.
10.6 Governing Law. This Plan shall be governed by and
construed and enforced in accordance with the laws of the State
of Utah, except to the extent preempted by federal law, in which
event (and to that extent only) federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this
Plan is intended to qualify as a "tax-free" reorganization under
the provisions of Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended. CVI and Chaos acknowledge, however,
that each are being represented by their own tax advisors in
connection with this transaction, and neither has made any
representations or warranties to the other with respect to
treatment of such transaction or any part or effect thereof under
applicable tax laws, regulations or interpretations; and no
attorney's opinion or tax revenue ruling has been obtained with
respect to the tax consequences of the transactions contemplated
by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in
any action or suit to enforce this Plan, or secure relief from
any default hereunder or breach hereof, the nonprevailing party
or parties shall reimburse the prevailing party or parties for
all costs, including reasonable attorney fees, incurred in
connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided
herein shall be cumulative and every other right and remedy,
whether conferred herein, at law or in equity, and may be
enforced concurrently or separately, and no waiver by any party
of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then,
therefore, or thereafter occurring or existing. Any time prior
to the expiration of thirty (30) days from the date hereof, this
Plan may be amended by a writing signed by the party or parties
for whose benefit the provision is intended.
10.10 Counterparts. This Plan may be executed in any
number of counterparts, each of which when executed and delivered
shall be deemed to be an original, and all of which together
shall constitute one and the same instruments.
10.11 Headings. The section and subsection headings in
this Plan are inserted for convenience only and shall not effect
in any way the meaning or interpretation of the Plan.
10.12 Parties in Interest. Except as may otherwise be
expressly provided herein, all terms and provisions of this Plan
shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, beneficiaries, personal and
legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and
Agreement of Reorganization effective the day and year first set
forth above.
CHOAS GROUP, INC.
By: /s/ Wm. Michael Reynolds
Wm. Michael Reynolds, President
CLEAR VISION INC.
By: /s/ Eric Lewis
Eric Lewis, President
SHAREHOLDERS
CHINEX INTERNATIONAL
By: /s/ Robert Stabile
Robert Stabile, President
BEVERLY HILLS 310, INC.
By: /s/ Trudy Reynolds
Trudy Reynolds, President
ECOSPHERE
By: /s/ Wm. Michael Reynolds
Wm. Michael Reynolds
LABRANDA
By: /s/ Ronnie Case
Ronnie Case, Secretary
ARTICLES OF INCORPORATION
Of
PAST-TELL LIMITED
WE, the undersigned natural persons, bona fide residents of
Utah, over the age of twenty-one years, associating to establish
a corporation for the business purposes hereinafter stated, do
hereby act as incorporators of a corporation pursuant to the Utah
Business Corporation Act, and we do adopt and declare the
following as Articles of Incorporation for the same:
ARTICLE I
The name of this Corporation is PAST-TELL LIMITED.
ARTICLE II
The initial registered agent and the registered office are:
Registered Agent: Sandra C. Sachs
Registered Office: 264 East 9800 South
Sandy City, Utah 84070
ARTICLE III
The Duration of this corporation is perpetual.
ARTICLE IV
The powers of this corporation shall be those enumerated,
granted and specified in the Utah Business Corporation Act, or
implied therefrom: and any and all powers necessary or convenient
to effect any or all of the purposes for which the corporation is
organized.
ARTICLE V
The purposes for which this corporation is organized, are:
Section 1. To generally engage in the business of
publishing: including but not limited to the buying and selling
of manuscripts, including plays, novels, short stories, poetry,
instruction manuals, catalogs and all other manner of prose. To
have such works prepared for printing; including editing, proof-
reading, type-setting and all other prerequisites to printing.
To publish and license said literature for public use.
Section 2. To engage in any and all other lawful business endeavors.
ARTICLE VI
The aggregate number of shares which this corporation shall
have the authority to issue shall be twenty-five million
(25,000,000) shares of a par value of 1 mill ($0.001) per share,
or $25,000.
ARTICLE VII
There will be but one class of stock, namely common stock.
Each share shall be entitled to one vote in shareholder meetings
and cumulative voting is denied. All shares shall be non-
assessable with equal rights and privileges. Share holder pre-
emptive rights are not accorded shareholders.
