U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB/A
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
LITEWAVE CORP.
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(Name of Small Business Issuer in its Charter)
Nevada, U.S.A. 95-4763671
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
3300 NE 191st Street, Suite 1015, Aventura, Florida 33180
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (305) 805-0344
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered: Each Class is to be Registered:
None NASD Bulletin Board
Securities to be registered under Section 12(g) of the Act:
Common Stock
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(Title of Class)
<PAGE>
TABLE OF CONTENTS
Cautionary Note: Forward Looking Statements
Glossary
Part I
Item 1. Description of Business.
Risk Factors
Item 2. Management's Discussion and Analysis or Plan of Operation.
Item 3. Description of Property.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Item 6. Executive Compensation.
Item 7. Certain Relationships and Related Transactions.
Item 8. Description of Securities.
Part II
Item 1. Market for Common Equity and Related Shareholder Matters.
Item 2. Legal Proceedings
Item 3 Changes In And Disagreements With Accountants On Accounting
And Financial Disclosure.
Item 4. Recent Sales of Unregistered Securities.
Item 5. Indemnification of Directors and Officers.
Part F/S
Part III
Glossary of Terms
Index to Exhibits
Exhibits
Signature Page
<PAGE>
CAUTIONARY NOTICE
FORWARD LOOKING STATEMENTS
The Registrant cautions readers that certain important factors may affect
the Registrant's actual results and could cause such results to differ
materially from any forward-looking statements that may be deemed to have
been made in this document or that are otherwise made by or on behalf of
the Registrant. For this purpose, any statements contained in the Document
that are not statements of historical fact may be deemed to be forward-
looking statements. This Registration contains statements that constitute
"forward-looking statements." These forward-looking statements can be
identified by the use of predictive, future-tense or forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates,"
"plans," "may," "will," or similar terms. These statements appear in a
number of places in this Registration and include statements regarding the
intent, belief or current expectations of the Registrant, its directors or
its officers with respect to, among other things: (i) trends affecting the
Registrant's financial condition or results of operations for its limited
history; (ii) the Registrant's business and growth strategies; (iii) the
Internet and telecommunications commerce; and, (iv) the Registrant's
financing plans. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. Factors that could adversely affect actual results and
performance include, among others, the Registrant's limited operating
history, dependence on continued growth in the use of the Internet, the
Registrant's inexperience with the Internet, potential fluctuations in
quarterly operating results and expenses, security risks of transmitting
information over the Internet, government regulation, technological change
and competition.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" identifies important additional
factors that could materially adversely affect actual results and
performance. All of these factors should be carefully considered and
evaluated. Any forward-looking statements in this report should be
evaluated in light of these important risk factors. The Registrant is also
subject to other risks detailed herein or set forth from time to time in
the Registrant's filings with the Securities and Exchange Commission.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Registrant is a development stage telecommunications company with
headquarters in Aventura, Florida, and a satellite office in Seattle.
The primary business of the Registrant is the development and delivery
of telecom network solutions, products and services to the global
marketplace, and the expansion of worldwide digital, voice, data and
image delivery services via ultra modern fiber optic, internet circuit,
satellite and Public Switched Telephone Network (PSTN) systems. The
network deployment will utilize gateways, digital signal processors, and
routers coupled to trans-oceanic fiber optics networks with both
originating and terminating facilities installed in North America,
Western Europe, Asia, Russia, China, Indonesia, and other regions.
The Registrant expects to develop and expand through strategic
partnerships and joint venture agreements with government telephone
companies or Post, Telegraph & Telecommunications (PTT) companies.
Several PTT's have expressed interest or agreed to work with the
Registrant to develop telecom programs with the Registrant. These
include Italy, Intelcom located in San Marino; Germany: Russia with
new joint venture partners at Crosna: the Ukraine; Malta with
new partners at M. Demajo Group; Lebanon PTT; and Poland.
