As filed with the Securities and Exchange Commission on
December 29, 2000
Registration No. 001-15355
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 1
to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
HOLTER TECHNOLOGIES HOLDING, AG
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(Name of Small Business Issuer in its charter)
Nevada 84-1393541
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23548 Calabasas Road, Suite 202, Calabasas, California 91302
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (818) 224-2145
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
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HOLTER TECHNOLOGIES HOLDING, AG
FORM 10-SB
TABLE OF CONTENTS
PART I
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ITEM 1. Description of Business........................................................3
ITEM 2. Management's Discussion and Analysis or Plan of Operation.....................23
ITEM 3. Description of Property.......................................................27
ITEM 4. Security Ownership of Certain Beneficial Owners and Management.....
ITEM 5. Directors, Executive Officers, Promoters and Control Persons..................28
ITEM 6. Executive Compensation........................................................29
ITEM 7. Certain Relationships and Related Transactions................................31
ITEM 8. Description of Securities.....................................................33
PART II
ITEM 1. Market Price of and Dividends on Registrant's.................................33
Common Equity and Other Shareholder Matters...................................34
ITEM 2. Legal Proceedings.............................................................34
ITEM 3. Changes in and Disagreements with Accountants.................................34
ITEM 4. Recent Sales of Unregistered Securities.......................................34
ITEM 5. Indemnification of Directors and Officers.....................................44
PART F/S
Financial Statements.........................................................................F-1 - F-26
PART III
ITEM 1. Index to Exhibits.............................................................46
ITEM 2. Description of Exhibits.......................................................46
Signatures......................................................................................47
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FORM 10-SB
PART I
ITEM 1. Description of Business
Business Development
Holter Technologies Holding, AG (the "Company") was incorporated in the
State of Nevada on March 21, 1997 as Lyon Mountain, Inc. On February 10, 1998,
the Company changed its name to Falken Investment, AG. On January 21, 1999, the
Company changed its name to Holter Technologies Holding, AG. The Company is
engaged primarily in the business of producing, marketing and selling air
filtration, water filtration and energy efficient products.
In February 1999, the Company acquired 100% of the outstanding equity
interests of Holter Sachsen DENATEC GmbH ("Denatec"), a German limited liability
company, and 80% of the outstanding equity interests of Philaqua
Aufbereitungstechnik GmbH ("Philaqua"), a German limited liability company, from
the stockholders of Denatec and Philaqua, including Professor Heinrich W.
Holter, the Company's President and Chairman of the Board of Directors. The
purchase price of Denatec and Philaqua was 44.1 million shares of the Company's
common stock, par value $.001 per share (the "Common Stock"). Denatec holds the
exclusive rights to exploit certain worldwide patents, patents pending and
similar intellectual property rights (collectively, "Intellectual Property
Rights") and other inventions of air filtration processes, including denaturing
heat exchangers and electrostatic filters having a denaturing collector
electrode. See Part I, Item 1, "Description of Business - Air Filtration."
Philaqua holds the exclusive rights to exploit certain worldwide Intellectual
Property Rights regarding industrial water treatment and purification through
ultraviolet light filtration. In December 1998, Philaqua entered into an
exclusive distribution agreement with Laboratory of Impulse Technique ZAO
("LIT"), a Russian corporation. The joint venture was formed to facilitate the
manufacture of UV constructions and for market support of each of Philaqua's and
LIT's products. Pursuant to the joint venture, Philaqua agreed to purchase
ultraviolet-based water treatment products and other products as agreed by the
parties from time to time exclusively from LIT, and LIT agreed not to supply its
products to any other distributors in the world except those located in the
former Soviet Union.
In March 2000, the Company acquired 30% of the outstanding common stock
of Heinrich Holter GmbH ("Holter GmbH"), a German corporation, from Professor
Holter in exchange for US$1.5 million. In December 2000, the Company acquired an
additional 20% of the outstanding common stock of Holter GmbH from Professor
Holter in exchange for 15,000,000 shares of the Company's Common Stock. Holter
GmbH engages primarily in the business of marketing, sales, production, research
and development of air, water and energy systems.
In March 2000, the Company acquired 50% of the outstanding common stock
of Holter Systembau GmbH ("Holter Systembau"), a German corporation, for
US$125,000. Holter Systembau engages primarily in the business of marketing and
sales of low-energy modular housing systems.
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In April 2000, the Company acquired 50% of the outstanding common stock
of LK- Luftqualitat AG ("LK-Luftqualitat"), a Swiss corporation, for US$650,000.
LK-Luftqualitat engages primarily in the business of marketing, sales,
production, research and development of the Ionair(R) filtration system. See
Part I, Item I, "Description of Business - Air Filtration."
In April 2000, the Company acquired 20% of the outstanding common stock
of Coolpoint Ventilation Equipment Ltd., a Hong Kong limited liability
corporation, now known as Coolpoint-Holter Environmental Technologies Limited
("Coolpoint"), in exchange for 1,388,889 shares of the Company's Common Stock.
Coolpoint engages primarily in the business of marketing and sales of air
filtration systems in Asia. The Company was granted an option to purchase up to
20% of any Coolpoint shares offered to the public in the future. In the event
that the price of the Company's Common Stock has failed to reach at least $2.00
per share on or before December 31, 2000, Coolpoint will receive an option from
the Company to purchase additional shares of the Company's Common Stock as
determined by the following formula:
Net profit distributed to the Company by Coolpoint Number of shares
---------------------------------------------------- = of Common Stock
The Company's Common Stock price on available to Coolpoint
December 31, 2000 pursuant to option
There can be no assurance that the price of the Company's Common Stock will
equal or exceed $2.00 prior to December 31, 2000 or that the Company will not be
required to issue the option to Coolpoint.
In April 2000, the Company acquired 23% of the outstanding common stock
of Huta Zabrze SA ("Huta Zabrze"), a Polish corporation, from Lezak Kulawik, the
Managing Director of Huta Zabrze, in exchange for 2,750,000 shares of the
Company's Common Stock. In May 2000, the Company acquired an additional seven
percent of the outstanding common stock of Huta Zabrze and $800,000 in exchange
for 2,000,000 shares of the Company's Common Stock. Huta Zabrze engages
primarily in the production, marketing and sales of steel and iron and
construction, telecommunication and energy systems in the international market.
In June 2000, the Company acquired 50% of the outstanding common stock
of Intherm GmbH ("Intherm"), a German corporation, for US$125,000. Intherm
engages primarily in the business of marketing and sales of energy systems such
as the IntherMobil(R), a refrigerated box used to provide refrigeration where
needed which may be loaded onto different types of machinery.
In December 2000, the Company acquired 50% of the outstanding common
stock of Holter Italia s.r.l. ("Holter Italia"), an Italian corporation, from
Professor Holter in exchange for 10,000,000 shares of the Company's Common
Stock. Holter Italia engages primarily in the business of marketing and sales of
air filtration systems.
In February 2000, the Company entered into a Distribution and
Cooperation Agreement with INSTAL Warszawa S.A. ("INSTAL"), a Polish
corporation. INSTAL engages in the design, construction and installation of air
conditioning systems in Poland and provides trained service support of such
systems. The agreement permits INSTAL and the Company to bid for and service
contracts in Poland using the Company's air filtration technologies. Each of
INSTAL and the Company agreed not to enter into agreements with other
competitors during the term of the agreement. Unless earlier terminated, the
agreement expires on December 31, 2003, and shall automatically renew for two
year terms unless terminated by either party at least six months in advance of
the termination date.
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The Company's acquisition of and/or association with these companies,
in whole or in part, has permitted the Company to increase its access to
intellectual property in its areas of primary focus, such as air filtration,
water filtration, and energy-related and energy conservation products.
Through its affiliates and subsidiaries, the Company operates in four
areas:
1. Marketing and sale of air filtration systems, including denaturing air
filters, Filtervlies, the Aer-O-Med(R)and Ionair(R)systems.
2. Marketing and sale of water filtration systems, including water
treatment and sewage sludge reduction treatments and UV/Ozon.
3. Marketing and sale of energy-related and energy conservation products,
including coal-waste systems, Hocodems, Pyrotec, Clean Coal Technology,
Thermo-Multiform and IntherMobil(R).
4. Provision of design and engineering services to third parties relating
to the development of large building or industrial projects in the
areas of air filtration, water filtration and energy conservation.
Air Filtration
With regard to air filtration products and services, the Company and
many of its affiliates and subsidiaries engage in the design, engineering and
provision of wet and dry dust collection systems for all types of industries,
including, but not limited to, power plants, steelworks and foundries, coke
processing plants, waste incineration plants and industrial boiler
installations. The Company contracts with third parties to provide design and
engineering services of air cleansing systems to major projects, either as a
contractor or subcontractor. The Company will design the system and subcontract
the production of the air cleansing equipment to a third party using
Intellectual Property Rights licensed to or otherwise owned by the Company. The
Company and a few of its subsidiaries and affiliates also engage in limited
production of air cleansing systems, such as the Filtervlies, Ionair(R) and
Aer-O-Med(R) products.
The Company uses denaturing electrostatic filters, enabling the system
to destroy substantially all germs and spores, biochemisorption filters, and
Ionair(R) technology, each of which serve to clean harmful bacteria and
allergens from indoor air, thus reducing the risk of "sick building syndrome,"
whereby occupants of air-conditioned buildings are repeatedly ill, and allergic
reactions from breathing recycled air. The denaturing electrostatic filter traps
particles, germs and spores conveyed through the system by means of a collector
electrode. The collector electrode causes electrically charged air molecules, or
ions, to separate from negatively charged ions. The ions attach to molecules of
dust and particulate matter, causing the dust and particulates to migrate to and
attach to the collector electrode, which the Company believes results in the
removal of up to 99% of the dust and particulate matter in the treated air. The
denaturing electrostatic filter does not use synthetic chemicals. Instead, it
relies solely upon natural mineral substances.
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The treated air is then funneled though a biochemisorption filter, a
three layer membrane filter placed across the treated air next to the positively
charged collector electrode. The first layer of the filter has a high acidic
value, the second layer is pH neutral and the third layer has a high alkaline
value. The Company believes that the biochemisorption filter kills over 90% of
airborne bacteria, spores and mold.
The Company also uses the Aer-O-Med(R) system, a portable chemisorption
air filter which uses natural, acidic and alkaline mineral substances to filter
microorganisms, pollutants and allergens, including, but not limited to, dust,
mite excrement, gases, odors, smog, animal dander, cigarette smoke, ozone and
pollen, from indoor air. The Aer-O-Med(R) system is designed mainly for
residential use.
LK-Luftqualitat's product, the Ionair(R) system, treats contaminated or
polluted indoor or extracted air with positive and negative oxygen ions such
that pollutants and allergens are discarded without use of UV rays or chemicals.
The Ionair(R) system is in operation in several installations in Europe. The
process is similar to the Company's systems, but differs in the manner in which
the ions attach to particulate matter. The Ionair(R) system is installed in
projects in which the Company performs design and engineering services, and is
also sold individually by LK-Luftqualitat.
The Company also manufactures the Filtervlies product, a basic air
filter that uses special denaturing techniques to filter particulate matter from
circulating air. It may be used in existing air systems. It differs from the
conventional, or sponge, air filter in that it filters and destroys
microorganisms and allergens such as fungi, mold spores and bacteria.
Holter GmbH, Denatec, LK-Luftqualitat, Holter Italia, INSTAL and
Coolpoint engage in marketing and sales of the Company's air filtration services
and systems. Holter GmbH, Coolpoint, INSTAL and LK-Luftqualitat also engage in
limited production of the systems.
The retail price and production of the Company's products is determined
on a contract-by-contract basis with each customer. As of the date of this
Registration Statement, the Company's products are not sold or distributed to
the general public, but rather to large purchasers such as municipalities,
governmental entities and other large users such as shopping malls, hotels and
office buildings interested in improving air quality. Because the number and
type of the Company's products are determined on a contract-by-contract basis,
the Company does not have any current plans for distribution.
The Company and certain of its subsidiaries and affiliates engage in
limited production of the Filtervlies, Ionair(R) and Aer-O-Med(R) products.
Other products distributed by the Company and its subsidiaries and affiliates
are subcontracted to third parties to produce the products. The Company's
monthly production capacity of its air filtration products is affected by the
Company's existing agreements and varies depending upon contract requirements.
As of the date of this Registration Statement, the Company has met all material
service and production requirements.
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Water Filtration
With regard to water filtration, the Company, through Philaqua and
others, including SHW Holter Wassertechnik GmbH, a German corporation founded by
Professor Holter, the Company's President and Chairman of the Board of
Directors, designs and supplies, and engages in limited production of, systems
and components for the treatment of water and wastewater, soils and sludge
through the use of ozone, ultraviolet light and biological applications. In
Philaqua's technology, the ozone is generated in a gas-tight apparatus and mixed
with oxygen. The mixture of oxygen and ozone is then transported via pipes into
the water to be cleaned, which is contained in stainless steel or concrete
vessels. The ozone-oxygen mixture is absorbed in the water and removes and/or
destroys surfactants, dyes, bacteria, viruses and spores in the water. Any gas
discharge from the chemical reaction is destroyed by catalysts. The water is
then disinfected by UV-irradiation prior to distribution for drinking. This
technology may be applied to reservoir, river, contaminated ground and cooling
water.
Philaqua also has developed its technology to reduce sewage sludge
produced by water treatment plants. The Company believes its technology reduces
the amount of sewage sludge by more than 80%. This technology uses ozone to
remove surfactants and dyes from sewage.
Philaqua also provides services to biologists, chemists and mechanical,
processing, electrical and site engineers engaged in large building projects to
assess water treatment processes.
Production of Philaqua's water filtration systems is performed by LIT.
Philaqua and LIT have entered into an exclusive distributorship, whereby
Philaqua has agreed to acquire its products exclusively from LIT, and LIT has
agreed not to sell its products to any third party except those located in the
former Soviet Union. By its terms, the exclusive distributorship agreement will
expire on December 31, 2001, although the agreement may be extended by mutual
agreement of the parties. Philaqua uses LIT's products to assemble and complete
Philaqua's products. Philaqua's monthly production capacity of its water
filtration products is affected by its existing agreements and varies depending
upon contract requirements. As of the date of this Registration Statement,
Philaqua has met all material service and production requirements.
The retail price and production of Philaqua's products is determined on
a contract-by-contract basis with each customer. As of the date of this
Registration Statement, Philaqua's products are not sold or distributed to the
general public, but rather to large purchasers such as municipalities,
governmental entities and other large users such as shopping malls, hotels and
office buildings interested in improving water quality. Because the number and
type of the Company's products are determined on a contract-by-contract basis,
except for the distribution agreement with LIT, Philaqua does not have any
current plans for distribution.
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Energy-Related and Energy Conservation Products
With regard to energy products, the Company, through its affiliates
Huta Zabrze, Holter Polska, a Polish corporation owned and controlled by
Professor Holter, the Company's President and Chairman of the Board of
Directors, Holter Systembau and Intherm, and its subsidiary Holter GmbH, engages
in the marketing and sale and limited production of various combustion,
conservation and environmental cleaning systems relating to energy products such
as coal.
Combustion Systems
Holter GmbH's product, coal waste systems ("CWS"), converts waste
products' inherent chemical energy into thermal energy in hot flue gas. Waste
products such as those normally deposited in landfills are instead used by a
power station to create a separate source of thermal energy, independent of
electricity, coal or other powered energy. The thermal energy is created by
converting the chemical energy of waste products into hot flue gas by means of a
plant satellite parallel to a power station steam generator. The waste products
are heated and converted to hot flue gas. The hot flue gas is conveyed to the
lower furnace section of a large steam generator in substitution for an
equivalent amount of coal. The hot flue gas is then heated to approximately
1,500 degrees Celsius. Any dioxins and furans contained in the hot flue gas are
destroyed during the heating process, and the remaining hot flue gases may be
cleaned with a conventional flue-gas scrubber normally used in coal-fired power
stations. The created energy is used to supply power for the power station. The
Company believes that this CWS technology results in a more efficient heating
method for the plant and a reduction in landfill waste and carbon dioxide
emissions of approximately 60%.
The Company's Pyrotec product is a two stage fluidized bed combustor
integrated into a steam boiler. It may be used to burn biomass materials such as
wood, hay, straw and paper, treated wood products, refuse-derived fuel, coal,
industrial and municipal sludge products. The Company believes that the use of
the Pyrotec product results in the ability to use a wide load range of
combustible materials, low carbon monoxide emissions, a high burn out rate and
an efficient method of thermal energy.
Conservation Systems
The Company's Thermo-Multiform product is a building product made of
expanded polystyrene which may be used to construct affordable, well-insulted
and hygienic housing. The Company believes that expanded polystyrene results in
a product that is resistant to fire, fails to absorb water, allows the passage
of gases, is more dense and has a higher heat insulation capacity than
conventional building materials such as brick or concrete. Additionally, the
expanded polystyrene consists of 98% air, which the Company believes results in
excellent heat insulation and a low specific weight. The Thermo-Multiform
product is produced in component pieces, which may be pieced together by the
home builder in the manner desired by the home owner similar to modular housing.
In order to construct a structure, the units are placed next to each other and
pressed together, and the hollow sections of the Thermo-Multiform blocks may be
filled with cement. Load-bearing cores may be inserted into multiple-block
walls.