ARTICLE VIII
The Board of Directors shall consist of no less than three
nor more than seven. The initial Board shall be three Directors,
as follows:
Sandra C. Sachs, 264 East 9800 South, Sandy, Utah, 84070
Gene L. Bowling, 175 East 5900 South, Murray, Utah, 84107
Wendy L. Prince, 269 East 9800 South, Sandy, Utah, 84070
ARTICLE IX
This corporation shall not commence business until
consideration of at least one thousand dollars ($1,000.00) has
been paid into the corporation for the issuance of shares.
However, this requirement shall not preclude transactions of the
incurring of indebtedness which is incidental to its organization
or to the obtaining of subscriptions to or payment for its shares
by the founding group of individuals.
ARTICLE X
The following provisions shall govern shareholder meetings:
Section 1. An annual meeting of the shareholders shall
be held at time and place within or without the State, and in
further manner as may be provided in By-Laws or other action of
the Board. Failure to hold an annual meeting as provided shall
not, however, work a forfeiture or dissolution of the
corporation.
Section 2. Thirty percent (30%) of the shares of common
stock entitled to vote shall be necessary to constitute a quorum
of shareholders. Affirmative vote of the majority of shares
represented shall be the act of the shareholders, at any annual
or special meeting - unless higher approval is required by law
concerning a specific subject matter or proposition.
Section 3. Special meeting of the shareholders may be
called by the Board, the Chairman of the Board, the President, or
the holders of not less than ten percent (10%) of all shares that
would be entitled to vote at the meeting, or by such other
officers or persons as may be additionally provided in By-Laws.
ARTICLE XI
Other provision regulating internal affairs of the corporation are:
Section 1. A director need not be a shareholder.
Directors' terms shall be until proper stockholder meeting is
called and successors are elected and qualify. A majority of the
Board shall constitute a quorum. Board meetings may be held
within or without the State, upon notice or waives as prescribed
in By-Laws, neither the business to be transacted nor the
purposes of any regular or special Board meeting need be
specified in the notice of meeting, or waiver thereunto
appertaining.
Section 2. The affairs of the Corporation shall be
governed by these articles until By-Laws are adopted and
thereafter shall be governed by these Articles and the By-Laws.
The Board shall have the power to adopt By-Laws and amend same at
any regular or special Board meeting.
Section 3. The Board of Directors shall have the power
to fix the fiscal period of the corporation, and until changed
the fiscal period shall be the calendar year.
Section 4. Officers of the corporation shall include a
President, a Vice-President, and a Secretary and Treasurer whose
offices may be combined. Officers shall be elected by the Board.
Additional offices may be established through By-Laws or other
Board action. Upon election of Directors at shareholders
meetings, said Directors shall immediately convene as a Board and
elect officers. Tenure of officers otherwise shall be at
discretion of the Board.
Section 5. Duties of the Officers shall be those usually
and normally incumbent upon holders of such offices, and in
conformity with By-Laws adopted and policy set by the Board.
Officers shall prepare and maintain necessary and usual books,
records and financial accounts.
ACTICLE XII
No contract or other transaction between this corporation
and any other corporation or entity shall be affected or
invalidated solely by the fact that any director or officer of
this corporation is interested in, or is a director or officer of
such other corporation or entity; provided, that the full extent
of the interest and connection of such director or officer shall
have been fully or satisfactorily disclosed to this corporate
Board of Directors, and no Board member disapproves of such
contract or transaction under the circumstances disclosed.
Executed by the undersigned incorporators, at Salt Lake
City, Utah on this 5th day of July, 1984.
/s/ Sandra C. Sachs
Sandra C. Sachs, Director
/s/ Gene L. Bowling
Gene L. Bowling, Director
/s/ Wendy L. Prince
Wendy L. Prince, Director
State of Utah )
)ss.
County of Salt Lake )
BE IT KNOWN AND REMEMEBERED, that personally appearing
before me, a Notary Public in and for the County and State
aforesaid, Sandra C. Sachs, Wendy L. Prince and Gene Bowling,
personally known to me to be the same and being the incorporators
and all of same who signed the foregoing Articles of
incorporation; and I having made known to them and each of them
the contents of said Articles, they did under oath severally
acknowledge their signature as their free act and deed and that
the facts are truly set forth therein.
Given under my hand and seal of office this 5th day of July,
1984, Sandy City, Utah.
