<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Galtech Semiconductor Materials Corporation
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(Name of Small Business Issuer as specified in its charter)
UTAH 87-0427597
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(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
923 West 500 North
Lindon, Utah 84042
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 785-6520
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.00025 Par Value Common Voting Stock
-------------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: None.
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PART I
Item 1. Description of Business.
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Business Development.
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Organization, Charter Amendments and General History
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Organization
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Galtech Semiconductor Materials Corporation, a Utah corporation (the
"Company"), was organized on June 18, 1984, for the purpose of investing "in
new products, properties and/or businesses which may have potential for
profit."
At inception, the Company was authorized to issue 50,000,000 shares
of common voting stock, par value one mill ($0.001) per share, with fully-paid
stock not to be liable for further call or assessment. Copies of the
Company's Articles of Incorporation and Bylaws are attached hereto and
incorporated herein by this reference. See Item 15.
Charter Amendments
------------------
Since its inception, the Company has amended its Articles of
Incorporation as follows:
Changed its name to "Galtech, Inc. and amended Article IV of the
Articles of Incorporation to provide the authority to issue
200,000,000 shares of $0.00025 par value common stock, with fully
paid stock not to be liable for further call or assessment
(Amendment filed January 29, 1986).
Changed its name to "Galtech Semiconductor Materials Corporation
(Amendment filed September 9, 1986).
Effected a reverse split of the Company's outstanding shares in
the ratio of 20-to-one, with fractional shares rounded to a whole
share (Amendment filed February 24, 1995).
Unless otherwise indicated, all computations in this Registration
Statement take into account these adjustments.
Copies of all amendments to the Company's Articles of Incorporation
are attached hereto and incorporated herein by this reference. See Item 15.
General History
---------------
The Company commenced operations in approximately January, 1986.
These activities consisted of the development of a process for manufacturing
cadmium telluride, a compound used in the production of semiconductors, and
the renovation of a manufacturing facility to produce the Company's products.
A fire destroyed its facilities in 1990 and the Company has not yet
recommenced its semiconductor development activities.
On February 28, 1995, the Company acquired all of the issued and
outstanding common stock of Commodity Recovery Corporation, a Utah corporation
("CRC"), in exchange for 500,000 "unregistered" and "restricted" shares of the
Company's common stock. CRC was organized on October 31, 1994, for the
purpose of marketing products for destroying aflatoxin, a cancer-causing
substance found in grain and other foodstuffs.
Also on February 28, 1995, the Company issued 4,200,000
"unregistered" and "restricted" shares of common stock in exchange for all of
the issued and outstanding common stock of Energy Recovery Corporation, an
Arizona corporation ("ERC"). ERC was incorporated on February 7, 1994, for
the purpose of developing and producing alternative energy sources.
At the time of their acquisitions by the Company, neither CRC nor
ERC had any assets or operations. After its acquisition, CRC developed a
treatment method using ammonia vapor to destroy aflatoxin. In 1997,
management decided to narrow its focus to the development of its semiconductor
materials and ceased further development of its aflatoxin technology. The
State of Utah has administratively dissolved CRC for failure to file its
annual report.
On April 29, 1997, ERC was awarded a patent on a carousel electric
generator that was designed to provide a high level of electrical power in a
compact structure. The Company has conducted preliminary testing on the
generator and believes that it has potential for use in electric-powered
vehicles. The Company has built an electric vehicle for additional testing.
However, due to management's decision to focus on its semiconductor materials
operations, the Company does not plan to expend substantial additional
resources on its generator project in the foreseeable future. The State of
Arizona has administratively dissolved ERC for failure to file its annual
report.
After reviewing the current market for semiconductor materials, in
1997, the Company began work on modernizing and redesigning its antiquated
semiconductor equipment for the purpose of developing a reliable and
repeatable process for growing large area, single crystal, bulk cadmium
telluride and cadmium zinc telluride semiconductor material. The Company is
presently configuring a research and development and production facility in
Lindon, Utah, for this purpose.
This Registration Statement is being filed on a voluntary basis to
maintain the Company's quotations on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD"). See the heading
"Effects of Existing or Probable Governmental Regulations," Item I.
NASD OTC Bulletin Board Quotations
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The Company's common stock is quoted on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD") under the
symbol "GTSM." For information concerning these stock quotations during the
past two years, see the caption "Market Price of and Dividends on the
Company's Common Equity and Other Stockholder Matters," Item 9. The quotations
presented do not represent actual transactions or broker/dealer markups,
markdowns or commissions.
Effective January 4, 1999, the NASD adopted rules and
regulations requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a "reporting
issuer" which is required to file reports under Section 13 or 15(d) of the
Securities and Exchange Act of the 1934, as amended (the "1934 Act"). The
Company is not currently a "reporting issuer," and this Registration Statement
will bring the Company into compliance with these listing provision of the OTC
Bulletin Board and should prevent the NASD from "delisting" quotations of the
Company's common stock. Under the "phase-in" schedule of the NASD, the
Company has until December, 1999, within which to become a "reporting issuer"
and to satisfy all comments of the Securities and Exchange Commission with
respect to this Registration Statement.
Changes of Control During the Past Three Years
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In August, 1998, the following persons were appointed to serve in
the capacities indicated: William F. Pratt (CEO and President); S. Kent Holt
(Executive Vice President and Director); and David Porter (Secretary/Treasurer
and Director). See the caption "Directors, Executive Officers, Promoters and
Control Persons," Part I, Item 5 of this Registration Statement.
Sales of "Unregistered" and "Restricted" Securities Over the Past Three
Years
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For information concerning sales of "unregistered" and "restricted"
securities during the past three years, see the caption " Recent Sales of
Unregistered Securities," Item 10.
Business.
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The Company's principal operations focus on the development and
commercial exploitation of a new and more economical method of growing II-VI
semiconductor compounds than current methods.
The semiconductor industry is a multi-billion dollar market that has
been supplied predominantly by silicon materials. However, other materials
also have general and specific semiconductor applications. Cadmium telluride
and cadmium zinc telluride are semiconductor materials used in electronic
equipment such as infrared detectors, weapons guidance systems, satellite
surveillance, solar cells, deep space communications, light emitting diodes,
infrared night vision devices, laser applications, tumor detectors, nuclear
radiation and gamma detectors, spectrometers for chemical identification,
nuclear medicine and related applications.
Prior to the 1990 fire in its facilities, the Company had been
successful in producing cadmium telluride crystal substrates (i.e., wafers) of
up to four to six square inches; previous commercially manufactured cadmium
telluride substrates had been only one to two square inches. In addition, the
Company was able to produce round wafers, rather than the customary D-shaped
and rectangular wafers. Round wafers are preferred by industry users.
At present, the Company is concentrating its efforts on refining its
methods for the production of cadmium telluride and cadmium zinc telluride
substrates and reproducing its earlier production results. In the future,
depending on the success of its research and development efforts, market
conditions and the Company's success with its principal operations, it will
consider the development of monocrystalline substrates and polycrystalline
substrates and ingots made from the following compounds: Indium Phosphide;
Indium Antimonide; Gallium Antimonide; and Gallium Arsenide, as well as metal
organic chemical vapor depositor epitaxial layers on each of these substrates.
The term "epitaxial" refers to the overgrowth in layers of a crystalline
substance deposited in a definite orientation on a base or substratum composed
of different crystals.
Risk Factors
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Limited Operating History. Although the Company was incorporated in
1984, it ceased its business operations in 1990 and is only now recommencing
its operations. The Company's business plan calls for it to commence research
and development on the production of monocrystalline cadmium telluride for use
as semiconductor materials. However, the Company is still in a formative
stage. Potential investors should be aware of the difficulties normally
encountered by a new enterprise in a highly competitive industry. There is
limited evidence at this time upon which to base an assumption that the
Company's business plans will prove successful or that its products will be
successfully marketed. As a consequence, there is no assurance that the
Company will be able to operate profitably in the future.
Uncertainty of Production Technology. The Company's research and
development activities are designed to reproduce the results of its 1990
production of a large, high quality monocrystalline boule, or lump, of cadmium
telluride. The Company's President and CEO, William F. Pratt, has developed a
model for the production of this compound. The Company's focus during the
next 12 months will be to test and refine the model, with the goal of
developing a consistent, reliable method for producing high quality, round
wafers of cadmium telluride. To date, the Company has not been successful in
reproducing its earlier results, and there can be no assurance that its
efforts will be successful. If the Company is not able to develop a reliable
process for producing marketable cadmium telluride wafers, it is likely to
fail.
Operating Results of the Company. The Company is still a
development stage company and has not yet earned an annual profit. The gross
revenues and net losses of the Company for the three calendar years ended
December 31, 1998 are shown below:
Year ended Gross Net
December 31, Revenues Loss
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1996 -0- $400,501
1997 $42,000 $290,549
1998 -0- $445,034
No assurance can be given that the Company will not continue to
report losses on an annual basis or that the Company's business operations
will ultimately prove to be profitable.
Any substantial downturn in economic conditions or any significant
price decreases related to the semiconductor industry could have a material
adverse effect on the Company's business. Economic conditions such as
inflation may also affect the future availability of attractive financing
rates for the Company or its customers and may materially adversely affect the
Company's business.
No Source of Revenue. The Company will have no source of revenue
until it has established the ability to produce marketable quantities of
cadmium telluride of sufficiently high quality. Its operations are still in a
research and development phase, and there can be no assurance that it will be
successful in this regard.
Auditor's 'Going Concern' Opinion. The Independent Auditors' Report
issued in connection with the audited financial statements of the Company for
the calendar years ended December 31, 1998, and 1997, expresses "substantial
doubt about its ability to continue as a going concern," due to the Company's
status as a development stage company and its lack of significant operating
results. See the Index to Financial Statements, Part F/S of this Registration
Statement.
Dependence Upon Additional Financing. The Company will require
substantial additional funding in order to refine its model and commence the
production of marketable quantities of cadmium telluride. This funding will
be used to upgrade the Company's control software and to purchase three
additional production furnaces and additional equipment. If the Company is
unable to secure this financing, any production of its product will be limited
and it may be unable to produce sufficient quantities to become profitable.
There can be no assurance that the Company will be able to raise enough
funding to make its operations viable.
Reliance on Existing Management. The Company's operations are
primarily dependent upon the experience and expertise of William F. Pratt and
David R. Porter. The loss of either Dr. Pratt or Mr. Porter may have a
material adverse effect on the Company's business. If its production model
proves successful and it is able to produce marketable quantities of cadmium
telluride, the Company's success will also be dependant on its ability to
attract and retain qualified management, administrative and sales personnel,
of which there can be no assurance. The Company does not carry key man
insurance upon the lives of any of its officers.
Management to Devote Insignificant Time to Activities of the
Company. Members of the Company's management are employed full-time by other
entities and are not required to devote their full time to the affairs of the
Company. Because of their time commitments, it is expected that management
will devote only part time attention to the Company's activities, until such
time as the Company has tested and refined it production methods and is able
to produce marketable quantities of product.
Rapid Technological Change. The high technology industry is
characterized by rapid change. The Company believes that its success will
increasingly depend on its ability to offer its products based on evolving
technologies and industry standards. Depending on the success of its initial
research and development efforts, the Company intends to develop new products
based on different chemical structures such as Indium Phosphide and Gallium
Antimonide; however, there can be no assurance that the Company will have the
ability or resources to develop such new products. Further, there can be no
assurance that the Company's competitors will not develop products that are
technologically superior to the Company's or that achieve greater market
acceptance. The development of any such superior technology by the Company's
competitors or the inability of the Company to successfully respond to such a
development, could render the Company's existing and planned products obsolete
and could have a material adverse effect on the Company's business, financial
condition and results of operations. The lack of capital resources could
materially affect the Company's ability to develop new technologies or to
respond to technological changes.
