UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
(x ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1999
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission File number 1-7301
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COLORMAX TECHNOLOGIES, INC.
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(Exact name of registrant as specified in charter)
Delaware 75-1329265
- -------------------------------- -------------------
State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization
14251 Chamber Rd., Tustin Ca. 92780
- ----------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 714-730-7900
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Securities registered pursuant to section 12 (b) of the Act:
Title of each class Name of each exchange on
which registered
None None
- ----------- --------------------------
Securities registered pursuant to section 12 (g ) of the Act:
None
- ----------------------
(Title of Class)
Check whether the Issuer (1 ) filed all reports required to be filed by section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes [ x ] No [ ] (2) Yes [x ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ 3,150
-----------
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days.
<PAGE>
At December 31, 1999, the aggregate market value of the voting stock held by
nonaffiliates is estimated to be $75,400,000.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of December 31, 1999, the registrant had 22,751,914 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the part
of the form 10- KSB (e.g., part I, part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) any proxy or other
information statement; and (3) Any prospectus filed pursuant to rule 424 (b) or
(c) under the Securities Act of 1933: NONE
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
PART I
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ITEM 1.. DESCRIPTION OF BUSINESS 4
ITEM 2.. DESCRIPTION OF PROPERTIES 4
ITEM 3.. LEGAL PROCEEDINGS 4
ITEM 4.. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 4
PART II
- --------
ITEM 5.. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 5
ITEM 6.. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 5
ITEM 7.. FINANCIAL STATEMENTS 8
ITEM 8.. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 8
PART III
- --------
ITEM 9.. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT 9
ITEM 10. EXECUTIVE COMPENSATION 11
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12
PART IV
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ITEM 13. EXHIBITS 10
</TABLE>
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on June
14, 1971. There have been several name changes and authorized stock changes
resulting in the present name and the authorized shares shown in the balance
sheet.
During June 1999, after transferring its remaining assets and liabilities, the
Company acquired all the outstanding stock of RGB Technology Group Inc.
RGB Technology Group Inc. was organized in the state of Delaware on April 28,
1999 for the purpose of marketing ColorMax lenses and a computer color
vision test software.
DESCRIPTION OF BUSINESS
ColorMax Technologies, Inc. is a scientifically based manufacturer and
distributor of innovative optical technologies. The Company's ColorMax brand
of medical products are the first and only optical aid approved by the U.S. Food
and Drug Administration designed specifically to address the needs of the
genetically colorblind and color vision deficient population. The Company's
principal strengths are its scientific leadership in the field of color vision
and its ability to market this breakthrough medical technology. The Company's
products are currently available in the United States and Australia.
FORWARD-LOOKING STATEMENTS
The following contains some forward-looking statements which are based upon the
plans, goals and objectives of the Company and its management. Such statements
are subject to various risks and uncertainties. Numerous factors exist within
the business world which may prevent the successful attainment of such plans,
goals and objectives. Consequently, the reader should consider that such risks,
uncertainties and unknown factors may cause actual results to vary materially
from those stated goals outlined below.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company does not own any real property
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
<PAGE>
On July 16, 1999 the Company received the consent to change the Company name to
ColorMax Technologies, Inc. and was effective September 7, 1999.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
During the past two years through December 31, 1999 there has been no
established trading market for the shares of the Registrant's common stock over
an exchange however the stock has been trading over-the-counter in small
quantities. The trading amounts for a share of stock for the last two years are
listed below by quarter:
<TABLE>
<CAPTION>
1999 1998
Low High Low High
--- ---- ---- ----
<S> <C> <C> <C> <C>
First. .13 .25 .156 .28
Second .16 .20 .156 .28
Third. 5.5 .6 .125 .219
Fourth 9. 9.75 .125 .219
</TABLE>
The above market quotes were provided by NASDAQ OTC Trading and Market Service.
There have been no interdealer sales. During the last fiscal year the
Registrant has sold 100,000 pre split common shares of its capital stock at
$1.00 per share in a private offering. Since its inception, the Company has not
paid any dividends on its common stock, and the Company does not anticipate that
it will pay dividends in the foreseeable future. At December 31, 1999 the
Company had approximately 3,795 shareholders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
In June of 1999, after the reorganization outlined in item 1, the Company
changed management and as part of the acquisition and merger with RGB
Technology Group, Inc., the Company began operations in the distribution of the
ColorMax brand of specialty medical eye products and transferred all of its
prior business and assets in the physical care field which it had been
developing since 1996.