/s/
Notary Public
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PAST-TELL LIMITED
Pursuant to the provision of the Utah Code Annotated (1953)
Section 16-10-57, et seq., as amended, the undersigned
corporation hereby adopts the following Articles of Amendment to
its Articles of Incorporation:
1. The name of the corporation is PAST-TELL LIMITED.
2. The following amendments to the Articles of
Incorporation were adopted by the shareholders of the
corporation on the 3rd day of June, 1985, in the manner
prescribed by the provision of the Utah Business
Corporation Act:
ARTICLE III
Purposes and Powers. The purposes of this Corporation are
to invest in all forms of investment, including real and personal
property, stocks and bonds, including, but not limited to, the
acquisition of a business opportunity in any industry including
industries such as manufacturing, finance, service, natural
resources, high technology, product development, medical,
communications or any other industry; and to engage in all other
lawful business.
3. The number of shares of the corporation outstanding at
the time of such adoption was 2,965,000, and the number
of shares entitled to vote thereon was 2,965,000. All
of the shares were common shares of the same class with
like rights and preference.
4. All of the shares were voted for the above amendments
as follows:
No. of Shares Shares Voted "For "Shares Voted "Against"
2,965,000 1,955,000 None
5. The manner in which an exchange of issued shares shall
be effected is as follows: No Exchange.
6. The manner in which such amendments effects a change in
the amount of stated capital, and the amount of stated
capital as changed by such amendment is as follows: No
Change.
DATED this 3rd day of June 1985.
PAST-TELL LIMITED
By: /s/ Wendy L. Prince
Vice President
By: /s/ Gene L. Bowling
Secretary
State of Utah )
)ss.
County of Salt Lake )
On the 3rd day of June 1985, personally appeared before
Wendy L. Prince and Gene Bowling, the signors of the within and
foregoing instrument, and duly acknowledged to me that they
executed the same.
/s/
Notary Public
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PAST-TELL LIMITED
We the undersigned as President and Secretary of Past-Tell
Limited do hereby certify:
That the Board of Directors of said Corporation at a Past-
Tell Limited meeting duly convened and held via telephone on the
14th day of October, 1996 adopted a Resolution to amend the
original Articles as follows:
A. Delete Article I in its entirety and substitute in its
place the following:
Article One. The name of the Corporation is Chaos Group,
Inc.
B. Delete Article II in its entirety and substitute in its
place the following:
Article Two. The resident agent and the resident office
are:
Resident Agent: Michael Morrison
Resident Office: 1025 Ridgeview, Suite 400
Reno, Nevada 89509
Said amendment has been consented to and approved by the
owners of majority of the duly issued and outstanding shares of
common stock which represent a majority of the sole class of
common stock outstanding and entitled to vote thereon. The
change is effective immediately upon the filing of this
Certificate.
/s/ Michael Reynolds
Michael Reynolds
/s/ Ronnie Case
Ronnie Case
State of California )
) ss.
County of Ventura )
On this 28th day of October, 1996, personally appeared
before Michael Reynolds and Ronnie Case, personally known to me
or provided to me on the basis of satisfactory evidence to the
persons whose names are signed on the preceding document, and
acknowledged to me that they signed it voluntarily for its stated
purpose.
/s/
Notary Public
CERTIFICATE OF AMENDMENT
OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF CHAOS GROUP, INC.
Wm. Michael Reynolds certifies that:
1. The original articles were filed with the Office of the
Secretary of State on March 24, 1987.
2. As of the date of this certificate, 9,249,215 shares of
stock of the corporation have been issued.
3. Pursuant to a shareholders meeting at which in excess
of 51% voted in favor of the following amendment, the
company hereby adopts the following amendment to the
amendment of the Articles of Incorporation of this
Corporation:
First: Name of Corporation.
The name of the corporation is Luminart Corp. (The
"Corporation").
/s/ Wm. Michael Reynolds
Wm. Michael Reynolds
President/Director
/s/ Ronnie Case
Ronnie Case,
Secretary/Treasurer
State of California )
) ss.
County of Ventura )
On April 23, 1998, personally appeared before Michael
Reynolds and Ronnie Case, personally known to me or provided to
me on the basis of satisfactory evidence to the persons whose
names are signed on the preceding document, and acknowledged to
me that they signed it voluntarily for its stated purpose.
/s/
Notary Public
Certificate of Amendment to Articles of Incorporation
For Profit Nevada Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of corporation: Luminart Corp.