Lack of Dividends. The Company has never paid, and does not plan to
pay in the foreseeable future, any cash dividends with respect to its common
stock.
Shares Eligible for Future Sales. Of the 14,644,018 currently
issued and outstanding shares of the Company's common stock, 5,761,515 are
freely tradeable, and 8,882,503 are unregistered securities and therefore
restricted from resale other than by way of a transaction complying with the
provisions of Rule 144, adopted under the Securities Act of 1933, as amended,
or some other exemption from registration. Rule 144 provides, among other
things, that if certain information concerning the operating and financial
affairs of the Company is publicly available, persons holding restricted
securities for a period of one year thereafter may sell in each subsequent
three month period up to that number of such shares equal to the greater of 1%
of the Company's outstanding common stock or the average weekly reported
volume of common stock trading during the four calendar weeks preceding the
filing of a notice of proposed sale. Pursuant to Rule 144(k), unlimited sales
of such restricted stock by non-affiliates may be effected following a two
year holding period. Future sales of the above mentioned shares under Rule
144 could depress the current market price of the common stock and any market
which may develop in the near future.
Risks of "Penny Stock." The Company's common stock may be deemed to
be "penny stock" as that term is defined in Reg. Section 240.3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks (i) with a price
of less than five dollars per share; (ii) that are not traded on a
"recognized" national exchange; (iii) whose prices are not quoted on the
NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (i) above); or (iv) in issuers with net tangible assets less than
$2,000,000 (if the issuer has been in continuous operation for at least three
years) or $5,000,000 (if in continuous operation for less than three years),
or with average revenues of less than $6,000,000 for the last three years.
The Company's common stock is currently quoted on the OTC Bulletin
Board of the NASD. However, there has been no "established public market" for
the Company's common stock during the last five years. At such time as the
Company meets the applicable eligibility requirements, if ever, it may attempt
to qualify for quotation on either NASDAQ or a national securities exchange.
However, at least initially, any trading in its common stock will most likely
continue to be on the OTC Bulletin Board.
Section 15(g) of the Securities Exchange Act of 1934, as amended,
and Reg. Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the
Company's common stock are urged to obtain and read such disclosure carefully
before purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange
Commission requires broker-dealers in penny stocks to approve the account of
any investor for transactions in such stocks before selling any penny stock to
that investor. This procedure requires the broker-dealer to (i) obtain from
the investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for investors in the Company's common stock to resell their
shares to third parties or to otherwise dispose of them.
Conflicts of Interest. Although they have no present plans to do
so, the Company's directors and officers may become officer, directors,
controlling shareholders and/or partners of other entities engaged in a
variety of businesses. Thus, there exist potential conflicts of interest
including, among other things, time, effort and corporate opportunity,
involved in participation with such other business entities.
No Assurance of Continued Public Market for the Company's
Securities. There is currently a limited public market for the Company's
common stock; however, there can be no assurance such a market will continue.
Purchasers of the Company's securities may, therefore, have difficulty in
selling such securities should they desire to do so.
Market Value of Common Stock. There is no correlation between the
market price of the Company's common stock and its book value. As of December
31, 1998, the net book value of a share of the Company's common stock was
$0.02, whereas the average closing bid price of a share of common stock during
the quarterly period ended on such date was $0.12 per share, and does not
necessarily bear any relationship to the Company's asset value, net worth or
other established criteria of value and should not be considered indicative of
the actual value of the Company or the market price of the common stock.
Year 2000
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The Company's computer system consists of personal computers built
by its Secretary/Treasurer, David R. Porter. These computers use the
Microsoft NT 4.0 operating system and the Company has confirmed that these
systems are Year 2000 compliant.
LabView, by National Instruments, is the software that will control
the furnaces used for the Company's semiconductor crystal growth; the Company
has also confirmed that this software is Year 2000 compliant. In addition,
the Company writes its own programs for other applications and these programs
have also been determined to properly recognize the change of year to the Year
2000.
The Company can give no assurance that third parties with whom it
intends to do business will ensure Year 2000 compliance in a timely manner or
that, if they do not, their computer systems will not have an adverse effect
on the Company. However, the Company does not believe that Year 2000
compliance issues of such third parties will result in a material adverse
effect on its financial condition or results of operations.
Principal Products and Services
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The Company is committing its resources to the development of a
reliable and repeatable process for growing large area, single crystal bulk
compound semiconductor material. The focus of this effort is the creation of
a viable and inexpensive production capability for cadmium telluride and
cadmium zinc telluride.
Each class of semiconductor material seems to have its own unique
properties that make it useful for specified applications. The II-VI
compounds as shown on the Periodic Table of Elements, which include cadmium
telluride and cadmium zinc telluride, have strong virtues in the field of
photo electronics. Devices such as photo cathodes (for night vision
instruments), solar cells and radiation detectors (used for applications such
as medical imaging equipment) are particularly well suited for the II-VI
compounds. The market for these devices has traditionally been military
applications. As these devices are adapted for consumer use, the market for
these compound semiconductor materials is also expected to expand. Management
also believes that cadmium telluride can also be used in medical imaging
devices market, which currently exceeds $2 billion per year. The use of II-VI
compounds to produce images in a digital format would be a revolutionary
development in the medical imaging device industry.
In 1990, Worth P. Allred, the Company's Vice President for Research
and Development, was able to produce large (four to six square inches)
crystalline substrates of cadmium telluride with rocking curve measurements of
9.6 to 20 arc seconds. Previous best measurements were 34 to 50 arc seconds.
Independent analyses performed at the University of Washington and California
State University, Fresno, showed these substrates to have extremely low
imperfections. The Company's current business operations are focused on the
development of a reliable, low cost method for reproducing these results and
commencing large-scale production of cadmium telluride semiconductor
materials.
The markets that the Company has targeted are primarily in the
United States, but potential opportunities are global. The major areas of
concentration outside of the United States are Japan, Taiwan, China, Korea,
the United Kingdom, West Germany, France and Italy.
Subject to the perfection of its production model, the Company
intends to serve the II-VI compound semiconductor market with both mono and
polycrystalline ingots and substrates. Presently, the only suppliers of any
quantities of specialty semiconductor materials such as cadmium telluride are
doing so at extremely high prices and in very small and inconsistent
quantities. Supply is so uncertain that some users of this material find it
necessary to internally produce material to supplement the short and uncertain
supply. These users have expressed a desire for additional suppliers to
supplement or improve their current sources of material. The Company's goal
will be to provide cadmium telluride materials in wafer form at potentially
lower cost and in larger amounts than other suppliers.
Cadmium telluride has properties that make it a good substrate for
the epitaxial growth of mercury cadmium telluride, a material with critical
applications for infrared photodetectors. Its advantages include infrared
transparency, lattice constancy, coefficient of expansion and ability to reach
into the far infrared regions.
There is also a small market for polycrystalline cadmium telluride
for use in optics. The Company expects that any sales in this market would be
secondary to its principal markets.
Distribution Methods of the Products or Services
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Companies such as Rockwell, Santa Barbara Research, Texas
Instruments, Hewlett-Packard, General Dynamics, ITT, McDonnell Douglas and
General Electric have done work in cadmium telluride device technology
development or production and would be potential customers of the Company.
Demand for cadmium telluride far exceeds the supply, with current
prices approximating $900 per square inch at a thickness of 20 to 30
thousandths of an inch. Management estimates that a six inch boule of
monocrystalline cadmium telluride would retail for approximately $500,000.
The Company believes that its production model will allow for semiconductor
crystal growth that produces much higher yields at high quality and will help
the Company to penetrate the market more easily. As the supply increases,
management expects that the demand for the material will increase,
particularly in the military market for infrared detectors and sensors.
The estimated market for cadmium telluride has grown from $30
million to approximately $60 million from 1994 to 1998. Users have also
questioned the quality of material currently on the market. Management
believes that the Company will be able to produce wafers approximately 300%
larger and with a higher quality monocrystalline structure.
If it is able to perfect its production model, the Company's first
aim will be to expand the market for cadmium telluride semiconductor materials
by producing them for approximately one-half the cost of current production.
This savings will be reflected in the prices at which the Company will sell
its materials. Management believes that these reduced prices, coupled with
increased product quality, will increase the demand for cadmium telluride
products; the Company will then provide the products necessary to meet this
demand.
The Company has personnel with contacts in the semiconductor
industry. It will place whole cadmium telluride ingots in the hands of
potential users so they can sample, test and evaluate them. Once potential
customers have evaluated the materials and are ready to make a purchase, the
parties will negotiate a price.
In order to place itself in a leadership position, the Company will
market its scientific staff as leaders and experts in the industry. Worth P.
Allred, the Company's Vice President for Research and Development, is the
world's leading expert in the field of Horizontal Bridgman crystal growth, the
method used to produce the Company's materials. Part of the Company's
marketing strategy will be to have the research and development staff prepare
research papers for presentation at crystal growth conferences and tradeshows,
and to co-author papers and projects with other leaders in the industry. Mr.
Allred has written several papers and participated in several conferences on
this subject.
The Company plans to use both an in-house sales force and contract
brokers to market its products. As sales increase, management intends to
increase its sales force. The marketing department will be given a budget for
advertising, promotion, sales visits with potential customers and
informational materials. However, in management's experience, the best and
most enduring sales in the semiconductor industry are made through personal
contacts and visits to the customer's plant. As a result, the sales manager's
focus will be on getting to know customers, their processes and products. As
sales increase, the Company plans to hire regional representatives for areas
that the sales manager can not handle personally or that require constant
attention that can not be given by the Company's in-house sales people.
Regional representatives will report to the sales manager.
Status of any Publicly Announced New Product or Service.
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None; not applicable.
Competitive Business Conditions.
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Crystal growth yields; wafer size and quality; and overhead costs
are the three problems that beleaguer each of the companies providing
semiconductor materials. The most successful materials suppliers are those
that master these problems best.
Yields. There are many problems associated with crystal growth
yields in the production of cadmium telluride. All of the Company's present
competitors have difficulty growing crystals with a single or monocrystalline
structure. The Company's process is designed to allow the manufacture of
large (greater than two square inches) wafers of a completely single
crystalline structure.
The Company's process includes a method that provides for the
production of large ingots that are three to 15 inches in length. This will
allow more of the ingot that is grown to be used in the end product. This end
product will be larger wafers at a lower or equal price than competitors'
products. This reduces cost stems largely from the less expensive growth
furnace that the Company will use. The Company has also developed a process
for lower wafer processing costs that should increase the yields of usable
material by over 50%.
Wafer Size and Quality. Due to the current small size of cadmium
telluride wafers, many device manufacturers have begun experimenting with
other substrate materials that could replace cadmium telluride. These
manufacturers have met with moderate success, but would prefer to use cadmium
telluride substrate if it were available in sufficient quantities and
qualities.
At present, the Company is able to match the size and quality of
materials being produced, and is conducting research to develop larger ingots
with consistency and of a quality of substrate that is not otherwise present
in today's market. The dislocation counts (a measurement of undesirable
lattice mismatch and stress) will be on the order of 10,000 dislocations or
less per square centimeter, rather than the usual 100,000 or more dislocations
in other products.