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The Company's Okompakt product is an air handling device which offers
low energy ventilation of homes and offices, which the Company believes results
in an energy savings of up to 66% compared to open-window ventilation.
Environmental Cleaning Systems Relating to Energy Products
The Company's "clean coal technology" cleans mined coal of sulfur and
other particulate matter from the coal itself, yielding what the Company
believes is a cleaner burning product that weighs less so it costs less to
transport. The raw mined coal is inserted into a boiler located at the mine
site. The boiler contains technology which pulverizes and heats the coal, thus
releasing the sulfur which may be extracted as a gas. Any withdrawn particulate
matter, such as ash, fuel and limestone, is funneled to an encased handling
system, resulting in a virtually dust-free operation. The technology may be
applied to many types of coal, and meets all current European Union
environmental and emissions requirements.
The Company's Hocodems product separates coal into two medium outlets,
which divide the coal into lower and higher density materials. The lower density
materials are distributed to the lower outlet by a vortex. The higher density
materials are moved along a chamber by means of centrifugal force and ejected at
the upper end of the vessel by a discharge facility. The Company believes that
the Hocodems product results in a simpler and smaller plant layout, less
necessary equipment, lower capital and operating costs and improved
availability.
Intherm's product, IntherMobil(R), consists of a refrigerated box on
wheels which may be transferred from one type of transport to another depending
upon need. IntherMobil(R) may be loaded onto any vehicle by means of wheels
attached to the bottom of the box. The product is then secured to the vehicle
and the materials may be transported. This enables a transporter to make more
efficient use of its vehicles and permits repair of the vehicle and/or the
IntherMobil(R) separately. The IntherMobil(R) product may be used for
refrigeration or freezing.
In addition to its limited production of energy products, the Company,
Holter GmbH, Holter Polska and Holter Systembau also provide design and
engineering of energy systems for third parties. As of the date of this
Registration Statement, the Company has met all material service and production
requirements.
The retail price and production of the Company's energy products is
determined on a contract-by-contract basis with each customer. As of the date of
this Registration Statement, the Company's products are not sold or distributed
to the general public, but rather to large purchasers such as municipalities,
governmental entities and other large users such as shopping malls, hotels and
office buildings interested in improving emissions and efficiency of its
facilities. Because the number and type of the Company's products are determined
on a contract-by contract basis, the Company does not have any current plans for
distribution.
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Design and Engineering Services
The Company and its subsidiaries and affiliates also provide design and
engineering services to third parties relating to the development of large
building or industrial projects in the areas of air filtration, water filtration
and energy conservation. The services are provided on a contract-by-contract
basis and are priced accordingly.
Markets
The Company believes its markets are worldwide, but presently is
focusing primarily upon markets in Eastern Europe, Germany, Asia and the Middle
East. The Company's research indicates that there are over 80,000,000 square
meters of floor space in the Federal Republic of Germany alone, and that such
space is growing by approximately 5,000,000 square meters each year. Based upon
the foregoing, the Company estimates a potential market of approximately 900,000
electrostatic denaturing outlet filters by January 2002. The Company intends to
focus its marketing efforts to consumers the Company believes would be
particularly attracted to the elimination of bacteria, spores, mold and other
airborne allergens and particulate removal, such as hospitals, other medical
facilities, schools, restaurants, hotels, apartment houses and office buildings.
The Company intends to enter into relationships with third parties to
market its products. As of the date of this Registration Statement, Holter GmbH,
Denatec, LK-Luftqualitat, Holter Italia, INSTAL and Coolpoint engage in
marketing and sales of the Company's air filtration systems; LIT and the Fushun
Coal Mining Bureau ("Fushun") have entered into agreements to market Philaqua's
water filtration products; and Huta Zabrze, Holter GmbH, Holter Polska, Holter
Systembau, Intherm and Fushun engage in the marketing and sales of the Company's
energy-related products. The Company intends to enter into further marketing
relationships with third parties.
Competition
Although the Company owns or has the rights by license to many of its
proprietary technologies, the Company has many competitors in the general areas
of air filtration, water filtration and energy-related products and the
provision of design and engineering services. Many of the Company's competitors
are larger, established companies with greater assets and financial reserves
than the Company. The Company's future success will partly depend on its ability
to compete with these businesses. Presently, there can be no assurance that the
Company will be able to compete with these businesses.
Air Filtration Products: The Company is not aware of any competitors in
the removal and denaturization of bacteria, spores, mold and other airborne
allergens. However, the Company believes that the following, among others,
compete with the Company by producing a product which removes particulate matter
from the air: Minnesota Mining and Manufacturing Company, General Electric
Company, Siemans AG, Camfil GmbH, Delbag Luftfilter GmbH and Gebruder Trox GmbH.
Water Filtration Products: The Company believes that Passavant-Roediger
Umwelttechnik GmbH, Wedeco AG, Philipp Muller-Hager & Elsasser GmbH, Degremont
S.A. and SHW Holter Wassertechnik GmbH, among others, compete with the Company
in water filtration. Nevertheless, the Company is not aware of any competition
in the area of its protected sewage sludge reduction technology.
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Energy-Related Products: The Company believes that Asea Brown Boveri
AG, Babcock BSH AG, Lurgi AG and L.&C. Steinmuller GmbH, among others, compete
with the Company in the provision of energy-related products similar to those
offered by the Company. Nevertheless, the Company is not aware of any competitor
in the area of coal waste co-combustion technology whose system has up to 50%
lower investment cost and up to 300% higher energy efficiency than conventional
waste incineration plants.
Principal Suppliers
LIT is the sole contractual supplier of components to Philaqua. The
Company, its affiliates and subsidiaries do not rely substantially on any
supplier.
Dependence Upon Customers
For the year ended December 31, 1999 and the nine period ended
September 30, 2000, the Company obtained 91% and 65% of its total revenues,
respectively, from Holter GmbH, a subsidiary of the Company. See Part I, Item 7,
"Certain Relationships and Related Transactions." For the nine month period
ended September 30, 2000, the Company did not derive more than 10% of its
revenues from any one source except Holter GmbH. However, the Company, through
its affiliates, has significant material contracts with each of the Government
of the City of Moscow, Russian Federation, and Lurgi Lent Jes AG and Lurgi
Energie Und Entsorgung GmbH with regard to a project in the Ukraine. The size of
either of these agreements may result in the Company deriving a significant
portion of its revenues from that source in any given time period. There can be
no assurance that the Company will not be significantly dependent upon revenues
derived from any one customer at any given time since the Company fulfills
executed contracts for completion of projects. The Company may remain dependent
in the immediate future upon a limited number of customers (the identity of
which may be subject to change from year to year) for a material percentage of
its annual operating revenue.
Governmental Regulation
The Company is subject to ordinary business regulation of employers and
businesses in the Federal Republic of Germany, ordinary business regulation of
businesses in the State of Nevada, and environmental regulations in each country
in which the Company's products are sold, including Russia, China, Poland,
Switzerland, Italy and Germany. The Company does not anticipate being subject to
significant regulation as a result of its business plans other than typical
safety certifications for its products and manufacturing capabilities,
electrical appliances and devices. To the best knowledge of the Company, as of
the date of this Registration Statement, the Company is in compliance with all
applicable material environmental laws. The costs and effects of such compliance
are incorporated into the costs of the Company's products charged to each
customer depending upon the country in which the customer wishes the Company's
products to be operational and installed and cannot be quantified. To the best
knowledge of the Company, as of the date of this Registration Statement, the
Company has obtained all applicable governmental approvals for its principal
products and services.
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Patents, Trademarks and Licensing Agreements
Professor Heinrich W. Holter, the Company's President and Chairman of
the Board of Directors, owns approximately 3,500 international Intellectual
Property Rights in the areas of air filtration, water filtration, energy
production and other technologies. Professor Holter has licensed approximately
975 of these Intellectual Property Rights to the Company and its subsidiaries,
including Denatec and Philaqua, and affiliates by royalty-free, nonexclusive,
perpetual licenses. By terms of the licenses, the Company may sublicense these
Intellectual Property Rights to third parties at its option.
The Company has no other Intellectual Property Right or licensing
agreements except for standard software license agreements.
Research and Development
The Company engages in research and development substantially through
its affiliates and subsidiaries. Air and water filtration and energy research
and development is performed by Holter GmbH. Air filtration research and
development is performed by Denatec, LK-Luftqualitat, and contracted out by the
Company to unaffiliated universities and centers of higher education such as
ILK, Uni Munchen, TU Dresden, Uni Essen and Institut Bodensee, German
universities and academic centers. Water filtration research and development is
performed by Philaqua. The owner of any results of the research and development
is the person or entity which pays for the research and development.
Accordingly, in the event that Professor Holter, the Company's President and
Chairman of the Board of Directors, pays for the research and development, he
will own the results of the research and development.
The Company estimates that an average of DM30 million was spent on
research and development on its behalf by Professor Holter or by companies
affiliated or owned, in whole or in part, by him. The costs of research and
development are not borne directly by customers.
Employees
Presently, the Company has five employees, all of whom are full-time,
in the Gladbeck, Germany office. The Company has three executive officers:
Professor Holter, the Company's President and Chairman of the Board of
Directors, Dirk Brinkmann, the Company's Executive Vice President and a
director, and Daniel Lezak, the Company's Secretary/Treasurer and a director.
See Part I, Item 5, "Directors and Executive Officers, Promoters and Control
Persons." The Company utilizes the personnel of its subsidiaries and affiliates
as it deems necessary from time to time. The Company's subsidiaries have the
following number of full-time employees: Holter Italia (130), Holter GmbH (105),
Philaqua (12), Holter Systembau (12), LK-Luftqualitat (10), Denatec (8) and
Intherm (5). The Company's affiliates have the following number of full-time
employees: Coolpoint (800) and Huta Zabrze (450).
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On October 25, 2000, the Company entered into employment agreements
with each of Professor Holter and Mr. Brinkmann. Each employment agreement will
terminate on December 31, 2005, and each automatically extends for another
calendar year unless terminated by either party by November 30 of each calendar
year. Pursuant to the terms of the employment agreements, Professor Holter will
be paid $20,000, and Mr. Brinkmann will be paid $10,000, per month. Both
Professor Holter and Mr. Brinkmann will be entitled to an annual bonus as
determined by the Board of Directors after consideration of each person's
contributions to the Company and the performance of his duties. Each employment
agreement provides that upon the termination of the employee's employment by the
Company other than for "cause" (as defined in the employment agreements) or by
the employee for certain actions of the Company, such as effecting a material
adverse change in the employee's responsibilities, the employee will be entitled
to all compensation and benefits payable under the employment agreement for the
remainder of the term.
Facilities
The Company's principal place of business and corporate offices are
located at 23548 Calabasas Road, Suite 202, Calabasas, California 91302. The
Calabasas facilities consist of approximately 600 square feet of office space
and is leased on a month to month basis from Gateway Industries, Ltd., of which
Daniel Lezak, the Company's Secretary/Treasurer and a director, is the
President. The monthly rental for the Calabasas property is $1,050 per month.
The Company also occupies office space in Dusseldorf and Gladbeck,
Germany as well as Italy, Poland, China, Switzerland, Russia and Czech Republic.
The Dusseldorf property consists of approximately 800 square feet, and is
provided by Holter GmbH, a subsidiary of the Company which Professor Holter, the
Company's President and Chairman of the Board of Directors, is the President, at
no cost to the Company. The Gladbeck offices are located in a building operated
by Grundstucksgesellschaft HKP GbR, a partnership in which Professor Holter, the
Company's President and Chairman of the Board of Directors, is a partner. The
offices consist of approximately 1,000 square feet of office space. The Company
does not pay rent nor has an executed lease for the premises. The Italian
property is located in Fano, Italy, consists of approximately 600 square feet,
and is provided by Holter Italia, a subsidiary of the Company, at no charge to
the Company. The Polish property is located in Zabrze, Poland, consists of
approximately 1,000 square feet, and is provided by Huta Zabrze, an affiliate of
the Company, at no charge to the Company. The Chinese properties are located in
Hong Kong and Fushun, China, consist of approximately 800 and 1,000 square feet,
and are provided by Coolpoint, an affiliate of the Company, and Fushun Cool
Mining Bureau, a party with whom the Company has a joint venture agreement, at
no charge to the Company. The Swiss property is located in Lucerne, Switzerland,
consists of approximately 900 square feet, and is provided by LK-Luftqualitat, a
subsidiary of the Company, at no charge to the Company. The Russian property is
located in Moscow, Russia, consists of approximately 1,200 square feet, and is
provided by the city of Moscow, a third party with whom the Company, through an
affiliate of Professor Holter has a relationship, has an agreement, at no charge
to the Company. The Czech property is located in Prague, Czech Republic,
consists of approximately 1,100 square feet, and is provided by Holter GmbH at
no charge to the Company.
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Litigation
There are presently no material pending legal proceedings to which the
Company or any of its subsidiaries is a party or to which any of its property is
subject and, to the best of its knowledge, no such actions against the Company
are contemplated or threatened.
Risk Factors
An investment in the Company's Common Stock involves a high degree of
risk, including the risks described below. Each of these risks could materially
adversely affect the business, operating results and financial condition of the
Company.
Conflicts of Interest; Related Party Transactions
The Company has acquired, and may in the future acquire, several
businesses owned and/or controlled, in whole or in part, by Professor Heinrich
W. Holter, the Company's President and Chairman of the Board of Directors. Any
transactions of such nature involve a conflict of interest of those parties with
a managerial position and/or ownership interest in both the Company and the
subsidiary, affiliate, or to-be-acquired entity. There can be no assurance that
the Company will enter into an arms length transaction with any such entity or
otherwise obtain an independent valuation or appraisal. Any failure of the
Company to resolve conflicts in the best interests of the Company and its
stockholders could have a material adverse effect on the Company's financial
condition. See Part I, Item 7, "Certain Relationships and Related Transactions."
High Volatility of Foreign Operations
Much of the Company's business is being conducted either in the Russian
Federation, China and Eastern Europe. The Russian and Chinese economic and
political situations are considered highly unstable and unpredictable. Renewed
financial or political crisis in Russia or China could have a severely negative
impact on the Company's operations. The Company's foreign operations are also
subject to other risks of doing business abroad, including fluctuations in the
value of currencies (which may affect demand for products priced in German
deutsche marks or U.S. dollars as well as local labor and supply costs), import
duties, changes to import and export regulations (including quotas), possible
restrictions on the repatriation of capital and earnings, labor or civil unrest,
long payment cycles, greater difficulty in collecting accounts receivable and
the burdens and cost of compliance with a variety of foreign laws, changes in
citizenship requirements for purposes of doing business and government
expropriation of operations and/or assets. There can be no assurance that
foreign governments will not adopt regulations or take other actions that would
have a direct or indirect adverse impact on the business or market opportunities
of the Company or that the political, cultural or economic climate outside the
United States will be favorable to the Company's operations and growth strategy.
Such actions or developments could have a material adverse effect on the
Company's business, financial condition and results of operations.
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Limited Operating History
The Company has a limited operating history and is in the early phases
of operation. The Company's likelihood of success must be considered in light of
the many unforeseen costs, expenses, problems, difficulties and delays
frequently associated with new ventures. There can be no assurance that the
Company's business ventures will be successful or that it will be able to
attract and retain sufficient customers and clients to attain its goals. The
success of the Company will be affected by expenses, operational difficulties
and other factors frequently encountered in the development of a business
enterprise in a competitive environment, many of which may be beyond the
Company's control. See Part I, Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Item 1, "Description of
Business."
No Assurance of Profitability
The Company anticipates that its operating expenses will increase
substantially as its business expands and there will be a greater need to
generate significantly more revenues to achieve profitability. There can be no
assurance that the Company will ever achieve significant revenues or profitable
operations. See Part I, Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
Notes thereto.
Prof. Holter, the Company's President and Chairman of the Board of
Directors, beneficially owns approximately 66.2% of the Company's outstanding
Common Stock as of November 30, 2000. As a result, Prof. Holter possesses
significant influence over the Company on matters including the election of
directors. This concentration of share ownership may: (i) delay or prevent a
change in control of the Company; (ii) impede a merger, consolidation, takeover,
or other business involving the Company; or (iii) discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of
the Company.
Possible Difficulties in Future Funding
In the past, the Company has financed much of its operations with
monies and other services provided by other companies owned and/or controlled by
Prof. Holter, the Company's President and Chairman of the Board of Directors. It
is unlikely that this funding source will be sufficient to satisfy the Company's
future, increasing financing demands. Accordingly, the Company may have to seek
funding from outside sources. There can be no assurance that outside funding
will be available to the Company at the time and in the amount necessary to
satisfy the Company's needs, or, that if such funds are available, they will be
available on terms favorable to the Company. The Company may also consider
selling new securities, either privately or publicly to raise funds. If the
Company issues additional shares of Common Stock, current shareholders may
experience immediate and substantial dilution in their ownership of Company
shares. In the event the Company issues securities or instruments other than
Common Stock, it may be required to issue such instruments with greater rights
than those currently possessed by holders of the Company's Common Stock.