The Registrant will deploy a telecommunications network by setting up
circuit switches, voice-over-the-Internet protocol (VoIP) servers, and
direct circuit connections, all of which provide international long
distance services and offer a suite of enhanced services to its customer
base. Through partnering arrangements with local exchange operators and
carriers, the Registrant will accelerate deployment of its services in
its initial targeted countries and thereafter to several other countries
where relationships exist.
The Registrant was incorporated in the State of Nevada on June 30, 1989
under the name "Homefront Safety Services of Nevada Inc." On April 26,
1999, by majority vote of the Shareholders and the Board of Directors,
the Registrant's name was changed to "LITEWAVE CORP." The Registrant's
principal executive office is located at 3300 NE 191 St., Suite 1015,
Aventura, FL 33180.
On October 20, 1998, pursuant to the Information Statement filed with
the National Association of Security Dealers, Regulations Inc., by the
Registrant under provisions of Section 15(c)2-11 (a)5 of the Securities
and Exchange Act of 1934 as amended, the Registrant received permission
for quotation on the National Association of Security Dealers Bulletin
Board (NASD OTC-BB). Subsequently, the Registrant's common shares were
eligible to be quoted on the NASD Bulletin Board on October 20, 1998.
On April 19, 1999, the Registrant entered into a Technology Purchase and
Assignment Agreement to acquire the assets of and the world-wide rights
to the technology of International Communications and Equipment, Inc.
(ICE) a telecom connectivity, products, and services company, based in
Kirkland, Washington. The ICE technology covers intellectual property,
contacts, strategic partnerships and capital equipment configured to
deploy a telecommunications network by setting up circuit switches,
satellite connectivity, Voice-over-the-Internet Protocol servers, direct
circuit connections, to provide international long distance services and
offer additional enhanced services to its customer base. Consideration
for the acquisition of ICE assets consisted of 10,300,000 common shares of
the Registrant's restricted capital stock.
The execution of the agreement with ICE was completed in conjunction
with the name change to LiteWave Corp. Mr. Ken Martin, founder and Chief
Executive Officer of ICE, was appointed Chief Executive Officer and
Director of the Registrant.
Business Approach
The Registrant is an emerging international telecommunications company
focused primarily on international connectivity solutions and the
international long distance market. The Registrant plans to offer
highly reliable, low-cost switched and Internet driven services on a
wholesale and retail basis. The Registrant is in the process of
formulating joint venture agreements with telephone service entities in
a targeted group of 25 countries through a flexible network comprised of
various foreign termination relationships, international servers, leased
and owned transmission facilities and resale arrangements with long
distance providers. The Registrant will provide voice-over-the-Internet
services in countries where it is appropriate. The Registrant's network
will employ state-of-the-art digital switching and transmission
technologies and will be supported by comprehensive monitoring and
technical support personnel. The Registrant's switching facilities will
be staffed 24 hours per day. The Registrant intends to grow its
revenues rapidly by capitalizing on the deregulation of international
telecommunications markets, combining sophisticated telecom and
information systems with flexible routing, and by applying management's
industry expertise.
The Registrant will market its services together with its strategic
partners to large global carriers and corporations seeking lower rates
and high-quality overflow capacity. Additionally the Registrant will
market services to small and medium-sized long distance companies that
do not have the critical mass to invest in their own international
transmission facilities or to obtain volume discounts from the larger
facilities-based carriers. The Registrant will be focused on building
customer bases in many countries through its acquisitions and
partnerships, particularly in Europe, and will open offices in Potsdam
(Berlin) and Miami, Florida.
Sales and Marketing
Because of the unique joint venture recently signed in Russia, the
Registrant will not initially require any sales or marketing staff.
This represents a significant cost saving to the Registrant. As the
Registrant extends it's service to include inbound minutes into Russia
from other points in the world, the Registrant then plans to market its
services on a wholesale basis to other carriers. This will be
accomplished through an experienced direct sales force and
marketing/account management team who depend upon the long-term industry
relationships of the Registrant's senior management. The Registrant
will employ direct sales and marketing employees and telemarketing
representatives and use its direct sales forces to target larger
commercial customers, concentrating at first on potential customers and
selected European cities where competition for commercial customers is
less mature.