Management expects that other parameters of wafer quality and size
will exceed or equal all present customer specifications and that initial
introduction of the Company's product will take six to 12 months after the
production method is perfected. Once the acceptance and initial utilization
phase has passed, management believes that small evaluation orders of one to
50 square inches will grow to larger orders in excess of 100 square inches,
and even "original equipment manufacturer" accounts.
Overhead Costs. Using its production protocol, management believes
that the Company's manufacturing costs of its semiconductor compound materials
will be approximately one-fourth of the overhead and capital equipment costs
of the methods currently used by its competition. Normally, 25 to 50 people
are required to operate a small crystal growth facility. The Company has
calculated that it will be able to operate its facility with 15 to 20 people,
which will result in substantial overhead reduction.
Major competitors in the production of cadmium telluride are II-VI,
Inc., located in Saxonburg, Pennsylvania, and Nippon Mining, Ltd., of Japan.
II-VI, Inc., employs approximately 150 people and and controls approximately
75% of the market for cadmium telluride of one to three square centimeters.
Its product is generally cut from large three-inch polycrystalline ingots.
Nippon Mining is a major supplier of cadmium telluride to the Japanese market.
It also ships to Unites States users and its materials are reported to be of
good quality. The Company estimates Nippon Mining's market share at
approximately five to 10%. Each of these competitors has financial,
personnel, marketing and other resources significantly greater than
those of the Company, as well as other competitive advantages including
customer bases. The Company can provide no assurance that it will be able to
compete successfully in its industry.
Sources and Availability of Raw Materials.
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The Company's source of cadmium telluride is Alfa Aesar, a Johnston
Matthey Company, located in Ward Hill, Massachusetts. Alfa Aesar provides
cadmium telluride in a variety of forms, including powder and lumps of various
sizes. The product is available in purities of 99.999% and 99.99999%. Alfa
Aesar's most recent catalog lists a retail price of $1182 for 100 grams of
cadmium telluride of 99.99999% purity. The Company generally purchases in
five kilogram quantities; an average production run uses approximately two
kilograms. Cadmium telluride is reusable, with a loss of approximately five
percent of the original material with each additional production run.
Alfa Aesar is a well-established company and management believes
that it will be able to provide as much raw material as the Company requires.
However, a disruption in availability for an extended period of time would
have a substantial adverse impact on the Company's operations, particularly if
it results in an inability to fill customer orders.
Dependence on One or a Few Major Customers.
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At present, there is a substantial worldwide shortage of cadmium
telluride suppliers and quality products. It is projected that demand will
exceed supply for the next 10 to 15 years. The Company expects that there
will be sufficient demand for its products for the foreseeable future.
However, the development of a better quality, less expensive alternative to
cadmium telluride would be likely to render the Company's technology and
product obsolete.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Payments or
Labor Contracts.
- ----------------
In April, 1997, ERC was assigned a U.S. patent (Patent No.
5,625,241) on a carousel electric generator that was invented by Russell R.
Chapman, David R. Porter (the Company's Secretary/Treasurer) and Harold E.
Ewing. The Company has no trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts. Because semiconductor material crystal
growth patents are difficult to protect, the production processes are closely
guarded. The Company will allow only a select group of researchers access to
its processes and each employee will be required to sign a nondisclosure
agreement before receiving knowledge of the Company's processes.
Need for Government Approval of Principal Products or Services.
- ---------------------------------------------------------------
To the knowledge of management, the Company's processes and products
will not be subject to governmental approval.
Effect of Existing or Probable Governmental Regulations on Business.
- --------------------------------------------------------------------
As with other manufacturing companies, the Company's operations will
be subject to state and federal regulations in the areas of workplace safety
and environmental emissions. The Company intends to take all steps necessary
to ensure compliance with these laws and regulations.
Cadmium telluride is a stable, odorless material when in a solid
form. It has a melting point of 1905.8 degrees Fahrenheit; heat, sparks and
open flame can cause it to become unstable. Exposure to cadmium telluride can
cause irritation to the eyes, skin and mucous membranes, as well as lung
cancer and liver damage. Precautions for safe handling include the use of a
respirator, chemical goggles and protective clothing. The Company will ensure
that all employees that handle cadmium telluride comply with these workplace
safety requirements. In addition, the Company has installed an air scrubber
in its production furnace to remove cadmium telluride from the air.
Cadmium telluride tends to stay within approximately one inch of the
soil surface and does not generally leach into groundwater. The Company
intends to dispose of waste in accordance with federal, state and local
regulations. Management believes that the costs of compliance with applicable
regulations will be less than 1% of gross profits.
Research and Development
- ------------------------
During the past fiscal years ended December 31, 1998, and 1997, the
Company expended $9,553 and $63,497, respectively, on research and development
activities.
Costs and Effects of Compliance with Environmental Laws.
- --------------------------------------------------------
See the heading "Effect of Existing or Probable Governmental
Regulations on Business."
Number of Employees.
- --------------------
The Company presently employs nine unpaid part-time employees and no
full-time employees. During the next 12 months, management expects that the
Company will have approximately 12 to 15 full-time employees and no part-time
employees.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- -------------------------------------------------------------------
Plan of Operations.
- -------------------
During the next six months, the Company plans to perform test
production runs to test the model developed by Dr. Pratt. Each production
run requires approximately three to four weeks to heat the metal in the
Company's furnace and allow it to cool. The Company has a fully instrumented,
custom-designed control program that will allow it to compare actual
production data to its model and make appropriate adjustments in the
production process. The Company has sufficient equipment, supplies and
materials to continue this process for six months. Any funds required at this
stage are expected to be minimal.
In the following six month period, management expects to transition
the engineering effort from the "proof-of-principle" effort of the preceding
six months, to a pilot production level. The Company will need to raise
substantial additional funding to purchase the necessary equipment, upgrade
its software. The Company will seek sufficient funds to allow it to continue
its research and development efforts for two years without the need for
additional capital. Management will attempt to raise up to $4 million in this
regard, with approximately $1,700,000 of these funds allocated to research and
development over the next two years.
Once the process has been refined and the Company is able to produce
cadmium telluride substrates of consistently high quality and size, it will
provide samples of its product to potential customers such as Texas
Instruments, Sandia and Santa Barbara Research for analysis. If its research
and development efforts are successful, and if it is able to raise sufficient
capital, the Company expects to be able to begin full-scale production in two
years.
The foregoing contains "forward-looking" statements and information,
all of which is modified by reference to the caption "Risk Factors," Item 1.
Results of Operations.
- ---------------------
The Company has not had any material operations since approximately
1990. In anticipation of renewed operations, it has conducted three test
crystal growths in the last two years.
Liquidity.
- ----------
Revenues during the calendar year ended December 31, 1998, were $0,
as compared to $42,000 in the calendar year ended December 31, 1997. Net loss
for these periods were $464,211 and $290,549, respectively.
The Company is presently located in a facility leased by Patterned
Fiber Composites, Inc., which it uses rent-free. The Company has sufficient
equipment, supplies and materials to continue its process improvements and
engineering analysis for the next six months. Current operations may be
characterized as a "proof-of-principle" effort, during which the Company is
testing and refining its production processes. At the end of this six month
period, management expects that the Company will need to raise substantial
additional capital in order to allow it to proceed to the pilot production
level.
Item 3. Description of Property.
- ---------------------------------
The Company is presently using the facilities of Patterned Fiber
Composites, Inc., which employs the Company's President and CEO, William F.
Pratt, and its Secretary/Treasurer, David R. Porter. The facilities are
located in Lindon, Utah, and are provided rent-free. They consist of
approximately 4,800 square feet, of which approximately 1600 square feet is
office space and 3,200 is a warehouse and production facility. In addition,
the Company has access to a full-service machine shop located next to its
facility. Patterned Fiber Composites has a two-year lease on the facility,
with 1-1/2 years remaining.
If the Company is able to raise sufficient funds, it will enter into
a lease with Patterned Fiber Composites at a monthly rental of $450. If
Carbon Fiber Products' lease is terminated or is not renewed after the end of
the term, depending on the success of its research and development efforts and
the availability of sufficient funds, the Company will seek out a facility of
its own to rent or purchase.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of the date
hereof:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ --------
<S> <C> <C>
William F. Pratt 1,000,000 6.8%
1184 East 830 South
Pleasant Grove, Utah
84062
Worth P. Allred 1,200,000 (1) 8.2%
Post Office Box 120
Moroni, Utah
84646
Russell R. Chapman 2,015,033 (2) 13.8%
1242 N. Palm Springs Dr.
Gilbert, Arizona
85234
David R. Porter 1,009,717 6.9%
286 W. Thorneberry Way
Pleasant Grove, Utah
84062
William Tunnell 2,000,000 13.7%
20165 N. 67th Ave., #122A
Glendale, Arizona 85308
</TABLE>
(1) A total of 800,000 of these shares are held in joint tenancy
with Mr. Allred's wife.
(2) A total of 1,000,000 of these shares are held of record by
Firm International Group Trust, a trust of which Mr. Chapman is
the settlor.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date hereof. Information regarding
the capacities in which each person serves for the Company is contained in
Item 5.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address Beneficially Owned of Class
- ---------------- ------------------ -------------
<S> <C> <C>
William F. Pratt 1,000,000 6.8%
1184 East 830 South
Pleasant Grove, Utah
84062
Worth P. Allred 1,200,000 (1) 8.2%
Post Office Box 120
Moroni, Utah
84646
David R. Porter 1,009,717 6.9%
286 W. Thorneberry Way
Pleasant Grove, Utah
84062
S. Kent Holt 500,000 (2) 3.4%
18320 Lochner Road
Spencerville, Indiana
46788
All directors and executive
officers as a group
(4 persons) 3,709,717 25.3%
</TABLE>
(1) A total of 800,000 of these shares are held in joint tenancy
with Mr. Allred's wife.
(2) Does not include options to acquire an additional 500,000
shares. See the caption "Executive Compensation," Part I, Item
6 of this Registration Statement.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are elected
or appointed and qualified, or their prior resignations or terminations.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
William F. Pratt CEO 8/98 *
President 8/98 *
S. Kent Holt Executive VP 8/98 *
Director 8/98 *
Worth P. Allred VP, Research
& Development 9/91 *
Director 9/91 *
David R. Porter Secretary/ 8/98 *
Treasurer 8/98 *
Director 8/98 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
William F. Pratt, Chief Executive Officer and President. Dr. Pratt
is 51 years old. He received his undergraduate engineering degree in 1970
from the United States Military Academy at West Point. He also holds a
Masters in Engineering Management degree from the Brigham Young University
Marriott School of Management and a Ph.D. in Mechanical Engineering from
Brigham Young University. From 1970 to 1990, he served as an armored cavalry
officer in the U. S. Army with qualifications in special operations. From
1991 to 1993, he was the New Business Development Manager for EDO
Corporation's Active Noise and Vibration Control business initiative to
commercialize piezoelectronic technology developed for the U. S. Navy. Dr.
Pratt consulted for the Defense Advanced Research Projects Agency, Metron,
Cimetrix and the Company from 1994 to 1997. Dr. Pratt is the inventor of
several patent-pending technologies dealing with composite materials and
machine design, and has been the President of a startup software and
engineering company that developed products for the aerospace and sports
equipment markets.
S. Kent Holt, Executive Vice President and Director. Mr. Holt, age
47, holds an executive MBA degree from Washington University in St. Louis and
Bachelor of Science degrees in Nutrition and Food Science and Business
Administration from Utah State University. He was employed by Ralston
Purina's Protein Technologies International Division for nine years, serving
from 1977 to 1982 as Ralston Purina's resident joint venture manager in Japan.
