SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
LUNA MEDICAL TECHNOLOGIES, INC.,
(Exact name of registrant as specified in its charter)
NEVADA (Applied For)
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1820-1095 West Pender Street, Vancouver, British Columbia, Canada V6E 2M6
(Address of registrant's principal executive offices) (Zip Code)
604.687.0719
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under 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 under Section 12(g) of the Act:
Common Stock, Par value $.001 Preferred Stock, Par value $.001
----------------------------- --------------------------------
(Title of Class) (Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 14
Exhibit Index is specified on Page 12
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Luna Medical Technologies, Inc.,
a Nevada corporation
Index to Form 10-SB Registration Statement
Item Number and Caption Page
- ----------------------- ----
1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
3. Description of Property 7
4. Security Ownership of Certain Beneficial Owners and Management 8
5. Directors, Executive Officers, Promoters and Control Persons 8
6. Executive Compensation - Remuneration of Directors and Officers 9
7. Certain Relationships and Related Transactions 10
8. Legal Proceedings 10
9. Market For Common Equity and Related Shareholder Matters 10
10. Recent Sales of Unregistered Securities 10
11. Description of Securities 11
12. Indemnification of Officers and Directors 11
13. Financial Statements 12
14. Changes in and Disagreements with Accountants 12
15. Financial Statements and Exhibits
15(a) Index to Financial Statements 12
Financial Statements F-1 through F-10
15(b) Index to Exhibits 12
Exhibits E-1 through E-32
Signatures 14
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Item 1. Description of Business.
Development of the Company. Luna Medical Technologies, Inc., a Nevada
corporation ("Company"), formerly entitled Luna Technologies, Inc., was
incorporated in the State of Nevada on January 19, 1999. On or about May 31,
1999, the Company changed its name to Luna Medical Technologies, Inc. The
executive offices of the Company are located at 1820-1095 West Pender Street,
Vancouver, British Columbia, Canada V6E 2M6. The Company's telephone number is
604.687.0719.
Business of the Company. On or about January 31, 1999, the Company entered
into an exclusive worldwide license agreement ("Agreement") with Luna Products,
Inc., a Canadian corporation ("LPI"), to distribute the Luna Fertility Indicator
("Indicator"), a lightweight, highly accurate and re-usable home fertility test.
In exchange for the grant of the worldwide license ("License"), the Company
agreed to lend LPI US$40,000, interest free ("Loan"), and spend a minimum of
US$20,000 on marketing the Indicator. The Agreement provides that LPI shall
repay the Loan by paying to the Company a fee of CDN$1.00 for each Indicator
sold for the first 30,000 Indicators sold, then US $.50 per Indicator sold in
perpetuity. The Company was also given the option of converting the Loan to a
50% equity interest in LPI, in which case LPI would have no obligation to repay
the Loan or any royalties. The Company also agreed to pay LPI a 5% royalty on
the total gross sales of the Indicator during the term of the License. Moreover,
the Company agreed to pay directly to Jim Emmerson, a director of LPI, a royalty
of US $1.00 per Indicator sold for perpetuity.
On or about May 6, 1999, the Company and LPI agreed to amend the Agreement.
Among other things, the Company agreed not to exercise its right to convert the
Loan to a 50% equity interest in LPI. LPI agreed that the Indicator would be
sold to the Company for US $12.50, if the Company sold the Indicator to
wholesalers and distributors, and CDN$16.50 if the Company sold the Indicator
directly to consumers. The Company also agreed to increase expenditures for
marketing the Indicator to US $250,000 or more, to be expended on or before May
31, 2000.
The concept of the Indicator has been used in Europe and has been
extensively tested as to verify the safety and accuracy of that concept. Quite
simply, a woman's body fluids indicate the changes in hormones during different
phases of her fertility cycle. When the dried fluids are viewed through a
powerful magnifier, patterns in the crystallized fluids indicate the stage of
her fertility cycle. The Indicator relies on the medical fact that saliva
crystallizes in the same special way as uterine cervical mucus, due to the
action of the estrogens, presenting the appearance of fern-type branches. In
1948, Dr. Ridborg first discovered physiological variations in the crystallized
arrangement of saliva (or cervical uterine mucus) related to ovulation. Later,
this scientific discovery was identified as an indicator of female fertility by
Doctors Evelyn L. and John J. Billings.
In 1969, at the Royal Academy of Medicine in Barcelona, Spain, Dr. Biel
documented his investigations evidencing the relationship between hormonal
changes during the menstrual cycle and crystallization of female saliva during
ovulation, which followed an identical pattern in uterine cervical mucus.
Specifically, a woman's saliva and uterine cervical mucus only crystallize
during a period of from 6 to 8 days, during the fertile stage of the menstrual
and ovulation cycle. It is important to note that individual advances and delays
in ovulation do not affect this method's precision, as the method relies on
ovulation itself rather than a projected cycle date.
The secretion of estrogen and progesterone changes daily during a woman's
menstrual cycle, influencing the characteristics which can be observed in the
dried body fluids, in particular, saliva and cervical fluid. These observable
characteristics include an increase in filaceousness (that is, the appearance of
thread-type anatomical
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structures) and specific changes in the crystalline patterns during the days
preceding ovulation. The increase of estrogen during the whole of the first
stage of the menstrual cycle produces changes in the consistency and
crystallization of saliva, in the same way as in uterine cervical mucus. The
estrogens only produce crystallization of these fluids when they reach a certain
concentration. This concentration is reached 3 to 4 days prior to ovulation.
The simple procedure to produce and examine these crystalline patterns is
by placing a saliva (or cervical mucus fluid) sample on a slide to evaporate and
view through a small, powerful, hand-held microscope. By repeated in-home
testing, a woman can track her complete ovulation cycle without the nuisance of
urine tests, temperature tests and monthly calendar tracking, or costly visits
to a fertility or health care service. It is totally private, non-invasive, and
chemical free method of testing for fertility.
The Indicator takes up slightly more space than a lipstick and can be used
any private place with access to natural or clear light. A woman simply places a
sample of her saliva on the clean slide, allows the saliva to dry, then holds
the slide up to the light. If the woman is in the biologically active, fertile
phase, her saliva will crystallize and fibrous "fern-type" patterns will be
clearly viewed in the small Indicator in-home small microscope. Then she can
rinse off the slide and put it away until the next use.
The Company anticipates that the Indicator will be used as a guide to
determine the different phases of the fertility cycle. The Company does not
intend for this device to be used or considered as a contraceptive or method of
birth control.
The Company's Subsidiary. On or about May 11, 1999, the Company caused to
be incorporated, in British Columbia, Luna Fertility Indicator, Inc. Luna
Fertility Indicator, Inc., is currently a wholly-owned subsidiary of the
Company. The Company anticipates that the primary business of Luna Fertility
Indicator, Inc., will be marketing and distributing the Company's products.
Marketing and Sales Strategy. The Company plans to establish the Indicator
as an industry standard for in-home fertility testing. The Company anticipates
hiring an inside marketing and public relations consultant to co-ordinate an
advertising campaign in targeted media such as medical journals, women's
magazines, religious publications and other selected media. Hopefully, this
should help generate immediate awareness of the Indicator. The Company will
attempt to market the Indicator in major chain stores using selected regional
distributors.