In the wholesale market, the Registrant's sales and marketing employees
will utilize the extensive customer-specific usage reports and network
utilization data that will be generated by the Registrant's
sophisticated information systems to effectively negotiate agreements
with customers. The Registrant believes that it will be able to compete
more effectively as a result of its plans to provide greater
personalized service and ongoing senior management-level attention given
to each customer.
The Registrant's marketing efforts will include but will not be limited
to: advertising in both domestic and foreign print, media and trade
publications; demonstration stations at trade fairs; and the
distribution of multilingual literature outlining the Registrant's
services. The Registrant has targeted certain niche markets around the
world such as ethnic market segments; small-to-medium-sized businesses
and trade organizations that are involved in international trade.
How International long Distance Switching Works
International switched long distance services are provided through
switching and transmission facilities that automatically route calls to
circuits based upon a predetermined set of routing criteria. The call
typically originates on a local exchange carrier's network and is
transported to the caller's domestic long distance carrier. The
domestic long distance provider then carries the call to an
international switch owned by the Registrant. At this point, an
international long distance provider picks up the call and sends it
either directly or through one or more additional long distance
providers to a corresponding switch owned and operated in the
destination country by the Registrant. Once the call reaches the
country of destination it is routed to the party being called by that
country's domestic telephone network.
International long distance companies can be categorized by their
ownership, use of switches, and their transmission facilities. The
largest global carriers, such as British Telecom, Deutsche Telecom,
AT&T, MCI and Sprint primarily use owned transmission facilities and
generally use other long distance providers to carry their overflow
traffic. Since only very large carriers have transmission facilities
that cover the more than 200 countries to which major long distance
providers generally offer service, a significantly larger group of long
distance providers own and operate their own switches. However,
they???? rely solely on resale agreements with other long distance
carriers to terminate their traffic, or use a combination of resale
agreements and owned facilities to terminate their traffic.
Voice-over-the-Internet Protocol (VoIP)
Circuit switching technology uses traditional telephone networks
inefficiently when it opens and maintains a dedicated line for every
call, regardless of the density of the information being transmitted.
The result is wasted bandwidth as the end-to-end connection remains in
place even during those moments when no information is being
transmitted.
Newer Internet Protocol "packet" technology breaks the information down
into pieces, places them into electronic packets and then fills the
"pipe" with these packets of information. The packets not only fill the
pipe but are also directed along the way by routers that read the
address information and direct each packet along the fastest route to
the destination, at which point all of the pieces of information are
reassembled, ready for receipt by fax, computer, or listener. All of
this takes place in a fraction of a second.
In order to understand the difference between circuit switching and
packet switching, it helps to visualize a highway between two cities.
Traditional telephone technology would dedicate an entire lane of the
highway to one single car for the duration of the trip. IP technology
would fill the entire lane with cars, thus making more efficient use of
the transmission path.
Packet Switching Versus Circuit Switching
There are two fundamental ways to switch traffic in a network:
connection-oriented and connectionless. Connection-oriented
technologies, of which the circuit-switched public telephone network is
the best example, have a setup process at the beginning of a telephone
call (session) to determine the best way to handle the session. Once a
call link is established, connection information is maintained
throughout the duration of the call.
By contrast, connectionless technologies, are exemplified by the
Internet. Both the endpoint and the network nodes send self-contained
packets of data by the most efficient route available at the time of
processing. There is no notion of a "session" or "call". No
information is kept from packet to packet. Since connectionless data
transfer is simpler, it relies on end stations to perform many necessary
functions, and as noted previously, "packets" of additional information
from many other sources can be inserted between the packets for a
quicker, more efficient and less costly method of transmission.