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Competition
The air filtration, water filtration and energy-related and
conservation product industries and the provision of engineering and design
services for air filtration, water filtration and energy-related and
conservation projects are intensely competitive. The Company will compete with
other air filtration, water filtration and energy related and conservation
developers, marketers, designers and engineers in the sale of its products and
provision of its design and engineering services. Based upon its knowledge and
assessment of these industries, the Company considers the following to be its
primary competitors in each industry:
Industry Competitor
-------- ----------
Air Filtration Minnesota Mining and Manufacturing Company
General Electric Company
Siemans AG
Camfil GmbH
Delbag Luftfilter GmbH
Gebruder Trox GmbH
Water Filtration Passavant-Roediger Umwelttechnik
Wedeco AG
Philipp Muller-Hager & Elsasser GmbH
Degremont S.A.
SHW Holter Wassertechnik GmbH
Energy-Related Products Asea Brown Boveri AG
Babcock BSH AG
Lurgi AG
L.& C. Steinmuller GmbH
Some of these competitors have substantially greater financial resources than
the Company. These entities generally may be able to accept more risk than the
Company prudently can manage, including risk with respect to the
creditworthiness of purchasers or risk related to geographic or other
concentration of investment.
Rapid Technological Changes
The water and air purification industries are subject to rapid and
significant changes in technology. While the Company believes that for the
foreseeable future these changes will not materially hinder the Company's
ability to acquire necessary technologies, the effect of technological changes
on the businesses of the Company cannot be predicted. Thus, there can be no
assurance that technological developments will not have a material adverse
effect on the Company.
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The Company's growth strategy includes investment in product
development. See Part I, Item 1, "Description of Business - Research and
Development." The Company sells its products in industries that are
characterized by rapid and significant technological changes, frequent new
product and service introductions and enhancements and evolving industry
standards. Without the timely introduction of new products, services and
enhancements, the Company's products and services may become technologically
obsolete over time, in which case its revenue and operating results would
suffer.
Many of the Company's products and services under development are
technologically innovative and require significant planning, design, development
and testing at the technological, product and manufacturing-process levels.
These activities require the Company to make significant investments.
Products in the air and water filtration and purification markets
undergo rapid and significant technological change because of quickly changing
industry standards and the introduction of new products and technologies that
make existing products and technologies uncompetitive or obsolete. The Company's
competition may adapt more quickly to new technologies and changes in its
customers' requirements than it can. The products the Company is currently
developing, or those it will develop in the future, may not be technologically
feasible or accepted by the marketplace, and its products or technologies could
become uncompetitive or obsolete.
The Company believes that its future success will depend in part upon
its ability to develop and enhance its current products and develop new products
to meet such anticipated technological changes. To the extent products developed
by the Company are based upon anticipated changes, sales of such products may be
adversely affected if other technology becomes accepted in the relevant
industry. If the Company does not successfully introduce new products or
enhanced versions of its current products in a timely manner, any competitive
position the Company may develop could be lost and the Company's sales, if any,
would be reduced. There can be no assurance that the Company will be able to
develop and introduce enhanced or new products that satisfy customer needs and
achieve market acceptance. The failure of the Company to manage its research and
development efforts would have a material adverse effect upon its business and
prospects.
Potential Volatility
The market price of the shares of Common Stock may be significantly
affected by factors such as actual or anticipated fluctuations in operating
results, new products or services or new contracts by the Company or their
competitors, legislative and regulatory developments, conditions and trends in
the air and water purification industries, general market conditions and other
factors. In addition, the stock market, from time to time, has experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stock of technology and other companies that have
often been unrelated to the operating performance of particular companies. These
broad market fluctuations may also adversely affect the market price of the
Company's Common Stock.
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No Dividends
The Company has never declared or paid any cash dividends and does not
expect to declare any such dividends in the foreseeable future. Payment of any
future dividends will depend upon earnings and capital requirements of the
Company, their debt facilities, if any, and other factors the Board of Directors
considers appropriate. The Company intends to retain its earnings, if any, to
finance the development and expansion of its business and, therefore, does not
anticipate paying any dividends in the foreseeable future. In addition, in the
future the Company may enter into certain borrowing arrangements which will
restrict its ability to pay dividends, although it currently has no intention to
do so. Accordingly, investors who anticipate the need for immediate income from
their investments by way of dividends should refrain from purchasing any of the
securities offered hereby. See Part II, Item 1, "Market Price of And Dividends
on the Registrant's Common Equity and Other Shareholder Matters - Dividend
Policy."
Dependence on Proprietary Technology; Expense and Risk of Patent
Litigation
The Company relies on patent, trade secret and other intellectual
property protection for its products and technology. Professor Holter, the
Company's President and Chairman of the Board of Directors, has received over
3,500 international Intellectual Property Rights, over 975 of which are licensed
to the Company and its subsidiaries and affiliates. The process of obtaining
Intellectual Property Rights can be expensive and there can be no assurance that
any future applications for Intellectual Property Rights will result in the
issuance of patents, that any issued patents or other Intellectual Property
Rights will provide the Company with meaningful competitive advantages, or that
challenges will not be issued against the validity or enforceability of any
patent or other Intellectual Property Right issued to the Company.
The Company also relies on trade secrets and proprietary technology
that it seeks to protect, in part, through confidentiality agreements with
employees, consultants and other parties. There can be no assurance that these
agreements will not be breached, that the Company will have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
known to or independently developed by others.
In the absence of significant Intellectual Property Right or other
proprietary protection, competitors may be able to copy the Company's technology
or design approaches, replicate its processes or gain access to its trade
secrets. Moreover, there can be no assurance that competitors will not be able
to develop technologies similar to or more advanced than the Company's or design
around any protected aspects of the Company's products or technology. No
assurance can be given that the Company's current or future products will not
infringe on the patents or other intellectual property rights of others.
There has been substantial litigation regarding patent and other
intellectual property rights in related industries. Further commercialization of
the Company's products could provoke additional claims of infringement from
third parties. In the future, litigation may be necessary to enforce
Intellectual Property Rights issued or licensed to the Company and/or Professor
Holter, to protect trade secrets or know-how owned or licensed by the Company,
or to defend the Company against claimed infringement of the rights of others
18
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and to determine the scope and validity of the proprietary rights of others. Any
such litigation would likely result in substantial cost and diversion of effort
by the Company, which by itself could have a material adverse effect on the
Company's business, financial condition and operating results. Further, adverse
determinations in such litigation could result in the Company's loss of
proprietary rights, subject the Company to significant liabilities to third
parties, require the Company to seek licenses from third parties, or prevent the
Company from manufacturing or selling its products, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Risks of Changing Laws
The Company believes that compliance with the air emission regulations
by coal users can be fully or partially met through the use of clean-burning
fuel technologies. The Company is unable to predict future regulatory changes
and their impact on the demand for its products. A full or partial repeal or
revision of certain environmental regulations would have a material adverse
effect on its prospects.
No Established Market for Energy-Related Products Exists
Although the Company believes that a substantial market will develop
for energy-related products, an established market does not currently exist. As
a result, the availability of accurate and reliable pricing information and
transportation alternatives is not fully known. The Company's future success
will depend on its ability to establish a market for energy-related products
among potential customers such as electrical utility companies and industrial
coal users. Further, potential users of its fuel products may be able to choose
among alternative fuel supplies. The Company faces the risk that
commercial-scale production facilities when completed will be unable to generate
sufficient market interest to continue in business. Further, the Company cannot
make assurances that any commercial-scale facility will be successful.
Competitive Cost
The Company's success depends, in substantial part, on its ability to
produce the Company's varied environmental products at a competitive cost on a
commercial scale. Until production volumes approach design capacity levels,
actual costs and profitability will not be certain. Further, all its other
products are currently in various stages of development and it has not yet
produced them on a fully integrated production line or on a commercial scale.
The Company has not, therefore, proven the actual cost of manufacturing these
products, and the Company cannot make assurances that it will be able to
manufacture them at a competitive cost. As possible licensees and possible joint
ventures begin to commercially produce the Company's environmental products,
they may encounter difficulties that cause costs of production to exceed what
the Company currently anticipates. The Company's failure to manufacture its
products at commercially competitive costs would make it difficult to compete
with other manufacturers.
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Fluctuation of Quarterly Operating Results
Sales of the Company's products have been, and are expected to continue
to be, characterized by a relatively long sales cycle due to such factors as the
substantial time required by potential customers for technical evaluation of the
Company's products prior to purchase, high cost and the critical roles third
party manufacturers used by the Company, if any, play in the manufacturing
process. Sales of the Company's systems and products may also depend upon the
decision of a prospective customer to upgrade the equipment in its existing
facilities or to open new facilities, which typically involves a significant
capital commitment. The Company believes that the sales cycle will continue to
be lengthy as certain of its anticipated customers centralize purchasing
decisions, which is expected to intensify the evaluation process and require
additional sales and marketing expenditures by the Company. The sales cycles of
many of the Company's products are lengthy and subject to a number of
significant risks that are beyond its control, including customers' budgetary
constraints and internal acceptance reviews. The Company believes that its
revenues could fluctuate significantly from quarter to quarter, due to its
lengthy and unpredictable sales cycle. A large portion of the Company's
expenses, including expenses for facilities, equipment and personnel, are
relatively fixed. Accordingly, if the Company's revenues decline or do not grow
as the Company anticipates, it might not be able to correspondingly reduce its
operating expenses. The Company's failure to achieve its anticipated levels of
revenues could significantly harm its operating results for a particular fiscal
period. Due to the possibility of fluctuations in its operating results, the
Company believes that quarter-to-quarter comparisons of its operating results
are not always a good indication of its future performance.
Dependence On Key Personnel; Management Of Expanding Operations
The Company's success will, to a large extent, depend upon the
continued services and capabilities of Professor Holter, President and Chairman
of the Board of Directors, and Mr. Brinkmann, Executive Vice President and a
director. The loss of services of Professor Holter and/or Mr. Brinkmann would
materially and adversely affect the Company. Further, a significant portion of
the Company's intellectual property has been licensed from Professor Holter. The
death, disability, or unavailability of Professor Holter and/or Mr. Brinkmann
could have a material adverse impact upon the Company. Although the Company
entered into five-year employment agreements with Professor Holter and Mr.
Brinkmann, those agreements may not assure the continued service of either of
them to the Company. See Part I, Item 1, "Description of Business - Employees."
The Company does not have "key man" insurance insuring Professor Holter.
The success of the Company will also depend, in part, upon its ability
to retain the personnel who have assisted in the development of the Company's
products, and to attract and retain additional qualified operating, marketing,
technical and financial personnel. The competition in the air and water
filtration and energy-related product industries for such qualified personnel is
often intense, and there can be no assurance that the Company will be able to
hire or retain necessary personnel. In addition, the Company will require
additional senior management and the development of additional expertise by
existing management personnel, as well as improved operational and financial
systems, and there can be no assurance that new personnel and systems will be
successfully integrated or that the developments will not result in a material
adverse effect on the Company.
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Pink Sheets Trading; Market Illiquidity
The Company's Common Stock currently trades on the "Pink Sheets."
Although the Company intends to apply for listing to a regulated exchange, there
can be no assurance that the Company's Common Stock will meet the initial or
continued listing requirements of such exchange. If the Company is unable to
meet such listing requirements, it will not be accepted by such exchange. If the
Company is required to maintain its listing on the Pink Sheets, the liquidity of
the Company's securities could be impaired, not only in the number of securities
which could be bought and sold, but also through delays in the timing of
transactions, reduction in security analysts' and the news media's coverage of
the Company, and lower prices for the Company's securities than might otherwise
be attained.
Risks of Penny Stock
The Company's Common Stock may be deemed to be "penny stock" as that
term is defined in Rule 3a51-1 promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Penny stocks are stocks (i) with a
price of less than $5.00 per share; (ii) that are not traded on a "recognized"
national exchange; (iii) whose prices are not quoted on the NASDAQ automated
quotation systems (NASDAQ-listed stocks must still meet requirement (i) above);
or (iv) of an issuer with net tangible assets less than $2,000,000 (if the
issuer has been in continuous operation for at least three years), or with
average annual revenues of less than $6,000,000 for the last three years.
A principal exclusion from the definition of a penny stock is an equity
security that has a price of $5.00 or more, excluding any broker or dealer
commissions, markups or markdowns. As of the date of this Registration
Statement, the Company's Common Stock does not have a price in excess of $5.00
and will be deemed a penny stock.
In the event that the Company's Common Stock is deemed a penny stock,
Section 15(g) of the Exchange Act and Rule 3a51-1 promulgated pursuant to the
Exchange Act would require broker-dealers dealing the Company's Common Stock 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 the Common Stock for the investor's account.
Potential investors in the Company's Common Stock will be urged to obtain and
read such disclosure carefully before purchasing the Common Stock.
Additionally, Rule 15g-9 promulgated pursuant to the Exchange Act
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 upon the information
obtained, 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.
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Risks of Delay
There are substantial risks of delay, some of which are beyond the
Company's control, associated with: (i) developing its products and related
manufacturing processes; (ii) market acceptance of and demand for its products;
and (iii) developing sufficient production capacity to produce its products.
Product Development Efforts
The Company intends to devote significant personnel and financial
resources to research and development activities to develop new products. The
Company may not be successful in developing new products, and it may never
realize any benefits from such research and development activities. The
Company's ability to increase its revenues and achieve and sustain profitability
is dependent upon its ability to successfully develop new and commercially
viable products.
Direct Sales Force
The Company sells a major portion of its products through the sales
forces of its subsidiaries and/or affiliates. The Company believes that it will
need to expand the direct sales and marketing forces of its subsidiaries and/or
affiliates to successfully address the market for its products. There can be no
assurance that the Company will be able to build an efficient and effective
sales and marketing force. Its failure to build an efficient and effective sales
and marketing force could negatively impact sales of its products, thus reducing
its revenues and profitability.
Limitations Imposed by Environmental Regulation
The ability of the Company to provide its products and services will be
subject to the rules and regulations promulgated by several government agencies.
Federal, state and local environmental laws in the Federal Republic of Germany
and other countries in which the Company, its affiliates and subsidiaries engage
in business govern air emissions and discharges into water and the generation,
transportation, storage, and treatment and disposal of solid and hazardous
waste. These laws establish standards that would govern most aspects of the
construction and operation of the Company's facilities, and often require
multiple governmental permits before these facilities can be constructed,
modified, or operated. There can be no assurance that all required permits will
be issued for the Company's projects under development or for future projects,
or that the requirements for continued environmental regulatory laws and
policies governing their enforcement may change, requiring new technology or
stricter standards for the control of discharges of air or water pollutants, or
for solid or hazardous waste or ash handling and disposal. Such future
developments could affect the manner in which the Company would operate its
plants and could require significant additional expenditures to achieve
compliance with such requirements. It is possible that compliance may not be
technically or economically feasible. As of the date of this Registration
Statement, the Company has not experienced any delays or costs associated with
environmental regulations that have materially effected the Company's business.
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Unascertainable Risks Associated with Potential Future Acquired
Businesses
To the extent that the Company may acquire a business in a highly risky
industry, the Company will become subject to those risks. Similarly, if the
Company acquires a financially unstable business or a business that is in the
early stages of development, the Company will become subject to the numerous
risks to which such businesses are prone. Although management intends to
consider the risks inherent in any industry and business in which it may become
involved, there can be no assurance that it will correctly assess such risks.
Risks Associated with Acquisitions, Strategic Relationships
The Company may acquire other companies or technologies in the future,
and the Company regularly evaluates such opportunities. Acquisitions entail
numerous risks, including difficulties in the assimilation of acquired
operations and products, diversion of management's attention from other business
concerns, amortization of acquired intangible assets, and potential loss of key
employees of acquired companies. No assurance may be given as to the Company's
ability to integrate successfully any operations, personnel, services or
products that might be acquired in the future. Failure to assimilate acquired
organizations successfully could have a material adverse effect on the Company's
business, financial condition and operating results. Due to the foregoing
factors among others, quarterly revenues and operating results are difficult to
forecast. The Company believes that period-to-period comparisons of the
Company's operating results will not necessarily be meaningful and you should
not rely on them as any indication of future performance. The Company's future
quarterly operating results may not consistently meet the expectations of
securities analysts or investors, which in turn may have an adverse effect on
the market price of the Company's Common Stock.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in the Form 10-SB.
December 31, 1999 and December 31, 1998
Changes in Financial Condition
In 1999, the Company acquired Denatec and Philaqua by issuing
43,600,000 shares of restricted Common Stock of the Company for all of the
outstanding common stock of Denatec and 80% of the outstanding common stock of
Philaqua. These acquisitions were accounted for as recapitalizations of Denatec
and Philaqua. Accordingly, the consolidated financial statements of Denatec and
Philaqua are presented as the historical financial statements of the Company.
The acquisition of Denatec and Philaqua has made a substantial, positive
contribution to the financial condition of the Company through year-end. The
balance of current assets at December 31, 1999 was $2,080,343, compared to a
balance of $157,602 at December 31, 1998. The balances of current liabilities
were $1,267,563 and $493,081 for the same periods respectively. The resulting
current ratio at December 31, 1999 was 1.6 :1. The current ratio at December 31,
1998 was 0.3 :1.
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The increase of current assets at December 31, 1999 over December 31,
1998 was due primarily to the increase of cash from $156,995 to $1,369,990, an
increase of $1,212,995, or 773%. This increase is due primarily to the cash
generated from the sale of the Company's common stock for cash of $923,324.
Current assets at December 31, 1999 also increased due to the increase
of accounts receivable and notes receivable from $0 to $616,765, an increase of
100%, of which $604,175 was to related parties. Additionally, inventory
increased $92,610 or 100% from $0 at December 31, 1998, to $92,610 at December
31, 1999. The balance at December 31, 1999 included primarily materials
purchased for jobs in progress.