In this position, he was responsible for the marketing and sale of Ralston
Purina's products in that country. From 1991 to 1998, Mr. Holt was Director,
New Products with the Corn Products Division of CPC International, where he
directed the New Product Marketing, Product Development and Applications
Research groups, and directed cross-functional product development teams vital
to creating new business for the company. Mr. Holt has been awarded two
patents in his field of expertise and is fluent in Japanese.
Worth P. Allred, Vice President, Research and Development, Director.
Mr. Allred is 73 years of age. He has over 40 years of experience in
semiconductor compound materials and is one of the world's leading experts in
the field of crystal growth. Mr. Allred received a Masters degree in Nuclear
Physics from Brigham Young University in 1953. For six years, he was a
faculty member at the University of Southern California's Materials Science
Department. Mr. Allred also worked for six years at Bell and Howell, Pasadena
Research Center, where he headed the Gallium Arsenide Research and Production
Facility. Prior to that he spent seven years conducting primary research in
crystal growth at the Batelle Memorial Institute in Columbus, Ohio. He was
also the founder and President of Crystal Specialties, Inc., a gallium
arsenide manufacturer that was located in Monrovia, California. Mr. Allred
has published over 33 papers in the area of crystal growth and has been
granted several patents, with others pending.
David R. Porter, Secretary/Treasurer and Director. Mr. Porter, age
42, worked for the Maricopa County Facilities Department in Phoenix Arizona,
from 1991 to 1997, in addition to consulting with the Company in the
development of a crystal growth furnace and software for control systems. Mr.
Porter is currently employed by Patterned Fiber Composites, Inc., which shares
its facilities with the Company. He continues to direct the Company's
manufacturing facilities development.
Significant Employees.
- ----------------------
The Company does not currently have any employees who are not
executive officers, but who are expected to make a significant contribution to
its business.
Family Relationships.
- ---------------------
There are no family relationships between any director or executive
officer.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Options outs ensat'n
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William F. 12/31/97 -0- -0- -0- -0- -0- -0- -0-
Pratt 12/31/98 -0- -0- -0- 550,000 -0- -0- -0-
CEO, Pres. 6/30/99 -0- -0- -0- -0- -0- -0- -0-
and Director
S. Kent Holt 12/31/97 -0- -0- -0- -0- -0- -0- -0-
Exec. Vice 12/31/98 -0- -0- -0- 500,000 500,000 (1)-0- -0-
President 6/30/99 -0- -0- -0- -0- -0- -0- -0-
and Director
Worth P. 12/31/97 -0- -0- -0- -0- -0- -0- -0-
Allred 12/31/98 -0- -0- -0- 800,000 -0- -0- -0-
Vice Pres., 6/30/99 -0- -0- -0- -0- -0- -0- -0-
R & D
and Director
David R. 12/31/97 -0- -0- -0- -0- -0- -0- -0-
Porter 12/31/98 -0- -0- -0- -0- -0- -0- -0-
Secretary/ 6/30/99 -0- -0- -0- -0- -0- -0- -0-
Treasurer
and Director
</TABLE>
(1) On July 1, 1998, Mr. Holt was granted options to purchase
500,000 "unregistered" and "restricted" shares of the
Company's common stock at the average closing price of
such stock for the 10 days immediately preceding the
notification of the Company's stockholders of Mr. Holt's
appointment as a director and executive officer. Based
on this formula, the exercise price of the options is
$0.27 per share. Options to purchase 250,000 shares
vested on July 1, 1999, and the options to purchase
the remaining 250,000 shares will vest on July 1, 2000.
The options are exercisable for three years from the
date of vesting. Unless otherwise prohibited, Mr. Holt
was granted the right to vote all 500,000 shares on
July 1, 1998.
No cash compensation, deferred compensation or long-term incentive
plan awards were issued or granted to the Company's management during the
year ended December 31, 1998, or the period ended June 30, 1999. Other than
the above-referenced options granted to Mr. Holt, no member of the Company's
management has been granted any option or stock appreciation rights;
accordingly, no tables relating to such items have been included within this
Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as a director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Employment Contracts and Termination of Employment and Change in Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
During the past two years, the only transactions between members of
management, nominees to become a director or executive officer, 5%
stockholders, or promoters or persons who may be deemed to be parents of the
Company are:
Issued a total of 550,000 shares of the Company's common stock to
William F. Pratt;
Issued a total of 500,000 shares of the Company's common stock to
S. Kent Holt;
Granted to S. Kent Holt options to purchase up to 500,000 shares
of the Company's common stock at a price of $0.27 per share;
Issued a total of 800,000 shares of the Company's common stock to
Worth P. Allred; and
Received advances totaling $80,691 from Russell Chapman to cover
operating expenses and equipment acquisitions. These advances
have been recorded as a note payable which is unsecured, non-
interest bearing and due upon demand.
See the caption "Security Ownership of Certain Beneficial Owners and
Management" of this Registration Statement.
Item 8. Description of Securities.
- -----------------------------------
The Company has one class of securities authorized, consisting of
200,000,000 shares of common voting stock having a par value of $0.00025 per
share. The holders of the Company's common stock are entitled to one vote per
share on each matter submitted to a vote at a meeting of stockholders. The
shares of common stock do not carry cumulative voting rights in the election
of directors.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock
carries no subscription or conversion rights. All shares of common stock now
outstanding are fully paid and non-assessable.
Outstanding Options, Warrants and Calls
---------------------------------------
Other than Mr. Holt's options to acquire up to 500,000 shares of the
Company's common stock at a price of $0.27 per share, there are no outstanding
warrants, options or calls with respect to the Company's common stock. See
the caption "Executive Compensation," Part I, Item 6 of this Registration
Statement.
No Provisions Limiting Change of Control
----------------------------------------
There is no provision in the Company's Articles of Incorporation or
Bylaws that would delay, defer, or prevent a change in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Related Stockholder Matters.
- ----------------------------
Market Information.
- -------------------
The Company's common stock is quoted on the OTC Bulletin Board of
the NASD, but there is currently no established market for such stock and
there can be given that one will develop or be maintained. For any market
that develops for the Company's common stock, the sale of "restricted
securities" (common stock) pursuant to Rule 144 of the Securities and Exchange
Commission by members of management or any other person to whom any such
securities may be issued in the future may have a substantial adverse impact
on any such public market. Information about the date when current holders'
holding period of "restricted securities" commenced can be found under the
caption "Recent Sales of Unregistered Securities," Item 10. A minimum holding
period of one year is required for resales under Rule 144, along with other
pertinent provisions, including publicly available information concerning the
Company (this requirement will be satisfied by the filing and effectiveness of
this Registration Statement, the passage of 90 days and the continued timely
filing by the Company of all reports required to be filed by it with the
Securities and Exchange Commission; limitations on the volume of "restricted
securities" which can be sold in any 90 day period; the requirement of
unsolicited broker's transactions; and the filing of a Notice of Sale on Form
144.
The following quotations were provided by the National Quotation
Bureau, LLC, and do not represent actual transactions; these quotations do not
reflect dealer markups, markdowns or commissions.
<TABLE>
<CAPTION>
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
<S> <C> <C>
March 31, 1997 1.3125 0.59375
June 30, 1997 0.90625 0.46875
September 30, 1997 0.84375 0.35
December 31, 1997 0.53125 0.22
March 31, 1998 0.65 0.22
June 30, 1998 0.55 0.21
September 30, 1998 0.31 0.16
December 31, 1998 0.17 0.07
March 31, 1999 0.19 0.08
June 30, 1999 0.27 0.10
</TABLE>
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 1,731.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock, and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with
any certainty, and if and until the Company completes any sales of its
products, no such policy will be formulated. There are no material
restrictions limiting, or that are likely to limit, the Company's ability to
pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. No director,
executive officer or other person who may be deemed to be an "affiliate" of
the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a material
interest adverse to the Company in any proceeding.
A judgment in the amount of $40,563 was entered against the Company
in December, 1992. This amount is included as an account payable in the
Company's consolidated financial statements. See Part F/S of this
Registration Statement.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
During the Company's two most recent calendar years, and to the date
of this Registration Statement, the Company's principal independent accountant
has not resigned, declined to stand for re-election or been dismissed.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
<S> <C> <C> <C>
Two subscribers 1/15/97 100,000 Services valued at
under Rule 504 $0.50 per share
offering
Five subscribers 1/22/97 771,700 (1) $385,850 (1)
under Rule 504
offering
One subscriber 2/13/97 272,000 $136,000
under Rule 504
offering
North American 7/31/97 150,000 $ 75,000
Corporate
Consultants, Inc.
North American 11/11/97 150,000 Services valued at
Corporate $0.50 per share
Consultants, Inc.
William F. Pratt 6/25/98 550,000 Services valued at
$0.12 per share
Worth P. Allred 6/25/98 800,000 Services valued at
$0.12 per share
S. Kent Holt 6/25/98 500,000 Services valued at
$0.12 per share
Flood Thomas 6/25/98 80,000 Services valued at
$0.12 per share
Jay Reynolds 6/25/98 20,000 Services valued at
$0.12 per share
Jim Whiting 6/25/98 10,000 Services valued at
$0.12 per share
James G. and 6/25/98 20,000 Services valued at
Tracy Davis $0.12 per share
C. Greg Jensen 6/25/98 20,000 Services valued at
$0.12 per share
Firm International 6/25/98 1,000,000 Services valued at
Group Trust $0.12 per share
</TABLE>
(1) A total of 30,000 of these shares were subsequently canceled.
Management believes each of the foregoing persons or entities was
either an "accredited investor," or a "sophisticated investor" as defined in
Rule 506 of Regulation D of the Securities and Exchange Commission. Each had
access to all material information regarding the Company prior to the offer,
sale or issuance of these "restricted securities." The Company believes these
shares were exempt from the registration requirements of the Securities Act of
1933, as amended (the "1933 Act"), pursuant to Section 4(2) and/or 3(b)
thereof.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 16-10a-902(1) of the Utah Revised Business Corporation Act
authorizes a Utah corporation to indemnify any director against liability
incurred in any proceeding if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from indemnifying
a director in a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in a proceeding in which
the director was adjudged liable on the basis that he or she improperly
received a personal benefit. Otherwise, Section 16-10a-902(5) allows
indemnification for reasonable expenses incurred in connection with a
proceeding by or in the right of a corporation.
Unless limited by the Articles of Incorporation, Section 16-10a-905
authorizes a director to apply for indemnification to the court conducting the
proceeding or another court of competent jurisdiction. Section 16-10a-907(1)
extends this right to officers of a corporation as well.
Unless limited by the Articles of Incorporation, Section 16-10a-903
requires that a corporation indemnify a director who was successful, on the
merits or otherwise, in defending any proceeding to which he or she was a
party against reasonable expenses incurred in connection therewith. Section
16-10a-907(1) extends this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may advance a
director's expenses incurred in defending any proceeding upon receipt of an
undertaking and a written affirmation of his or her good faith belief that he
or she has met the standard of conduct specified in Section 16-10a-902.
Unless limited by the Articles of Incorporation, Section 16-10a-907(2) extends
this protection to officers, employees, fiduciaries and agents of a
corporation as well.
Regardless of whether a director, officer, employee, fiduciary or
agent has the right to indemnity under the Utah Revised Business Corporation
Act, Section 16-10a-908 allows the corporation to purchase and maintain
insurance on his or her behalf against liability resulting from his or her
corporate role.