Acquisition of Marketing Rights
- ----------------------------------
In June 1999, the Company obtained a long-term exclusive license to market,
sell, and distribute the proprietary technologies of the ColorMax product
line in the United States, Australia, New Zealand, Japan and United Kingdom.
Colorblindness and Corrective Aids
- -------------------------------------
Color blindness is genetic condition that affects approximately 1 in 12 men and
1 in 250 women or 8% of men and 0.5% of women, respectively. There are 12
million colorblind Americans and over 250 million colorblind people around the
world. Color blindness is caused by genetic defect on the X chromosome and is
passed on by women who are carriers to their sons. Color vision deficiencies
are caused when there is a malfunction of the photo receptive cones in the
retina. Color vision deficiencies can also be acquired with age or from
illness, such as diabetes.
<PAGE>
Color is a critical element in visual communication. There is a growing
emphasis on color in modern day society to easily convey the rising complexity
of data and information. Virtually every occupation relies on color to some
degree. Many professions are highly color sensitive including the arts,
computers, graphics, electronics and transportation.
People who suffer from colorblindness are significantly disadvantaged throughout
their lives educationally, vocationally and in simple everyday activities. Of
special importance is the high rate that colorblind children are undiagnosed and
who face serious hardships in school with color-coded learning materials such as
blocks and maps. Furthermore, the long-term consequences of an undiagnosed
color vision deficiencies will often continue throughout adulthood.
The two most common types of genetic color vision deficiencies are:
Deuteranamolous (also known as green weak): defect in medium wavelength
frequency or green color confusion
Protanamolous (also known as red weak): defect i8n the long wavelength
frequency or red color confusion
Tritanamolous, or blue-yellow color confusion is the most common type of
acquired color vision deficiency.
The concept of corrective aids for color vision deficiencies has been in the
scientific mind for many years, including by the physicist James Clerk Maxwell.
However, there has never been a corrective aid that has adequately achieved an
improvement in color vision discrimination. The X-Chrom contact lens, a
red-tinted hard contact lenses worn monocularly in the dominant eye, for color
vision deficiencies were available in the 1970's and is no longer available.
Currently, there are no optical aids in the market which effectively treats
colorblindness.
In November 1999, the FDA approved ColorMax Color Vision Enhancement Lenses as
the first safe and effective optical aid for duetan and protan color vision
deficiencies ColorMax Color Vision Enhancement Lenses change the spectral
energy composition of light entering the eye to balance brightness, saturation
and hue and improve color vision discrimination. ColorMax lenses have been in
development for over a decade.
Products
- --------
ColorMax offers a line of optical goods that detect and aid color vision
deficiencies by the use of ColorMax Color Vision Enhancement Lenses.
Every colorblind person has a distinct color vision makeup and is
characteristized by a distinct type of color vision defect and severity. There
are 10 different types of Color Vision Enhancement Lenses to properly
accommodate each individual. There are two classifications of ColorMax lenses,
the Duetan Series and the Protan Series. Each classification is divided into
five density classes, one though five. By selecting the appropriate filter
component, greater color vision discrimination is achieved.
<TABLE>
<CAPTION>
DEUTAN SERIES LENSES PROTAN SERIES LENSES
<S> <C>
D1. . . . P1
D2. . . . P2
D3. . . . P3
D4. . . . P4
D5. . . . P5
</TABLE>
ColorMax lenses are custom to properly accommodate each individual. There are
two classifications of ColorMax can process various types of lenses including
CR-39, polycarbonate and glass and are available as plano or prescription
lenses. The lense have been categorized by the FDA as a "prescription spectacle
lens" and may be considered as such by most health care plans and insurance
companies.
ColorMax Color Test
- -------- ------------
The ColorMax Color Test is a computerized psuedo-ischronmatic plate test that
helps optometrists and ophthalmologists select the appropriate ColorMax lens
for the patient. Using the software, the doctor can make an accurate lens
selection in a few minutes. ColorMax Color Test operates on the Windows
platform.
ColorMax Color Vision Testing Program and Protocol
- -------- -----------------------------------------------
The ColorMax Color Vision Testing Program and Protocol consists of
comprehensive color vision testing and an iterative lens fitting process.