The balance of current liabilities at December 31, 1999 was $1,267,563
compared to $493,081 at December 31, 1998. The increase of $774,482, or 157%,
was due primarily to the accrued expenses payable at December 31, 1999 of
$619,775. Current liabilities at December 31, 1999 also increased by a related
party payable of $59,125. Accounts payable increased $151,134 or 68%, from
$220,727 at December 31, 1998 to $371,861 at December 31, 1999. The increase is
primarily due to the expanded operations of the Company.
The Company purchased $50,636 of equipment during the year ended
December 31, 1999. Depreciation expense for the current year was $34,290
compared to $12,976 for the prior year.
At December 31, 1999, the Company had no long-term debt. The Company
had sufficient cash flow from operations to meet its current cash obligations.
The Company anticipates continued positive cash flow from existing operations
during the next twelve months, and will continue to look for ways to invest its
cash flow in acquisitions of companies and other investments that will
contribute in a positive way to the Company's operating strategy.
Results of Operations
Sales for the year ended December 31, 1999 were $2,626,460 compared to
$291,735 for the year ended December 31, 1998, resulting in an increase of
$2,334,725 or 80%. Cost of goods sold for the year ended December 31, 1999 was
$487,078, or 19% of sales, resulting in gross profit of $2,139,382, or 81%, of
sales.
Operating expenses include primarily salary and wage expenses and
general and administrative expenses. Salary and wage expenses for the year ended
December 31, 1999 were $895,925 compared to salary and wage expenses of $302,337
for the year ended December 31, 1998. General and administrative expenses were
$762,697, or 29%, of sales for the same period in 1998, resulting in an increase
of $487,880, or 178%. The increase was due to the expanded operations of Denatec
and Philaqua.
24
<PAGE>
Other income increased from $11,798 in 1998 to $56,063 for the year
ended December 31, 1999, an increase of $44,265, or 375%. This increase is
offset somewhat by the increase in interest expense from $1,157 for the year
ended December 31, 1998 to $49,064 for the year ended December 31, 1999, a
decrease of $47,097, or 4141%.
Three and Nine Month Periods Ended September 30, 2000
Changes in Financial Condition
In March 2000, the Company acquired 50% of Holter Systembau for
$125,000 and 30% of the outstanding common stock of Holter GmbH for $1.5
million. In April 2000, the Company purchased 50% of the outstanding common
stock of LK-Luftqualitat. In June 2000, the Company purchased Intherm for
$125,000. These acquisitions were accounted for as purchases with the assets and
liabilities recorded at predecessor cost since they were purchased from the
Company's controlling shareholders. The Company believes that the purchases of
Systembau, Holter GmbH, LK-Luftqualitat and Intherm have made a substantial,
positive contribution to the financial condition of the Company through the nine
months ended September 30, 2000. The balance of current assets at December 31,
1999 was $2,080,343 compared to a balance of $5,391,139 at September 30, 2000.
The balances of current liabilities were $1,267,563 and $4,567,741 for the same
periods respectively. The resulting current ratio at December 31, 1999 was 1.6
:1. The current ratio at September 30, 1998 was 1.2 :1.
The increase of current assets at September 30, 2000 over December 31,
1999 was due primarily to the increase of accounts receivable from $12,590 to
$1,710,398, an increase of $1,697,808, or 13485%. This increase is due primarily
to the sales generated by Holter GmbH which were collected in the fourth quarter
of 2000.
Current assets at September 30, 2000 also increased due to the increase
of prepaid expenses from $978 to $996,883, an increase of $995,905 due to costs
accumulated in jobs in progress by Holter GmbH. Additionally, inventory
increased $2,191,482 or 2366% from $92,610 at December 31, 1999 to $2,284,092 at
September 30, 2000. The increase at September 30, 2000 primarily consisted of
materials for jobs in progress by Holter.
The balance of current liabilities at September 30, 2000 is $4,567,741
and at December 31, 1999 was $1,267,563. The increase of $3,300,178, or 260%,
was due primarily to the accrued expenses payable at September 30, 2000 of
$2,682,979. Accounts payable increased $1,294,062, or 348%, from $371,861 at
December 31, 1999 to $1,665,923 at September 30, 2000. The increase was
primarily due to the expanded operations of the Company from its acquisition of
Holter GmbH and the jobs in progress to be completed by Holter GmbH.
The Company purchased $185,306 of equipment during the nine months
ended September 20, 2000.
25
<PAGE>
At September 30, 2000, the Company had no long term debt. The Company
had sufficient cash flow from operations to meet its current cash obligations.
The Company anticipates continued positive cash flow from existing operations
during the next twelve months, and will continue to look for ways to invest its
cash flow in acquisitions of companies and other investments that will
contribute in a positive way to the Company's operating strategy.
Results of Operations
Sales for the three months ended September 30, 2000 were $1,072,071
compared to $1,768,627 for the 3 months ended September 30, 1999 resulting in an
decrease of $696,556, or 39%. Cost of goods sold for the quarter was $580,939,
or 54%, of sales, resulting in gross profit of $491,132, or 46%, of sales.
Operating expenses include primarily salary and wage expenses and
general and administrative expenses. Salary and wage expenses for the three
months ended September 30, 2000 were $601,762. For the three months ended
September 30, 1999, the Company had salary and wage expenses of $200,604.
General and administrative expenses were $1,364,469 for the three months ended
September 30, 2000 compared to $254,097 for the three months ended September 30,
1999. The increase is due to the expanded operations of Systembau. None of the
costs were capitalized during the three months ended September 30, 2000 since
all jobs were completed by September 30, 1999.
Sales for the nine months ended September 30, 2000 were $3,788,585
compared to $1,850,725 for the nine months ended September 30, 1999, resulting
in an increase of $1,937,860 or 105%. Cost of goods sold for the nine months
ended September 30, 2000 was $2,083,772 or 55% of the sales, resulting in gross
profit of $1,704,863, or 45% of sales.
Salary and wage expenses for the nine months ended September 30, 2000
were $1,963,080. For the nine months ended September 30, 1999, the Company had
salary and wage expenses of $665,157. General and administrative expenses were
$3,682,389 for the nine months ended September 30, 2000 compared to $421,534 for
the nine months ended September 30, 1999. $4,503,534 of these costs were
capitalized during the nine months ended September 30, 2000 for jobs to be
completed in calendar year 2000 compared to $0 in 1999 since all projects were
completed at September 30, 1999.
Inflation
In the opinion of management, inflation has not had a material effect
on the operations of the Company.
Forward Looking Statements
This Registration Statement contains certain forward looking
statements. The Company wishes to advise readers that actual results may differ
materially from such forward looking statements. Forward looking statements
involve substantial risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements, and
which may be beyond the Company's control, including, but not limited to, the
26
<PAGE>
following: the possible success of the Company's varied projects and
subsidiaries, the volatility of the financial markets in which the Company
invests, the ability of the Company to fund its current and future projects and
its ability to meet its cash and working capital needs, the industries in which
the Company operates, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission (the "Commission"). Any
statements contained in this Registration Statement that are not statements of
historical fact may be deemed to be forward looking statements. Without limiting
the generality of the foregoing, words such as "may," "will," "expect,"
"anticipate," "intend," "could," "estimate," or "continue," or the negative or
other variations thereof or comparable terminology are intended to identify
forward looking statements.
ITEM 3. Description of Property
The Company's principal place of business and corporate offices are
located at 23548 Calabasas Road, Suite 202, Calabasas, California 91302. The
Calabasas facilities consist of approximately 600 square feet of office space
and are leased on a month to month basis from Gateway Industries, Ltd., of which
Daniel Lezak, the Company's Secretary/Treasurer and a director, is the
President. The monthly rental for the Calabasas property is $1,050 per month.
The purposes of this office are to maintain corporate records and provide office
space for corporate maintenance.
The Company also occupies office space in Dusseldorf and Gladbeck,
Germany as well as Italy, Poland, China, Switzerland, Russia and Czech Republic.
The Dusseldorf property consists of approximately 800 square feet, and is
provided by Holter GmbH, a subsidiary of the Company which Professor Holter, the
Company's President and Chairman of the Board of Directors, is the President, at
no cost to the Company. The Gladbeck offices are located in a building operated
by Grundstucksgesellschaft HKP GbR, a partnership in which Professor Holter, the
Company's President and Chairman of the Board of Directors, is a partner. The
offices consist of approximately 1,000 square feet of office space. The Company
does not pay rent nor has an executed lease for the premises. The Italian
property is located in Fano, Italy, consists of approximately 600 square feet,
and is provided by Holter Italia, a subsidiary of the Company, at no charge to
the Company. The Polish property is located in Zabrze, Poland, consists of
approximately 1,000 square feet, and is provided by Huta Zabrze, an affiliate of
the Company, at no charge to the Company. The Chinese properties are located in
Hong Kong and Fushun, China, consist of approximately 800 and 1,000 square feet,
and are provided by Coolpoint, an affiliate of the Company, and Fushun Cool
Mining Bureau, a party with whom the Company has a joint venture agreement, at
no charge to the Company. The Swiss property is located in Lucerne, Switzerland,
consists of approximately 900 square feet, and is provided by LK-Luftqualitat, a
subsidiary of the Company, at no charge to the Company. The Russian property is
located in Moscow, Russia, consists of approximately 1,200 square feet, and is
provided by the city of Moscow, a third party with whom the Company, through an
affiliate of Professor Holter has a relationship, has an agreement, at no charge
to the Company. The Czech property is located in Prague, Czech Republic,
consists of approximately 1,100 square feet, and is provided by Holter GmbH at
no charge to the Company. The purposes of these offices are to perform the
Company's obligations and conduct its operations through its subsidiaries and
affiliates located in each area and for general office purposes.
27
<PAGE>
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the
Company's knowledge, as of November 30, 2000 with respect to each person known
by the Company to own beneficially more than five percent of the outstanding
Common Stock, each director and all directors and officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
------------------- ------------------- -----------
Prof. Heinrich W. Holter 63,083,333(2) 66.2%
President, Chairman of the Board
of Directors
Beisenstr.39
45964 Gladbeck, Germany
Dirk Brinkmann 1,055,555(3) 1.1%
Executive Vice President, Director
Beisenstr. 39
45964 Gladbeck, Germany
Daniel Lezak 1,055,555(4) 1.1%
Secretary/Treasurer, Director
23548 Calabasas Road, Suite 202
Calabasas, California 91302
Herman Hogg 4,270,348(5) 4.5%
Hans-Adolf-Buhler-Strasse 8
D-79361 Sasbach-Jechtingen
Germany
Leszek Kulawik 4,750,000(6) 5.0%
Bytomska 1
41-800 Zabrze, Poland
All directors and officers 65,184,443 68.5%
a group (3 persons)
(1) Based upon 95,208,533 shares outstanding as of November 30, 2000.
(2) Includes 1,000,000 shares held by his son, Dr. Gerhardt Holter, in
which Professor Holter disclaims beneficial ownership.
28
<PAGE>
(3) Includes 1,000,000 shares held by his wife, Daniela Brinkmann, in which
Mr. Brinkmann disclaims beneficial ownership.
(4) Includes 1,000,000 shares indirectly held by Gateway Industries, Ltd.,
of which Mr. Lezak is a beneficial owner.
(5) Includes 20,348 shares held by his children, Michael and Verena Hogg,
in which Mr. Hogg disclaims beneficial ownership.
(6) Includes 2,000,000 shares held by Huta Zabrze, of which Mr. Kulawik is
Managing Director and in which he may be considered to have a
beneficial interest.
Unless otherwise indicated in the footnotes, the Company has been
advised that each person above has sole voting power over the shares indicated
above.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
Executive Officers and Directors
Name Age Position
---- --- --------
Professor Heinrich W. Holter 70 President and Chairman
of the Board of Directors
Dirk Brinkmann 35 Executive Vice President, Director
Daniel Lezak 66 Secretary/Treasurer, Director
All directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and qualified. Directors will
be elected at the annual meetings to serve for a term of one year, and until his
successor shall have been elected and accepted his election to the board in
writing. There are no agreements with respect to the election of directors. The
Company has not compensated its directors for service on the Board of Directors
or any committee thereof. Any non-employee director of the Company shall be
reimbursed for expenses incurred for attendance at meetings of the Board of
Directors and any committee of the Board of Directors.
The Executive Committee of the Board of Directors, to the extent
permitted under Nevada law, exercises all of the power and authority of the
Board of Directors in the management of the business and affairs of the Company
between meetings of the Board of Directors. Each executive officer is appointed
by and serves at the discretion of the Board of Directors. All members of the
Board of Directors serve on the Executive Committee.
Except as otherwise provided herein, none of the officers and/or
directors of the Company are officers or directors of any other publicly traded
corporation, nor have any of the directors, officers, affiliates, subsidiaries
or promoters of the Company filed any bankruptcy petition, been convicted in or
been the subject of any pending criminal proceedings, or the subject of any
order, judgment, or decree involving the violation of any state or federal
securities laws within the past five years.
29
<PAGE>
The business experience of each of the persons listed above during the
past five years is as follows:
Professor Heinrich W. Holter, President and Chairman of the Board of Directors
Professor Holter has served as the Company's President and Chairman of
the Board of Directors since January 1999 and the Managing Director and
principal shareholder of Holter GmbH since 1995. He also serves as the Managing
Director of each of Denatec, Philaqua, Holter Systembau, LK-Luftqualitat, Holter
Italia and Holter Polska.
Professor Holter holds over 3,500 international Intellectual Property
Rights in the area of environmental protection technology. In 1985, he was
appointed Chairman of the German Diesel Board by the Society of Inventors. He
has been awarded the order of merit from the Federal Republic of Germany
(Bundesverdienstkreuz), the Diesel gold medal for his scientific works, and the
German Federal Service Cross with ribbon. Professor Holter also received the
order of merit from the Moscow Academy of Sciences. Professor Holter was the
first citizen of the Federal Republic of Germany to receive the "Order of
Friendship" granted to him by the President of the Russian Federation, Boris
Yeltsin, for "personal contribution to the development of the coal industry of
Russia and to the strengthening of the friendly relations between Germany and
Russia." Professor Holter received this honor for his work as the president and
a member of the East-West Academy, a foundation which promotes multinational
cooperation in the field of environmental protection, technology and medicine.
Professor Holter holds an engineering degree (Dipl.-Ing., Graduate in
Engineering) from the Mining College in Essen, Germany in 1953, a Doctor of
Science degree (Dr. sc.) from the technical University of Mining in Ostrava in
1991, and a Doctor of Engineering degree (Dr.-Ing.) from the Silesian Technical
College in Gliwice in 1992. Professor Holter has served as a University
Professor at Kosice Technical University, Germany since 1994, and was awarded a
prestigious State Professor position by the State of North-Rhine-Westphalia,
Germany.
Dirk Brinkmann, Executive Vice President and Director
Since 1995 Mr. Brinkmann has been employed as a financial advisor by
several entities owned and/or controlled by Professor Holter, the Company's
President and Chairman of the Board of Directors, including Holter GmbH and
Holter Polska. Mr. Brinkmann obtained an advanced degree in finance from College
Monchengladbach in 1989. Mr. Brinkmann has served as the Company's Executive
Vice President since October 2000 and as a director since January 1999.
Daniel Lezak, Secretary/Treasurer and Director
Mr. Lezak holds a B.S. Degree in Accounting from Roosevelt University
in Chicago and is a Certified Public Accountant. He has performed consulting
services to financially distressed public and private companies since 1965,
establishing reorganization plans through acquisition, sale or Chapter 11
bankruptcy reorganization. Mr. Lezak joined the Company in January 1999 as its
Secretary/Treasurer and a director.
30
<PAGE>
In addition to his position with the Company, Mr. Lezak serves as Vice
President and a director of Turbo, Inc., a publicly held company that was
formerly engaged in gold mining in California, and President and a director of
Sierra-Rockies Corporation, a publicly held company presently in Chapter 11
reorganization in California. Until August 2000, Mr. Lezak served as President
and a director of Organik Technology, Inc., a publicly held company recently
released from Chapter 11 proceedings.
Mr. Lezak is also an officer and a director of Gateway Industries Ltd.,
a privately-held consulting and holding company which is a shareholder of the
Company. See Part I, Item 4, "Security Ownership of Certain Beneficial Owners
and Management."
ITEM 6. Executive Compensation
During the fiscal years ended December 31, 1998 and 1999 and for the
nine month period ended September 30, 2000, the Company did not pay compensation
to its officers or directors. During such periods, Professor Heinrich W. Holter,
the Company's President and Chairman of the Board of Directors, and Dirk
Brinkmann, the Company's Executive Vice President and a director, received
compensation from Holter GmbH and other affiliates or subsidiaries of the
Company. Because the Company did not pay compensation to its officers or
directors, the summary compensation table has been omitted from this
Registration Statement.
Pursuant to their October 25, 2000 employment agreements, Professor
Holter and Mr. Brinkmann will be paid $20,000 and $10,000 per month,
respectively, for their performance of duties to the Company. Professor Holter
and Mr. Brinkmann will also be eligible for annual bonuses as determined by the
Company's Board of Directors, after consideration of each person's contributions
to the Company and the performance of his duties. As of the date of this
Registration Statement, no payments have been made to Professor Holter or Mr.