2. The articles have been amended as follows:
The aggregate number of common shares which this corporation
shall have the authority to issue shall be one hundred million
(100,000,000) shares of a par value of 1 mill ($0.001) per share,
or $100,000.
3. The vote by which the stockholders holding shares in the
corporation entitling them to exercise at least a majority of the
voting power, or such greater proportion of the voting power as
may be required in the case of a vote by classes or series, or as
may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is:
COMMON SHARES ISSUED AND OUTSTANDING: 16,315,880
COMMON SHARES VOTING IN FAVOR: 11,583,763
COMMON SHARES VOTING AGAINST: 0
/s/ Wm. Michael Reynolds
Wm. Michael Reynolds
President/Director
/s/ Ronnie Case
Ronnie Case,
Secretary/Treasurer
State of California )
) ss.
County of Ventura )
On July 8, 1999, personally appeared before Michael Reynolds
and Ronnie Case, personally known to me or provided to me on the
basis of satisfactory evidence to the persons whose names are
signed on the preceding document, and acknowledged to me that
they signed it voluntarily for its stated purpose.
/s/
Notary Public
BYLAWS
OF
PAST-TELL LIMITED
ARTICLE I - OFFICES
The principal office of the corporation in the State of Utah
shall be located in the City of Salt Lake, County of Salt Lake.
The corporation may have such other offices, either within or
without the State of Incorporation, as the Board of Directors may
designate or as the business of the corporation may from time to
time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held one
year from the date of incorporation, beginning with the year
1985, at the hour of one o'clock p.m., and annually on that date
thereafter, or as soon thereafter as is practicable, for the
purposes of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day.
2. SPECIAL MEETINGS. UCA 16-10-26
Special meetings of the stockholders for any purpose or
purposes, unless otherwise prescribed by statute, may be called
by the president or by the directors, and shall be called by the
president at the request of the holders of not less than ten
percent of all the outstanding shares of the corporation entitled
to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or
without the State unless otherwise prescribed by statute, as the
place of meeting for any annual meeting or for any special
meeting called by the directors. A waiver of notice signed by
all stockholders entitles to vote at a meeting may designate any
place, either within or without the State unless otherwise
prescribed by statute, the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal office of the
corporation.
4. NOTICE OF MEETING. UCA 16-10-27
Written or printed 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 be delivered not
less than ten nor more than fifty days before the date of the
meeting, either personally or by mail, by or at the direction of
the president, or the secretary, or the officer or persons
calling the meeting, to each stockholder 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 stockholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OF FIXING OF RECORD DATE UCA 16-20-28
For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment
or any dividend, or in order to make a determination of
stockholders for any other proper purpose, the directors of the
corporation may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in case, fifty
days. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for
at least ten days immediately preceding such meeting. In lieu of
closing the stock transfer books, the directors may fix in
advance a date as the record date for any such determination of
stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment
thereof.
6. VOTING LISTS. UCA 16-10-29
The officer or agent having charge of the stock transfer
books for shares of the corporation shall make, at least ten days
before each meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and
the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the
principal office of the corporation and shall be subject to
inspection by any stockholder at any time during usual business
hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the
meeting. The original stock transfer book shall be prima facie
evidence as to who are the stockholders entitled to examine such
list of transfer books or to vote at the meeting of stockholders.
7. QUORUM. UCA 16-10-30
At any meeting of stockholders 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 stockholders. If less than said number 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 notified. The stockholders 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.
8. PROXIES. UCA 16-10-30
At all meetings of stockholders, a stockholder may vote by
proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the
meeting.
9. VOTING. UCA 16-10-30
Each stockholder entitled to vote in accordance with the
terms and provisions of the Certificate of Incorporation and
these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such
stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by
ballot. All elections for directors shall be decided by majority
vote except as otherwise provided by the Certificate of
Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders
shall be as follows:
1. Roll Call.
2. Proof of notice of meeting of waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS. UCA 16-138
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 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
1.GENERAL POWERS. UCA 16-10-33
The business and affairs of the corporation shall be managed
by its Board of Directors. The directors shall in all cases act
as a board, and they shall adopt such rules and regulations for
the conduct of their meetings and the management of the
corporation, as they may deem proper, not inconsistent with these
By-Laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be not more
than nine (9) or less than three (3). Each director shall
hold office until the next annual meeting of stockholders
and until his successor shall have been elected and
qualified.