Optometrists and ophthalmologists administer the ColorMax Color Test, the
Ishihara Psuedo-Isochomatic Plate Test and the Farnsworth D-15 Test to patients.
ColorMax lenses are selected and tested to measure the patient's performance on
the color vision tests and tasks and to evaluate the patient's subjective
response to the environment in a non-clinical setting.
ColorMax Soft Contact Lenses
- -------- ----------------------
ColorMax soft contact lenses are currently in development. ColorMax contact
lenses are based on the same technology and work similarly to ColorMax Color
Vision Enhancement Lenses. The Company will seek FDA approval on the soft
Contact Lenses and then distribute them through its authorized ColorMax
providers.
Distribution
- ------------
ColorMax Color Vision Enhancement Lenses are a medical device and are
distributed only through authorized eye care professionals. Licensed eye care
professionals, such as optometrists and opthamologists, have the experience and
education to properly diagnose and treat vision related conditions. Authorized
ColorMax providers undergo extensive training to learn to use the ColorMax
system and understand ColorMax products.
Marketing and Sales
- ---------------------
ColorMax marketing objective is to maximize patient awareness of an effective
corrective aid and to make it easy and convenient for color vision deficient
patients to te primary function of ColorMax's domestic sales force is to expand
the ColorMax provider base of eye care professionals and to help existing
ColorMax patient base within their practice.
ColorMax believes that effective marketing and education, patient service and
its relationships with its providers effectively manage their ColorMa program,
including national consumer marketing and extensive practice support such as
Internet referrals, marketing materials, public relations assistance and a
toll-free patient care line.
<PAGE>
Advertising and Promotion
- ---------------------------
ColorMax's products receive significant publicity and media coverage. The media
relates to the human element to how ColorMax products help people improve and
change their lives in fundamental ways as well as to the technology behind the
lenses. The ColorMax products have been featured in over 100 national and
local newspapers, television news broadcasts and radio programs. This publicity
has helped established the ColorMax brand name to a large general population
and to the colorblind market.
Furthermore, through ColorMax's clear and cohesive advertising strategies,
doctors and patients are gaining brand recognition of ColorMax products.
Optometrists and Opthamologists learn about ColorMax providers through
demonstrations and lectures given at optical trade shows where they attend to
maintain their certification through continuing education. Potential patients
learn about ColorMax products through direct mail, print advertisement,
in-store visual displays mailers and the Internet. ColorMax maintains a strong
presence on the Internet. The ColorMax website provides detailed technical
information on the science of colorblindness and useful tips on lifestyle.
Additionally, patients can find the nearest ColorMax provider on the site.
Through the Internet site, ColorMax has received thousands of registrations
from colorblind people. The company is assembling one of the largest databases
of color deficient people in the world.
Manufacturing
- -------------
The manufacture of ColorMax lenses is a complex process that involves numerous
stages and a series of quality control tests before shipment. In September of
1999, the Company relocated to a new manufacturing facility with three build in
clean room facilities. The Company performs its proprietary manufacturing
methods in-house using specially designed and engineered equipment. ColorMax's
in-house manufacturing enables production in accordance with strict quality
control standards and the protection of its processes. The Company also has the
opportunity to experiment with new technologies and materials in its product
development. There are a wide array of suppliers that we can obtain our raw
materials. The Company could find substitute suppliers if necessary.
Research and Development and Regulatory
- -------------------------------------------
ColorMax is committed to research and development in the area of color vision.
ColorMax has signed agreements for cooperative research and development with
pre-eminent researchers in the field. There are several products in the
development pipeline. Licensed technology developed by other parties could
provide an additional source of potential products. All medical devices require
approval by the FDA prior to marketing and distribution. The Company has
received FDA approval on its ColorMax Color Vision Enhancement Lenses and
plans on receiving the necessary approvals on its other products.
Competition
- -----------
The FDA has not given approval to any other optical aids for red-green color
vision deficiencies. Currently, there is little competition and ColorMax has
the opportunity to dominate this newly emerging market. While it is anticipated
that other companies will try to develop similar aids and seek FDA approval,
their outcome is uncertain.