PART F/S
GALTECH SEMICONDUCTOR MATERIALS
CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
C O N T E N T S
Independent Auditors' Report 3
Consolidated Balance Sheet 4
Consolidated Statements of Operations 5
Consolidated Statements of Stockholders' Equity 6
Consolidated Statements of Cash Flows 13
Notes to the Consolidated Financial Statements 15
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Galtech Semiconductor Materials Corporation
and Subsidiaries
(A Development Stage Company)
Lindon, Utah
We have audited the accompanying consolidated balance sheets of Galtech
Semiconductor Materials Corporation and Subsidiaries (A Development Stage
Company) as of December 31, 1998 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December
31, 1998 and 1997 and from inception on June 18, 1984 through December 31,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Galtech
Semiconductor Materials Corporation and Subsidiaries (A Development Stage
Company) as of December 31, 1998 and the results of their operations and their
cash flows for the years ended December 31, 1998 and 1997 and from inception
on June 18, 1984 through December 31, 1998, in conformity with generally
accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 6 to the financial
statements, the Company is a Development Stage Company with no significant
operating results to date. These conditions raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
June 30, 1999
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Inventory $ 160,000
Total Current Assets 160,000
EQUIPMENT, NET (Note 2) 95,034
TOTAL ASSETS $ 255,034
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable (Note 5) $ 40,563
Total Current Liabilities 40,563
STOCKHOLDERS' EQUITY
Common stock, $0.00025 par value, 200,000,000 shares authorized;
10,644,018 shares issued and outstanding 2,663
Additional paid-in capital 3,805,723
Deficit accumulated during the development stage (3,593,915)
Total Stockholders' Equity 214,471
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 255,034
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
From
Inception on
June 18, 1984
For the Years Ended Through
December 31, December 31,
1998 1997 1998
SALES $ - $ 42,000 $ 599,609
COST OF PRODUCT SOLD - - 676,198
GROSS MARGIN - 42,000 (76,589)
OPERATING EXPENSES
General and administrative 47,084 90,359 1,648,708
Legal and professional 356,400 137,914 799,572
Research and development 9,553 63,497 510,688
Depreciation 31,997 40,779 328,134
Total Expenses (445,034) 332,549 3,287,102
Net Loss From Operations (445,034) (290,549) (3,363,691)
OTHER INCOME (EXPENSE)
Interest expense - - (84,919)
Interest income 106 - 93,427
Loss on disposal of assets (19,283) - (241,238)
Miscellaneous - - 2,506
Total Other Income (Expense) (19,177) - (230,224)
NET LOSS $ (464,211) $(290,549) $(3,593,915)
BASIC LOSS PER SHARE $ (0.05) $ (0.04)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 9,211,908 6,982,168
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance, June 18, 1984 - $ - $ - $ -
Stock issued for cash at
$0.0143 per share 140,173 35 1,965 -
Balance,
December 31, 1984 140,173 35 1,965 -
Stock issued for cash at
$0.05 per share 400,000 100 19,900 -
Stock issuance costs - - (4,450) -
Purchase of treasury
stock - - - -
Sale of treasury stock at - - 411,073 -
$2.11 per share
Stock issued to officers for
services at $0.005
per share 438,600 110 2,083 -
Net loss for the year ended
December 31, 1985 - - - (146,384)
Balance,
December 31, 1985 978,773 $ 245 $ 430,571 $ (146,384)
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance forward 978,773 $ 245 $ 430,571 $ (146,384)
Purchase of treasury stock - - - -
Sale of treasury stock at
$29.65 per share - - 1,838,032 -
Net loss for the year ended
December 31, 1986 - - - (542,930)
Balance,
December 31, 1986 978,773 245 2,268,603 (689,314)
Net loss for the year ended
December 31, 1987 - - - (509,693)
Balance,
December 31, 1987 978,773 245 2,268,603 (1,199,007)
Stock issued for services
at $0.60 per share 25,000 6 14,994 -
Net loss for the year ended
December 31, 1988 - - - (501,513)
Balance,
December 31, 1988 1,003,773 $ 251 $2,283,597 $(1,700,520)
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance forward 1,003,773 $ 251 $ 2,283,597 $(1,700,520)
Stock issued for cash at
$2.00 per share 10,000 3 19,997 -
Stock issued for cash
at $0.575 per share 20,000 5 11,495 -
Sale of treasury stock
and subscription receivable - - (34,786) -
Net loss for the year ended
December 31, 1989 - - - (306,612)
Balance
December 31, 1989 1,033,773 259 2,280,303 (2,007,132)
Cancellation of shares (5) - - -
Stock issued for cash
at $0.10 per share 25,000 6 2,494 -
Stock issued for cash
at $0.005 per share 3,150 1 15 -
Additional compensation
for treasury stock - - 34,701 -
Balance 1,061,918 $266 $2,317,513 $(2,007,132)
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance forward 1,061,918 $266 $2,317,513 $ (2,007,132)
Net loss for the year ended
December 31, 1990 - - - (123,676)
Balance,
December 31, 1990 1,061,918 266 2,317,513 (2,130,808)
Stock issued for services
at $0.12 per share 20,400 5 2,395 -
Net loss for the year ended
December 31, 1991 - - - (207,142)
Balance,
December 31, 1991 1,082,318 271 2,319,908 (2,337,950)
Net loss for the year ended
December 31, 1992 - - - -
Balance,
December 31, 1992 1,082,318 271 2,319,908 (2,337,950)
Net loss for the year ended
December 31, 1993 - - - -
Balance,
December 31, 1993 1,082,318 $271 $2,319,908 $ (2,337,950)
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance,
December 31, 1993 1,082,318 $ 271 $ 2,319,908 $ (2,337,950)
Net loss for the year ended
December 31, 1994 - - - (10,964)
Balance,
December 31, 1994 1,082,318 271 2,319,908 (2,348,914)
Stock issued for
Commodity Recovery
Corporation valued at
predessor cost of $0.00 500,000 125 (125) -
Stock issued for Energy
Research Corporation
valued at predessor cost
of $0.00 4,200,000 1,050 (1,050) -
Conversion of debt to
equity - - 3,500 -
Net loss for the year ended
December 31, 1995 - - - (89,740)
Balance,
December 31, 1995 5,782,318 $1,446 $ 2,322,233 $(2,438,654)
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance,
December 31, 1995 5,782,318 $1,446 $ 2,322,233 $(2,438,654)
Stock issued for cash
cash at $0.60 per share 150,000 38 89,962 -
Stock issued for
services valued at $1.00
per share 288,000 73 287,927 -
Stock subscription receivable
at $0.50 per share 40,000 10 19,990 -
Net loss for the year ended
December 31, 1996 - - - (400,501)
Balance,
December 31, 1996 6,260,318 1,567 2,720,112 (2,839,155)
Stock issued for cash
at $0.50 per share 1,163,700 291 575,773 -
Stock issued for services
at $0.50 per share 250,000 63 124,937 -
Receipt of stock
subscription - - - -
Net loss for the year ended
December 31, 1997 - - - (290,549)
Balance,
December 31, 1997 7,674,018 $ 1,921 $3,420,822 $(3,129,704)
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance,
December 31, 1997 7,674,018 $ 1,921 $ 3,420,822 $ (3,129,704)
Stock issued for services
valued at $0.12 per share 2,970,000 742 355,658 -
Contribution of capital by
shareholder - - 29,243 -
Net loss for the year ended
December 31, 1998 - - - (464,211)
Balance,
December 31, 1998 10,644,018 $ 2,663 $ 3,805,723 $ (3,593,915)
<PAGE>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
- $ - $ - $ -
- - - 2,000
- - - 2,000
- - - 20,000
- - - (4,000)
(403,976) (5,950) - (5,950)
196,658 2,896 - 413,969
- - - 2,193
- - - (146,384)
(207,318 (3,054) $ - $ 281,378)
(207,318) $ (3,054) $ - $ 281,378
(13,997) (13,500) - (13,500)
62,000 768 (732,300) 1,106,500
- - - (542,930)
(159,315) $15,786) (732,300) 831,448
- - - (509,693)
(159,315) (15,786) (732,300) 321,755
- - - 15,000
- - - (501,513)
(159,315) $ (15,786) $ (732,300) $ (164,758)
(159,315) (15,786) (732,300) (164,758)
- - - 20,000
- - - 11,500
159,315 15,786 732,300 713,300
- - - (306,612)
- - - 273,430
- - - -
- - - 2,500
- - - 16
- - - 34,701
- $ - $ - $ 310,647
$ - $ - $ - $ 310,647
- - - (123,676)
- - - 186,971
- - - 2,400
- - - (207,142)
- - - (17,771)
- - - -
- - - (17,771)
- $ - $ - $ (17,771)
- $ - $ - $ (17,771)
- - - (10,964)
- - - (28,735)
- - - -
- - - -
- - - 3,500
- - - (89,740)
- $ - $ - $ (114,975)
- $ - $ - $ (114,975)
- - - 90,000
- - - 288,000
- - (20,000) -
- - - (400,501)
- - (20,000) (137,476)
- - - 576,064
- - - 125,000
- - 20,000 20,000
- - - (290,549)
- $ - $ - $ 293,039
- $ - $ - $ 293,039
- - - 356,400
- - - 29,243
- - - (464,211)
- $ - $ - $ 214,471
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
From
Inception on
June 18, 1984
For the Years Ended Through
December 31, December 31,
1998 1997 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(464,211) $(290,549) $(3,593,915)
Adjustment to reconcile net loss to net
cash used by operating activities:
Depreciation 31,997 40,779 328,134
Stock issued for services 356,400 125,000 769,400
Loss on disposal of property 19,283 - 241,238
Changes in operating assets and liabilities:
(Increase) in inventory - (160,000) (160,000)
(Increase) decrease in note receivable 8,510 (8,510) -
Increase (decrease) in accrued liabilities - 7,814 59,670
Net Cash (Used) by Operating Activities (48,021) (285,466) (2,355,473)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (13,545) (101,920) (718,191)
Purchase of treasury stock - - (19,450)
Stock subscription - - (732,300)
Net Cash (Used) from Investing Activities(13,545) (101,920) (1,469,941)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - related 13,000 67,691 477,376
Repayments of note payable - related (31,933) (213,400) (443,761)
Sale of treasury stock - - 1,911,183
Cancellation of stock subscription - - 732,300
Common stock issued for cash - 576,064 1,148,316
Net Cash (Used) Provided by Financing
Activities $ (18,933) $ 430,355 $3,825,414
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From
Inception on
June 18, 1984
For the Years Ended Through
December 31, December 31,
1998 1997 1998
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $(80,499) $42,969 $ -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 80,499 37,530 -
CASH AND CASH EQUIVALENTS
END OF PERIOD $ - $80,499 $ -
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
Interest $ - $ - $ 84,919
Income taxes $ - $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ 356,400 $125,000 $ 769,400
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements presented are those of Galtech
Semiconductor Materials Corporation (the Company) and its wholly-
owned subsidiaries Energy Research Corporation (ERC) and Commodity
Recovery Corporation (CRC). The Company was incorporated on June
18, 1984 under the laws of the State of Utah as Versa tech, Inc. On
April 30, 1985, the Company changed its name to Galtech, Inc., and
on June 18, 1986, the Company changed its name to Galtech
Semiconductor Materials Corporation. The Company was engaged in the
manufacture of compound semiconductor materials, but ceased all
operations in 1990 when a fire destroyed the Company's research and
development as well as the Company's operations center. Principal
operations have not yet resumed. On February 28, 1995, the Company
issued 500,000 shares of common stock in exchange for 100% of the
issued and outstanding common stock of CRC. On February 28, 1995,
the Company issued 4,200,000 shares of common stock in exchange for
100% of the issued and outstanding shares of ERC. (Note 4)
Energy Research Corporation (ERC) was incorporated on February 7,
1994 under the laws of the State of Arizona. ERC was incorporated
to develop and produce alternative sources of energy.