Brinkmann pursuant to the employment agreements. See Part I, Item 1,
"Description of Business - Employees."
ITEM 7. Certain Relationships and Related Transactions
There have been no transactions between the Company and any officer,
director, nominee for election as director, or any shareholder owning greater
than five percent (5%) of the Company's outstanding shares, nor any member of
the above referenced individuals' immediate family, except as set forth below.
In February 1999, the Company acquired 100% of the outstanding equity
interests of Denatec, a German limited liability company, and 80% of the
outstanding equity interests of Philaqua, a German limited liability company,
from the stockholders of Denatec and Philaqua, including Professor Heinrich W.
Holter, the Company's President and Chairman of the Board of Directors. The
purchase price of Denatec and Philaqua was 44.1 million shares of the Company's
Common Stock, valued at aggregate predecessor cost of US$263,935. Denatec holds
the exclusive rights to exploit certain worldwide Intellectual Property Rights
and other inventions of air filtration processes, including denaturing heat
exchangers and electrostatic filters having a denaturing collector electrode.
See Part I, Item 1, "Description of Business - Air Filtration." Philaqua holds
the exclusive rights to exploit certain worldwide Intellectual Property Rights
and other inventions regarding industrial water treatment and purification
through ultraviolet light filtration. See Part I, Item 1, "Description of
Business - Water Filtration."
31
<PAGE>
In March 2000, the Company acquired 30% of the outstanding common stock
of Holter GmbH, a German corporation, from Professor Holter in exchange for
US$1.5 million. In December 2000, the Company acquired an additional 20% of the
outstanding common stock of Holter GmbH from Professor Holter in exchange for
15,000,000 shares of the Company's Common Stock. Holter GmbH engages primarily
in the business of marketing, sales, production, research and development of
air, water and energy systems.
In March 2000, the Company acquired 50% of the outstanding common stock
of Holter Systembau, a German corporation, for US$125,000. Holter Systembau
engages primarily in the business of marketing and sales of low-energy modular
housing systems.
In December 2000, the Company acquired 50% of the outstanding common
stock of Holter Italia, an Italian corporation, from Professor Holter in
exchange for 10,000,000 shares of the Company's Common Stock. Holter Italia
engages primarily in the business of marketing and sales of air filtration
systems.
For the year ended December 31, 1999, the Company derived 91% of its
total revenues from Holter GmbH, a subsidiary of the Company, and purchased
US$123,017 of equipment and other products from Holter GmbH.
In March 1997, the Company was formed in part by Mr. Georgios Stolte, a
German resident. The Company considers Mr. Stolte to be an initial promoter of
the Company.
During 1999, the Company made unsecured loans in the amount of $520,841
to Holter GmbH, a company owned and controlled at the time by Professor Holter.
During 1999, Holter GmbH made unsecured loans in the amount of $36,931 to the
Company. Each of the loans has an interest rate of 6.5% per annum and is due and
payable upon demand.
On December 30, 1998, Professor Holter executed a loan agreement for
$39,743 in favor of Denatec. The loan accrues interest at 6% per annum and is
due and payable on demand with six months prior notice. On December 30, 1998,
Denatec executed a loan agreement for $18,560 in favor of Holter GmbH in the
amount of $7,552.
32
<PAGE>
ITEM 8. Description of Securities
The authorized capital stock of Company consists of 200 million shares
of Common Stock, $.001 par value, and 10 million shares of preferred stock, par
value $.001 (the "Preferred Stock"). No warrants to acquire Common Stock have
been authorized. There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any shares of the Company's Common
Stock.
Holders of the Common Stock do not have preemptive rights and the
Common Stock is not convertible, redeemable, assessable or entitled to the
benefits of any sinking fund. Holders of the Common Stock do not have cumulative
voting rights. The holders of a majority of the shares of Common Stock voting
for the election of the directors may elect all of the directors.
The Preferred Stock may be issued in series, the rights and preferences
of which may be determined by the Company's Board of Directors. As of September
30, 2000, no Preferred Stock has been issued and the Company has no present
intention to issue such shares.
PART II
ITEM 1. Market Price of And Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Prior to the filing of this Registration Statement, no shares of the
Company's Common Stock have been registered with the Commission or any state
securities agency of authority.
The Company's Common Stock is listed for trading on the Pink Sheets.
Pink Sheets LLC is a provider of pricing and financial information for
over-the-counter ("OTC") securities markets. The Pink Sheets provide products
and services that increase the information available in the OTC markets so as to
make them more efficient for all participants. The Pink Sheets offer a
centralized information network that includes services designed to benefit
market makers, issuers, brokers and OTC investors.
The Company trades on the Pink Sheets under the symbol "HOTK." The
Company traded on the Over-the-Counter-Bulletin-Board from March 1998 until
November 1999. Prior to March 1999, the Company's Common Stock traded under the
symbol "FALK." The following sets forth the high and low bid prices for the
Common Stock to the best knowledge of the Company as of the dates set forth
below.
Quarter Ending High Bid Low Bid
-------------- -------- -------
March 31, 1998 1.25 0.53125
June 30, 1998 1.50 0.125
September 30, 1998 1.125 0.0625
December 31, 1998 0.3750 0.0625
March 31, 1999 0.4688 0.3750
June 30, 1999 3.25 0.3750
October 31, 1999 N/A 0.47
December 31, 1999 N/A 0.50
March 30, 2000 N/A 1.00
June 30, 2000 N/A 1.00
September 30, 2000 N/A 0.82
33
<PAGE>
As of December 27, 2000, there were 460 holders of record of the
Company's Common Stock. As of November 30, 2000, the Company had issued and
outstanding 95,208,533 shares of Common Stock. Of this total, approximately
87,337,116 shares were deemed "restricted securities" as defined by the Exchange
Act and certificates representing such shares bear an appropriate restrictive
legend.
Of the Company's total outstanding shares, upon the effectiveness of
this Registration Statement and subsequent review by the Commission,
approximately 7,871,417 shares may be sold, transferred or otherwise traded in
the public market without restriction, unless held by an affiliate or
controlling shareholder of the Company. None of these shares have been
identified as being held by affiliates.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past on its Common Stock. The Company reserves the right to
declare a dividend when operations may merit.
ITEM 2. Legal Proceedings
There are presently no material pending legal proceedings to which the
Company or any of its subsidiaries is a party or to which any of its property is
subject and, to the best of its knowledge, no such actions against the Company
or any of its subsidiaries are contemplated or threatened.
ITEM 3. Changes in and Disagreements With Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
In the last three years, the Company issued shares of its Common Stock
in private placements to the following investors in the following amounts:
34
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
4/16/99 Prof. Heinrich W. Holter (1) 36,000,000 Share Exchange
4/16/99 La Salle Investments, Ltd. (1) 2,600,000 Share Exchange
4/16/99 Daniela Brinkmann (1) 1,000,000 Share Exchange
4/16/99 Prof. Heinrich W. Holter (1) 1,000,000 Share Exchange
4/16/99 Dr. Gerhardt Holter (1) 1,000,000 Share Exchange
4/16/99 La Salle Investments, Ltd. (1) 1,000,000 Share Exchange
4/19/99 Gateway Industries Ltd.(1) 1,000,000 Share Exchange
4/19/99 Ralph Burstedde (1) 500,000 Share Exchange
8/9/99 Dennis Brovarone (2) 50,000 Services $.80
2/3/00 Howard Bronson Associates, Inc. (3) 200,000 Services $.80
3/23/00 Nick Jones and Morison Stoneham (4) 100,000 Services $.50
4/20/00 Leszek Kulawik (5) 1,875,000 Share Exchange $.80
4/28/00 Leszak Kulawik (5) 875,000 Share Exchange $.80
5/19/00 Huta Zabrze SA (5) 2,000,000 $800,000 and
Share Exchange
Acquisition
5/19/00 Coolpoint Ventilation Equipment Ltd. (6) 1,388,889 Cost $.90
8/25/00 Prof. Heinrich W. Holter(7) 83,333 Services $.80
8/25/00 Daniel Lezak (7) 55,555 Services $.80
8/25/00 Dirk Brinkmann (7) 55,555 Services $.80
12/18/00 Prof. Heinrich W. Holter (8) 10,000,000 Share Exchange
12/18/00 Prof. Heinrich W. Holter (8) 15,000,000 Share Exchange
Regulation S Sales (9)
----------------------
7/7/99 Walter Dreher 6,028 $5,274.50 $.87
7/7/99 Gretel Fischer 1,909 $ 1,670.37 $.87
7/7/99 Ute Fischer 3,014 $2,637.25 $.87
7/7/99 Katharina Giel 4,521 $ 3,955.87 $.87
7/7/99 Richard Kehrer 11,152 $19,516.00 $1.75
7/7/99 Inge Pfeffer 1,808 $ 1,670.37 $.87
7/7/99 Emil Teufel 1,909 $ 1,670.37 $.87
7/7/99 Andreas Thomas 1,909 $ 1,670.37 $.87
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
7/7/99 Erwin Ulrich 6,028 $5,274.50 $.87
7/7/99 Nedzad Redzepagic 1,507 $1,318.62 $.87
8/2/99 Uwe Arnot 3,014 $2,109.80 $.70
8/2/99 Moritz von Bethmann 18,512 $12,958.40 $.70
8/2/99 Elena Munzer 22,898 $16,028.60 $.70
8/4/99 Karl Burkhart 30,000 $21,000.00 $.70
8/4/99 Frank Braun 7,072 $4,950.40 $.70
10/21/99 Hans Joachim Sieland 500,000 $200,000.00 $.40
10/21/99 Rolf-Schmitt and Hans Joachim Sieland 500,000 $200,000.00 $.40
10/26/99 Antonio Sieland 100,000 $40,000.00 $.40
10/26/99 Hans Joachim Sieland 400,000 $160,000.00 $.40
11/9/99 Rolf Schmitt 500,000 $200,000.00 $.40
11/26/99 Sigrid Molz 32,565 $ 26,052.00 $.80
11/29/99 Reinhard Hofmann 11,718 $ 9,374.40 $.80
12/6/99 Hermann Casper 6,410 $ 5,128.00 $.80
12/6/99 Franz-Josef Meyer 19,336 $15,468.80 $.80
12/6/99 Sylvia Rudell 12,820 $10,256.00 $.80
12/6/99 Gerlinde Walter 6,410 $5,128.00 $.80
12/7/99 Hans-Jurgen Prei(beta)mann 32,552 $ 26,041.60 $.80
12/9/99 Alexander Aschauer 15,037 $ 10,525.90 $.70
12/15/99 Andreas Prei(beta)mann 16,108 $ 12,886.40 $.80
12/15/99 Andreas Weber 13,500 $5,400.00 $.40
1/1/00 Eva Bartels 3,681 $2,576.70 $.70
1/6/00 Thomas Weinand 3,681 $2,576.70 $.70
1/10/00 Peter Fichtner 8,270 $5,789.00 $.70
1/10/00 Werner Gerhartz 9,828 $7,862.40 $.80
1/11/00 Marco Schaden 6,556 $5,244.80 $.80
1/12/00 Lothar Reidenbach 30,234 $ 21,163.80 $.70
1/12/00 Dr. Irmgard Weinbach 4,409 $2,645.40 $.60
1/12/00 Sascha Weinbach 4,409 $2,645.40 $.60
1/13/00 Christian Kruchten 17,415 $ 10,449.00 $.60
1/13/00 Elisabeth Mall 19,531 $ 15,624.80 $.80
1/13/00 Klaus Chrustowski 61,400 $ 36,840.00 $.60
1/13/00 Ulrich Ostringer 110,456 $ 77,319.20 $.70
1/13/00 Manfred Neumann 36,831 $ 25,781.70 $.70
1/13/00 Peter Rubsamen 40,000 $ 28,000.00 $.70
1/13/00 Harald Mertes 12,865 $ 10,292.00 $.80
1/13/00 Roselie Gras 32,552 $ 26,041.60 $.80
1/13/00 Heinz Hoff 6,530 $5,224.00 $.80
1/13/00 Heinz Hoff 6,589 $5,271.20 $.80
1/14/00 Ilse Bethke 75,187 $ 52,630.90 $.70
1/14/00 Hugo Friebel 52,630 $ 36,841.00 $.70
1/17/00 Toni Bender 8,680 $5,208.00 $.60
1/17/00 Bernd Cappi 6,250 $5,000.00 $.80
1/17/00 Waltraub Nassen 6,510 $5,208.00 $.80
1/17/00 Inga Weinand 8,771 $5,262.60 $.60
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
1/18/00 Andreas Weber 13,500 $5,400.00 $.40
1/20/00 Werner Gerhartz 11,649 $9,319.20 $.80
1/21/00 Behnam Ensafi 6,501 $5,200.80 $.80
1/24/00 Dieter Klaes 18,601 $ 13,020.70 $.70
1/24/00 Uwe Marx 3,225 $2,580.00 $.80
1/26/00 Peter Bier 21,978 $ 15,384.60 $.70
1/26/00 Elisabeth Pank 21,978 $ 15,384.60 $.70
1/28/00 Gerlinde Walter 36,104 $ 25,272.80 $.70
1/29/00 Jens-Uwe Salomon 5,000 $3,500.00 $.70
1/31/00 Jakob Eichinger 42,857 $ 29,999.90 $.70
1/31/00 Rolf Rab 42,857 $ 29,999.90 $.70
2/1/00 Claudia Brodkorb 3,101 $2,480.80 $.80
2/1/00 Curritum Investment, Ltd. 175,263 $105,157.80 $.60
2/1/00 Ulrich Ostringer 184,094 $128,865.80 $.70
2/2/00 Mojgan Ensafi 4,971 $3,976.80 $.80
2/7/00 Friedrich Mangartz 6,291 $5,032.80 $.80
2/8/00 Sigrid and Hafid Frigini 33,333 $ 19,999.80 $.60
2/8/00 Michael Hogg 5,000 $3,000.00 $.60
2/8/00 Verena Hogg 5,000 $3,000.00 $.60
2/9/00 Sven Mobius 6,250 $5,000.00 $.80
2/9/00 Monika Rausch 3,153 $2,522.40 $.80
2/10/00 Sylvio Richter 125,000 $62,500.00 $.50
2/11/00 Stefan Limbach 8,809 $7,047.20 $.80
2/11/00 Karin Walscheid 6,292 $5,033.60 $.80
2/11/00 Sascha Weinbach 8,540 $5,124.00 $.60
2/15/00 Heike Bohm 6,281 $5,024.80 $.80
2/15/00 Ursula Denker 6,313 $5,050.40 $.80
2/15/00 Torsten Mobius 6,250 $5,000.00 $.80
2/15/00 Helmut and Irene Ubel 6,281 $5,024.80 $.80
2/16/00 Hans-Albert Becher 6,476 $5,180.80 $.80
2/16/00 Werner Leins 6,313 $5,050.40 $.80