The Company is currently negotiating with Bathurst Sales ("Bathurst") of
Downsview, Ontario, Canada's leading distributor of cosmetics and personal care
products, whose customers include London Drugs, Shoppers Drug Mart, Pharma Plus
Drugmarts, Lawton's Drug Stores and Uniprix. Bathurst distributes products such
as Revlon, John Frieda, Elizabeth Arden, Rubbermaid, AM Cosmetics and Vogue
International, and its current clients are those that the Company desires will
market and promote the Company's products. Bathurst will be informed of the
dates of the Company's advertising programs to co-ordinate any co-operative
advertising plans that its clients may have for the period.
The Company anticipates that initial sales of the Indicator will occur only
in Canada. The Company anticipates that it will then initiate a mail order
campaign and advertising in selected publications. Foreign market development
has begun and discussions with potential distributors in Taiwan, South Africa
and Turkey are being conducted. The Company hopes to expand marketing and
distribution into Spain, Turkey and the United States. The Company also
anticipates providing distributors with rebates for co-operative advertising and
freight and discount allowances. The Company anticipates allocating
approximately CDN$6.00 per Indicator to provide marketing and advertising funds.
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The Indicator will be targeted toward: (i) big box drug and pharmacy
retailers, (ii) distributors selling to health food chains, and (iii) natural or
homeopathic medical clinics.
Competition. The Company has identified two significant competitors,
Personal Fertility Technologies, Inc. and Med-Direct Products, Inc.
Personal Fertility Technologies, Inc. ("PFT"). Headquartered in Gold River,
California, PFT has designed a product called the PFT 1-2-3TM , which uses
colored slides to incorporate a technique similar to the staining method used in
medical test laboratories. PFT has distributors in Mexico, Germany, Hong Kong
and Canada. To the best of the Company's knowledge, this product has not been
approved by the United States Food and Drug Administration, but is currently
being re-tested for distribution in the United States.
Med-Direct Products Inc. ("MDP"). Headquartered in Australia, MDP
distributes (i) the Lady Fertility Tester, a saliva-based fertility test; (ii)
the Bioself Fertility Indicator, a temperature and calendar-based fertility
test; (iii) the Lady Ovulation Tester, a urine-based fertility test; and (iv)
the Lady Pregnancy Tester, also a urine-based fertility test. The Lady Fertility
Tester is not for sale in either Canada or the United States. In Australia, the
Lady Fertility Tester retails for 55 Australian Dollars or approximately
$CDN57.00. The Indicator retails for approximately $CDN40.00, providing the
Company with a competitive pricing advantage. The Indicator also requires the
purchase of a $CDN3.00 book of charts per year. The Company also believes that
it will have a significant advantage over the Australian product because of the
North American Free Trade Agreement and monetary exchange rates favorable for
the export of Canadian products. The Company may reduce its introductory price
to attract distributors.
Natural Family Planning using the Luna Fertility Indicator. The health
problems and abortifacient properties associated with pills, IUDs, and Norplant
have been documented but seldom disseminated to patients. The Company believes
that the indicator has no side effects that can reduce fertility in the
long-term. The Company believes that natural family planning using the Indicator
is a safe and 99% effective natural family planning device. For comparison,
below is the approximate method effectiveness of alternative family planning
methods (percentage of couples of normal fertility who go one year without
getting pregnant, using each method properly).
No family planning method 20%
Calendar Rhythm (Ogino-Knaus) 87%
Withdrawal 91%
Ovulation (or Billings) method 96%
Diaphragm with spermicide 97%
Foam 97%
LAM (breastfeeding) (first 6 months) 98%
Condom 99%
IUD 99%
Pill 99.7%
Sympto-Thermal method 99.8%
Tubal Ligation 99.6%
Vasectomy 99.85%
"User rates" for all methods of family planning are less than the
percentages specified above. The "user rate" is the actual rate in practice by
couples who sometimes misuse a method. The percentages specified above are a
compilation of studies reported by the U.S. Dept. of Health, Education and
Welfare and various medical
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journals, as referenced in "The Art of NFP" (American Natural Family Planning)
book. Two studies actually indicated a zero Sympto-Thermal method pregnancy
rate, but realistically all methods of family planning, even tubal ligation and
vasectomy, have a measurable pregnancy rate.
The Company believes that natural family planning can be extremely
effective in the Third World. In a study of 19,843 predominantly poor women in
Calcutta, the pregnancy rate for women practicing natural family planning was
similar to that of women using the combined contraceptive pill - 0.2 pregnancies
per 100 users yearly. (British Medical Journal, Sept. 18, 1993, by R.E.J.
Ryder).
Basic Fertility Awareness. In a typical menstrual cycle, a woman has
several days of bleeding, usually followed by a few infertile days, then several
days during which fertile cervical fluid is produced, then ovulation. About 2
weeks after ovulation the cycle ends and the bleeding of the next cycle begins.
The different parts of this cycle can be identified by changes in body
temperature and production of cervical fluid. In the usual cycle, cervical fluid
increases, ovulation occurs, then the cervical fluid dries and basal body
temperature increases. An increase in basal body temperature of approximately
half a degree Fahrenheit is a reliable indicator that ovulation has occurred.
This increase in basal body temperature remains for approximately 2 weeks
(called the "luteal phase"), then usually decreases just before menses starts
again.
Other Methods of Natural Family Planning. The now almost obsolete Calendar
Rhythm method used each woman's past menstrual cycle history to predict future
cycles. Its method effectiveness, up to 87%, was similar to that of its
competitors in the 1930's and 1940's. The Ovulation Method ("OM"), also known as
the Billings method, depended on observation of menstrual bleeding and the
production of cervical fluid. Such observations were subject to
misinterpretation. Also, in a very short menstrual cycle, fertile cervical fluid
may begin to be produced before menstruation has finished, and it may be
difficult to observe in the presence of bleeding.
Using cervical fluid observations such as the OM but cross-checking those
observations by temperature is called the Sympto-Thermal Method ("STM"). STM
requires daily temperature measurements, taken upon waking in the morning at the
same time every day. It also relies on symptoms of fertility, most commonly the
presence of fertile cervical fluid, and the position of the cervix. Around the
fertile time, the cervix withdraws further into the body and the opening of the
cervix increases. At the time of ovulation, temperature starts to increase about
half a degree Fahrenheit. Cross-checked with the other symptoms, this provides
confirmation that ovulation has occurred and determines the infertile time
following ovulation. The precise sympto-thermal rules require waiting 3, 4 or
more days, depending on the situation, after the first sign that ovulation seems
to have occurred, while continuing to collect information to confirm ovulation.
This also allows for multiple ovulations. The infertile time in the early part
of the cycle is less certain, but can still be found with effectiveness rates
that compare well with other methods.
Recently, researchers have defined what they call the Lactation Amenorrhea
Method ("LAM"). Used since the beginning of humanity, breastfeeding still
prevents more pregnancies than all artificial methods of birth control put
together. After giving birth, a woman normally experiences a time of infertility
until her body is ready for another pregnancy. If a woman doesn't breastfeed,
this period of infertility is usually quite short. If a woman exclusively
breastfeeds, without pacifiers, bottles or schedules, the average length of
infertility is 14 months, but can vary from a few months to several years.
Employees. The Company does not currently have any employees. The Company
currently uses two consultants at its corporate office in Vancouver, British
Columbia.
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Reports to Security Holders. The Company intends to provide an annual
report to its security holders, which will include audited financial statements.
The Company will become a reporting company with the Securities and Exchange
Commission ("SEC") upon the effective date of this Registration Statement on
Form 10-SB, at which time the public may read and copy any materials filed with
the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington,
D.C. 20549. The public may also obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address
of that site is http://www.sec.gov. The Company does not currently maintain its
own Internet address.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Revenue. The Company's year end is March 31 and its first year end is March
31, 1999. Consolidated revenue and income (loss) and forecasts are specified
below. For the first three month period ended March 31, 1999, the Company
generated revenue of US$1,020.00 and an operating loss of approximately
US$29,100. The Company anticipates a US$40,000 operating loss for the first
quarter fiscal 2000 and positive cash receipts beginning July, 1999.