There are various technical methods to establish direct circuit
connections to a foreign country. The joint venture with Crosna in
Russia (See "Agreements", following.) provides experience and methods to
install direct circuit connections. The Registrant will partner with
local in country entities to set up the connections, assist in financing
and provide all installation and support services for turn-key
solutions.
Direct circuit installations between certain countries provide alternate
access for telephone traffic at lower rates. Market analysis is
performed for each country to determine the economic viability of
proposed routes. Circuits have already started in Russia through the
joint venture with Crosna.
Information and Billing Services
The Registrant's operations will employ advanced information systems
including all data collection and call data storage linked to a
proprietary reporting system. The Registrant will also maintain
comprehensive billing systems for rapid and accurate customer billing.
The Registrant's switching facilities will be linked to reporting
systems which provide reports on a real-time basis to determine the most
cost-effective alternatives for customer usage and manage gross margins
by route. The Registrant's systems also enable it to assure accurate
and timely billing and to reduce routing errors.
While the Registrant bears ultimate responsibility for collections, its
agents' compensation is based on actual revenue received, thus providing
the agent with great incentive to assist in the collection process. As
the Registrant will monitor collection closely, it will also be able to
implement additional procedures quickly and as needed in order to
control receivables. The agents may assist the Registrant in
establishing local banking relationships and providing local information
regarding local legal, political, and economic conditions, changing
situations and pending changes.
Agreements
On June 10, 1999, the Registrant announced a Letter of Intent, dated May
27, 1999, from ZAO NPO Crosna ("Crosna") of the Russian Federation. The
Agreement covers the installation and operation of Voice over the
Internet Protocol technology for carrying long distance telephone
traffic to and from the Russian Federation. Mr. Victor Vodemarov,
Director of the Registrant's Russian operations is responsible for
coordinating the installation of specialized VoIP switches and gateways
in the Russian Post Telephone and Telegraph system. This initial intent
resulted in the signing of the Protocol of Intentions Agreement of June
22, 1999, covering organization of international and inter-city VoIP
communications channels in the territory of Russia and CIS. On
September 10, 1999, an agreement entitled "Principles for Setting up the
IP Telephone Network and Providing IP Telephone Services in the
Territory of the Russian Federation" was signed in Moscow, establishing
a 50/50 joint venture between Crosna and the Registrant. The Agreement
establishes the set up of IP telephone networks in a number of regions
of the Russian Federation utilizing the Registrant's provided
management, equipment and technology, and Crosna's premises, clients and
its license (No. 12690) issued under the Law of the Russian Federation
to provide telematic services.
The Registrant has received a Letter of Interest on May 20, 1999,
from the firm P.P.H.U. Andromeda of Warsaw, Poland for the installation
and operation of Voice-over-the-Internet Protocol technology for long
distance telephone traffic to and from Poland utilizing their
telecommunications license.
On June 17, 1999, the Registrant entered into a Letter of Intent to form
a joint venture with the M. Demajo Group of Companies of Valletta, Malta,
in order to provide VoIP network and services, pre-paid calling cards,
Internet Service Provider access and other telephony services for
Lebanon, Syria, Jordan, Libya, Iraq, Iran, Turkey, Cyprus, Egypt, and
potentially several other Middle Eastern and African countries where the
Demajo Group has relationships. Malta will serve as the base for these
operations. The joint venture will be the core for international VoIP
and work with Maltacom to provide bandwidth to carry traffic to and from
other Mediterranean and North African countries and to provide gateway
installation, maintenance, and network operation activities.
The Registrant's VoIP network is expected to start in Russia, then to
Germany, Malta and Poland where possible bilateral agreements and
traffic commitments have already been discussed. The Registrant will
deploy a standard model of its VoIP network in a limited number of
countries initially, but will be able to rapidly duplicate the service
in other countries.