2/16/00 Maria Nicolai 6,126 $4,900.80 $.80
2/16/00 Markus Schafer 3,138 $2,510.40 $.80
2/16/00 Michael and Sybille Schon 6,250 $5,000.00 $.80
2/17/00 Charlotte Gohlert 6,476 $5,180.80 $.80
2/17/00 Thomas Michalski 3,125 $2,500.00 $.80
2/19/00 Ulrich Ostringer 144,300 $101,010.00 $.70
2/20/00 Brigitte Bock 12,608 $ 10,086.40 $.80
2/20/00 Anneliese Jurgensen 31,407 $ 25,125.60 $.80
2/21/00 Alexander Hein 6,296 $5,036.80 $.80
2/21/00 Maria Hein 6,296 $5,036.80 $.80
2/22/00 Frank Bruninghaus 7,575 $6,060.00 $.80
2/23/00 Christian Kruchten 8,552 $5,131.20 $.60
2/23/00 Simone Ross 3,207 $2,565.60 $.80
2/24/00 Waltraud Arnold 36,630 $ 25,641.00 $.70
2/24/00 Helmut Ganzler 7,414 $5,189.80 $.70
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
2/24/00 Wilhem Lenz 2,209 $1,546.30 $.70
2/24/00 Otmar Ternes 32,216 $25,772.80 $.80
2/28/00 Walter Hoffmeyer 7,364 $5,154.80 $.70
2/28/00 Michaela Karbach 3,436 $2,577.00 $.75
3/1/00 Gerd Meurer 7,072 $4,950.40 $.70
3/1/00 Ulf Schonfelder 1,414 $989.80 $.70
3/2/00 Hermann Hogg 4,250,000 $2,550,000.00 $.60
3/2/00 Garnet and Ingo Thom(beta)en 6,220 $4,976.00 $.80
3/3/00 Christoph Reifferscheid 6,188 $4,950.40 $.80
3/4/00 Hans Mobius 3,125 $2,500.00 $.80
3/7/00 Michael Hug 28,200 $22,560.00 $.80
3/7/00 Andreas Hunke 1,226 $980.80 $.80
3/8/00 Sabine Ulmen and Christoph Schafer 14,074 $9,851.80 $.70
3/10/00 Mehrdad Ensafi 43,242 $34,593.60 $.80
3/10/00 Heidi Schwarm 2,036 $1,628.80 $.80
3/10/00 Matthias Schwarz 7,000 $5,600.00 $.80
3/13/00 Elisabeth Both 6,157 $4,925.60 $.80
3/13/00 Gerd Meurer 7,037 $4,925.90 $.70
3/14/00 Michaela Kron 3,536 $2,475.20 $.70
3/15/00 Helmut Cohrs 6,250 $5,000.00 $.80
3/15/00 Uwe and Anja Dietz 6,188 $4,950.40 $.80
3/15/00 Garnet Thom(beta)en 6,186 $4,948.80 $.80
3/15/00 Markus and Nicole Wilkes 6,186 $4,948.80 $.80
3/20/00 Hannelore Gartner 46,410 $37,128.00 $.80
3/20/00 Stefan Limbach 12,436 $9,948.80 $.80
3/20/00 Marion Prei(beta)mann 12,437 $9,949.60 $.80
3/22/00 Johanna Arns 3,083 $2,466.40 $.80
3/22/00 Kurt and Doris Kleemann 18,473 $14,778.40 $.80
3/22/00 Fritz Stock 10,000 $8,000.00 $.80
3/23/00 Kordula Schroder 25,000 $10,000.00 $.40
3/24/00 Stefan Hermans 12,437 $9,949.60 $.80
3/27/00 Friedrich Horz 12,492 $7,495.20 $.60
3/27/00 Gunther Reif 3,079 $2,463.20 $.80
3/28/00 Jasmin David 706 $494.20 $.70
3/28/00 Thomas Muller 823 $493.80 $.60
4/1/00 Jorg Bethke 6,250 $5,000.00 $.80
4/1/00 Hannelore Gartner 12,315 $9,852.00 $.80
4/1/00 Mathias Horn 6,250 $5,000.00 $.80
4/3/00 Michael Kalig 12,254 $9,803.20 $.80
4/3/00 Helmut and Trudel Klee 6,127 $4,901.60 $.80
4/3/00 Christian Mau 3,056 $2,444.80 $.80
4/3/00 Wolfgang Schafer 6,112 $4,889.60 $.80
4/4/00 Christine Roth 13,158 $7,894.80 $.60
4/4/00 Jurgen Zeissler 6,157 $4,925.60 $.80
4/5/00 Carla Cramer 61,576 $49,260.80 $.80
4/5/00 Peter Cramer 49,261 $39,408.80 $.80
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
4/5/00 Jens Ernat 1,231 $984.80 $.80
4/5/00 Werner Fritzen 30,788 $24,630.40 $.80
4/5/00 Stefan Keber 183,333 $109,999.80 $.60
4/5/00 Dieter Klaes 6,157 $4,925.60 $.80
4/5/00 Dieter Klaes 6,157 $4,925.60 $.80
4/5/00 Stefan Krystek 42,892 $34,313.60 $.80
4/5/00 Axel Puchmuller 27,573 $22,058.40 $.80
4/5/00 Peter Schommer 14,074 $9,851.80 $.70
4/5/00 Michael Schwartz 36,764 $29,411.20 $.80
4/5/00 Thomas Weinand 6,333 $3,799.80 $.60
4/6/00 Roman Bermel 6,157 $4,925.60 $.80
4/6/00 Jurgen Bertges 6,188 $4,950.40 $.80
4/6/00 Peter Rubsamen 40,000 $30,000.00 $.75
4/6/00 Thomas Weinand 41,254 $24,752.40 $.60
4/7/00 Markus Gamperling 3,084 $2,451.20 $.80
4/7/00 Bernhard Gueth 10,000 $8,500.00 $.85
4/7/00 Roland Kunz 10,000 $8,500.00 $.85
4/7/00 Andreas Sabisch 22,700 $18,160.00 $.80
4/10/00 AAA Investment Management, Inc. 19,659 $13,761.30 $.70
4/10/00 Alexander Aschauer 13,106 $9,174.20 $.70
4/10/00 Peter Bier 21,429 $15,000.30 $.70
4/10/00 Annerose Cappi 6,157 $4,925.60 $.80
4/10/00 Barbara Fussel 3,063 $2,450.40 $.80
4/10/00 Theodor Hensolt 6,127 $4,901.60 $.80
4/10/00 Jutta Klaes 3,063 $2,450.40 $.80
4/10/00 Waltraud Nassen 6,127 $4,901.60 $.80
4/10/00 Elisabeth Pank 28,571 $19,999.70 $.80
4/10/00 Michael Seidel 18,000 $12,600.00 $.70
4/10/00 John Patrick Smalley 6,127 $4,901.60 $.80
4/10/00 William Staufenbiel 14,005 $9,803.50 $.70
4/11/00 Heinz Igel 6,127 $4,901.60 $.80
4/11/00 Hans Muller 6,127 $4,901.60 $.80
4/11/00 Dieter Putz 22,059 $17,647.20 $.80
4/11/00 Jurgen Rehm 16,420 $9,852.00 $.60
4/11/00 Karl-Heinz Rehm 28,736 $17,241.60 $.60
4/12/00 Jurgen Blos 15,319 $12,255.20 $.80
4/12/00 Jochen Burbach 10,000 $8,500.00 $.85
4/12/00 Angelika Fersch 6,128 $4,902.40 $.80
4/12/00 Matthias Furst 3,064 $2,451.20 $.80
4/12/00 Wolfgang Klein 3,079 $2,463.20 $.80
4/13/00 Leonard Hey 15,000 $10,500.00 $.70
4/13/00 Markus Holzknecht 15,000 $10,500.00 $.70
4/13/00 Maria Nicolai 6,275 $5,020.00 $.80
4/13/00 Christoph Tross 3,049 $2,439.20 $.80
4/14/00 Hans Juergen Preissman 6,157 $3,694.20 $.60
4/14/00 Bernd Wolf 4,618 $2,770.80 $.60
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
4/14/00 Eduard Ganter 6,157 $3,694.20 $.60
4/14/00 Inge & Will Braeunling 6,157 $3,694.20 $.60
4/14/00 Eva & Karl Heinz 3,078 $1,846.80 $.60
4/14/00 Ingrid & Franz Weinand 6,157 $3,694.20 $.60
4/14/00 Alexander Ashauer 5,849 $3,509.40 $.60
4/14/00 Roselle Gras 6,157 $3,694.20 $.60
4/14/00 Josef Gras 3,078 $1,846.80 $.60
4/14/00 Heiko Stefan Braeunling 6.157 $3,694.20 $.60
4/14/00 Bernd Imhaeuser 2,976 $2,380.80 $.80
4/19/00 Burkhard Reeh 6,000 $5,100.00 $.85
4/20/00 Manfred Neumann 6,494 $4,870.50 $.75
4/20/00 Dieter Roch 3,044 $2,435.20 $.80
4/25/00 Peter Imhaeuser 2,976 $2,380.80 $.80
4/28/00 Stefan Keber 125,000 $75,000.00 $.60
4/28/00 Michael and Andrea Otter 8,861 $7,088.80 $.80
4/28/00 Toni Bender 22,642 $13,585.20 $.60
4/28/20 Toni Bender 12,443 $7,465.80 $.60
4/28/00 Michael Hogg 2,491 $1,494.60 $.60
4/28/00 Verena Hogg 2,491 $1,494.60 $.60
4/28/00 Verena Hogg 2,683 $1,609.80 $.60
4/28/00 Stefan Keber 15,086 $9,051.60 $.60
4/28/00 Karl-Heinz Rhem 8,962 $5,377.20 $.60
4/28/00 Thomas Weinand 39,308 $23,584.80 $.60
4/28/00 Sascha Weinbach 4,701 $2,820.60 $.60
5/1/00 Michael Hug 34,375 $27,500.00 $.80
5/2/00 Oliver Wollenweber 2,928 $2,342.40 $.80
5/3/00 Manfred Kopl 3,000 $2,400.00 $.80
5/4/00 Alexander and Ingeborg Bastian 5,743 $4,594.40 $.80
5/4/00 Marc and Silke Hamel 2,862 $2,289.60 $.80
5/8/00 Joachim Schikora 2,880 $2,304.00 $.80
5/9/00 Alexander and Ingeborg Bastian 5,743 $4,594.40 $.80
5/9/00 Engelbert Gerhartz 5,744 $4,595.20 $.80
5/9/00 Thomas Kramer 20,933 $17,793.05 $.85
5/10/00 Jurgen Rehm 7,825 $4,695.00 $.60
5/17/00 Herbert Pfannenmuller 5,674 $4,611.20 $.80
5/17/00 Peter Rubsamen 4,712 $3,298.40 $.60
5/17/00 Manfred Neumann 1,407 $964.90 $.70
5/19/00 Alpaslan Goksin 2,854 $2,283.20 $.80
5/19/00 Aysun Goksin 5,708 $4,566.40 $.80
5/19/00 Karl and Anneliese Kraemer 17,140 $13,712.00 $.80
5/19/00 Rolf Hadilich 5,000 $3,500.00 $.70
5/19/00 Peter Imhauser 2,976 $2,306.80 $.80
5/22/00 Harald Kalitzke 3,440 $2,752.00 $.80
5/24/00 Max Tomrell 2,723 $2,314.55 $.85
5/24/00 Marc Walter 7,728 $4,636.80 $.60
5/26/00 Stefan Grassdorf 5,830 $4,664.00 $.80
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
5/26/00 Steven Koster 875 $700.00 $.80
5/26/00 Hans-Dieter Lohoff 8,621 $6,896.80 $.80
5/27/00 Marlies Marks 4,463 $3,570.40 $.80
5/27/00 Gerlinde Walter 5,102 $3,571.40 $.70
5/27/00 Gerlinde Walter 850 $595.00 $.70
5/29/00 Dieter Grothe 2,995 $2,396.00 $.80
5/29/00 Dr. Irmgard Weinbach 11,962 $7,177.20 $.60
5/29/00 Michael Hogg 2,683 $1,609.80 $.60
5/29/00 Jurgen Rehm 1,951 $1,170.60 $.60
5/30/00 Christine Foos 2,976 $2,380.80 $.80
5/31/00 Rolf Doeres 29,703 $23,762.40 $.80
6/2/00 Josef Gras 22,135 $17,708.00 $.80
6/6/00 Eike Hell 3,031 $2,424.80 $.80
6/8/00 Hermann Eilers 3,058 $2,446.40 $.80
6/13/00 Erika Droessler-Weber 30,788 $24830.40 $.80
6/13/00 Klaus Weber 10,222 $8,177.60 $.80
6/15/00 Manfred Fachinger 8,640 $7,344.00 $.85
6/16/00 Richard Flohrer 11,534 $9,803.90 $.85
6/16/00 Steve Fuller 5,767 $4,901.95 $.85
6/16/00 Werner Schweitzer 10,381 $8,823.85 $.85
6/19/00 Heinz Buchner 6,000 $5,100.00 $.85
6/19/00 Janot Friedl 6,161 $4,928.80 $.80
6/19/00 Nikola Friedl 6,161 $4,928.80 $.80
6/19/00 Greold Meurer 6,161 $4,928.80 $.80
6/19/00 Raimund Rubsamen 4,000 $2,800.00 $.70
6/19/00 Eckart Tausendpfund 6,161 $4,928.80 $.80
6/20/00 Werner Mittendorf, Jr. 613 $490.40 $.80
6/21/00 Sascha Weinbach 4,319 $2,591.40 $.60
6/27/00 Nedzad Redzepagic 1,507 $1,318.63 $.88
6/27/00 Erwin Teufel 1,909 $1,670.38 $.88
6/27/00 Gretel Fischer 1,909 $1,670.38 $.88
6/27/00 Andres Thomas 1,909 $1,670.38 $.88
6/27/00 Inge Feffer 1,909 $1,670.38 $.88
6/27/00 Walter Dreher 6,028 $5,274.50 $.88
6/27/00 Ute Simon 3,014 $2,637.25 $.88
6/27/00 Katharina Giel 4,521 $3,955.88 $.88
6/27/00 Rudi Reichert 5,425 $4,746.88 $.88
6/27/00 Erwin Ulrich 6,028 $5,274.50 $.88
7/3/00 Jorg Marrach 8,608 $7,316.80 $.85
7/3/00 Heiko Sierk 5,745 $4,883.25 $.85
7/3/00 Frank Waldner 5,800 $4,930.00 $.85
7/4/00 Ira Reichstein 5,681 $4,828.85 $.85
7/4/00 Gerhard Sierk 5,745 $4,883.25 $.85
7/16/00 Renate Flotkotter 30,638 $24,510.40 $.80
7/18/00 Karin Kramer-Wollny 5,985 $4,788.00 $.80
7/20/00 Ernina Balivevac 30,466 $18,279.60 $.60
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Price
# of shares Aggregate per
Date Name issued Consideration share
---- ---- ------ ------------- -----
Acquisition, Reorganization and Services
----------------------------------------
<S> <C> <C> <C> <C>
7/20/00 Elisabeth Wisowaty 10,000 $6,000.00 $.60
7/20/00 Marla Asaad 10,000 $6,000.00 $.60
7/20/00 Josef Kocher 5,000 $3,000.00 $.60
7/20/00 Margaret Dyba 59,524 $23,809.60 $.40
7/31/00 Peter Seel and Beate Schwager 17,442 $13,953.60 $.80
8/2/00 Rolf Werner 11,681 $9,344.80 $.80
8/4/00 Olaf Steigemann 7,500 $6,000.00 $.80
8/4/00 Erich Wedel 8,762 $7,009.60 $.80
8/4/00 Sven Gruenert 10,024 $7,518.00 $.75
8/4/00 Margot Gruenert 26,981 $20,235.75 $.75
8/4/00 Gisbert Mueller 26,359 $19,769.25 $.75
8/8/00 Ingrid Reich 14,404 $11,523.20 $.80
8/10/00 Theobald Reis 9,345 $7,476.00 $.80
8/18/00 Udo Fassbender 293 $234.40 $.80
8/21/00 Erika Zeilmann 8,139 $6,511.20 $.80
8/21/00 Karola Lindenfeld 28,830 $23,064.00 $.80
8/22/00 Werner Frerich 14,402 $11,521.60 $.80
8/22/00 Ingrid Hofs 2,880 $2,304.00 $.80
8/22/00 Siegfried Ganter 18,936 $15,148.80 $.80
8/25/00 Heinz Igel 11,511 $9,208.80 $.80
8/25/00 Rick Lleshi 5,755 $4,604.00 $.80
8/25/00 Tosh Lleshi 11,510 $9,208.00 $.80
8/25/00 Herbert Pfannenmuller 5,755 $4,604.00 $.80
8/28/00 Axel and Kirsten Woelfert 8,680 $6,944.00 $.80
8/28/00 Jurgen Rehm 36,866 $29,492.80 $.80
8/28/00 Martin Wacker 2,277 $1,992.38 $.88
8/28/00 Markus Dudzik 3,281 $2,870.88 $.88
8/28/00 Matthias Fieml 1,585 $1,981.25 $1.25
8/28/00 Fatma Ismail 3,317 $2,902.38 $.88
8/28/00 Thomas Wuerfel 15,145 $18,779.80 $1.24
8/29/00 Sigrid and Hafid Frigini 26,063 $20,850.40 $.80
8/29/00 Kumar Raj 1,728 $1,382.40 $.80
8/29/00 Thomas Muhlenweg 5,755 $4,604.00 $.80
9/1/00 Stefan Obel 2,723 $2,178.40 $.80
9/2/00 Diana Walter 2,880 $2,304.00 $.80
9/6/00 Elvira Nentwig 15,877 $11,113.90 $.70
9/6/00 Thomas Muhlenweg 2,845 $2,276.00 $.80
9/7/00 Claus Werle 2,855 $2,284.00 $.80
9/12/00 Volkmar Knapp 13,735 $10,988.00 $.80
9/12/00 Hans Muller 8,237 $4,942.20 $.60
9/13/00 Manfred Neumann 2,078 $1,454.60 $.70
9/13/00 Peter Rubsamen 6,127 $4,901.60 $.80
9/13/00 Sascha Weinbach 7,576 $4,545.60 $.60
</TABLE>
42
<PAGE>
(1) Shares were issued in relation to the Company's acquisition of Denatec
and Philaqua. Shares issued to Howard Bronson Associates, Inc. were
issued pursuant to written agreement in exchange for the performance of
public relations services on behalf of the Company.
(2) Shares issued to Mr. Brovarone were issued as compensation for legal
services rendered to the Company.
(3) Shares issued Howard Bronson Associates, inc. were issued pursuant to
written agreement in exchange for the performance of public relations
services on behalf of the Company.
(4) Shares issued to Messrs. Jones and Stoneham were issued as compensation
for services rendered to the Company.
(5) Shares issued to Mr. Kulawik were issued in connection with the
Company's acquisition of 23% of the outstanding common stock of Huta
Zabrze. Huta Zabrze acquired 2,000,000 shares of the Company's Common
Stock, for which it paid $800,000 and issued an additional seven
percent of Huta Zabrze's outstanding common stock to the Company. See
Part I, Item 1, "Description of Business-Business Development."
(6) Shares issued to Coolpoint were issued in connection with the Company's
acquisition of 20% of the outstanding common stock of Coolpoint. See
Part 1, Item 1, "Description of Business-Business Development."
(7) Shares issued to Professor Holter and Messrs. Brinkmann and Lezak, the
Company's President and Chairman of the Board of Directors, Executive
Vice President and a director and the Company's Secretary/Treasurer and
a director, respectively, were issued as compensation for services
rendered to the Company.