Liquidity and Capital Resources
- ----------------------------------
<PAGE>
ColorMax has plans to make further investments in equipment to increase
production capacity in order to keep up with demand. At the end of the year,
the Company needed to raise additional funds for its ongoing operations. The
Company successfully raised the funds in March 2000, as detailed in Subsequent
Events in the accountants report, and currently has sufficient funds to meet its
operations for approximately two to three years.
Results of Operations
- -----------------------
The Company has not started the operations in the optical industry. Its
future operations will consist of marketing, selling, and distributing the
proprietary vision care technology outlined above.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are included following the signature
page to this form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
At December 31, 1999 the following table shows the name, age, and position of
each executive officer and director and the term of office of each director of
the Company.
<TABLE>
<CAPTION>
Name Age Position Director and/or Officer Since
- ---------------- --- --------------------------------- -----------------------------
<S> <C> <C> <C>
Donald H. Hansen 73 President and Director 1999
John D. Jantzi . 52 Vice President and Dir. 1999
Julie Kim. . . . 25 Secretary, Treasurer and Director 1999
</TABLE>
The term of office of each director is one year and until his successor is
elected at the Registrant's annual shareholders' meeting and is qualified,
subject to removal by the shareholders. The term of office for each officer is
one year and until his successor is elected at the annual meeting of the Board
of Directors and is qualified, subject to removal of the Board of Directors.
<PAGE>
DONALD H. HANSEN, O.D., President and Director, Dr. Hansen, age 73, is a
graduate of Coe College in Cedar Rapids, Iowa, and the Illinois College in Cedar
Rapids, Iowa, and the Illinois College of Optometry. He has owned and operated
the Main Vision Clinic & Contact lens Center of Davenport, Iowa, since 1968.
Since 1993, Dr. Hansen has been the President/CEO of The American College of
Ophthermology, Inc., and Supervision Research Development Company, Inc., both of
which are devoted to research into eye temperature measurement and diagnosis of
health problems based on ocular thermal mapping. Dr. Hansen has conducted
extensive research on the relationship between low ocular blood flow and
increased risk of stroke and heart attack. He is a member of numerous
professional organizations, including American Optometric Association and the
Iowa Optometric Association. Dr. Hansen is the founder of the National Council
of Ophthalmic Inventors and the National Care Association.
JOHN D. JANTZI, O.D., Vice President and Director. Dr. Jantzi is 52 years
of age. He received his Doctor of Optometry degree from the University of
Waterloo in 1975, and was granted a Master of Science degree in physiological
optics in 1981. Dr. Jantzi has practiced optometry in the Vancouver area since
that time. He co-produced the award winning television program "Life is Worth
Seeing," which is televised annually by the Knowledge Network in British
Columbia. Dr. Jantzi is a frequent lecturer and has participated in over 30
clinical research projects with the U.S. Food and Drug Administration and
numerous major ophthalmic corporations. He was the editor-in-chief of the
Canadian Vision science journal Practical Optometry from 1990 to 1998. Dr.
Jantzi is a member of the Canadian Association of Optometrists, the Ontario
Association of Optometrists, and the British Columbia Association of
Optometrists.
JULIE KIM, AGE 25, Secretary, Treasurer and Director, graduated from
Cornell University in 1997 with a degree in Business Administration. From 1995
to 1996, she was the Vice President for Development of LightDrive Technologies,
Inc., of Ft. Lauderdale, Florida. From 1997 to 1998, she served as a Consultant
for Ernst & Young LLP and E&Y Kenneth Leventhal Real Estate Group in New York
City and Miami. Ms. Kim is the creator of Lodging Magazine's Lodging Stock
Index, which tracks the performance of lodging stocks versus the Standard &
Poor's 500. Ms. Kim is a member of the Cornell Society of Hotelmen.
Except as indicated below, to the knowledge of management, during the past five
years, no present or former director, executive officer or person nominated to
become a director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state insolvency
law, nor had a receiver, fiscal agent or similar officer appointed by a court
for the business or property of such person, or any partnership in which he was
a general partner at or within two years before the time of such filing;
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliate person,
director or employee of any investment company, or engaging in or continuing
any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of federal or
state securities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending or otherwise limiting for more than 60 days the right of such person
to engage in any activity described above under this Item, or to be associated
with persons engaged in any such activity;
<PAGE>
(5) was found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Since the Company ceased operations, the Company knows of no person, who at any
time during the subsequent fiscal years, was a director, officer, beneficial
owner of more than ten percent of any class of equity securities of the
registrant registered pursuant to Section 12 ("Reporting Person"), that failed
to file on a timely basis any reports required to be furnished pursuant to
Section 16 (a). Based upon a review of Forms 3 and 4 furnished to the registrant
under Rule 16a-3(d) during its most recent fiscal year the registrant knows of
no Reporting Person that failed to file the required reports during the most
recent fiscal year or prior years.