The Registrant has established a vendor/supplier relationship with
Clarent Corporation, a leading manufacturer of VoIP switch/servers that
have proven very effective in the industry, in which Clarent will supply
VoIP equipment to the Registrant. On October 1, 1999, Clarent shipped
the first equipment to the Registrant. This company has physical
equipment installations in a variety of international markets which have
been operating for the past several years. According to Cape Saffron,
a UK-based research group focused on the international voice market in
a report published in 1999, entitled "Global IP Voice/ Fax Market
1999", more minutes travel across Clarent-enabled networks worldwide
than those of any other equipment supplier.
Additionally, there are several other equipment manufacturers which are
optional providers of Internet Protocol telephony such as Cisco, Lucent,
Intertel, Netspeak, Siemens, Oki, and Rockwell. The Registrant will
deploy VoIP solutions with dedicated circuits from foreign partnering
PTTs to create unique, low cost voice and data connections between
numerous countries. By establishing dedicated leased circuits for the
VoIP transmission from gateway to gateway, the Registrant's networks
will avoid the problems sometimes associated with traditional VoIP
installations that lack sufficient quality of service or experience
signal delay (latency) problems and signal loss.
In addition to long distance voice traffic, Internet specific features
such as "unified messaging" can add to the Registrant's revenue base.
These features include voice mail, e-mail, fax mail and paging, which
can all be combined to provide efficient services to customers on
traditional wire line devices as well as wireless devices.
Other services can include: voice mail that can be transferred between
locations for customers who travel; mass faxing that can be conducted
through the Internet at low cost, making it a viable revenue source for
the Registrant; e-mail-to-voice conversion (text-to-speech) that allows
non-computer users to access electronic mail.
The Registrant's management possesses substantial knowledge in global
business. Strategic relationships with telephone and telegraph
companies in a number of countries provide the Registrant with the
ability to facilitate the negotiation, importation and deployment of
equipment. The Registrant is planning to establish its technical
operation and European headquarters in Potsdam (Berlin), Germany to
facilitate the development of working relationships and management of
network control command centers. By leveraging management's
relationships and knowledge of global connectivity solutions, the
Registrant anticipates capturing significant market share by
reacting efficiently in regions where deregulation is occurring.
Regulatory Developments
In the past two years, three significant regulatory changes have
substantially improved the telecom marketplace for businesses and their
customers worldwide.
1. On January 1, 1998, the European Union, accounting for a third of
the world's telephone lines, decreed an open telecommunications market.
This has transformed one of the world's most protected markets into one
of the most open. This is a signal that governments are beginning to
recognize and accept the link between competitive telecommunications and
economic prosperity based on widely-accepted forecasts of cost
reduction, service improvement and increased competition.
2. On February 5, 1998, the World Trade Organization's Agreement on
Basic Telecommunication Services came into effect. As a result, 69
countries, accounting for 90% of the world's telecom equipment and
services market, agreed to move from the rigid bilateral agreements of
the former limited structure to embrace national and international
competition. The World Trade Organization agreement on
telecommunications services collectively accounts for more than 90% of
all telecommunications trade in the world and calls for the
liberalization for nearly all markets by the year 2000 or shortly
thereafter. The Registrant is in position to take advantage of
these changes in order to market newly discounted services to current
and new customers in all 69 countries where this deregulation has taken
place.
3. During 1998, the Japanese telecommunications market, which is the
world's second largest became fully open. The Japanese government
passed extensive legislation designed to liberalize the market and was
one of the first to ratify the World Trade Organization protocol on
Basic telecommunications Services.
Deregulation and privatization have allowed new long distance providers
to emerge in foreign markets. By eroding the traditional monopolies
previously held by single national providers, many of which were
partially or wholly government owned, deregulation presents an
opportunity for businesses to negotiate more favorable agreements with
post telephone and telegraph operators and emerging foreign providers.
In addition, deregulation in certain foreign countries will enable the
Registrant to establish local switching and transmission facilities,
thus allowing the Registrant to terminate traffic and begin carrying
international long distance traffic originating in those countries. The
Registrant believes that the growth of traffic originating in several
markets worldwide will be significant due to relative economic growth
rates and increasing access to telecommunications facilities in emerging
markets.