(8) Shares issued to Professor Holter were issued in connection with the
Company's acquisition of an additional 20% of the outstanding common
stock of Holter GmbH and 50% of the outstanding common stock of Holter
Italia. See Part I, Item 1, "Description of Business-Business
Development."
(9) The private placements were conducted pursuant to Regulation S. The
securities were sold in an offshore transaction to non-U.S. persons
located outside of the United States at the time the Common Stock was
purchased and the Company did not engage in any directed selling
efforts in the United States. No offer or sale was made to a U.S.
person or for the account or benefit of a U.S. person. No general
solicitation or advertising was made. The Common Stock sold pursuant to
the private placements was restricted. Each purchaser was notified of
the restrictions imposed on the Common Stock and his or her transfer
thereof. Upon purchase of the Common Stock, each purchaser signed an
investment letter, acknowledging that the Common Stock was not
registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and that resale of such Common Stock could only occur
if the Common Stock was subsequently registered pursuant to the
Securities Act or an exemption from such registration was available.
Each purchaser further acknowledged that he or she purchased the Common
Stock for his or her own account and not with a view to public resale
or distribution, and that he or she was capable of bearing the economic
risks of investment in the Common Stock. Each share certificate
representing the Common Stock contained a legend reflecting the
restrictions on transfer of the Common Stock. The proceeds from the
issuances were used for general corporate operating purposes.
43
<PAGE>
None of the issuances of shares set forth above were registered with
the Commission under the Securities Act, because the transactions were believed
to be exempt from such registration pursuant to the exemptions provided by
Regulation S.
ITEM 5. Indemnification of Directors and Officers
As permitted under the Nevada General Corporation Law, the Bylaws of
the Company eliminate personal liability and provide for indemnification of the
officers, directors, employees, agents or affiliates of the Company for any
damages, actions, suits or proceedings provided that such person acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, as applicable, and, with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
The Bylaws of the Company also provide for indemnification of any person
who was or is a party or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director or officer of
the corporation, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he 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 conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent shall not, without more create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
The Nevada General Corporation Law similarly authorizes indemnification
of officers, directors and persons serving other entities in certain capacities
at the request of the corporation, subject to certain conditions and limitations
set forth therein, against all expenses and liabilities incurred by or imposed
upon them as a result of actions, suits and proceedings brought against them in
such capacity if they acted in good faith, in a manner they reasonably believed
to be in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action, they had reasonable cause to believe the conduct
was lawful.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act, and is therefore
unenforceable.
44
<PAGE>
Transfer Agent
The Company has designated Interwest Transfer Co., Inc., 1981 East 4800
South, Suite 100, Salt Lake City, Utah 84117 as its transfer agent.
45
<PAGE>
PART F/S
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Heading
-------
Page
----
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Consolidated Balance Sheets -- September 30, 2000...............................F-1 - F-2
Consolidated Statements of Operations -- three and nine months ended
September 30, 2000 and 1999.....................................................F-3 - F-4
Consolidated Statements of Cash Flows -- three and nine months ended
September 30, 2000 and 1999.....................................................F-5 - F-6
Notes to Consolidated Financial Statements .................................... F-7 - F-8
</TABLE>
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 349,597 $ 1,369,990
Accounts receivable, net 1,710,398 12,590
Accounts receivable - related party, net -- 83,334
Inventories 2,284,092 92,610
Prepaid expenses 996,883 978
Notes receivable - related party 50,169 520,841
------------ ------------
Total Current Assets 5,391,139 2,080,343
------------ ------------
PROPERTY AND EQUIPMENT
Equipment and machinery 307,907 246,758
Furniture and office equipment 150,232 42,812
Software 1,747 1,046
Less - accumulated depreciation (73,661) (47,266)
------------ ------------
Total Property and Equipment 386,225 243,350
------------ ------------
OTHER ASSETS
Unconsolidated subsidiaries 4,455,086 --
Capitalized project costs 7,903,902 --
Patents -- --
Deposits 127,305 16,704
------------ ------------
Total Other Assets 12,486,293 16,704
------------ ------------
TOTAL ASSETS $ 18,263,657 $ 2,340,397
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 1,665,923 $ 371,861
Accounts payable - related party -- 123,017
Accrued expenses 2,682,979 619,775
Lines of credit- -- 203
Notes payable - related party 218,839 36,931
Billings in excess of costs
and earned profit on
construction contracts -- 33,890
Provision for projected loss
on construction contracts -- 81,886
Total Current Liabilities 4,567,741 1,267,563
------------ ------------
LONG-TERM DEBT -- --
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 2,657,793 88,727
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: $0.001 par value; 200,000,000 shares
authorized, 70,076,659 and 54,837,737 shares issued
and outstanding, respectively 72,109 54,838
Additional paid-in capital 12,186,735 1,303,425
Stock subscription receivable (1,300,000) --
Other comprehensive income 468,967 53,776
Accumulated deficit (389,688) (427,932)
------------ ------------
Total Stockholders' Equity 11,038,123 984,107
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,263,657 $ 2,340,397
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Contracting revenue $ 1,072,071 $ 1,768,627 $ 3,788,585 $ 1,850,725
----------- ----------- ----------- -----------
Total Revenues 1,072,071 1,768,627 3,788,585 1,850,725
----------- ----------- ----------- -----------
COST OF SALES
Direct contracting costs 580,939 300,921 2,083,722 343,218
----------- ----------- ----------- -----------
Total Cost of Sales 580,939 300,921 2,083,722 343,218
----------- ----------- ----------- -----------
GROSS MARGIN 491,132 1,467,706 1,704,863 1,507,507
----------- ----------- ----------- -----------
EXPENSES
General and administrative 555,799 627,331 1,232,540 1,086,691
Bad debt expense 263 -- 16,161 --
Depreciation expense 25,498 12,551 42,431 35,898
----------- ----------- ----------- -----------
Total Expenses 581,560 639,882 1,291,132 1,122,589
----------- ----------- ----------- -----------
GAIN BEFORE OTHER INCOME
(EXPENSES) (90,428) 827,824 413,731 384,918
OTHER INCOME (EXPENSES)
Equity loss (173,090) -- (228,574) --
Other income (expense) 29,214 (197) 22,479 (3)
Interest income 3,983 -- 13,457 --
Interest expense (27,377) (916) (53,304) (4,984)
Total Other Income (Expenses) (167,270) (1,113) (245,942) (4,987)
----------- ----------- ----------- -----------
GAIN (LOSS) BEFORE INCOME
TAXES (257,698) 826,711 167,789 379,931
----------- ----------- ----------- -----------
PROVISION FOR INCOME TAXES 64 270,904 1,077 272,186
----------- ----------- ----------- -----------
INCOME BEFORE MINORITY
INTEREST IN NET (INCOME) LOSS
OF CONSOLIDATED SUBSIDIARIES (257,762) 555,807 166,712 107,745
----------- ----------- ----------- -----------
MINORITY INTEREST IN NET (INCOME)
LOSS OF CONSOLIDATED SUBSIDIARIES 22,220 (273,161) (128,468) (164,752)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (235,542) $ 282,646 $ 38,244 $ (57,007)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Statements of Operations (Continued)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OTHER COMPREHENSIVE INCOME
Foreign currency translation
adjustments $ 68,744 $ (24,463) $ 415,191 $ 10,138
----------- ----------- ----------- -----------
Total Other Comprehensive Income 68,744 (24,463) 415,191 10,138
----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE INCOME $(166,798) $ 258,183 $ 453,435 $ (46,869)
=========== =========== =========== ===========
BASIC INCOME (LOSS) PER SHARE $ (0.00) $ 0.00 $ 0.00 $ (0.00)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 38,244 $ (57,007)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Equity loss 228,574 --
Minority interest 128,468 164,752
Common stock issued for services -- --
Depreciation 42,431 35,898
Bad debt expense 16,161 --
Currency translation adjustment 415,191 10,138
Changes in assets and liabilities:
(Increase) in accounts receivable (1,713,969) (1,967,734)
(Increase) in prepaid expenses (2,191,482) (107,066)
(Increase) in inventories (995,905) --
(Increase) in deposits (110,601) --
Increase (decrease) in accounts payable 1,294,062 198,422
Decrease in payable to related parties (123,017) 4,774
Increase in accrued expenses 1,947,428 515,255
----------- -----------
Net Cash Used by Operating Activities (1,024,415) (1,202,568)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in unconsolidated subsidiaries (132,760) --
Payment of capitalized project costs (5,457,239) (317,466)
Purchase of property and equipment (185,306) (38,917)
----------- -----------
Net Cash Used by Investing Activities (5,775,305) (356,383)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment from related parties 554,006 232,802
Proceeds from lines of credit -- --
Common stock issued for cash 5,043,616 170,590
Repayment of related party loans (77,894) --
Borrowings from related parties 259,802 1,016,420
Payment on lines of credit (203) (1,599)
----------- -----------
Net Cash Provided by Financing Activities 5,779,327 1,418,213
----------- -----------
NET INCREASE (DECREASE) IN CASH (1,020,393) (140,738)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,369,990 156,995
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 349,597 $ 16,257
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Nine Months Ended
September 30,
2000 1999
----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $53,304 $ 4,984
Income taxes $ 1,077 $ 1,282
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ -- $ --
F-6
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
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 September 30, 2000 and
1999 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, 1999 audited consolidated financial statements. The results of
operations for periods ended September 30, 2000 and 1999 are not
necessarily indicative of the operating results for the full
years.
NOTE 2 - MATERIAL EVENTS
Acquisitions
------------
Effective March 29, 2000, the Company purchased 30% of Heinrich
Holter, GmbH (HH) for $1,500,000. The shares were purchased from
the Company's majority shareholder at his original cost. HH is a
German company operating in environmental technology and mineral
processing in Europe and Asia.
In December 2000, the Company acquired an additional 20% interest
in Heinrich Holter, GmbH from its controlling shareholder for
15,000,000 shares of its common stock.
In March 2000, the Company acquired 50% of Holter Systembau GmbH
(HSB) for $125,000. HSB is a newly formed German corporation
engaged primarily in the business of marketing and sales of low
energy modular housing systems.
On April 1, 2000, the Company purchased 20% of Coolpoint Holter
Environmental Technologies, Ltd. (Coolpoint), a Hong Kong limited
liability corporation, in exchange for 1,388,889 shares of the
Company's common stock. The Company was also granted an option to
purchase up to 20% of any Coolpoint shares offered to the public
in the future. The Company's shares were valued at the trading
price on the date of issue of $0.90 per share. Coolpoint engages
primarily in the business of marketing and sales of air filtration
systems in Asia. Coolpoint has the option to buy additional shares
of the Company's common stock based upon its profits in the year
2000.
In April 2000, the Company acquired 50% of LK-Luftqualitaet AG
(LK), a Swiss corporation, for $650,000. LK engages primarily in
the business of marketing, sales, production, research and
development of air filtration systems in Europe.
F-7
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 2 - MATERIAL EVENTS (Continued)
In April 2000, the Company purchased 23% of the outstanding common
stock of Huta Zabrze SA (HZ), a Polish corporation, from Leszek
Kulawik, the Managing Director of HZ, in exchange for 2,750,000
shares of the Company's common stock valued at $0.80 per share. In
May 2000, the Company acquired an additional 7% of the outstanding
common stock of Huta Zabzre in exchange for $800,000 and 2,000,000
shares of the Company's common stock. HZ engages primarily in the
production, marketing and sales of steel and iron construction,
telecommunication and energy systems in Europe.
On June 21, 2000, the Company acquired 50% of Intherm GmbH
(Intherm), a German corporation, for $125,000. Intherm engages
primarily in the business of marketing and sales of energy systems
in Europe.
In December 2000, the Company acquired 50% of Holter Italia
s.r.l., an Italian corporation, from its controlling shareholder
for 10,000,000 shares of its common stock.
Stock Offerings
---------------
Subsequent to December 31, 1999, the Company sold approximately
7,385,160 shares of its common stock for $3,718,678.
F-8
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
Independent Auditors' Report.................................................................................... F-9
Consolidated Balance Sheet...................................................................................F-10 - F-11
Consolidated Statements of Operations........................................................................F-12 - F-13
Consolidated Statements of Stockholders' Equity................................................................. F-14
Consolidated Statements of Cash Flows........................................................................F-15 - F-16
Notes to the Consolidated Financial Statements...............................................................F-17 - F-26
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
Holter Technologies Holding AG and Subsidiaries
Calabasas, California
We have audited the accompanying consolidated balance sheet of Holter
Technologies Holding AG and Subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1999 and 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 consolidated financial position of Holter
Technologies Holding AG and Subsidiaries as of December 31, 1999 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1999 and 1998, in conformity with generally accepted
accounting principles.
/S/ HJ & Associates, LLC
------------------------
HJ & Associates, LLC
Salt Lake City, Utah
May 10, 2000
F-9
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Balance Sheet
ASSETS
------
December 31,
1999
-----------
CURRENT ASSETS
Cash $ 1,369,990
Accounts receivable, net (Note 2) 12,590
Accounts receivable - related party, net (Note 7) 83,334
Inventory (Note 2) 92,610
Prepaid expenses 978
Notes receivable - related party (Note 4) 520,841
-----------
Total Current Assets 2,080,343
-----------
PROPERTY AND EQUIPMENT (Note 2)
Equipment and machinery 246,758
Furniture and office equipment 42,812
Software 1,046
Less - accumulated depreciation (47,266)
-----------
Total Property and Equipment 243,350
-----------
OTHER ASSETS
Patents (Note 10) --
Deposits 16,704
-----------
Total Other Assets 16,704
-----------
TOTAL ASSETS $ 2,340,397
===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-10
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31,
1999
-----------
CURRENT LIABILITIES
Accounts payable $ 371,861
Accounts payable - related party (Note 7) 123,017
Accrued expenses 619,775
Lines of credit (Note 6) 203
Notes payable - related party (Note 5) 36,931
Billings in excess of costs and
earned profit on construction
contracts (Notes 2 and 3) 33,890
Provision for projected loss on
construction contracts (Note 3) 81,886
-----------
Total Current Liabilities 1,267,563
-----------
LONG-TERM DEBT --
-----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 88,727
-----------
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY
Common stock: $0.001 par value; 200,000,000 shares
authorized, 54,837,737 shares issued and outstanding 54,838
Additional paid-in capital 1,303,425
Other comprehensive income (loss) 53,776
Accumulated deficit (427,932)
-----------
Total Stockholders' Equity 984,107
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,340,397
===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-11
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Statements of Operations
For the Years Ended
December 31,
-------------------------
1999 1998
----------- -----------
REVENUES
Sales revenue $ 2,468,807 $ 291,735
Contracting revenue (Note 3) 157,653 --
----------- -----------
Total Revenues 2,626,460 291,735
----------- -----------
COST OF SALES
Direct sales costs 197,363 --
Direct contracting costs (Note 3) 289,715 --
----------- -----------
Total Cost of Sales 487,078 --
----------- -----------
GROSS MARGIN 2,139,382 291,735
----------- -----------
EXPENSES
General and administrative 762,697 274,817
Research and development 65,678 --
Advertising and marketing 88,699 13,208
Salaries and wages 895,925 302,339
Bad debt expense 14,567 --
Depreciation expense 34,290 12,976
----------- -----------
Total Expenses 1,861,856 603,340
----------- -----------
GAIN (LOSS) BEFORE OTHER INCOME (EXPENSES) 277,526 (311,605)
----------- -----------
OTHER INCOME (EXPENSES)
Other income 44,561 11,798
Interest income 11,502 --
Interest expense (49,064) (1,157)
----------- -----------
Total Other Income (Expenses) 6,999 10,641
----------- -----------
GAIN (LOSS) BEFORE INCOME TAXES 284,525 (300,964)
PROVISION FOR INCOME TAXES (Note 2) 386,272 --
----------- -----------
LOSS BEFORE MINORITY INTEREST IN NET INCOME
OF CONSOLIDATED SUBSIDIARIES (101,747) (300,964)
----------- -----------
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
SUBSIDIARY 85,414 (60,193)
----------- -----------
NET LOSS $ (187,161) $ (240,771)
----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-12
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Statements of Operations (Continued)
For the Years Ended
December 31,
-------------------------
1999 1998
----------- -----------
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments $ 64,525 $ (10,749)
--------- ---------
Total Other Comprehensive Income (Loss) 64,525 (10,749)
--------- ---------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) $(122,636) $(251,520)
========= =========
BASIC LOSS PER SHARE (NOTE 9) $ (0.00) $ (0.00)
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
F-13
<PAGE>
<TABLE>
<CAPTION>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Statements of Stockholders' Equity
Other
Common Stock Additional Comprehensive
------------------------- Paid-In Income Accumulated
Shares Amount Capital (Loss) Deficit
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 -- $ -- $ -- $ -- $ --
Common stock issued to
founders at $0.006 per share 44,100,000 44,100 219,835 -- --
Currency translation adjustment -- -- -- (10,749 --
Net loss for the year ended
December 31, 1998 -- -- -- -- (240,771)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 44,100,000 44,100 219,835 (10,749) (240,771)
Common stock issued in
recapitalization 8,400,000 8,400 (8,400) -- --
Common stock issued for cash
at $0.30 to $0.80 per share 2,184,767 2,185 921,139 -- --
Common stock issued for services
at $0.30 to $0.80 per share 152,970 153 76,829 -- --
Contributed capital by founding
shareholders -- -- 94,022 -- --
Currency translation adjustment -- -- -- 64,525 --
Net loss for the year ended
December 31, 1999 -- -- -- -- (187,161)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 54,837,737 $ 54,838 $ 1,303,425 $ 53,776 $ (427,932)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-14
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Statements of Cash Flows
For the Years Ended
December 31,
-------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (187,161) $ (240,771)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interest 96,997 (8,271)
Common stock issued for services 76,982 --
Depreciation 34,290 12,976
Bad debt expense 14,567 --
Currency translation adjustment 64,525 (10,749)
Change in assets and liabilities:
(Increase) in accounts receivable (110,491) --
(Increase) in prepaids (371) (607)
(Increase) in inventories (92,610) --
(Increase) in deposits (16,704) --
Increase in accounts payable 151,134 220,727
Increase in payable to related parties 59,125 63,892
Increase in accrued expenses 606,951 128,600
----------- -----------
Net Cash Provided by Operating Activities 697,234 165,797
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Lending to related parties (520,841) --
Purchase of property and equipment (50,636) (239,976)
----------- -----------
Net Cash Used in Investing Activities (571,477) (239,976)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash acquisition recapitalization 112,621 --
Proceeds from lines of credit -- 57,063
Common stock issued for cash 923,324 151,314
Contributed capital by founding shareholders 94,022 --
Borrowings from related parties 14,131 22,797
Payment on lines of credit (56,860) --
----------- -----------
Net Cash Provided by Financing Activities $ 1,087,238 $ 231,174
----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-15
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
December 31,
-------------------------
1999 1998
----------- -----------
NET INCREASE (DECREASE) IN CASH $1,212,995 $ 156,995
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 156,995 --
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $1,369,990 $ 156,995
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 42,902 $ 1,157
Income taxes $ 153,915 $ --
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ 76,982 $ --
The accompanying notes are an integral part of these consolidated
financial statements.