3. REGULAR MEETINGS. UCA 16-10-40
A regular meeting of the directors shall be held without
other notice than this By-Law immediately after, and at the same
place as, the annual meeting of stockholders. The directors may
provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the 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
directors may fix the place for holding any special meeting
of the directors called by them.
5. NOTICE. UCA 16-10-40
Notice of any special meeting shall be given at least two days
previously thereto by written notice delivered personally, or by
telegram or mailed to each director at his business address. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States 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. The attendance of a director at a meeting
shall constitute a waive 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.
6. QUORUM. UCA 16-10-38
At any meeting of the directors a majority shall constitute
a quorum for the transaction of business, but if less than said
number is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further
notice.
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
directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in
the number of directors and vacancies occurring in the board for
any reason except the removal of directors without cause may be
filled by a vote of a majority of the directors then in office,
although less than a quorum exists. Vacancies occurring by
reason of the removal of the directors without cause shall be
filled by vote of the stockholders. A director elected to fill a
vacancy caused by resignation, death or removal shall be elected
to hold office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote
of the stockholders or by action of the board. Directors may be
removed without cause only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice
to the board, the president or the secretary of the corporation.
Unless otherwise specified in the notice, the resignation shall
take effect upon receipt thereof by the board or such officer,
and the acceptance of the resignation shall not be necessary to
make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for
their services, but by resolution of the board a fixed sum and
expenses for actual attendance at each regular or special meeting
of the board may be authorized. Nothing herein contained shall
be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of
the directors at which action on any corporation matter is taken
shall be presumed to have assented to the action taken unless his
dissent shall be entered into 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.
13. EXECUTIVE AND OTHER COMMITEES.
The board, by resolution, may designate from among its
members an executive committee and other committees, each
consisting of three or more directors. Each such committee shall
serve at the pleasure of the board.
14. ACTION WITHOUT A MEETING. UCA 16-10-40
Any action that may be taken by the Board of Directors at a
meeting may be taken without a meeting if consent in writing,
setting forth the action so to be taken, shall be signed before
such action by all of the directors.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, two
vice-presidents, a secretary and a treasurer, each of whom shall
be elected by the directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed
by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the
directors shall be elected annually at the first meeting of the
directors held after each annual meeting of the stockholders.
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
hereinbefore provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors
may be removed by the directors whenever in their judgment the
best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
directors for the unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of
the corporation and, subject to the control of the 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 stockholders and of the directors. He may
sign, with the secretary or any other proper officer of the
corporation thereunto authorized by the directors, certificates
for shares of the corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the directors have
authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the directors
or by these By-Laws 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 directors from time to time.
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 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 directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders'
and of the directors' meetings in one or more books provided for
that purpose, so that all notices are duly given in accordance
with the provisions of these By-Laws or as required, be custodian
of the corporate records and of the seal of the corporation and
keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholders,
have general charge of the stock transfer books of the
corporation and in general perform all duties incident to the
office of secretary and such other duties as from time to time
may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and
with such surety or sureties as the directors shall determine.
He shall have charge and custody of and be responsible for all
funds and securities of the corporation; receive and give
receipts for monies due and payable to the corporation; receive
and give receipts for monies due and payable to the corporation
from any source whatsoever, and deposit all such monies in the
name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with these By-
Laws and in general perform all of the duties incident to the
office of the treasurer and such other duties as from time to
time may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to
time by the 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 - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer 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.
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 directors. Such
authority may be general or confined to specific instances.
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 directors.
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
directors may elect.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be
in such form as shall be determined by the directors. Such
certificates shall be signed by the president and by the
secretary or by such other officers authorized by law and by the
directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the
stockholders, 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 certificates shall be issued until the
former certificate for a like number of shares shall have been
surrendered and cancelled, except 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
directors may prescribe.
2. TRANSFER OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, and
cancel the old certificate; every such transfer shall be entered
on the transfer book of the corporation which shall be kept at
its principal office.
(b) The corporation shall be entitled to treat the holder
of record of any share as the holder in fact thereof, and,
accordingly, shall not be bound to recognize an equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this State.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the first
day of January in each year.
ARTICLE VIII - DIVIDENDS
The 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 conditions provided by law.
ARTICLE IX - SEAL
The directors may provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation, the state of incorporation, year of incorporation
and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any stockholder or director of the
corporation under the provisions of these By-Laws or under the
provisions of the Articles of Incorporation, a waiver to such
notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted by a vote of the stockholders representing
a majority of all the shares issued and outstanding, at annual
stockholders' meeting or at any special stockholders' meeting
when the proposed amendment has been set out in the notice of
such meeting.