The Registrant is in the process of acquiring telecom reseller
operations in order to establish alliances, partnerships and joint
ventures with telecom facilities-based firms and carriers on every
continent. The Registrant has the ability to offer leadership models,
marketing support services, and financial support to its acquired
telecom resellers and service its allied facilities-based operating
firms and carriers.
The Development of the U.S. and Overseas Markets
The international long distance industry consists of all transmissions
of voice and data that originate in one country and terminate in
another. This industry is undergoing a period of fundamental change
which has resulted in substantial growth in international traffic.
According to industry sources, world-wide gross revenues for providers
of international telephone service exceeded $80 billion in 1998 and the
volume of international traffic on public telephone networks is expected
to compound at an annual growth rate of approximately 13 to 17% from
1999 through the year 2003.
Additional Marketing Opportunities
AUSTRALIA
Transcom: as a carrier in Australia, Transcom is interested in a joint
venture or to purchase services from direct circuit(s) between Australia
and China. The Registrant has developed a financial profile for these
circuits, which highlights the profitability of the connections.
GERMANY
It is the Registrant's intention is to make Berlin its European
headquarters. With the help of our Joint Venture contacts in Potsdam,
the Registrant will have access to Government funding in the form of
grants and low interest loans. One proposed partnership is with Lietzmann
and Partner, an association for consulting and management. Mr.
Siegfried Lietzmann is the Managing Director along with Hans-Joachim
Brockmann. Lietzmann & Associates is in the process of creating a
wholly-owned subsidiary corporation (GmbH), LiteWave GmbH, in Germany
with all relevant business transactions handled by Mr. Lietzmann. Plans
are to secure German grant money for operations and equipment.
ITALY
The Registrant's potential partners in Italy currently have a contract
with San Marino PTT to partition their switch, and the Registrant can
use it for originating and terminating calls.
UNITED KINGDOM
Tyne Tees Telecom: This company will supply GSM Cellular equipment to
the Registrant. The Registrant will then lease or rent the equipment to
businesses and individuals in the United States who travel
internationally. Tyne Tees has retail establishments throughout the UK
that could market the Registrant's services. Tyne Tees is the largest
reseller of Cell Net and GSM equipment in the U.K. (Cell Net is 40%
owned by British Telecom).
Paradise International Calls Ltd., the largest calling center operation
in England, has call centers all over the world, billing at least two
million minutes per month in London alone. Paradise International has
expressed the desire to migrate its call traffic to the Registrant's
switch network.
POLAND
The Registrant has already been offered the opportunity to acquire a
telecom license for all of Poland through its proposed partners in the
country.
FRANCE
The Registrant has had several meetings in Paris with a potential joint
venture partner and French Telecom. The Registrant has the opportunity
to carry 20,000,000 minutes per month through VoIP from France.
RUSSIA
The Registrant currently has a joint venture Agreement with government-
licensed Crosna to create a VoIP platform in Moscow.
UKRAINE
The Registrant has had discussions about a possible installation in Kiev
which has been received with interest.
CHINA
A meeting with Chinese Officials including a delegation from the
Ministry of Commerce has led to an invitation to the Registrant to visit
the Minister of Telecommunications in Beijing to discuss VoIP
operations.
LEBANON
It is the Registrant's intention to make Lebanon its base of operations
in the Middle East. The Registrant has made inroads with the PTT and
anticipates signing a contract in the near future.
JORDAN
The Registrant has been invited to visit Jordan by Government-level
contacts there.
SYRIA
A dialogue has been established at the Government level. One meeting has
occurred to date in Lebanon.
MALTA
After numerous visits to Malta, strong affiliations have been
established and the Registrant is relying on its joint venture associates,
The Demajo Group and Maltacom (PTT) to help the Registrant establish
footholds throughout the region.