Commodity Recovery Corporation (CRC) was incorporated on October 31,
1994 under the laws of the State of Utah. CRC was incorporated to
develop and market products relating to the decontamination of
aflatoxin.
At the time of acquisition of CRC and ERC, the Company was
essentially inactive, with no operations and minimal assets.
Neither CRC or ERC had any assets or operations. As such, the
acquisition was recorded at predessor cost which was $0. The
Company is the continuing entity for accounting and legal purposes.
a. Accounting Methods
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year
end.
b. Equipment
Depreciation of equipment is provided using the straight-line method
over the estimated lives of five years.
Maintenance and repairs of the equipment that do not improve or
extend the lives of the respective assets are charged to expense as
incurred. Major renewals and betterments are treated as capital
expenditures and depreciated accordingly.
When assets are retired or otherwise disposed of, or become fully
depreciated, the cost of the assets and the related accumulated
depreciation are removed from the accounts with any gain or loss on
disposition reflected in the statement of operations.
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Income Taxes
No provision for taxes has been made, due to cumulative operating
losses at December 31, 1998. The Company has net operating loss
carry forwards of approximately $3,100,000 which will expire by
2013. The potential tax benefits of the loss carryforwards are
offset by a valuation allowance of the same amount.
d. Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
e. Basic Loss Per Share
The computations of basic loss per share of common stock is based on
the weighted average number of shares outstanding during the period.
f. Principles of Consolidation
The consolidated financial statements include those of Galtech
Semiconductor Materials Corporation (the Company) and its 100% owned
subsidiaries Energy Research Corporation and Commodity Recovery
Corporation. All significant intercompany accounts and transactions
have been eliminated.
g. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
h. Inventory
The inventory of raw materials for crystal growing is stated at the
lower of cost or market and is accounted for on a first-in-first-out
basis.
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 2 - EQUIPMENT
December 31,
1997
Equipment consists of the following:
Research equipment $ 181,187
Less: Accumulated Depreciation (86,153)
Net Equipment $ 95,034
Amounts charged to depreciation expense were $31,997 and $40,779 for
the years ended December 31, 1998 and 1997, respectively.
NOTE 3 - RELATED PARTY TRANSACTIONS
The former president of the Company has provided advances to the
Company to cover operating expenses as well as equipment
acquisitions which have been recorded as a note payable - related.
This note is unsecured, non-interest bearing and is due upon demand.
The advances are repaid as the Company's cash needs allow. During
the year ended December 31, 1998, the former President advanced
$13,000 to the Company, was repaid $31,933 and contributed the
balance of the advance payable to him of $29,243, to the Company.
NOTE 4 - STOCK TRANSACTIONS
On February 8, 1995, the Board of Directors approved a 20 to 1
reverse stock split. All references to shares outstanding and
earnings per share have been retroactively restated to reflect the
reverse stock split.
On February 28, 1995, the Board of Directors issued 500,000 shares
of common stock to acquire Commodity Research Corporation (CRC).
CRC has no assets or operating history and the acquisition was
valued at $0.
On February 28, 1995, the Board of Directors issued 4,200,000 shares
of common stock to acquire Energy Research Corporation (ERC). ERC
had no assets or operating history, and the acquisition was valued
at predecessor cost of $0.
In November 1995, the Company issued 125,000 shares of common stock
for public relations services to be performed. The contract was
canceled in December, 1995 and the stock was returned and canceled.
Accordingly, the financial statements do not reflect the issuance
and cancellation of the 125,000 shares.
In 1996, the Company issued 150,000 shares of common stock for cash
at $0.60 per share.
In 1996, the Company issued 288,000 shares of common stock for legal
and professional services rendered, valued at $1.00 per share.
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 4 - STOCK TRANSACTIONS (Continued)
In 1997, the Company issued 1,163,700 shares of common stock for
cash at $0.50 per share.
In 1997, the Company issued 250,000 shares of common stock for
services, valued at $0.50 per share.
In 1998, the Company issued 2,970,000 shares of common stock for
services valued at $0.12 per share.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
On December 18, 1992, a judgment was entered against the Company for
$40,563 for non-payment of an account payable. This amount has been
included in the accounts payable for December 31, 1998. The Company
has written off other accounts payable which were incurred prior to
1990. The Company's legal counsel has represented that the statute
of limitations for collection of the payables has expired. The
Company does not intend to pay the liabilities however there is no
assurance that the creditors will not make claims against the
Company.
NOTE 6 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
has little cash and without realization of additional adequate
financing, it would be unlikely for the Company to pursue and
realize its objective of operating profitably. The Company plans to
raise additional capital through equity financing. In the interim,
management has committed to covering the operating expenses of the
Company.
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS
CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and December 31, 1998
<PAGE>
C O N T E N T S
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows 12
Notes to the Consolidated Financial Statements 14
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Inventory $ 160,000 $ 160,000
Total Current Assets 160,000 160,000
EQUIPMENT, NET 76,916 95,034
TOTAL ASSETS $ 236,916 $ 255,034
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 40,563 $ 40,563
Notes payable - related parties 30,990 -
Total Current Liabilities 71,553 40,563
STOCKHOLDERS' EQUITY
Common stock, $0.00025 par value, 200,000,000
shares authorized; 10,644,018 shares issued and
outstanding 2,663 2,663
Additional paid-in capital 3,805,723 3,805,723
Deficit accumulated during
the development stage (3,643,023) (3,593,915)
Total Stockholders' Equity 165,363 214,471
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 236,916 $ 255,034
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the June 18,
Three Months Ended Six Months Ended 1998 Through
June 30, June 30, June 30,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
SALES $ - $ - $ - $ - $
599,609
COST OF PRODUCT SOLD - - - - 676,198
GROSS MARGIN - - - - (76,589)
OPERATING EXPENSES
General
and administrative 1,741 17,254 29,789 45,451 1,678,497
Legal and professional - 4,752 1,200 5,502 800,772
Research
and development - - - 2,462 510,688
Depreciation 9,059 8,000 18,119 15,999 346,253
Total Expenses (10,800) (30,006) (49,108) (69,414) 3,336,210
Net Loss
From Operations (10,800) (30,006) (49,108) (69,414) (3,412,799)
OTHER INCOME (EXPENSE)
Interest expense - - - -
(84,919)
Interest income - - - 100 93,427
Loss on disposal
of assets - - - - (241,238)
Miscellaneous - - - - 2,506
Total Other Income
(Expense) - - - 100 (230,224)
NET LOSS $(10,800) $(30,006) $(49,108) $(69,313) $(3,643,023)
BASIC LOSS
PER SHARE $ (0.01) $ (0.02) $ (0.04) $ (0.05)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
June 18, 1984 - $ - $ - $ -
Stock issued for cash at
$0.0143 per share 140,173 35 1,965 -
Balance,
December 31, 1984 140,173 35 1,965 -
Stock issued for cash at
$0.05 per share 400,000 100 19,900 -
Stock issuance costs - - (4,450) -
Purchase of treasury
stock - - - -
Sale of treasury stock at
$2.11 per share - - 411,073 -
Stock issued to officers for
services at $0.005
per share 438,600 110 2,083 -
Net loss for the year ended
December 31, 1985 - - - (146,384)
Balance,
December 31, 1985 978,773 $ 245 $430,571 $ (146,384)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1985 978,773 $ 245 $ 430,571 $(146,384)
Purchase of treasury stock - - - -
Sale of treasury stock at
$29.65 per share - - 1,838,032 -
Net loss for the year ended
December 31, 1986 - - - (542,930)
Balance,
December 31, 1986 978,773 245 2,268,603 (689,314)
Net loss for the year ended
December 31, 1987 - - - (509,693
Balance,
December 31, 1987 978,773 245 2,268,603 (1,199,007)
Stock issued for services
at $0.60 per share 25,000 6 14,994 -
Net loss for the year ended
December 31, 1988 - - - (501,513)
Balance,
December 31, 1988 1,003,773 $ 251 $2,283,597 $(1,700,520)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1988 1,003,773 $ 251 $ 2,283,597 $(1,700,520)
Stock issued for cash at
$2.00 per share 10,000 3 19,997 -
Stock issued for cash
at $0.575 per share 20,000 5 11,495 -
Sale of treasury stock
and subscription receivable - - (34,786) -
Net loss for the year ended
December 31, 1989 - - - (306,612)
Balance
December 31, 1989 1,033,773 259 2,280,303 (2,007,132)
Cancellation of shares (5) - - -
Stock issued for cash
at $0.10 per share 25,000 6 2,494 -
Stock issued for cash
at $0.005 per share 3,150 1 15 -
Additional compensation
for treasury stock - - 34,701 -
Balance forward 1,061,918 $ 266 $2,317,513 $(2,007,132)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance forward 1,061,918 $ 266 $ 2,317,513 $
(2,007,132)
Net loss for the year ended
December 31, 1990 - - - (123,676)
Balance,
December 31, 1990 1,061,918 266 2,317,513 (2,130,808)
Stock issued for services
at $0.12 per share 20,400 5 2,395 -
Net loss for the year ended
December 31, 1991 - - - (207,142
Balance,
December 31, 1991 1,082,318 271 2,319,908 (2,337,950)
Net loss for the year ended
December 31, 1992 - - - -
Balance,
December 31, 1992 1,082,318 271 2,319,908 (2,337,950)
Net loss for the year ended
December 31, 1993 - - - -
Balance,
December 31, 1993 1,082,318 $ 271 $ 2,319,908 $(2,337,950)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1993 1,082,318 $ 271 $ 2,319,908 $(2,337,950)
Net loss for the year ended
December 31, 1994 - - -
(10,964)
Balance,
December 31, 1994 1,082,318 271 2,319,908 (2,348,914)
Stock issued for
Commodity Recovery
Corporation valued at
predecessor cost of $0.00 500,000 125 (125) -
Stock issued for Energy
Research Corporation
valued at predecessor cost
of $0.00 4,200,000 1,050 (1,050) -
Conversion of debt to
equity - - 3,500 -
Net loss for the year ended
December 31, 1995 - - - (89,740)
Balance,
December 31, 1995 5,782,318 $1,446 $2,322,233 $(2,438,654)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1995 5,782,318 $ 1,446 $ 2,322,233
$(2,438,654)
Stock issued for cash
cash at $0.60 per share 150,000 38 89,962 -
Stock issued for
services valued at $1.00
per share 288,000 73 287,927 -
Stock subscription receivable
at $0.50 per share 40,000 10 19,990 -
Net loss for the year ended
December 31, 1996 - - - (400,501)
Balance,
December 31, 1996 6,260,318 1,567 2,720,112
(2,839,155)
Stock issued for cash
at $0.50 per share 1,163,700 291 575,773 -
Stock issued for services
at $0.50 per share 250,000 63 124,937 -
Receipt of stock
subscription - - - -
Net loss for the year ended
December 31, 1997 - - - (290,549)
Balance,
December 31, 1997 7,674,018 $1,921 $3,420,822 $(3,129,704)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1997 7,674,018 $ 1,921 $3,420,822 $(3,129,704)
Stock issued for services
valued at $0.12 per share 2,970,000 742 355,658 -