/s/ Sandra C. Sachs
Sandra C. Sachs, Director
/s/ Gene L. Bowling
Gene L. Bowling, Director
/s/ Wendy L. Prince
Wendy L. Prince, Director
MANAGEMENT CONTRACT
This Agreement ("Agreement") is entered into this 15th day
of January, 1997, by and between Wm. Michael Reynolds
(hereinafter, "Reynolds"), whose address is 548 Diaz Avenue,
Oxnard, California 93030 and Chaos Group, Inc. (hereinafter
"Chaos"), whose address is 345 North Maple Drive, Suite 185,
Beverly Hills, California 90210.
WHEREAS, Reynolds desires to provide his expertise and
services in the fields of executive general management to Chaos;
and
WHEREAS, Chaos desires to use the services and expertise of
Reynolds in the management of the company;
NOW, THEREFORE, the parties agree to be bound to the terms
of this Agreement as follows:
1. Duties
A. During the Term of this Agreement, Reynolds will
serve as the President and Chief Executive Officer of Chaos and
will perform such duties to include, but not be limited to,
providing Chaos with his expertise in executive general
management.
B. Reynolds will oversee and direct all operations of
Chaos and its subsidiary, Clear Vision, Inc. and will be directly
responsible to the Board of Directors of Chaos.
C. Reynolds will direct Chaos at all times, and, in
such a way, as to maximize the company's market presence and its
net income.
D. Reynolds will ensure that accurate and current
records of Chaos and its subsidiary are at all times maintained,
and will provide timely reports to the Board of Directors keeping
them informed as to the direction of Chaos.
E. Reynolds will perform all other reasonable tasks
within his expertise as may be periodically assigned to him by
the Board of Directors.
2. Term and Termination
A. This Agreement shall commence on the day, month
and year first above written and shall continue in full force and
effect for a period of thirty six (36) months.
B. This Agreement may be terminated at will, with or
without cause, by either Reynolds or by the Board of Directors of
Chaos after having given a thirty (30) day written notice to the
other party to the address of record personally or by mail,
postage prepaid, or by facsimile machine message.
3. Compensation
A. Reynolds will devote his full time and effort to
the performance of his duties as set forth in this Agreement.
For these services, Chaos will compensate Reynolds in a base
salary in the amount of Ten Thousand Dollars ($10,000.00) per
month. If Chaos realizes a net profit, after having given effect
for tax liability, for a full twelve (12) months ending
coincident with its fiscal year end, to wit December 31, then for
the following twelve months the Board of Directors may approve
that Reynolds will be paid an amount in addition to his base
salary to reward his performance. Maximum payroll to Reynolds
under this Agreement will not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) in any one year.
B. Reynolds may accrue any portion of his salary and
Chaos will maintain this accrual as a primary short-term
liability on its books of record. In the event of termination of
this Agreement, all accrual still existing on the company books
of record will be paid to Reynolds within five (5) business days
of said termination by either party to this Agreement.
C. Upon execution of this Agreement, Reynolds will be
vested with an option to purchase up to and including 960,000
shares of the company's common stock (par value $0.001) for a
value of $0.25 per share. Thereafter, and for each fiscal year
during the term of this Agreement wherein a net profit has been
realized by Chaos, after giving effect for tax liabilities,
Reynolds will be granted options to purchase an additional one
million (1,000,000) shares of said stock at $0.25 per share.
Reynolds may exercise his earned options at any time either by
direct payment to the company or by applying an offset of equal
amount against any accrual on his behalf then existing on the
books of the corporation.
D. Reynolds agrees that neither federal nor state nor
local taxes will be withheld from his payroll, and as such he is
fully and personally liable for their payment.
4. Confidentiality
Reynolds agrees to maintain in strictest confidence
all information provided by Chaos or any subsidiary of Chaos
regarding any and all proprietary information. Reynolds further
agrees to hold in trust and use such information only as needed
to fulfill Reynolds's obligations for Chaos' sole benefit.
Reynolds shall not use such information for his own benefit,
publish or otherwise disclose it to others, or permit its use to
the detriment of Chaos. Upon termination of Reynolds's
obligations under this Agreement, Reynolds shall return to Chaos
all copies of all information provided by Chaos to Reynolds,
including partial copies and derivative works of such
information.