EGYPT, KUWAIT, SAUDl ARABIA, CYPRUS, GREECE, TURKEY, SUDAN, SOUTH
AFRICA, KENYA, ZAMBIA.
Tussonia Ltd. was founded by Willi F. Kienzie a former lobbyist for the
International Olympic Committee. Mr. Kienzie represents companies such
as Ericsson and Daimler Benz in those countries and has expressed
willingness to work with the Registrant to introduce the Registrant into
those countries. He has secured invitations for the Registrant to
Cyprus and Egypt.
STRATEGIC ALLIANCES
Management plans to utilize its many relationships and strategic
alliances that have already been formed. Additionally, the Registrant
will continue to seek other partnerships that have global market reach
and significant compatibility with the Registrant's business goals.
Many of the Registrant's selected European associates have worked
together extensively on a variety of international endeavors over the
past two decades. Several business ventures formed are
telecommunications oriented. An overview of these relationships is
highlighted below:
1. Mr. J. Brian Walsh (United Kingdom) Mr. Walsh has been involved in
the European oil and gas industry for over 25 years where he developed
relationships with large multinational companies throughout Europe. Mr.
Walsh will lead the Registrant's sales effort in the European market
through a network of representatives which he has already established.
His relationships with large companies will provide sales and revenues
as services become available.
2. Herr Cuno von Buchwaldt (Germany) Herr von Buchwaldt has been
involved in setting up joint ventures in France, Germany, the Czech
Republic and China. He approves capital investments for Middle East
funds in excess of US$100 million. Additionally, Herr von Buchwaldt has
interests in three telecom companies in Germany that bill approximately
US$1 million annually. These companies are currently waiting for the
Registrant's switch network to be established and are anticipated to
route their international traffic to the Registrant.
3. Mr. Harry Rolney (Turkey) With his involvement in many projects,
including construction, in Turkey, Mr. Rolney has indicated his
willingness to form a partnership with the Registrant as he has letters
of intent for the installation of switches in Turkey. Today, five
million Turkish nationals live in Germany and typically pay US$1.80 per
minute to call Turkey. Using the Registrant's VoIP network, new
competitive rates could be offered to this niche market at extremely
profitable margins for the Registrant.
4. Mr. William Hartuno (Germany and Singapore) Mr. Hartuno is an
international trader and restaurateur residing in Germany and Singapore.
He has diplomatic contacts in China and is also networked with 3,000
Asian restaurants located throughout Europe. Prepaid calling cards
running through the Registrant's telecommunications network are planned
to be distributed through these locations. Mr. Hartuno also has close
affiliations with certain directors of the Bank of China, which has
expressed interest in participating in the Registrant's prepaid calling
card programs.
5. Mr. Franco Rodizza (Italy) Mr. Rodizza is a senior member of
Siemens Nixorf in Italy. He has considerable experience in Siemens
systems and in the computer/telephony field. Mr. Rodizza has offered
his assistance by providing relationships to key contacts in and
throughout Europe, including Italy, Georgia and Azerbaijan.
6. Mr. Giulio Lucci and Mr. Claudio Giaoacchini (the Vatican) These
gentlemen are already the Registrant's preferred partners in Italy and
have provided their high level contacts in the Vatican, where the
Registrant has proposals to provide telecommunications services.
Additionally, they have important contacts in several foreign embassies
and numerous multinational corporations in Italy.
7. Mr. John Darmanian (Malta and North Africa) Mr. Darmanian is
Director of Joseph Cachia & Sons Ltd., one of the largest and most
prestigious trading and investment companies in Malta and North Africa,
which also owns 70% of the Hilton Hotel in Malta. He is a former
biochemist and responsible for building one of the largest saline
treatment plants in the world. He has political ties and business
activities throughout Northern Africa, the Mediterranean region and
Europe. Through Mr. Darmanian, telecom agreements with MaltaCom are
near completion and negotiations for other telecom programs are under
way, including commitments for direct circuits and VoIP switch
installations.