ITEM 10. EXECUTIVE COMPENSATION
CASH COMPENSATION
There was no cash compensation paid to any director or executive officer of the
Company during the fiscal years ended December 31, 1999
BONUSES AND DEFERRED COMPENSATION
During 1999 officers and Directors received post split common shares of the
Company as compensation as follows:
<TABLE>
<CAPTION>
Name Shares
- ---------------------- ------
<S> <C>
Donald H. Hansen 33,334
John D. Jantzi . 30,000
Julie Kim. . . . 30,000
</TABLE>
During 1999 accrued compensation was recorded and is due to Julie Kim of
$42,000.
COMPENSATION PURSUANT TO PLANS
None.
PENSION TABLE
None.
OTHER COMPENSATION
None
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT
<PAGE>
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in Cash Compensation
set out above which would in any way result in payments to any such person
because of his resignation, retirement, or other termination of such person's
employment with the Company or its subsidiaries, or any change in control of the
Company, or a change in the person's responsibilities following a changing in
control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1999, the name and address and
the number of shares of the Company's Common Stock held of record or
beneficially by each person who held of record, or was known by the Company to
own beneficially, more than 5% of the issued and outstanding shares of the
Company's Common Stock, and the name and shareholdings of each director and of
all officers and directors as a group.
<TABLE>
<CAPTION>
NATURE OF NUMBER OF
NAME OF PERSON OR GROUP OWNERSHIP (1) SHARES OWNED PERCENT
- -------------------------- ------------- ------------ ---------
<S> <C> <C> <C>
Donald H. Hansen . . . . . 33,334 .1
John D. Jantzi 30,000 .1
Julie Kim 30,000 .1
Kimrose Holdings . . . . . 5,903,000 26.9
All Officers and Directors
and benefical owner
as a group 5,996,334 26.3
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Except as indicated below, and for the periods indicated, there were no material
transactions, or series of similar transactions, since the beginning of the
Company's last fiscal year, or any currently proposed transactions, or series of
similar transactions, to which the Company was or is to be party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any security holder who is known by the Company to own of record or
beneficially more than 5% of any class of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, has an interest.
INDEBTEDNESS OF MANAGEMENT
<PAGE>
There were not material transactions, or series of similar transactions, since
the beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company was or is
to be a party, in which the amount involved exceeds $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, has an interest.
TRANSACTIONS WITH PROMOTERS
The Company was organized more than five years ago therefore transactions
between the Company and its promoters or founders are not considered to be
material.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS. The following financial statements are included
in this report:
<TABLE>
<CAPTION>
Title of Document Page
- ----------------------- ----
<S> <C>
Report of Andersen Andersen and Strong. . . . . . . . . . . . . . . . . . . 14
Balance Sheet as of December 31, 1999 . . . . . . . . . . . . . . . . . . . 15
Statements of Operations for the period April 28, 1999 to December 31, 1999 16
Statements of Changes in Stockholders' Equity for the period April 28, 1999
to December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Statements of Cash Flows for the period April 28, 1999 to December 31, 1999 18
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
(a)(2) FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(a)(3) EXHIBITS. The following exhibits are included as part of this report by
reference:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
COLORMAX TECHNOLOGIES INC.
Date: March 29, 2000
By: /s/ Donald H. Hansen
------------------------------
Donald H. Hansen
President and Director
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C.
941 EAST 3300 SOUTH, SUITE 202
SALT LAKE CITY, UTAH 84106
Board of Directors
ColorMax Technologies, Inc.
Tustin, Ca
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying consolidated balance sheet of Colormax
Technologies, Inc., and Subsidiary, at December 31, 1999 and the related
statements of operations, stockholders' equity, and cash flows for the period
April 28, 1999 (date of inception) to December 31, 1999 These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall balance sheet presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ColorMax Technologies, Inc.,
and Subsidiary at December 31, 1999 and the results of operations, and cash
flows for the period April 28, 1999 (date of inception) to December 31, 1999 ,
in conformity with generally accepted accounting principles.