5. Limitation on Use
Reynolds shall use the proprietary information
provided to him by Chaos only in connection with the duties as
set forth in Section 1 of this Agreement. It is expressly
understood and agreed, however, that Reynolds may perform duties
for others which are not based upon or derived from Chaos'
proprietary and/or patented information. Except as provided in
this Agreement, Reynolds shall have no right to disclose or use
proprietary of Chaos and no license is granted or implied under
this Agreement.
6. Indemnification
(A) Reynolds shall indemnify, defend, and hold
harmless Chaos for claims, actions, losses, damages and expenses,
including costs and reasonable attorneys fees, arising out of
Reynolds's negligence relating to any breach of this Agreement.
(B) Chaos shall indemnify, defend, and hold
harmless Reynolds from and against all claims, actions, losses,
damages, and expenses, to include costs and reasonable attorneys
fees, arising out of Chaos' negligence or breach of this
Agreement, or otherwise relating to any of the services accepted
and approved by Chaos under this Agreement.
7. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
8. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
9. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
10. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
11. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
12. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
13. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
14. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
WM. MICHAEL REYNOLDS
/s/ Wm. Michael Reynolds
CHAOS GROUP, INC.
By: /s/ Patrick Reynolds
Patrick Reynolds, President
MANAGEMENT CONTRACT
This Agreement ("Agreement") is entered into this 15th day
of January, 1997, by and between Ronnie Case (hereinafter,
"Case"), whose address is 548 Diaz Avenue, Oxnard, California
93030 and Chaos Group, Inc. (hereinafter "Chaos"), whose address
is 345 North Maple Drive, Suite 185, Beverly Hills, California
90210.
WHEREAS, Case desires to provide his expertise and services
in the fields of executive general management to Chaos; and
WHEREAS, Chaos desires to use the services and expertise of
Case in the management of the company;
NOW, THEREFORE, the parties agree to be bound to the terms
of this Agreement as follows:
1. Duties
A. During the Term of this Agreement, Case will serve
as the Senior Vice President of Chaos and will perform such
duties to include, but not be limited to, providing Chaos with
his expertise in operations and general management.
B. Case will oversee and direct all plant and
facility operations of Chaos and its subsidiary, Clear Vision,
Inc. and will be directly responsible to the President of Chaos.
C. Case will direct his attention at all times, and,
in such a way, as to maximize the company's market presence,
operational efficiency and its net income.
D. Reynolds will ensure that accurate and current
records of Clear Vision, Inc. are at all times maintained, and
will provide timely reports to the President keeping him informed
as to the direction of the company.
E. Case will perform all other reasonable tasks
within his expertise as may be periodically assigned to him by
the Board of Directors or President.
2. Term and Termination
A. This Agreement shall commence on the day, month
and year first above written and shall continue in full force and
effect for a period of thirty six (36) months.
B. This Agreement may be terminated at will, with or
without cause, by either Case or by the Board of Directors of
Chaos after having given a thirty (30) day written notice to the
other party to the address of record personally or by mail,
postage prepaid, or by facsimile machine message.
3. Compensation
A. Case will devote his full time and effort to the
performance of his duties as set forth in this Agreement. For
these services, Chaos will compensate Case in a base salary in
the amount of Two Thousand Dollars ($2,000.00) per month. If
Chaos realizes a net profit, after having given effect for tax
liability, for a full twelve (12) months ending coincident with
its fiscal year end, to wit December 31, then at the direction of
the Board of Directors, Case's salary may be increased to Three
Thousand Dollars ($3,000.00) per month.
B. Case may accrue any portion of his salary and
Chaos will maintain this accrual as a primary short-term
liability on its books of record. In the event of termination of
this Agreement, all accrual still existing on the company books
of record will be paid to Case within five (5) business days of
said termination by either party to this Agreement.
C. Upon execution of this Agreement, Case will be
vested with an option to purchase up to and including 40,000
shares of the company's common stock (par value $0.001) for a
value of $0.25 per share. Thereafter, and for each fiscal year
during the term of this Agreement wherein a net profit has been
realized by Chaos, after giving effect for tax liabilities, Case
will be granted options to purchase an additional fifty thousand
(50,00) shares of said stock at $0.25 per share. Case may
exercise his earned options at any time either by direct payment
to the company or by applying an offset of equal amount against
any accrual on his behalf then existing on the books of the
corporation.