The revenue forecast is based on assumptions considered reasonable at the
date of preparation. Users of the forecast must recognize that the uncertainty
of future events and circumstances may result in revenues not materializing as
anticipated and the variances can be material. The Company does not make any
warranty that forecast revenue will be achieved.
Liquidity and Capital Resources. From the date of its incorporation on
January 19, 1999, through March 31, 1999, the Company realized US$72,500 through
the sale of 7,310,660 shares of its $.001 par value common stock. After payment
of development and operating expenses, the Company had cash resources of
US$9,897 at March 31, 1999. At March 31, 1999, the Company had revenues of
US$1,020. The cash and equivalents constitute the Company's present internal
sources of liquidity. Because the Company is generating only limited revenues
from the sale or licensing of the Company's products, including the Indicator,
the Company's main external source of liquidity is the sale of its capital
stock.
Results of Operations. The Company has realized gross revenue of US$1,020
from operations. The Company anticipates generating additional revenue beginning
in or about July of 1999.
Item 3. Description of Property
Property held by the Company. As of the dates specified in the following
table, the Company held the following property:
================================================================================
Property January 19, 1999 March 31, 1999
-------- ---------------- --------------
- --------------------------------------------------------------------------------
Cash and equivalents $ 0 US$ 9,897
- --------------------------------------------------------------------------------
Inventory $ 0 US$ 1,012
================================================================================
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The Company defines cash equivalents as all highly liquid investments with
a maturity of 3 months or less when purchased. The Company currently owns
US$1,012 in inventory.
The Company occupies facilities consisting of 600 square feet of leased
commercial office space located at 1820-1095 West Pender Street, Vancouver,
British Columbia, V6E 2M6. The Company occupies those facilities on a
month-to-month basis and has no financial obligation for or relating to those
facilities.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. Other than officers
and directors, there are no persons who are beneficial owners of 5% or more of
the Company's issued and outstanding common stock.
(b) Security Ownership of Management. The directors and principal executive
officers of the Company beneficially own, in the aggregate, 6,000,000 shares of
the Company's $.001 par value common stock, or approximately 82.1% of the issued
and outstanding shares of such common stock, as set forth on the following
table:
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Amount and Nature of Percent of Class
Owner Beneficial Owner
- -------------- ------------------------------ -------------------- ----------------
<S> <C> <C> <C>
Common Stock Campbell Capital Advisory Inc. 6,000,000 82.1%
10832 Magnolia Court An entity wholly-owned
Delta, British Columbia, by the Company's
Canada V4K 2L3 President, Gordon
McDougall
All officers and directors as a group 6,000,000 82.1%
</TABLE>
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Gordon McDougall 43 President and Director
================================================================================
Gordon McDougall, age 43, is a member of the Board of Directors of the
Company. Mr. McDougall currently holds the offices of Chairman of the Board of
Directors and President, Chief Executive Officer, Secretary, and Chief Financial
Officer of the Company.
Mr. McDougall has 17 years experience in general management, venture
capital, and financing, primarily with emerging companies. Mr. McDougall's
business experience includes general management, venture capital and the
financing of emerging companies. From 1994 to January 1996 he was chief
executive officer for Sierra Capital Corporation. Previously, Mr. McDougall was
a registered representative with Nesbitt, Thomson,
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Bongard, Inc; Corporate Development Consultant; SOLUS Technology Corporation
(building automation systems) and president of LMB Holdings Ltd. (consulting and
franchising). From April 1986 to June 1987, Mr. McDougall was vice-president of
Orcatron Communications, Inc. From September 1987 to May 1998, Mr. McDougall was
president of LMB Holdings Ltd. Mr. McDougall was also president of Campbell
Technologies Inc. and president, chief financial officer and secretary of C-2
Technologies, Inc. Mr. McDougall is the current president and chief executive
officer of Campbell Capital Advisory, Inc. Mr. McDougall's experience as a
director includes directorships with Orcatron Communications Ltd. (manufacturer
of wireless communication equipment for underwater use by commercial, military
and recreational divers); Shelter Island Venture Capital (VCC) Corp. (founding
shareholder); Raider Reach Manufacturing Ltd (construction equipment); BCS
Technology Inc.; Sierra Capital Corp.; Campbell Technologies, Inc.; and C-2
Technologies, Inc.
All directors of the Company hold office until the next annual meeting of
the shareholders and the election and qualification of their successors. The
Officers of the Company are elected annually by the Board of Directors and serve
at the discretion of the Board of Directors.
There are no significant employees expected by the Company to make a
significant contribution to the business of the Company.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. McDougall from engaging in or continuing any conduct, practice
or employment in connection with the purchase or sale of securities, or
convicting such person of any felony or misdemeanor involving a security, or any
aspect of the securities business or of theft or of any felony, nor is Mr.
McDougall the officer or director of any corporation or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Specified below, in tabular form, is the aggregate annual remuneration of
the Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group remuneration was received remuneration
- --------------------------------------------------------------------------------
None(1) None None
================================================================================
There was no compensation paid to any executive officer of the Company at
any time from its formation through June 4, 1999.
Item 7. Certain Relationships and Related Transactions
Compensation to Officers and Directors of the Company As of June 4, 1999,
no compensation has been paid or accrued to any of the officers or directors of
the Company.
- --------
(1) The officers and directors of the Company received no direct compensation
from the Company during the Company's most recent fiscal year. The officers
and directors of the Company are reimbursed for expenses incurred on behalf
of the Company.
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Related Party Transactions. Gordon McDougall is the President, Chief
Executive Officer, Secretary, Chief Financial Officer and a director of the
Company. He is also the president and sole shareholder of Campbell Capital
Advisory, Inc. ("Campbell"). Campbell has advanced CDN$20,469 to the Company to
fund the Company's initial operations. The loan is unsecured and accrues no
interest. Through the period ending March 31, 1999, the Company had repaid
CDN$16,000.
The Company occupies office space furnished by Mr. McDougall in premises
leased to Mr. McDougall by International Parkside. Through the period ending
March 31, 1999, the Company had paid to International Parkside a total of
CDN$1,700 rent.
The Company and Campbell have an agreement whereby the Company is obligated
to pay Campbell consulting fees of $5,000 per month for the services of Mr.
McDougall. Mr. McDougall is the President and a shareholder of Campbell, as well
as the President, Chief Executive Officer, Secretary and Chief Financial Officer
of the Company. Through the period ending March 31, 1999, the Company had paid
$5,000 in consulting fees to Campbell.
Transactions with Promoters. Gordon McDougall was the promoter of the
Company, and Campbell Capital Advisory Inc., a company wholly-owned by Mr.
McDougall, received 6,000,000 shares of $.001 par value common stock of the
Company for Mr. McDougall's management and organizational services provided to
the Company.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such
legal actions contemplated.
Item 9. Market For Common Equity and Related Stockholder Matters
There is currently no market for the Company's common stock, although the
Company anticipates applying to participate in the OTC Bulletin Board electronic
quotation system maintained by the National Association of Securities Dealers,
Inc.
As of June 4, 1999, there were approximately 18 holders of the Company's
$.001 par value common stock. There have been no cash dividends declared on the
Company's common stock in the last two fiscal years. Dividends are declared at
the sole discretion of the Company's Board of Directors.