ANDERSEN ANDERSEN & STRONG
Salt Lake City, Utah
March 22, 2000
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,314
Accounts receivable. . . . . . . . . . . . . . . . . . . . . 2,000
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . 6,601
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 20,102
------------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . 41,017
------------
PROPERTY AND EQUIPMENT -
net of accumulated depreciation. . . . . . . . . . . . 113,612
------------
OTHER ASSETS
Marketing rights - net of amortization -
Notes 2 and 5. . . . . . . . . . . . . . . . . . . . . . . . 1,372,733
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 13,519
------------
$ 1,540,881
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties . . . . . . . . . . . . . . . $ 118,562
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 127,969
------------
Total Current Liabilities . . . . . . . . . . . . . . . 246,531
------------
LONG TERM DEBT AND OTHER CONTINGENCIES
Notes payable - related parties - Note 6 . . . . . . . . . . 179,300
------------
STOCKHOLDERS' EQUITY
Convertible preferred stock
1,001,000 shares authorized, series A and B at $.10
par value, series C at $.001 par value - none outstanding
Common stock
100,000,000 shares authorized, at $0.001 par value;
22,751,914 shares issued and outstanding. . . . . . . . . 22,752
Capital in excess of par value - Note. . . . . . . . . . . . 3,079,082
Accumulated deficit during development stage - Note 4. . . . (1,986,784)
------------
Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . 1,115,050
------------
$ 1,540,881
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLORMAX TECHNOLOGIES INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD APRIL 28, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
(NOTE 4)
<TABLE>
<CAPTION>
<S> <C>
REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,150
-------------
EXPENSES
Administrative and developmental . . . . . . . . . . . . . . . . . . . 1,960,970
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,267
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,697
-------------
1,989,934
-------------
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,986,784)
=============
GAIN (LOSS) PER COMMON SHARE
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (.21)
-------------
AVERAGE OUTSTANDING SHARES
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,694,600
-------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 29, 1999 TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
-------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
---------- -------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE APRIL 1, 1999
(date of inception - note 4) . . . . . . 672,580 $ 673 $ (672) $ -
Issuance of common stock for all stock
of RGB Technology - no recorded
value - June 9, 1999 - Note 4. . . . . 6,000,000 6,000 (6,000) -
Issuance of common stock for expenses
and services at $.21 - July to Oct 1999. 1,373,334 1,373 291,960 -
Issuance of common stock for cash at
$.50 - July and August 1999. . . . . . . 200,000 200 99,800 -
Issuance of common stock for United
Kingdom marketing rights -
at $.10 - November 8, 1999 . . . . . . 4,000,000 4,000 396,000 -
Issuance of common stock for Japan
and Canada marketing rights
at $.10 - November 8, 1999 . . . . . . . 10,000,000 10,000 990,000 -
Issuance of common stock for services -
at $2.50 - November 18, 1999 . . . . . . 500,000 500 1,249,500 -
Issuance of common stock for services
at $2.25 - December 30, 1999 . . . . . . 6,000 6 13,494 -
Contribution to capital - equipment . . . . - - 45,000 -
Net operating loss for the period April 9,
1999 to December 31, 1999 . . . . . . . - - - (1,986,784)
BALANCE DECEMBER 31, 1999 . . . . . . . . . 22,751,914 $ 22,752 $3,079,082 $(1,986,784)
========== ======== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
( DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 28, 1999 (DATE OF INCEPTION ) TO DECEMBER 31, 1999
(NOTE 4)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . $(1,986,784)
Adjustments to reconcile net loss to
net cash provided by operating activities
Amortization of marketing rights. . . . . . . . . . . . . . . 23,267
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 5,697
Issuance of common stock for expenses . . . . . . . . . . . . 1,556,833
Changes in inventory. . . . . . . . . . . . . . . . . . . . . (6,601)
Change in accounts receivable . . . . . . . . . . . . . . . . (2,000)
Change in prepaid expenses and deposits . . . . . . . . . . . (33,621)
Change in accounts payable . . . . . . . . . . . . . . . . . 429,831
Net Cash Used by Operations. . . . . . . . . . . . . . . . . . . (13,378)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment . . . . . . . . . . . . . . . . . . . . (74,308)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock. . . . . . . . . . . . 100,000
------------
Net Increase (Decrease) in Cash . . . . . . . . . . . . . . . . . 12,314
Cash at Beginning of Period . . . . . . . . . . . . . . . . . . . -
------------
Cash at End of Period . . . . . . . . . . . . . . . . . . . . . . $ 12,314
============
NONCASH OPERATING AND INVESTING ACTIVITIES
Issuance of 1,373,334 common shares for expenses - 1999 . . . . . $ 293,333
------------
Issuance of 14,000,000 common shares for marketing rights - 1999. 1,400,000
------------
Contribution to capital - equipment - 1999. . . . . . . . . . . . 45,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on June
14, 1971 with name "Worldcom, Inc.". There have been several name changes and
authorized stock changes resulting in the present name and the authorized
shares shown in the balance sheet.