Contribution of capital by
shareholder - - 29,243 -
Net loss for the year ended
December 31, 1998 - - - (464,211)
Balance,
December 31, 1998 10,644,018 2,663 3,805,723 (3,593,915)
Net loss for the six months
ended June 30, 1999
(unaudited) - - - (49,108)
Balance,
June 30, 1999
(unaudited) 10,644,018 $2,663 $3,805,723 $(3,643,023)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
June 18, 1984 - $ - $ - $ -
Stock issued for cash at
$0.0143 per share - - - 2,000
Balance,
December 31, 1984 - - - 2,000
Stock issued for cash at
$0.05 per share - - - (20,000)
Stock issuance costs - - - (4,450)
Purchase of treasury
stock (403,976) (5,950) - (5,950)
Sale of treasury stock at
$2.11 per share 196,658 2,896 - 413,969
Stock issued to officers for
services at $0.005
per share - - - 2,193
Net loss for the year ended
December 31, 1985 - - - (146,384)
Balance,
December 31, 1985 (207,318 $ (3,054) $ - $(281,378)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1985 (207,318) $ (3,054) $ - $ 281,378
Purchase of
treasury stock (13,997) (13,500) - 13,500
Sale of treasury stock at
$29.65 per share 62,000 768 (732,300) 1,106,500
Net loss for the year
ended December 31, 1986 - - - (542,930)
Balance,
December 31, 1986 (159,315) (15,786) (732,300) 831,448
Net loss for the year
ended December 31, 1987 - - - (509,693)
Balance,
December 31, 1987 (159,315) (15,786) (732,300) 321,755
Stock issued for services
at $0.60 per share - - - 15,000
Net loss for the year ended
December 31, 1988 - - - (501,513)
Balance,
December 31, 1988 (159,315) $(15,786) $(732,300) $(164,758)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1988 (159,315) $ (15,786) $ (732,300)
(164,758)
Stock issued for cash
at $2.00 per share - - - 20,000
Stock issued for cash
at $0.575 per share - - - 11,500
Sale of treasury stock
and subscription
receivable 159,315 15,786 732,300 713,300
Net loss for the year
ended December 31, 1989 - - - (306,612)
Balance
December 31, 1989 - - - 273,430
Cancellation of shares - - - -
Stock issued for cash
at $0.10 per share - - - 2,500
Stock issued for cash
at $0.005 per share - - - 16
Additional compensation
for treasury stock - - - 34,701
Balance forward - $- $ - $310,647
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance forward $ - $ - $ - $ 310,647)
Net loss for the year
ended December 31, 1990 - - - (123,676)
Balance,
December 31, 1990 - - - 186,971
Stock issued for services
at $0.12 per share - - - 2,400
Net loss for the year ended
December 31, 1991 - - - (207,142)
Balance,
December 31, 1991 - - - (17,771)
Net loss for the year ended
December 31, 1992 - - - -
Balance,
December 31, 1992 - - - (17,771)
Net loss for the year ended
December 31, 1993 - - - -
Balance,
December 31, 1993 - $- $ - $(17,771)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1993 - $ - $ - $(17,771)
Net loss for the year
ended December 31, 1994 - - - (10,964)
Balance,
December 31, 1994 - - - (28,735)
Stock issued for
Commodity Recovery
Corporation valued
at predecessor
cost of $0.00 - - - -
Stock issued for Energy
Research Corporation
valued at predecessor cost
of $0.00 - - - -
Conversion of debt to
equity - - - 3,500
Net loss for the year
ended December 31, 1995 - - - (89,740)
Balance,
December 31, 1995 - $- $- $(114,975)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1995 - $ - $ - $(114,975)
Stock issued for cash
cash at $0.60 per share - - - 90,000
Stock issued for
services valued at $1.00
per share - - - 288,000
Stock subscription receivable
at $0.50 per share - - (20,000) -
Net loss for the year
ended December 31, 1996 - - - (400,501)
Balance,
December 31, 1996 - - (20,000) (137,476)
Stock issued for cash
at $0.50 per share - - - 576,064
Stock issued for services
at $0.50 per share - - - 125,000
Receipt of stock
subscription - - 20,000 20,000
Net loss for the year
ended December 31, 1997 - - - (290,549)
Balance,
December 31, 1997 - $- $- $ 293,039
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1997 - $ - $ - $ 293,039
Stock issued for services
valued at $0.12 per share - - - 356,400
Contribution of capital by
shareholder - - - 29,243
Net loss for the year ended
December 31, 1998 - - - (464,211)
Balance,
December 31, 1998 - - - 214,471
Net loss for the six months
ended June 30, 1999
(unaudited) - - - (49,108)
Balance,
June 30, 1999
(unaudited) - $- $- $165,363
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the June 18,
Three Months Ended Six Months Ended 1998 Through
June 30, June 30, June 30,
1999 1998 1999 1998 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net loss $(10,800) $(30,006) $(49,108) $(69,313) $(3,643,023)
Adjustment to
reconcile net
loss to net
cash used by
operating activities:
Depreciation 9,059 8,000 18,119 15,999 346,253
Stock issued
for services - - - - 769,400
Loss on disposal
of property - - - - 241,238
Changes in operating
assets and liabilities:
(Increase) in inventory - - - - (160,000)
Increase (decrease) in accrued
liabilities - - - - 59,670
Net Cash (Used) by
Operating Activities (1,741) (22,006) (30,989) (53,314) (2,386,462)
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures - (4,593) - (13,546) (718,191)
Purchase of
treasury stock - - - - (19,450)
Stock subscription - - - - (732,300)
Net Cash (Used) from Investing
Activities - (4,593) - (13,546) (1,469,941)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from
note payable - related 1,741 1,700 30,989 - 508,365
Repayments of
note payable - related - - - (9,300) (443,761)
Sale of treasury stock - - - - 1,911,183
Cancellation of
stock subscription - - - - 732,300
Common stock
issued for cash - - - - 1,148,316
Net Cash (Used) Provided by
Financing Activities $ 1,741 $1,700 $30,989 $(9,300)$3,856,403
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
</TABLE>
<TABLE>
<CAPTION> From
Inception on
For the For the June 18,
Three Months Ended Six Months Ended 1998 Through
June 30, June 30, June 30,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS $ - $(24,899) $- $ (76,160) $ -
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD - 29,238 - 80,499 -
CASH AND CASH EQUIVALENTS
END OF PERIOD $ - $ 4,339 $ - $ 4,339 $ -
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
Interest $ - $ - $ - $ - $ 84,919
Income taxes $ - $ - $ - $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Common stock
issued for services $ - $ - $ - $ - $ 769,400
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
June 30, 1999 and 1998 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and notes thereto included
in the Company's December 31, 1998 audited consolidated financial
statements. The results of operations for the periods ended June 30,
1999 and 1998 are not necessarily indicative of the operating results for
the full years.
<PAGE>
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this Registration
Statement:
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Articles of Incorporation filed June 18, 1984.
3.2 Articles of Amendment filed on April 30, 1985.
3.3 Articles of Amendment filed September 9, 1986.
3.4 Articles of Amendment filed February 24, 1995.
3.5 Bylaws
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this Registration Statement to be signed on
its behalf by the undersigned, hereunto duly authorized.
GALTECH SEMICONDUCTOR MATERIALS
CORPORATION
Date: 26 Aug. 1999 By: /s/ William F. Pratt
------------- ------------------------
William F. Pratt
CEO, President and Director
Date: 27 Aug. 1999 By: /s/ S. Kent Holt
------------- ------------------------
S. Kent Holt
Executive Vice President and
Director
Date: 26 Aug. 1999 By: /s/ Worth P. Allred
------------- ------------------------
Worth P. Allred
Vice President, Research and
Development, and Director
Date: 26 Aug. 1999 By: /s/ David R. Porter
------------- ------------------------
David R. Porter
Secretary/Treasurer and Director
ARTICLES OF INCORPORATION
OF
VERSA TECH, INC.
We, the undersigned natural persons of the age of twenty-one years or
more, acting as incorporators of the corporation under the provisions of the
Utah Business Corporation Act (hereinafter called the "Act"), do hereby adopt
the following Articles of Incorporation for such Corporation.
ARTICLE I
Name. The name of the corporation (hereinafter called the "Corporation")
is VERSA TECH, INC.
ARTICLE II
Period of Duration. The period of duration of the Corporation is
perpetual.
ARTICLE III
Purpose and Powers. The purposes for which this Corporation is organized
is to invest in new products, properties and/or businesses which may have
potential for profit.
ARTICLE IV
Capitalization. The Corporation shall have the authority to issue
50,000,000 (fifty million) shares of stock each having a par value of
one-tenth of one cent ($0.001). All stock of the Corporation shall be of the
same class and shall have the same rights and preferences. Fully paid stock of
this Corporation shall not be liable for further call or assessment. The
authorized trading shares shall be issued at the discretion of the Directors.
ARTICLE V
Incorporators. The name and post office address of each incorporator is:
Raymond L. Shuman
636 North 360 East
American Fork, Utah 84003
Richard Wilcox
4611 Quail Vista Lane
Salt Lake City, Utah 84117
Tillman S. Boxell
4916 Russell Street,
Salt Lake City, Utah 84117
ARTICLE VI
Directors. The Corporation shall be governed by a Board of Directors
consisting of no less than three (3) and no more than nine (9) directors.
Directors need not be stockholders of the Corporation. The number of Directors
constituting the initial Board of Directors is three (3) and the names and
post office addresses of the persons who shall serve as Directors until their
successors are elected and qualified are:
Raymond L. Shuman
636 North 360 East
American Fork, Utah 84003
Richard Wilcox
4611 Quail Vista Lane
Salt Lake City, Utah 84117
Tillman S. Boxell
4916 Russell Street
Salt Lake City, Utah 84117
ARTICLE VII
Commencement of Business. The Corporation shall not commence business
until at least One Thousand Dollars ($1,000) has been received by the
Corporation as consideration for the issuance of its shares.
ARTICLE VIII
Preemptive Rights. There shall be no preemptive rights to acquire
unissued and/or treasury' shares of the stock of the Corporation.
ARTICLE IX
Voting of Shares. Each outstanding share of common stock of the
Corporation shall be entitled to one vote on each matter submitted to a vote
at the meeting of the stockholders. Each stockholder shall be entitled to vote
his or its shares in person or by proxy, executed in writing by such
stockholders, or by his duly authorized attorney-in-fact. At each election of
Directors, every stockholder entitled to vote in such election shall have the
right to vote, in person or by proxy, the number of shares owned by him or it
for as many persons as there are Directors to be elected and for whose
election he or it has the right to vote, but the Shareholder shall have no
right to accumulate his or its votes with regard to such election.
ARTICLE X
Initial Registered Office and Initial Registered Agent. The address of
the initial registered office of the Corporation is 636 North 360 East,
American Fork, Utah and the initial registered Agent at such office is Raymond
L. Shuman.
State of Utah )
:ss
County of Salt Lake )
On the 13 day of June, 1984, personally appeared before me RAYMOND
L. SHUMAN, RICHARD WILCOX, and TILLMAN S. BOXELL, who acknowledged to me that
they are the persons who signed the foregoing Articles of Incorporation as
incorporators and that they have read the foregoing Articles of Incorporation
and know the content thereof, and that the same is true of their knowledge as
to those matter upon which they operate on information and belief, and as to
those matters believe them to be true.