Item 10. Recent Sales of Unregistered Securities
There have not been sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
On or about January 19, 1999, the Company commenced an offering of shares
of its $.001 par value common stock for $.001 per share. Those shares were
issued in reliance on an exemption from the registration requirements of the
Securities Act of 1933 ("Act") specified by the provisions of Section 3(b) of
the Act and Rule 504 of Regulation D promulgated by the Securities and Exchange
Commission pursuant to that Section 3(b). Through June 4, 1999, the Company had
sold a total of 7,170,000 shares of its $.001 par value common stock pursuant to
that offering. The gross proceeds from that offering amounted to US$7,170, all
of which was allocated to working capital.
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In or about March of 1999, the Company commenced an offering of shares of
its $.001 par value common stock for US$.50 per share. The shares were issued in
reliance on an exemption from the registration requirements of the Act specified
by the provisions of Section 3(b) of the Act and Rule 504 of Regulation D
promulgated by the Securities and Exchange Commission pursuant to Section 3(b).
Through June 4, 1999, the Company had sold a total of 140,660 shares of its
common stock pursuant to that offering. The gross proceeds to the Company
amounted to US$70,330, all of which was allocated to working capital.
Item 11. Description of Securities
The Company is authorized to issue 50,000,000 shares of common stock, $.001
par value, each share of common stock having equal rights and preferences,
including voting privileges; and 5,000,000 shares of preferred stock, $.001 par
value. As of June 4, 1999, there were 7,310,660 shares of the Company's common
stock were issued and outstanding, and no shares of the Company's $.001 par
value preferred stock issued and outstanding.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The Bylaws of
the Company specify how the cash available for distribution, whether occurring
from operations or sales or refinancing, is to be shared among the shareholders.
The holders of the Company's common stock are entitled to one vote for each
share of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors of the Company or
any other matter, with the result that the holders of more than 50% of the
shares voted for the election of those directors can elect all of the directors.
The holders of the Company's common stock are entitled to receive dividends
when, as and if declared by the Company's Board of Directors from funds legally
available therefor; provided, however, that cash dividends are at the sole
discretion of the Company's Board of Directors. In the event of liquidation,
dissolution or winding up of the Company, the holders of common stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities of the Company and after provision has been
made for each class of stock, if any, having preference in relation to the
Company's $.001 par value common stock. Holders of the shares of Company's
common stock have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to the Company's common stock. All
of the outstanding shares of Company's common stock are duly authorized, validly
issued, fully paid and non-assessable.
Item 12. Indemnification of Directors and Officers
Article Twelve of the Company's Articles of Incorporation provides that no
director or officer of the Company shall be personally liable to the Company or
any of its stockholders for damages for breach of fiduciary duty as a director
or officer involving any act or omission of any such director or officer;
provided, however, that the foregoing provision does not eliminate or limit the
liability of a director or officer for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes.
The Company anticipates that it will enter into indemnification agreements
with each of its directors and executive officers pursuant to which the Company
agrees to indemnify each such director and executive officer for all expenses
and liabilities, including criminal monetary judgments, penalties and fines,
incurred by such director and officer in connection with any criminal or civil
action brought or threatened against such director or officer by reason of such
person being or having been an officer or director of the Company. In order to
be entitled to indemnification by the Company, such person must have acted in
good faith and in a manner such officer or director believed to be in the best
interests of the Company and, with respect to criminal actions, the officer or
director must have had no reasonable cause to believe his or her conduct was
unlawful.
11
<PAGE>
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements.
Copies of the financial statements specified in Regulation 228.310 (Item
310) are filed with this Registration Statement, Form 10-SB (see Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements. Page
----
Independent Auditor's Report F-1
Audited Balance Sheet as at March 31, 1999 F-2 through F-3
Audited Statement of Operations and Accumulated Deficit for the
period from January 19, 1999 (inception) to March 31, 1999 F-4
Audited Statement of Stockholders' Equity
for the period ending March 31, 1999 F-5
Audited Statement of Cash Flows for the period ending
March 31, 1999 F-6
Notes to Financial Statements F-7 through F-10
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form 10-SB as exhibits:
Index to Exhibits Page
----
1 Corporate Charter of Luna Medical Technologies, Inc. E-1
(Charter document)
2 Bylaws of Luna Medical Technologies, Inc. E-2 through E-21
(Instrument defining the rights of Security holders)
3 Articles of Incorporation of Luna E-22 through E-26
Medical Technologies, Inc.(Charter document)
4 Amendment to Articles of Incorporation of Luna Medical E-27
Technologies, Inc., Authorizing the Name Change
5 License Agreement Between Luna Medical E-28 through E-31
Technologies, Inc. and Luna Products, Inc.
6 Amendment to License Agreement Between E-32 through E-33
Luna Medical Technologies, Inc. and Luna Products, Inc.
12
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange Act
of 1934, Luna Medical Technologies, Inc. has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vancouver, on June 14, 1999.
Luna Medical Technologies, Inc.,
a Nevada corporation
By: /s/ Gordon McDougall
--------------------
Gordon McDougall
Its: President
13
<PAGE>
Board of Directors
Luna Medical Technologies, Inc.
1820 - 1095 West Pender Street
Vancouver, BC V6E 2M6
Independent Auditor's Report
We have audited the accompanying balance sheet of Luna Medical Technologies,
Inc., formerly Luna Technologies, Inc., (a development stage enterprise), as of
March 31, 1999 and the related statements of operations and accumulated deficit,
stockholders' equity and cash flows for the period from January 19, 1999
(inception) to March 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Luna Medical Technologies,
Inc., formerly Luna Technologies, Inc. as of March 31, 1999, and the results of
its operations and its cash flows for the period from January 19, 1999
(inception) to March 31, 1999, in conformity with generally accepted accounting
principles.
Williams & Webster, P.S.