The authorized convertible preferred shares consist 1,000,000 Class A at $.10
par value, 50,000,000 Class B at $.001 par value, and 50,000,000 class C at
$.001 par value.
The Company has been involved in various activities over the years and during
the year 1983 discontinued all operations until 1996 when the Company started
developmental work on a device to be used in the physical care field however
during June 1999 the Company transferred the business as part of an acquisition
and reorganization and is now engaged in the business as outlined in note 4.
On July 12, 1999 the Company completed a reverse stock split of 30 shares of
outstanding stock for one share and on January 7, 2000 a forward stock split of
two shares for each outstanding share. This report has been prepared showing
after stock split shares from inception.
The company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- -------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ----------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- -------------
On December 31, 1999, the Company had a net operating loss carry forward of
$1,986,477. The tax benefit from the loss carry forward has been fully offset
by a valuation reserve because the use of the future tax benefit is doubtful
since the Company has not started operations and is unable to project a reliable
future net profit. The loss carryforward will expire in 2021.
Principles of Consolidation
- -----------------------------
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary after the elimination of intercompany transactions.
Note 4
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Marketing Rights
- -----------------
Marketing rights are amortized, on the straight line method, over ten years.
Property and Equipment
- ------------------------
Office and manufacturing equipment is being depreciated on the straight line
method over three, five, and seven years and summarized as follows;
Cost $119,309
Accumulated depreciation 5,697
--------
Net 113,612
-------
Basic and Diluted Net Income (Loss) Per Share
- ----------------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding, after the stock splits. Diluted
net income (loss) per share amounts are computed using the weighted average
number of common shares and common equivalent shares outstanding as if shares
had been issued on the exercise of the preferred share rights unless the
exercise becomes antidilutive and then only the basic per share amounts are
shown in the report.
Comprehensive Income
- ---------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity on
June 30, 1999.
Accounting for Stock-Based Compensation
- ------------------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 123 but
has elected to continue to measure compensation cost under APB 25. The adoption
of FASB No. 123 has no impact on the Company's financial statements.
Recent Accounting Pronouncements
- ----------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will
have a material impact on its financial statements.
Financial Instruments
- ----------------------
The carrying amounts of financial instruments, including all assets and
liabilities shown in the balance sheet, are considered by management to be
their estimated fair values.
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimates and Assumptions
- ---------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. TRANSFER OF COMPANY ASSETS IN EXCHANGE FOR ALL LIABILITIES
During June 1999 the Company transferred all its assets and the business in the
physical care field in exchange for the assumption of all its liabilities, as
part of an acquisition and reorganization outlined in note 4, between the
Company and RGB Technology Group, Inc. and Kimrose Holdings. At the report date
$ 175,000 of assumed liabilities had been paid. The remaining balance of
$204,260 will remain as a contingent liability to the Company until they are
satisfied. Management believes the liabilities will be fully satisfied by the
predecessor.
4. ACQUISITION OF ALL OUTSTANDING STOCK OF RGB TECHNOLOGY GROUP
INC.
On June 8, 1999 the Company acquired all of the outstanding stock of RGB
Technology Group Inc. through a stock for stock exchange in which the
stockholder (Kimrose Holdings) of RGB Technology Group Inc. received 6,000,000,
after stock split, common shares of the Company in exchange for all of the stock
of RGB Technology Group Inc. RGB Technology Group Inc. was organized in the
state of Delaware on April 28, 1999 for the purpose of marketing ColorMax
lenses and a computer color vision test software. After the completion of the
transaction the outstanding stock of the Company was 6,664,082 common shares of
which 6,000,000 was owned by Kimrose Holdings.