D. Case agrees that neither federal nor state nor
local taxes will be withheld from his payroll, and as such he is
fully and personally liable for their payment.
4. Confidentiality
Case agrees to maintain in strictest confidence all
information provided by Chaos or any subsidiary of Chaos
regarding any and all proprietary information. Case further
agrees to hold in trust and use such information only as needed
to fulfill Case's obligations for Chaos' sole benefit. Case
shall not use such information for his own benefit, publish or
otherwise disclose it to others, or permit its use to the
detriment of Chaos. Upon termination of Case's obligations under
this Agreement, Case shall return to Chaos all copies of all
information provided by Chaos to Case, including partial copies
and derivative works of such information.
5. Limitation on Use
Case shall use the proprietary information provided to
him by Chaos only in connection with the duties as set forth in
Section 1 of this Agreement. It is expressly understood and
agreed, however, that Reynolds may perform duties for others
which are not based upon or derived from Chaos' proprietary
and/or patented information. Except as provided in this
Agreement, Case shall have no right to disclose or use
proprietary of Chaos and no license is granted or implied under
this Agreement.
6. Indemnification
(A) Case shall indemnify, defend, and hold harmless
Chaos for claims, actions, losses, damages and expenses,
including costs and reasonable attorneys fees, arising out of
Case's negligence relating to any breach of this Agreement.
(B) Chaos shall indemnify, defend, and hold
harmless Case from and against all claims, actions, losses,
damages, and expenses, to include costs and reasonable attorneys
fees, arising out of Chaos' negligence or breach of this
Agreement, or otherwise relating to any of the services accepted
and approved by Chaos under this Agreement.
7. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
8. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
9. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
10. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
11. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
12. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
13. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
14. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
RONNIE CASE
/s/ Ronnie Case
CHAOS GROUP, INC.
By: /s/ Patrick Reynolds
Patrick Reynolds, President
SUBSIDIARIES OF THE REGISTRANT
Luminart International, Inc., a Nevada corporation
<TABLE> <S> <C>
<S> <C>
<PAGE>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S AUDITED FINANCIAL STATEMENTS, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1998
<PERIOD-START> OCT-1-1998 JAN-1-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 7,472 13,738
<SECURITIES> 0 0
<RECEIVABLES> 140,442 9,210
<ALLOWANCES> 5,731 0
<INVENTORY> 801,319 698,367
<CURRENT-ASSETS> 965,195 745,386
<PP&E> 603,140 485,862
<DEPRECIATION> 186,300 63,600
<TOTAL-ASSETS> 2,010,938 1,618,648
<CURRENT-LIABILITIES> 172,249 106,477
<BONDS> 0 0
0 0
685,000 685,000
<COMMON> 17,006 11,804
<OTHER-SE> 1,658,689 1,491,171
<TOTAL-LIABILITY-AND-EQUITY> 2,010,938 1,618,648
<SALES> 1,637,683 765,141
<TOTAL-REVENUES> 1,637,683 765,141
<CGS> 628,489 80,321
<TOTAL-COSTS> 628,489 80,321
<OTHER-EXPENSES> 1,192,505 406,564
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 59,938 18,987
<INCOME-PRETAX> (243,249) 259,269
<INCOME-TAX> (82,705) 0
<INCOME-CONTINUING> (160,544) 259,269
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (160,544) 259,269
<EPS-BASIC> (.01) (.02)
<EPS-DILUTED> (.01) (.02)
</TABLE>
PATENT
On April 30, 1996 Luminart was issued a Compound and Method
Patent (US # 005512122A) for the Luminite gel and the process by
which it is applied onto vinyl. On January 4, 1999 Luminart was
issued a Compound and Method Patent (Canada # 2,126,104) for the
Luminite gel and the process by which it is applied onto vinyl.
The Company also has been issued patents in Europe (#93922873.0)
and in Australia (#51735/93). Abstract: Luminite is a printing
compound and method of producing three-dimensional signs and
lettering and Braille reading materials. The printing compound
includes an ultraviolet radiation curable resin and a filler
mixed with the resin to form a paste. The resin can be an
acrylated urethane oligomer or an epoxidized oil. The compound
is applied to a substrate manually or by a computer controlled
dispensing apparatus. The compound is subjected to ultraviolet
radiation to cure quickly allowing for mass production.