Spokane, Washington
May 31, 1999
F-1
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
BALANCE SHEET
For the period
Ended
3/31/99
-------------
ASSETS
CURRENT ASSETS
Cash 9,897
Accounts receivable 1,091
Loan receivable 40,000
GST receivable 920
Prepaid marketing expense 16,453
Prepaid expenses 5,637
Inventory 1,012
-------
TOTAL CURRENT ASSETS 75,010
OTHER ASSETS
Licensing agreement 1
-------
TOTAL OTHER ASSETS 1
TOTAL ASSETS $75,011
=======
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
For the period
Ended
3/31/99
-------------
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable 10,556
Accrued marketing costs 16,453
Royalties payable 130
Short term loans - CCA 4,469
--------
TOTAL CURRENT LIABILITIES 31,608
--------
COMMITMENTS AND CONTINGENCIES --
TOTAL LIABILITIES 31,608
--------
STOCKHOLDERS EQUITY
Preferred stock, 5,000,000 shares authorized,
$0.001 par value; no shares issued and outstanding --
Common stock, 50,000,000 shares authorized,
$0.001 par value; 7,310,660 shares issued and outstanding 7,311
Additional paid-in capital 70,189
Stock subscriptions receivable (5,000)
Accumulated deficit during developmental stage (29,097)
--------
TOTAL STOCKHOLDERS' EQUITY 43,403
--------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 75,011
========
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
For the period from January 19, 1999 (inception) to March 31, 1999
REVENUES $ 1,020
COST OF GOODS SOLD (827)
-----------
GROSS MARGIN ON SALES 193
E X P E N S E S
Consulting 13,163
Legal 2,506
Marketing expense 5,907
Office Expense 673
Rent 1,700
Transfer agent 2,798
Travel Expense 1,199
Stock issuance costs 1,344
-----------
TOTAL EXPENSES 29,290
-----------
NET LOSS FROM OPERATIONS (29,097)
ACCUMULATED DEFICIT, BEGINNING BALANCE --
-----------
ACCUMULATED DEFICIT, ENDING BALANCE $ (29,097)
===========
NET LOSS PER COMMON SHARE $ (0.01)
===========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING 5,154,552
===========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from January 19, 1999 (inception) to March 31, 1999
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional Stock Total
Number Paid-In Accumulated Subscriptions Stockholders'
of Shares Amount Capital Deficit Receivable Equity
--------- ------ ------- ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock through March 1999:
for cash at $0.001 per share 7,170,000 $ 7,170 $ -- $ -- $ $ 7,170
Issuance of common stock through March 1999:
for cash at $.50 per share 140,660 141 70,189 -- (5,000) 65,330
Loss for period ending,
March 31, 1999 (29,097) (29,097)
--------- --------- --------- --------- ------ ---------
Balance,
March 31, 1999 7,310,660 7,311 70,189 (29,097) (5,000) 43,403
========= ========= ========= ========= ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
For the period from January 19, 1999 (inception) to March 31, 1999
Cash flows from operating activities:
Net Loss $(29,097)
Adjustment to reconcile net loss
to net cash used by operating activities:
Increase (decrease) in:
Accounts receivable (2,011)
Prepaid expenses (22,090)
Inventory (1,012)
Increase (decrease) in:
Accounts payable 10,556
Accrued liabilities 16,583
--------
Net cash (used) in operating activities (27,071)
--------
Cash flows from investing activities:
Loan to licensor pursuant to licensing agreement (40,000)
Acquisition cost of license (1)
--------
Net cash (used) by investing activities (40,001)
--------
Cash flows from financing activities:
Proceeds from sale of Common Stock 72,500
Proceeds from short-term loan payable 20,469
Repayment of short-term loan payable (16,000)
--------
Net cash provided by financing activities 76,969
--------
Change in cash 9,897
Cash, beginning of period --
--------
Cash, end of period $ 9,897
========
Supplemental disclosures:
Interest paid $ --
Income taxes paid $ --
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Luna Medical Technologies, Inc., formerly Luna Technologies, Inc., (hereinafter
"the Company"), was incorporated January 19, 1999 under the laws of the State of
Nevada for the purpose of engaging in any lawful activity. The Company has
entered into an exclusive worldwide license agreement with Luna Products, Inc.
to manufacture and distribute the Luna Fertility Indicator, and is in the
process of developing marketing plans for the products acquired. The Company
maintains an office in Vancouver, British Columbia.
On May 31, 1999 the Company amended its articles of incorporation to reflect the
name change to Luna Medical Technologies, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Luna Medical Technologies,
Inc. is presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Development Stage Activities
The Company has been in the development stage since its formation in January,
1999 and has not yet realized any significant revenues from its planned
operations. It is primarily engaged in the manufacture and distributions of the
Luna Fertility Indicator, and is in the process of developing marketing plans
for the products acquired.
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
Loss Per share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
F-7
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Provision for Taxes
At March 31, 1999, the Company had net operating loss of approximately $29,100.
No provision for taxes or tax benefit has been reported in the financial
statements, as there is not a measurable means of assessing future profits or
losses.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
Translation of Foreign Currency
The Company has adopted Financial Accounting Standard No. 52. The Canadian
foreign exchange rate has remained approximately the same since inception
therefore, there are no material exchange rate transaction gains or losses. In
the future, the Company will record such transactions in the Statement of
Stockholders' Equity.
NOTE 3 - DETAILS OF SHORT-TERM DEBT
Short-term loan payable consists of the following at March 31, 1999:
Campbell Capital Advisory, Inc. (CCA) $4,469
During this period CCA advanced $20,469, of which $16,000 has been repaid. The
loan payable is unsecured and bears no interest. The Company intends to pay the
balance when funds become available. It is payable to a related company under
the control of the Company's president (see Note 5).
F-8
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE 4 - COMMON STOCK
Upon incorporation, 7,310,660 shares of common stock were sold, 7,170,000 at
$.001 per share, and 140,660 at $.50 per share, under Regulation D, Rule 504.
No shares of preferred stock were issued during the period ending March 31,
1999.
NOTE 5 - RELATED PARTIES
The President and Chief Executive Officer of the Company, Gordon C. McDougall,
is also the president and stockholder of Campbell Capital Advisory, Inc., which
has advanced funds to the Company to begin operations and to retain the services
of an attorney. The Company occupies office space contracted by Mr. McDougall.
The rental agreement is a monthly agreement with International Parkside, for
which the Company paid one month's rent during the reporting period.
During the period ended March 31, 1999, Campbell Capital Advisory, Inc. was paid
$5,000 in consulting fees for the services of Mr. McDougall.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
On January 31, 1999, Luna Medical Technologies, Inc. entered into a licensing
agreement with Luna Products, Inc. (LPI). This arrangement is recorded as a loan
receivable of $40,000 and as deferred and accrued marketing expenses, originally
in the sum of $20,000. The value ascribed by the agreement to the license is $1.
The Agreement calls for the loan to be paid by a $1 fee per unit for the first
30,000 units sold, and then a $.50 fee per unit in perpetuity, continuing after
the loan is paid in full as a licensing cost. Until May 31, 1999, the agreement
can be modified and the loan converted into 50% of the common stock of Luna
Products, Inc. The loan does not have a stated rate of interest and management
believes that sales should result in a complete repayment of this loan within
one year. Furthermore, the Licensing Agreement calls for continuing royalties of
5% of Luna Medical Technologies gross sales to Luna Products, Inc. and $1 for
each unit sold to Jim Emmerson, a director of LPI.
Each of these royalties will be paid monthly and include all units sold, in
perpetuity.
On May 6, 1999, the Company and LPI agreed to certain modifications to the
Licensing agreement. The Company agreed not to exercise its right to acquire a
50% equity interest in LPI. The companies agreed to certain pricing and
purchasing structures and increased the required total marketing obligation to
$250,000, to be expended by May 31, 2000.
F-9
<PAGE>
LUNA MEDICAL TECHNOLOGIES, INC.
Formerly Luna Technologies, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1999
NOTE 7 - YEAR 2000 ISSUES
Like other companies, Luna Medical Technologies, Inc. could be adversely
affected if the computer systems the Company, its suppliers or customers use do
not properly process and calculate date-related information and data from the
period surrounding and including January 1, 2000. This is commonly known as the
"Year 2000" issue. Additionally, this issue could impact non-computer systems
and devices such as production equipment and elevators, etc. At this time,
because of the complexities involved in the issue, management cannot provide
assurance that the Year 2000 issue will not have an impact on the Company's
operations.
F-10
<PAGE>
SECRETARY OF STATE
[GRAPHIC OMITTED]
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that LUNA TECHNOLOGIES INC. did on January 19, 1999 file in this
office the original Articles of Incorporation; that said Articles are now on
file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I
have hereunto set my
hand and affixed the
Great Seal of State, at
my office, in Carson
City, Nevada, on January
20, 1999.
/s/ Dean Heller
Secretary of State
[SEAL]
By /s/ [ILLEGIBLE]
Certification Clerk
E-1
<PAGE>
BYLAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
LUNA TECHNOLOGIES INC.