The only asset held by RGB Technology Inc. on June 8, 1999 consisted of the
exclusive marketing rights for the above technology, for use in the United
States, Australia, and New Zealand, which was recorded on the books of RGB with
no value.
For reporting purposes, the acquisition is treated as an acquisition of the
Company by RGB Technology Group Inc., the acquirer, (a reverse acquisition) and
a recapitalization of RGB Technology Group Inc. The historical financial
statements prior to June 8, 1999 are those of RGB Technology Group Inc. No good
will was recognized from the consolidation. All material intercompany accounts
and transactions have been eliminated.
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. MARKETING RIGHTS
The Company acquired marketing rights, from related parties, for use in the
countries of the United Kingdom, Canada, and Japan by the issuance of common
stock as outlined in the Statement of Changes in Stockholders Equity. The
marketing rights will continue for ten years with rights of renewal.
6. NOTES PAYABLE - RELATED PARTIES
The Company has received loans from related parties amounting to $179,300 with
various due dates after one year with interest at 8%.
7. RELATED PARTY TRANSACTIONS
Related parties own 26.3 % of the outstanding common stock.
See notes 3 and 4 for the transfer of assets and the assumption of liabilities
to related parties as part of an acquisition and reorganization of the Company.
Other related party transactions are identified in the balance sheet and in
notes 5 and 6.
8. GOING CONCERN
The Company has acquired marketing rights, described above, and in the opinion
of management, will provide a profit to the Company after operations begin. The
Company will need additional working capital to be successful in this effort.
The management of the Company has developed a strategy, which it believes will
accomplish this objective through additional loans from related parties, equity
funding and long term financing, which will enable the Company to operate for
the coming year. See the subsequent events for a private placement of preferred
stock.
9. CONTINUING AND CONTINGENT LIABILITIES
The Company remains contingently liable on certain accounts payable as outlined
in note 3.
The Company is obligated under an office and manufacturing facility lease
agreement starting September 1, 1999 and continuing for five years as follows;
Year Amount
1 $101,030
2 105,250
3 109,450
4 113,660
5 117,880
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. SUBSEQUENT EVENTS
Preferred Capital Stock
- -------------------------
On March 6, 2000 the Company completed a private placement and sale of 40,000
shares of 7% convertible preferred capital stock for cash of $3,680,000 net of
offering costs of $320,000 and included 76,471 warrants convertible to common
stock. 20,000 of the warrants issued was additional offering costs
The terms of the preferred stock includes semi-annual dividend payments in cash
and conversion rights of one share of preferred for one share of common, not to
exceed 50% of holding by each shareholder during any 30 day period upon an
effective registration date with the SEC, with a conversion rate of the lower of
$12.75, or 85% of the low three-day average closing bid price of the Company's
common stock for the 20 consecutive trading days prior to the trading day on
which conversion notice is sent, however, the Company cannot issue more than 20%
of common shares outstanding without shareholder approval. If shareholder
approval cannot be obtained then the Company will be obligated to purchase the
preferred shares at 120% of the original purchase price plus accrued dividends.
The terms of the warrants provides for conversion to common capital stock of one
warrant for one share of common stock at the rate of $12.75 per share with an
expiration date of four years from the date of issuance.
Patents
- -------
During March 2000 the Company purchased two patents and trademarks relating to
soft contact lenses including the trademarks of the X-Chrom Company in the
United State , US Patent Number 4998817 and in Canada, Canadian Patent Number
1318529 for $125,000.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 12314
<SECURITIES> 0
<RECEIVABLES> 2000
<ALLOWANCES> 0
<INVENTORY> 6601
<CURRENT-ASSETS> 41017
<PP&E> 119309
<DEPRECIATION> 5697
<TOTAL-ASSETS> 1540881
<CURRENT-LIABILITIES> 246531
<BONDS> 0
0
0
<COMMON> 22752
<OTHER-SE> 1092298
<TOTAL-LIABILITY-AND-EQUITY> 1540881
<SALES> 3150
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1989934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1986784)
<EPS-BASIC> (.21)
<EPS-DILUTED> 0
</TABLE>