/s/
RAYMOND L. SHUMAN
/s/
RICHARD WILCOX
/s/
TILLMAN S. BOXELL
SUBSCRIBED AND SWORN TO before me this 18th day of June, 1984
/s/
NOTARY PUBLIC: Residing at SLC, UT
My Commission Expires:
2/17/88
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
VERSA TECH, INC.
A UTAH CORPORATION
WE, the President and Secretary, of Versa Tech, Inc., pursuant to the
provisions of Section 16-10-54 of the Utah Business Corporation Act, pursuant
to a resolution by the Board of Directors, and pursuant to a fifty-one percent
(51%) vote of the shareholders of said Corporation, at a meeting held April
30, 1985, there being two million six hundred ninety-nine thousand eight
hundred sixty-five (2,699,865) shares of outstanding stock and 1,380,000
shares voting for the following amendment, and no shares voting against the
following amendment, hereby amend the Articles of incorporation as follows:
1. Delete Article I in its entirety and substitute the following:
ARTICLE I
1. Name. The name of the Corporation (hereinafter called
the "Corporation") is Galtech, Inc.
2. Delete Article IV, Capitalization, in its entirety and
substitute the following:
ARTICLE IV
Capitalization. The Corporation shall have the authority to issue two
hundred million (200,000,000) shares of stock each having a par value of
twenty-five one thousandths (25/1000) of one cent ($0.00025). All stock of
the Corporation shall be of the same class and shall have the same rights and
preferences. Fully paid stock of this Corporation shall not be liable for
further call or assessment. The authorized trading shares shall be issued at
the discretion of the Directors.
VERIFIED this 30 day of April, 1985.
Rulon W. Cluff, President
Vincent R. Houtz, Secretary
<PAGE>
STATE OF UTAH )
)ss.
COUNTY OF SALT LAKE )
On the 30th day of April, 1985, personally appeared before
me Rulon W. Cluff, who being by me duly sworn, did say that he is the
President of Versa Tech, Inc. that the foregoing instrument was signed in
behalf of said Corporation by authority of a Resolution of its Board
of Directors; and said President acknowledged to me that said Corporation
executed the same.
/s/ Wayne H. Braumberger
Notary Public
Residing in Salt Lake County,
State of Utah
My Commission expires:
6/12/86
STATE OF UTAH )
)ss
COUNTY OF SALT LAKE )
On the 30th day of April, 1985, personally appeared before me
Vincent R. Houtz, who being by me duly sworn, did say that he is the Secretary
of Versa Tech. Inc. that the foregoing instrument was signed in behalf of said
Corporation by authority of a Resolution of its Board of Directors; and said
Secretary acknowledged to me that said Corporation executed the same.
/s/Wayne H. Braumberger
Notary Public
Residing in Salt Lake County
State of Utah
My Commission expires:
6/12/86
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GALTECH, INC.
WE, THE UNDERSIGNED, pursuant to the Utah Business Corporation Act,
hereby adopt the following Articles of Amendment as a revision of the Articles
of Incorporation of GALTECH, INC.
FIRST: The name of the corporation is GALTECH, INC.
SECOND: The duration of the corporation is perpetual.
THIRD: The following amendments to the Articles of Incorporation
were approved by the shareholders:
Article I of the Articles of Incorporation is hereby amended in its
entirety to read as follows:
ARTICLE I
Corporate Name
The name of this corporation is:
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
FOURTH: The amendments set forth in Article Third above were
adopted the 18th day of June, 1986.
FIFTH: The number of shares outstanding and entitled to vote on
such amendments as of the 18th day of June, 1986, was
19,580,460.
<PAGE>
SIXTH: 13,335,254 shares voted for such amendments, and 232,000
shares voted against such amendments.
DATED this 3rd day of July, 1986.
/s/Rulon W. Cluff, President
/s/Wayne Beach, Secretary
STATE OF UTAH )
)ss.
COUNTY OF Salt Lake )
I, THE UNDERSIGNED, a Notary Public, hereby certify that on the 3rd day
of July, 1986, personally appeared before me Rulon W. Cluff and Wayne Beach,
who being by me first duly sworn severally declared that they are the persons
who signed the foregoing Articles of Amendment as corporate officers of
Galtech, Inc., and that the statements contained therein are true.
DATED this 3rd day of July, 1986.
/s/
NOTARY PUBLIC
My commission Expires:
12/29/88
Residing at Mt. Pleasant, Utah
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
WE, THE UNDERSIGNED, pursuant to the Utah Business Corporation Act,
hereby adopt the following Articles of Amendment as a revision of the Articles
of Incorporation of Galtech Semiconductor Materials Corporation.
FIRST: The name of the corporation is GALTECH SEMICONDUCTOR
MATERIALS CORPORATION.
SECOND: The duration of the corporation is perpetual.
THIRD: The following amendments to the Articles of
Incorporation were approved by the shareholders:
Article XI of the Articles of Incorporation is hereby amended
in its entirety to read as follows:
ARTICLE XI
REVERSE STOCK SPLIT
All Thirty-One Million Six Hundred Forty-Two Thousand Three
Hundred Sixty (31,642,360) outstanding shares of stock by the
corporation are hereby split in a twenty-to-one reverse split
(20-1). Any fractions of a share created by said reverse split
shall be made a whole share.
FOURTH: The amendments set forth in Article Third above were
adopted the by the Board of Directors on the 13th day of
February, 1995.
FIFTH: More than 51% of the outstanding shares entitled to vote on
the reverse stock split voted in favor of said split at the
Shareholders meeting on February 8, 1995.
DATED this 21st day of February, 1995.
/s/ Russell Chapman, President
/s/ Paul C. Riggs, Secretary
<PAGE>
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
I THE UNDERSIGNED, a Notary Public, hereby certify that on the 21st day of
February, 1995, personally appeared before me Russell Chapman and Paul C.
Riggs, who being by me first duly sworn severally declared that they are the
persons who signed the foregoing Articles of Amendment as corporate officers
of Galtech Semiconductor Materials Corporation, and that the statements
contained therein are true.
DATED this 21st day of February, 1995.
/s/Lois Wells
Notary Public
My Commission Expires:
5/27/96
BYLAWS
OF
VERSA TECH, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Utah shall be
located in the City of American Fork, County of Utah. The Corporation may have
such other offices, either within or without the State of Incorporation, as
the Board of Directors may designate or as the business of the corporation may
from time to time require.
ARTICLE II STOCKHOLDERS
1. ANNUAL MEETING
The annual meeting of the stockholders shall be held one year from the
date of incorporation, beginning with the year 1985, at the hour of one
o'clock p.m. and annually on that date thereafter, for the purpose of electing
directors and for the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a legal holiday,
such meeting shall be held on the next succeeding business day.
2. SPECIAL MEETINGS. UCS 5 16-10-26
Special meetings of the stockholders for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders
of not less than ten percent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
without the State unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting called by the
directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the State unless
otherwise prescribed by statute, the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation.
<PAGE>
4. NOTICE OF MEETING. UCA 16-10-27
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty
days before the date of the meeting, either personally or by mail, by or at
the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the stockholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
5. CLOSING OF TRANSFER BOOKS OF FIXING OF RECORD DATE. UCA 516-20-28
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment or any dividend, or in order to make
a determination of stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books shall be closed for
a stated period but not to exceed, in case, fifty days. If the stock transfer
books shall be closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting at a meting of stockholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the stock transfer books, the directors may fix in advance a
date as the record date for any such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to
any adjournment thereof.
6. VOTING LISTS. UCA 16-10-29
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office
of the Corporation and shall be subject to inspection by any stockholder at
anytime during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list of transfer books.or to vote at the
meeting of stockholders.
7. QUORUM. 16-10-30
At any meeting of stockholders a majority of the outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally notified. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES. UCA 16-10-30
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney-in-fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting.
9. VOTING. UCA 16-10-30
Each stockholder entitled to vote in accordance with the terms and
provisions of the Certificate of Incorporation and these Bylaws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled
to vote held by such stockholders. Upon the demand of any stockholder, the
vote for directors and upon any question before the meeting shall be by
ballot. All elections for directors shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of this
State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders shall be a
follows:
1. Roll Call.
2. Proof of notice of meeting of waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS. UCA Section 16-138
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III BOARD OF DIRECTORS
1. GENERAL POWERS. UCA 16-10-33
The business and affairs of the corporation shall be managed by its Board
of Directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these By-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be not more than nine
(9) or less than three (3). Each director shall hold office until the next
annual meeting of stockholders and until his successor shall have been elected
and qualified.
3. REGULAR MEETINGS. UCA 16-10-40
A regular meeting of the directors shall be held without other notice
than this By-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide, by resolution, the time
and place for the holding of additional regular meetings without other notice
than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE. UCA 16-10-40
Notice of any special meeting shall be given at least two days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall constitute a wive of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
6. QUORUM. UCA 16-10-38
At any meeting of the directors a majority shall constitute a quorum for
the transaction of business, but if less than said number is present at a
meting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors then in office, although less than a quorum exists, vacancies
occurring by reason of the removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance
at each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporation matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in
the minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
14. ACTION WITHOUT A MEETING. UCA 16-10-40
Any action that may be taken by the Board of Directors at a meeting may
be taken without a meeting if a consent in writing, setting forth the action
so to be taken, shall be signed before such action by all of the directors.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, two vice
presidents, a secretary and a treasurer, each of whom shall be elected by the
directors. Such other officers and assistant officers as my be deemed
necessary may be elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected bv the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
3. REMOVAL.
Any officer or agent elected of appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these By-laws to some other officer or agent of the corporation, or shall
be required by law to be otherwise signed or executed, and in general shall
preform all duties incident to the office of president and such other duties
as may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of he president,
and when so acting, shall have all powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the president or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, so that
all notices are duly given in accordance with the provisions off these By-laws
or as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall furnished to the secretary by such stockholders, have general
charge of the stock transfer books of the corporation and in general duties
incident to the office of secretarv and such other duties as from time to time
may be assigned to him by the President or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful I discharge of his duties in such sum and with such surety or
sureties as the directors shall determine. He shall have charge and custody
of and be responsible for all funds and securities of the corporation;
received and give receipts for monies due and payable to the corporation;
receive and give receipts for monies due and payable to the corporation from
any source whatsoever, and deposit all such monies in the name of the
corporation in such banks, trust companies or other depositories as shall be
selected in accordance with these By-laws and in general perform all of the
duties incident to the office of treasurer and such other duties as from time
to time may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or
confined to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued, in the name of the corporation, shall
be signed by such officer or officers, agent or agents of the corporation and
in such manner as shall from, time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks trust
companies or other depositories the directors may select.
<PAGE>
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders,
the number of shares and date of issue, shall be entered on the stock
transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have
been surrendered and canceled, except that in case of a lost, destroyed or
mutilated certificate a new one may be issued therefore upon such terms and
indemnity to the corporation as the directors may prescribe.
2. TRANSFER OF SHARES.
(a) Upon surrender to the corporation of the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered
on the transfer book of the corooration which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound
to recognize an equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have exoress or other notice
thereof, except as expressly provided by the laws of this State.
ARTICLE VII - FISCAL YEAR
The fiscal Year of the corooration shall begin on the first day of
January in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors may provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of-the corporation, the state
of incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions
of these By-laws or under the provisions of the Articles of Incorporation, a
waiver to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These By-laws maybe altered, amended or repealed and new Bylaws may be
adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.
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