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
the business of the corporation is hereby fixed and located at Suite 880, Bank
of America Plaza, 50 West Liberty Street, Reno, Nevada 89501, being the offices
of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors is hereby granted
full power and authority to change said principal office from one location to
another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all other
meetings of shareholders shall be held either at the principal office or at any
other place within or without the State of Nevada which may be designated either
by the board of directors, pursuant to authority hereinafter granted to said
board, or by the written consent of all shareholders entitled to vote thereat,
given either before or shareholders entitled to
1
E-2
<PAGE>
vote thereat, given either before or after the meeting and filed with the
Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall be
held on the second Thursday of September of each year, at the hour of 10:00
o'clock A.M. of said day commencing with the year 1999; provided, however, that
should said day fall upon a legal holiday then any such annual meeting of
shareholders shall be held at the same time and place on the next day thereafter
ensuing which is not a legal holiday.
Written notice of each annual meeting signed by the president or a vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called.
2
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<PAGE>
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes whatsoever, may be called at any time by the president or by
the board of directors, or by one or more shareholders holding not less than 10%
of the voting power of the corporation. Except in special cases where other
express provision is made by statute, notice of such special meetings shall be
given in the same manner as for annual meetings of shareholders. Notices of any
special meeting shall specify in addition to the place, day and hour of such
meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote has
been absent from any meeting of shareholders, whether annual or special, an
entry in the
3
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<PAGE>
minutes to the effect that notice has been duly given shall be conclusive and
incontrovertible evidence that due notice of such meeting was given to such
shareholders, as required by law and the Bylaws of the corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting fights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as
4
E-5
<PAGE>
though at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if either before or after the meeting,
each of the shareholders entitled to vote, not present in person or by proxy,
sign a written waiver of Notice, or a consent to the holding of such meeting, or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of this
meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution,
unless the shareholder executing it specifies therein the length of time for
which such proxy is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution.
ARTICLE Ill
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the Bylaws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the Bylaws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations,
5
E-6
<PAGE>
it is hereby expressly declared that the directors shall have the following
powers, to wit:
First - To select and remove all the other officers, agents and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the Bylaws, fix
their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, with the Articles of incorporation or the Bylaws, as they may deem
best.
Third - To change the principal office for the transaction of the business
of the corporation from one location to another within the same county as
provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or- without the State of Nevada for the holding of any shareholders I
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Fourth - To authorize the issue of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities canceled, or
tangible or intangible property
6
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<PAGE>
actually received, or in the case of shares issued as a dividend, against
amounts transferred from surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal Bylaws. The executive
committee shall be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors of the corporation shall be not less than one (1) and no more than
fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders, but if any such annual meeting is not held,
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders. All directors shall hold office until their
respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining
7
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<PAGE>
director, and each director so elected shall hold office until his successor is
elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the board or by written consent of all
members of the board. In the absence of such designation, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each annual
8
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<PAGE>
meeting of shareholders, the board of directors shall hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call on the eighth (8th) day of each month at
the hour of 10:00 clock A.M. of said day; provided, however, should said day
fall upon a legal holiday, then said meeting shall be held at the same time on
the next day thereafter ensuing which is not a legal holiday. Notice of all such
regular meetings of the board of directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. special meetings of the board of directors for
any purpose or purposes shall be called at any time by the president, or, if he
is absent or unable or refuses to act, by any vice president or by any two (2)
directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by mail or other form of
written communication, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation, or if it is not shown on such records
or is not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In case such notice is mailed or telegraphed, it
shall be deposited in the United States mail or delivered to the telegraph
company in the place in which the principal office of the corporation is located
at least forty-eight (48) hours prior to the time of the holding of the
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meeting. In case such notice is delivered as above provided, it shall be so
delivered at least twenty-four (24) hours prior to the time of the holding of
the meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such director.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given to absent directors, if the time and
place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was give to such director, as
required by law and the Bylaws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the board
of directors, however called and noticed or wherever held, shall be as valid as
though had a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present sign a written waiver of notice or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of directors shall
be
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necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the board of directors, unless a
greater number be required by law or by the Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any stated
salary for their services as directors, but by resolution of the board, a fixed
fee, with or without expenses of attendance may be allowed for attendance at
each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a president,
a vice president and a secretary/treasurer. The corporation may also have, at
the discretion of
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the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
3 of this Article. Officers other than president and chairman of the board need
not be directors. Any person may hold two or more offices.
Section 2. ELECTION. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the board of directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may appoint
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the Bylaws or as the board of directors may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with
or without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the board of
directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and,
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unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there shall
be such an officer, shall, if present, preside at all meetings of the board of
directors, and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
Bylaws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be such
an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the Bylaws.
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Section 8. VICE PRESIDENT. In the absence or disability of the president,
the vice presidents in order of their rank as fixed by the board of directors,
or if not ranked, the vice president designated by the board of directors, shall
perform all the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of directors
or the Bylaws.
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a book
of minutes at the principal office or such other place as the board of directors
may order, of all meetings of directors and shareholders, with the time and
place of holding, whether regular or special, and if special, how authorized,
the notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of certificates issued for the same, and the number and date
of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the board of directors required by the Bylaws or by
law to be given,
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and he shall keep the seal of the corporation in safe custody, and shall have
such other powers and perform such other duties as may be prescribed by the
board of directors or the Bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
the Bylaws.
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AN CLOSING STOCK BOOKS. The board of
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directors may fix a time, in the future, not exceeding fifteen (15) days
preceding the date of any meeting of shareholders, and not exceeding thirty (30)
days preceding the date fixed for the payment of any dividend or distribution,
or for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or exchange
of shares, and in such case only shareholders of record on the date so fixed
shall be entitled to notice of and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The board of directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or duplicate
share register, the books of account, and minutes of proceedings of the
shareholders and directors shall be open to inspection upon the written demand
of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust certificate, and shall be
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders' meeting. Such inspection
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may be made in person or by an agent or attorney, and shall include the right to
make extracts. Demand of inspection other than at a shareholders' meeting shall
be made in writing upon the president, secretary or assistant secretary of the
corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the corporation shall
cause to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors, except as
in the Bylaws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract, deed or lease or execute any instrument
in the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances; and unless so authorized by the board
of directors, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit to
render it liable for any purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for shares
of the capital stock of the corporation shall be issued to each shareholder when
any such
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shares are fully paid up. All such certificates shall be signed by the president
or a vice president and the secretary or an assistant secretary, or be
authenticated by facsimiles of the signature of the president and secretary or
by a facsimile of the signature of the president and the written signature of
the secretary or an assistant secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer
clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the Bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The president
or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. INSPECTION OF BYLAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
Bylaws as
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amended, or otherwise altered to date, certified by the secretary, which shall
be open to inspection by the shareholders at all reasonable times during office
hours.
Section 9. REFUSAL TO REGISTER TRANSFER. The Corporation shall not register
any transfer of securities issued by the Corporation in any transaction that
qualifies for the exemption from registration requirements specified by the
provisions of Regulation S, unless such transfer is made in accordance with the
provisions of Regulation S.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or these Bylaws
may be amended or repealed by the vote of shareholders entitled to exercise a
majority of the voting power of the corporation or by the written assent of such
shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal Bylaws,
Bylaws other than a Bylaw or amendment thereof changing the authorized number of
directors may be adopted, amended or repealed by the board of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. Any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof, may be taken without a meeting, if a
written consent
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thereto is signed by all the members of the board or of such committee. Such
written consent shall be filed with the minutes of proceedings of the board or
committee.