F-16
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION
The consolidated financial statements include those of Holter
Technologies Holdings AG (HTH AG) and its wholly-owned subsidiary,
Holter Sachsen Denatec GmbH (Denatec), and its 80% owned
subsidiary Philaqua Aufbereitungstechnik GmbH (Philaqua).
Collectively, they are referred to herein as "the Company".
HTH AG was incorporated under the laws of the State of Nevada on
March 21, 1997 under the name of Lyon Mountain, Inc. On March 5,
1998, the Company changed its name to Falken Investment, AG and
then later changed its name on January 20, 1999 to Holter
Technologies Holding AG in contemplation of a merger with Denatec
and Philaqua. HTH AG was incorporated to seek business
opportunities and acquire interests in products and businesses
which may have a potential for profit. Prior to the acquisition of
Denatec and Philaqua, HTH AG was a non-operating public shell.
Denatec was incorporated under the laws of Germany on May 3, 1998
for the purpose of acquiring technology. Denatec is engaged in the
continued development of a denaturing electrostatic filter
technology.
Philaqua was incorporated under the laws of Germany on June 30,
1998 for the purpose of acquiring and implementing technology.
Philaqua supplies systems and components to many processes in the
environmental engineering field. Philaqua's main focus is on the
treatment of water, waste water, soils, sludges, and air.
During 1999, HTH AG completed an agreement and plan of
reorganization whereby HTH AG issued 43,600,000 shares of common
stock in exchange for all of the outstanding shares of Denatec and
Philaqua. Pursuant to the reorganization, the name of the Company
was changed to Holter Technologies Holding AG.
The reorganization was accounted for as a recapitalization of
Denatec and Philaqua because the shareholders of Denatec and
Philaqua controlled the Company after the acquisition. Therefore,
Denatec and Philaqua are treated as the acquiring entity.
Accordingly, there was no adjustment to the carrying value of the
assets or liabilities of Denatec and Philaqua. HTH AG is the
acquiring entity for legal purposes and Denatec and Pilaqua are
the surviving entity for accounting purposes. As such, the
financial statements reflect the history of Denatec and Philaqua
prior to the acquisition.
F-17
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
c. Provision for Taxes
The provision for income taxes charged to operations for the years
ended December 31, 1999 and 1998 was $386,272 and $-0-,
respectively. This amount is based on the income tax rates in the
country of Germany and has been converted to U.S. dollars.
d. Principles of Consolidation
The consolidated financial statements include those of Holter
Technologies Holding AG (HTH AG) and its wholly-owned subsidiary,
Holter Sachsen Denatec GmbH (Denatec), and its 80% owned
subsidiary, Philaqua Aufbereitungstechnik GmbH (Philaqua). All
significant intercompany accounts and transactions have been
eliminated.
For the Company's foreign subsidiaries (Denatec and Philaqua) the
functional currency has been determined to be the Duetsch Mark.
Accordingly, assets and liabilities are translated at year-end
exchange rates, and operating statement items are translated at
average exchange rates prevailing during the year. The resultant
cumulative translation adjustments to the assets and liabilities
are recorded as a separate component of stockholders' equity.
Exchange adjustments resulting from foreign currency transactions
are included in the determination of net income (loss). Such
amounts are immaterial for all years presented.
In accordance with Statement of Financial Accounting Standards No.
95, "Statements of Cash Flows," cash flows from the Company's
foreign subsidiaries are calculated based upon the local
currencies. As a result, amounts related to assets and liabilities
reported on the statements of cash flows will not necessarily
agree with changes in the corresponding balances on the balance
sheets.
F-18
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Inventory
Inventory supplies are stated at the lower of purchase or
production cost (computed on a first-in, first-out basis) or
market. The inventory cost includes all expenses necessary to
place the inventory in a saleable condition. The components of
inventory are as follows:
Prepaid inventory $ 42,135
Finished goods 50,475
-------------------
Total $ 92,610
===================
f. Property and Equipment
Property and equipment are stated at cost. Expenditures for small
tools, ordinary maintenance and repairs are charged to operations
as incurred. Major additions and improvements are capitalized.
Depreciation is computed using the straight-line method over
estimated useful lives as follows:
Equipment and machinery 3-10 years
Furniture and office equipment 5-10 years
Software 5 years
Depreciation expense for the years ended December 31, 1999 and
1998 was $34,290 and $12,976, respectively.
g. Accounts Receivable
Accounts receivable are recorded net of the allowance for doubtful
accounts of $7,282 as of December 31, 1999.
h. Revenue Recognition - Inventory Sales
Revenue is recognized upon shipment and acceptance of goods by the
customer. If the Company installs the units, revenue is recognized
on the transaction when the unit is installed. The customer has no
right of return on the products and as a result, no allowance has
been recorded for possible returns.
F-19
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Revenue Recognition - Contract Sales
The financial statements are prepared on the
percentage-of-completion on individual contracts, commencing when
progress reaches a point where cost and estimate analysis and
other evidence of trends are sufficient to estimate final results
with reasonable accuracy. That portion of the total contract price
which is allocable to contract expenditures incurred and work
performed is accrued as earned income. At the time a loss on a
contract becomes known, the entire amount of the estimated
ultimate loss is accrued. Claims for additional revenue are
recognized when settled.
j. Costs and Billings on Contracts
Costs and earned profit on contracts - unbilled represent the
amount by which costs of contracts in process plus estimated
earned profit exceed related progress billings. Billings in excess
of costs and earned profit on contracts represent the amount by
which progress billings on contracts in process exceed related
costs and estimated earned profit.
k. Classifications of Current Assets and Liabilities
In accordance with industry practice, the Company includes in
current assets and liabilities amounts realizable and payable
under contracts which may extend beyond one year. Other assets and
liabilities are classified as current and non-current on the basis
of expected realization or payment within or beyond one year.
l. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and revenues
and expenses during the reporting period. In these financial
statements; assets, liabilities, and earnings form contracts
involve extensive reliance on management's estimates. Actual
results could differ from those estimates.
m. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
F-20
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
n. Concentrations of Risk
Cash
----
At times, the Company's funds exceed depository insurance limits
in the United States.
Foreign Currency Translation
Since Denatec and Philaqua are German companies whose financial
statements must be translated into U.S. Dollars to conform with
the requirements of the Securities and Exchange Commission, major
changes in the currency exchange rate between the German Mark and
U.S. Dollars may have a significant impact on operations of the
Company. Although the Company does not anticipate the currency
exchange rate to be significantly different over the next 12
months, no such assurances can be given. The aggregate adjustments
resulting from translation adjustments are found in the
consolidated statements of stockholders' equity.
Accounts Receivable
-------------------
Credit losses, if any, have been provided for in the financial
statements and are based on management's expectations. The
Company's accounts receivable are subject to potential
concentrations of credit risk. The Company does not believe that
it is subject to any unusual, or significant risks in the normal
course of its business.
o. Research and Development
The Company follows the policy of charging research and
development costs to expense as incurred.
p. Change in Accounting Principle
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The adoption of this statement had no material
impact on the Company's financial statements.
F-21
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 3 - CONTRACTS IN PROCESS
Comparative information with respect to contracts in process at
December 31, 1999 and 1998 follows:
1999 1998
--------- -----------
Expenditures $ 289,715 $ --
Estimated earnings (loss) thereon (132,062) --
--------- -----------
157,653
Less billings applicable thereto (191,543) --
--------- -----------
$ (33,890) $ --
========= ===========
Included in the accompanying balance
sheet under the following
captions:
Billings in excess of costs and earned
profit on construction $ (33,890) $ --
========= ===========
Provision for projected
loss on construction
contracts $ (81,886) $ --
========= ===========
NOTE 4 - NOTES RECEIVABLE - RELATED PARTY
Notes receivable - related party consisted of the following at
December 31, 1999:
<TABLE>
<CAPTION>
<S> <C>
Heinrich Holter, GmbH, unsecured due upon
demand, including accrued interest at 6.5% per annum. $ 520,841
------------------
Total notes receivable - related party 520,841
Less: current maturities (520,841)
------------------
Non-current notes receivable - related party $ --
==================
</TABLE>
F- 22
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 4 - NOTES RECEIVABLE - RELATED PARTY (Continued)
Maturities of notes receivable - related party debt are as
follows:
Year Ending
December 31, Amount
------------ ------------------
2000 $ 520,841
2001 --
2002 --
2003 --
2004 --
2005 and thereafter --
------------------
Total $ 520,841
==================
NOTE 5 - NOTES PAYABLE - RELATED PARTY
Notes payable - related party consisted of the following at
December 31, 1999:
Heinrich Holter GmbH, unsecured due
due upon demand, including accrued interest
at 6.5% per annum $ 36,931
------------------
Total notes payable - related party 36,931
Less: current maturities (36,931)
------------------
Notes payable - related party $ --
==================
Maturities of long-term debt are as follows:
Year Ending
December 31,
2000 $ 36,931
2001 --
2002 --
2003 --
2004 --
2005 and thereafter --
------------------
Total
$ 36,931
==================
F-23
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 6 - LINES OF CREDIT
An analysis of the lines of credit with various banks of the
Company and its subsidiaries as of December 31, 1999 is shown
below:
Line of Debt
Credit Outstanding
------------------ ------------------
Multi-currency line of credit $ 50,000 $ 68
Multi-currency line of credit 40,000 135
------------------ ------------------
$ 90,000 $ 203
================== ==================
Borrowings under the multi-currency lines of credit are guaranteed
by the Company and bear interest between 7.25% and 8.75%.
NOTE 7 - RELATED PARTY TRANSACTIONS
From time to time, the Company borrows and lends funds to and from
a Company controlled by its majority shareholder. The amounts are
non-interest bearing, due on demand and unsecured (see notes 4 and
5).
The Company also sells most of its product to a company controlled
by the major shareholder. In 1999, the related party sales were
91% of total revenues and 100% of total revenues in 1998. At
December 31, 1999, the Company was owed $83,334 for such sales.
The Company also purchases product from companies controlled by
the major shareholder. The Company owed $123,017 at December 31,
1999 for these purchases.
NOTE 8 - SEGMENT OF BUSINESS
The Company operates primarily in one industry segment which
includes the production and distribution of water and air
filtration systems.
A summary of the Company's sales by geographic area is as follows:
December 31,
---------------------------------------
1999 1998
----------------- -----------------
Foreign sales:
Asia $ - $ -
Europe 2,626,460 291,735
----------------- -----------------
Total foreign sales 2,626,460 291,735
Domestic sales - -
----------------- -----------------
Total Revenues $ 2,626,460 $ 291,735
================= =================
F-24
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 9 - BASIC AND DILUTED EARNINGS PER SHARE
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding during the
period of the financial statements as follows:
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
December 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------------
Loss Shares Per-Share Loss Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
$ (187,161) 52,573,121 $ (0.00) $ (240,771) 52,000,000 $ (0.00)
=============== ================= ============= ================ ============== ==============
</TABLE>
Diluted loss per share is not presented because the common stock
equivalents are antidilutive.
NOTE 10 - PATENTS
In accordance with Generally Accepted Accounting Principles, the
cost to research and develop and obtain the patents in the
Company are expensed. The acquisition of HTH AG and Philaqua
created a reverse merger; therefore, the value of the patents
must be handled as if they were developed and not purchased.
Management has determined that in the long range planning this is
a more conservative approach and eliminates the need of burdening
future revenues with the amortization costs that would arise.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company is leasing its U.S. office on a month to month basis
from its secretary/treasurer at $1,050 per month. The Company's
Dusseldorf, Germany office is provided by Heinrich Holter, GmbH
at no cost to the Company.
Philaqua is leasing its office space under a 10-year lease from a
German partnership. The lease began on January 7, 1998. The lease
payment is $4,689 per month, plus insurance. The lease payment is
fixed for the term of the lease. The Company's majority
shareholder is a 1/3 partner of the partnership.
NOTE 12 - SUBSEQUENT EVENTS
Acquisitions
------------
Effective March 29, 2000, the Company purchased 30% of Heinrich
Holter, GmbH (HH) for $1,500,000. The shares were purchased from
the Company's majority shareholder at his original cost. HH is a
German company operating in environmental technology and mineral
processing in Europe and Asia.
F-25
<PAGE>
HOLTER TECHNOLOGIES HOLDING AG
AND SUBSIDIARIES
(Formerly Falken Investment AG)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 12 - SUBSEQUENT EVENTS (Continued)
Acquisitions (Continued)
------------
Effective February 17, 2000, the Company acquired 50% of Holter
Systembau. GmbH (HSB) for $125,000. HSB is a newly formed German
corporation engaged primarily in the business of marketing and
sales of low energy modular housing systems.
On April 1, 2000, the Company purchased 20% of Coolpoint Holter
Environmental Technologies, Ltd. (Coolpoint), a Hong Kong limited
liability corporation, in exchange for 1,388,889 shares of the
Company's common stock. The Company was also granted an option to
purchase up to 20% of any Coolpoint shares offered to the public
in the future. The Company's shares were valued at the trading
price on the date of issue of $0.90 per share. Coolpoint engages
primarily in the business of marketing and sales of air
filtration systems in Asia. Coolpoint has the option to buy
additional shares of the Company's common stock based upon its
profits in the year 2000.
In April 2000, the Company acquired 50% of LK-Luftqualitaet AG
(LK), a Swiss corporation, for $615,000. LK engages primarily in
the business of marketing, sales, production, research and
development of air filtration systems in Europe.
In April 2000, the Company purchased 235 of the outstanding
common stock of Huta Zabrze, (HZ), a Polish corporation, in
exchange for 2,750,000 shares of the Company's common stock
valued at $0.80 per share. HZ engages primarily in the
production, marketing and sales of steel and iron construction,
telecommunication and energy systems in Europe.
On June 21, 2000, the Company acquired 50% of Intherm, GmbH
(Intherm), a German corporation, for $125,000. Intherm engages
primarily in the business of marketing and sales of energy
systems in Europe.
Stock Offerings
Subsequent to December 31, 1999, the Company sold approximately
7,385,160 shares of its common stock for $3,718,678.
F-26
<PAGE>
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Exhibit Name
3.1 Articles of Incorporation and Amendments*
3.2 Bylaws*
10.1 Acquisition Agreement of Denatec*
10.2 Agreement between the Government of the City of Moscow, Russian
Federation and THG Ost-West mbH
10.3 June 29, 2000 Contract with Lurgi Lent Jes AG and Lurgi Energie Und
Entsorgung GmbH
10.4 December 12, 1998 Exclusive Distribution Agreement between Laboratory
of Impulse Technique (L.I.T.) ZAO and Philaqua Aufbereitungstechnik
GmbH
10.5 September 2000 Joint Venture Agreement with Fushun Coal Mining Bureau
10.6 October 25, 2000 Employment Agreement with Professor Heinrich W. Holter
10.7 October 25, 2000 Employment Agreement with Dirk Brinkmann
21.1 Subsidiaries and Affiliates of the Registrant
27.1 Financial Data Schedule
*Filed previously
Item 2. Description of Exhibits
See Part III, Item 1, "Index to Exhibits."
46
<PAGE>
SIGNATURES
----------
In accordance with Section 12 of the Securities and Exchange Act of
1934, the registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly organized.
HOLTER TECHNOLOGIES HOLDING, AG
(Registrant)
Date: December 29, 2000 By: /s/ Prof. Dr. Dr. Heinrich W. Holter
------------------------------------
Prof. Dr. Dr. Heinrich W. Holter
President and Chairman of the Board of
Directors
47