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FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 19 1999
NO. C1092-99
-----------------
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
Luna Technologies Inc.
* * * * * *
The undersigned, acting as incorporator, pursuant to the provisions of the
laws of the State of Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. (NAME]. The name of the corporation is:
Luna Technologies Inc.
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of process is
The Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880, City of
Reno, County of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. [OMNIBUS). To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and
all acts amendatory thereof and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry on its
business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such state,
territory, or foreign country, and to have and maintain in any state,
territory, or foreign country a business office, plant, store or other
facility.
III. [PURPOSES TO BE CONSTRUED AS POWERS]. The purposes specified
herein shall be construed both as
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purposes and powers and shall be in no wise limited or restricted by
reference to, or inference from, the terms of any other clause in this or
any other article, but the purposes and powers specified in each of the
clauses herein shall be regarded as independent purposes and powers, and
the enumeration of specific purposes and powers shall not be construed to
limit or restrict in any manner the meaning of general terms or of the
general powers of the corporation; nor shall the expression of one thing be
deemed to exclude another, although it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of FIFTY-FIVE MILLION (55,000,000) shares of stock, divided
into two (2) classes of stock as follows for a total capitalization of
FIFTY-FIVE THOUSAND DOLLARS ($55,000):
(A) NON-ASSESSABLE COMMON STOCK: FIFTY MILLION (50,000,000) shares of
COMMON STOCK, Par Value ONE MILL ($0.001) per share and
(B) PREFERRED STOCK: FIVE MILLION (5,000,000) shares of PREFERRED STOCK,
Par Value ONE MILL ($0.001) per share.
All capital stock when issued shall be fully paid and non-assessable. No
holder of shares of capital stock of the corporation shall be entitled as such
to any pre-emptive or preferential rights to subscribe to any unissued stock, or
any other securities which the corporation may now or hereafter be authorized to
issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
Holders of the corporation's Common Stock shall not possess cumulative
voting rights at any shareholders meetings called for the purpose of electing a
Board of Directors or on other matters brought before stockholders meetings,
whether they be annual or special.
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ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be governed
by a Board of Directors of not more than fifteen (15) nor less than one (1)
person. The name and address of the first Board of Director is:
NAME ADDRESS
1820-1095 West Pender Street
Gordon McDougall Vancouver, British Columbia
Canada VGE 2MG
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the corporation,
after the amount of the subscription price or par value has been paid in, shall
not be subject to pay debts of the corporation, and no paid up stock and no
stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
Amanda Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders of
at least ten percent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholders having at
least a majority of the voting power.
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ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
ARTICLE TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its stockholders
for damages for breach of fiduciary duty as a director or officer, except that
this Article Twelve shall not eliminate or limit the liability of a director or
officer for (I) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of the
Nevada Revised Statutes.
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IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed her
signature at Reno, Nevada this 15th day of January, 1999.
/s/ Amanda Cardinalli
------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: ss.
COUNTY OF WASHOE }
On the 15th day of January, 1999, before me, the undersigned, a Notary
Public in and for the State of Nevada, personally appeared AMANDA CARDINALLI,
known to me to be the person described in and who executed the foregoing
instrument, and who acknowledged to me that she executed the same freely and
voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Margaret A. Oliver
------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires: -----------------------------------------------
October 10, 2002 MARGARET A. OLIVER
- ---------------- [SEAL] Notary Public - State of Nevada
Appointment Recorded in Washoe County
No.94-5323-2-EXPIRES OCT 10, 2002
-----------------------------------------------
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FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 11 1999
C 1092-99
---------------
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
LUNA TECHNOLOGIES, INC.,
a Nevada corporation
Pursuant to the provisions of the Nevada Revised Statutes, LUNA
TECHNOLOGIES, INC., a Nevada corporation, adopts the following amendment to its
Articles of Incorporation.
1. The undersigned hereby certify that on the 31 day of May, 1999, a
Special Meeting of the Board of Directors was duly held and convened at which
there was present a quorum of the Board of Directors acting throughout all
proceedings, and at which time the following resolution was duly adopted by the
Board of Directors:
BE IT RESOLVED, that the Secretary of the corporation is hereby ordered'
and directed to obtain at least a majority of the voting power of the
outstanding stock of the corporation for the following purpose:
To amend Article One to provide that the name of the corporation shall be
changed from Luna Technologies, Inc. to Luna Medical Technologies. Inc.
2. Pursuant to the provisions of the Nevada Revised Statutes, a majority of
the stockholders holding 6,000,000 shares of the 7,310,660 shares outstanding of
Luna Technologies, Inc. gave their written come to the adoption of the Amendment
to Article One of the Articles of Incorporation as follows:
ARTICLE ONE. {NAME} The name of the corporation is: Luna Medical
Technologies, Inc.
In witness whereof, the undersigned being the President and Secretary of
Luna Technologies, Inc., a Nevada corporation, hereunto affix their signatures
this 31 day of May, 1999
Luna Technologies, Inc.
By: /s/ Gordon McDougall
--------------------
Gordon McDougall,
President
By: /s/ Gordon McDougall
---------------------
Gordon McDougall,
Secretary
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Luna Technologies, Inc.
Suite 880-50 West Liberty Street
Reno, Nevada, USA
89501
- --------------------------------------------------------------------------------
January 27, 1999
Via Facsimile (604) 525-8243
Luna Products, Inc.
107-329 7th
New Westminister, B.C, V3M 3K9
Attention: Mr. James Emmerson
Dear Jim:
Re: License agreement
We write to set out the general terms whereby Luna Products Inc. and you,
(collectively referred to as "you") will grant to us a license to market and
sell your products.
1. You hereby grant to us the exclusive worldwide license (the "License") to:
1.a) purchase and resell your Luna Fertility Indicator including all products
which replace or modify such products (the "Products"). Luna Technologies, Inc.
for the first year will pay a Fair Market Value price in US Dollars FOB New
Westminister, B.C. per unit for each Luna Fertility Indicator including
packaging. This pricing to be mutually agreed upon by the parties to this
License agreement.
b) have unrestricted access to and use for all purposes herein set forth, your
documents, records computer source code, trade secrets, studies, data and
information comprising or otherwise relating to the Products, provided we keep
such information confidential unless required to be disclosed by law; and
2. The consideration payable by us to you for the grant of the Licensee is:
a) the sum of $1.00 and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by you; and
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2.b) the loan of US$40,000.00 to Luna Products, Inc. by us (the "Loan") on or
before February 12, 1999 on the terms described herein. In addition to Luna
Technologies, Inc. will spend a minimum of US$20,000.00 on direct marketing
expenses to promote the sale of the Luna Fertility Indicator over the next 3
months. Luna Technologies undertakes to use its best efforts to market the
Fertility Indicator and commence such efforts without unreasonable delay.
3. The loan shall be repaid by Luna Products, Inc. paying a fee of $1.00 for
each Luna Fertility Indicator sold for the first 30,000 units sold, then will
pay us $0.50 per unit sold in perpetuity. At our option we may convert the loan
to a 50% common share interest in Luna Products, Inc. at any time up until May
31, 1999. If Luna Technologies, Inc. converts its loan to a 50% equity interest
in Luna Products, Inc. Luna Products, Inc. will have no obligation to repay this
loan or any royalties or fees. Furthermore James Emmerson shall not be
personally responsible for repayment of this loan. It is our clear understanding
that $US30,000 of the loan will be used by Luna Products, Inc. to pay its
existing accounts payable with the balance being used for the expenses of Luna
Products, Inc.
4. The terms of the Licensee will be for the period commencing from the date
hereof until the date the loan is repaid in full.
5. We will pay to you a continuing royalty equal to 5% of all our gross sales
(as computed in accordance with generally accepted accounting principles) from
our sale of the Products during the term of the License. We shall pay such
royalty to you on the last day of each month for the gross sales in the
preceding month. In addition we will pay directly to Jim Emmerson a royalty of
$1.00 for each unit sold in perpetuity. Each of these royalties will be paid
monthly.
6. Each royalty payment shall be accompanied by an unaudited statement of
monthly gross sales of the payor of the royalties described herein. Each
statement shall be final and not subject to adjustment unless the recipient of
such royalty delivers to the payor written notice of objection within 12 months
after the receipt of such statement. The recipient, or its representative duly
authorized in writing, shall have the right to audit, at its expense, the books
and records of the payor to determine the accuracy of the statement. The audit
shall be conducted by a Certified General Accountant or Chartered Accountant of
recognized standing. The payor shall have the right to condition access to its
books and records on executions of a written agreement by the auditor that all
information will be held in confidence and used solely for purposes of audit and
resolution of any disputes related to the said statement. A copy of the
auditor's report shall be delivered to the payor and the amount which should
have been paid according to the auditor's report shall be paid forthwith, one
party to the other. In the event that the said discrepancy is to the detriment
of the recipient of such royalty and exceeds 5% of the amount actually paid by
the payor, then the payor shall pay the entire cost of the audit.
7. You agree that you will endeavor, without unreasonable delay, to register the
Luna name and logo (or a variation of that name and logo acceptable to us) as a
trademark in Canada, at your expense, and shall permit us the unrestricted use
of such trademark during the term of the License.
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8. You hereby represent and warrant to us as follows:
a) you hold all valid licenses and permits as may be requisite for carrying
on your business and producing and selling the Products in the manner and
locations in which you have carried on business and intend to carry on business;
b) no person, firm or corporation other than us has any agreement or option
or right capable of becoming an agreement for the purchase or licensing of the
Products;
c) there is no basis for and there are no actions, suits or judgements,
investigations or preceedings outstanding or pending or, to your knowledge,
threatened against or affecting you or the Products at law or in equity or
before or by any federal, provincial, state, municipal or other governmental
department, commission, board, bureau or agency;
d) to the best of your knowledge, you and the Products are not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which
they are subject or which apply to them;
e) you have good and marketable title to all of your assets, subject to no
mortgage, pledge, deed of trust, lien, conditional sale agreement, encumbrance
or charge; and
f) you have not experienced nor are you aware of any occurrence or event
which has had, or might reasonably by expected to have, a materially adverse
effect on your business or the results of your operations.
9. All obligations of the parties under this letter agreement are subject to the
acceptance of this letter agreement by such regulatory authorities having
jurisdiction.
10. Any notice, election, consent or other writing required or permitted to be
given hereunder shall be deemed to be sufficiently given if delivered in writing
to the address herein set out. Any party may from to time by notice in writing
change its address for the purpose of this paragraph.
11. This letter agreement shall be governed by and construed in accordance with
laws of the Province of British Columbia which shall be deemed to be the proper
law hereof.
12. All rights and remedies of either party hereunder are cumulative and are in
addition to, and shall not be deemed to exclude, any other right or remedy
allowed by law. All rights and remedies may be exercised concurrently.
13. Should any part of this letter agreement be declared or held invalid for any
reason, such validity shall not affect the validity of the remainder which shall
continue in full force and effect and be construed as if this letter agreement
had been executed without the invalid portion and it is hereby declared the
intention of the parties hereto that this letter agreement would have been
executed without reference to any portion which may, for any reason, be
hereafter declared or held invalid.
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14. No condoning, excusing or waiver by any party hereto of any default, breach
or non-observance by any other party hereto at any time or times in respect of
any covenant, proviso or condition herein contained shall operate as a waiver of
that party's rights hereunder in respect of any continuing or subsequent
default, breach or non-observance, or so as to defeat or affect in any way the
rights of that party in respect of any such continuing or subsequent default,
breach or non-observance, and no waiver shall be inferred from or implied by
anything done or omitted to be done by the party having those rights.
15. This letter agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto or by their successors or permitted
assigns.
16. Time shall be of the essence in this letter agreement.
17. This letter agreement constitutes the entire agreement between the parties
hereto and supersedes all prior agreements and understandings, oral or written,
by and between any of the parties hereto with respect to the subject matter
hereof.
If the above terms are satisfactory, please sign this letter in the spaces below
and return one copy to us.
Yours truly,
LUNA TECHNOLOGIES, INC.
/s/Gordon McDougall
- ----------------------------------
per Gordon McDougall, President
The above terms and conditions are hereby accepted and agreed to this 31 day of
January, 1999.
LUNA PRODUCTS, INC.
/s/ James Emmerson
- ----------------------------------
per James Emmerson, Director
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<PAGE>
[LOGO]
May 6, 1999
Luna Technologies, Inc.
Suite 880 - 50 West Liberty Street
Reno, Nevada 89501
USA
Attention: Gordon McDougall, President
Dear Gordon:
I would propose by this letter to outline certain changes to the January 27,
1999 letter agreement to meet our changing needs. The changes are appropriate
because LPI and LTI now have a better knowledge of what is required of each of
them if the Luna Fertility Indicator is to be marketed successfully to the
public. LTI wishes to have a lower product cost. Because LTI presently has an
exclusive worldwide right to marketing, LPI wishes to ensure that LTI will
actively market the Indicator.
The proposed changes to our agreement are as follows:
1. LPl agrees to sell each Indicator to LTI for $12.50 if to be resold to
wholesalers and distributors, and $16.50 if sold directly to consumers.
(a) If LTI does not know whether the units that it purchases will be for
direct sale or sale to wholesalers, it will pay the lower price and
account for the additional cost at the time that the Indicator is
shipped to a consumer.
(b) The price per unit shall remain in effect until May 31, 2000 at which
time the price shall be revised to a price agreed upon by LTI and LPI.
If LTI and LPI cannot agree on an appropriate price, then the price
shall be determined by an arbitrator acting under the Commercial
Arbitration Act. This price adjustment provision is to ensure that the
price is set at an amount which allows each of us to earn a reasonable
profit. Any price set by this procedure will remain in effect until
May 31 of the following year at which time it can be revised again
using this procedure.
(c) LTI will purchase the Indicators in one carton units (i.e. 264
Indicators per carton).
2. LTI agrees to use its best efforts to market the Indicators which efforts
will include the following:
Luna Products, Inc. Suite 107-329 7th Street New Westminister B.C. V3M 3K9
Phone: (604) 526-4964 Fax: (604) 525-8243
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-2-
(a) incurring total marketing cost during the period February 1, 1999 to
May 31, 2000 of not less than $250,000;
(b) changing the colour and design of the box to such other design and
colour as LTI and LPI shall agree upon (these costs will form part of
the marketing expenses).
3. The exclusive marketing rights and royalty payments provided by the January
27 agreement apply to the Indicator and any modified versions of the
Indicator but do not apply to other products that may be developed by LPI.
4. LTI agrees that it will not acquire one-half interest in the shares of LPI
which it had the right to acquire under the January 27 agreement.
If you agree, could you please sign below.
Yours truly,
LUNA PRODUCTS INC.
Per:
/s/ Len Reeves
- -------------------------------------
Len Reeves
Vice-President
Signed and agreed to:
Gordon McDougall
- -------------------------------------
Gordon McDougall, President
Luna Technologies, Inc.
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