8. Mr. Muhammad Ghetti (Switzerland) Mr. Ghetti is a partner in
StatCom, a fiber optic cable manufacturing company in Switzerland.
Discussions are expected to lead to a joint venture partnership to
include switch installation, and the roll out of other services such as
debit cards.
9. Mr. Jurek Marty (Switzerland) Mr. Marty is President of Invest
Progress S.A., based in Zug and Zurich. He has extensive business
interests in Switzerland, and is currently employed as the secretary for
the IPRA in Geneva. The Registrant and Mr. Marty have been discussing
his interest to be a business representative for the Registrant.
10. Dr. J. Goring (Ireland) Dr. Goring has been working with the
Registrant to develop a network marketing business in Ireland using
telecommunications products provided by the Registrant. Currently Dr.
Goring operates as a financial consultant for Statcom.
11. Mr. Harry Strobel (Poland) Mr. Strobel is a member of Invest
Progress and has extensive contacts with former USSR countries,
particularly those around and adjacent to the Caspian Sea. Mr. Strobel
has expressed the desire to market the Registrant's telecom services in
Poland and has also discussed installing a switch in Georgia.
12. Mr. Nicolas Vassiliadis (Greece and Russia) Mr. Vassiliadis is
Chairman of Delta Finance Group Ltd. in London. He specializes in
private placement programs for government projects typically ranging
from $50 million to $2.5 billion dollars. Mr. Vassiliadis has excellent
global contacts particularly in Greece and Russia and can assist the
Registrant with facilitating international banking and capital fund
raising for government telecom projects.
13. Mr. Victor Voldamarov (Russia) As Director of Green Oak, a Russian
Import /Export company, Mr. Voldamarov has extensive experience in
negotiations with the government, banks and major corporations in
Russia. He is currently working with Russian telecom companies on
behalf of the Registrant to develop a VoIP-based telecom joint venture.
14. Mr. Tom O'Niell Mr. O'Niell is Chairman of the U.K. Drilling
Contractors Association in Aberdeen. He has excellent contacts in the
oil and gas industries throughout the world and is interested in
representing the Registrant in its market of telecommunications services
to these industries.
15. Mr. Rafik Bouhlila (North Africa) Mr. Bouhlila has an office in
Geneva and works extensively throughout the world representing North
African projects. He has diplomatic and royal connections in North
Africa and relations with the Minister of Telecommunications in
Morocco. Mr. Bouhlila and the Registrant have been working together
strategically to develop telecom projects in several countries including
Malta and Tunisia. He also brings access to sources of foreign
investment funds for these projects.
RISK FACTORS
The Registrant does not have any significant operating history upon
which to evaluate its future performance. As there is no lengthy
history of operations, investors will be unable to assess future
operating performance or future financial results or conditions by
comparing these criteria against their past or present equivalents. No
revenues have been received as yet and no services have actually been
delivered to any customers.
The Registrant expects to incur losses on both a quarterly and an annual
basis for the foreseeable future and cannot assure investors of ever
achieving profitability.
Because Voice-over-the-Internet Protocol is a rapidly developing
technology, the Registrant cannot assure investors that future developments
will not render its technology outdated or obsolete, thus creating the need
for high or prohibitive expenditures to remain competitive.
The Registrant's ability to generate revenue will depend upon a number
of factors, including:
(A) pricing of VoIP services delivered by competing companies;
(B) the amount of traffic on its proposed sites;
(C) the ability of the Registrant to demonstrate user demographic
characteristics that are attractive to VoIP service providers;
(D) the establishment of desirable business governmental, and technical
relationships.
Acceptance of VoIP services will also depend to a large extent on the
level of Internet use by consumers and upon growth in the commercial use
of the Internet.
Because global commerce and the on-line exchange of information is new
and evolving, we are unable to predict with any assurance whether the
Internet will prove to be a viable commercial marketplace in the long
term. Prospective revenues would be adversely affected if widespread
commercial use of the Internet does not develop or is substantially
delayed, especially in under-developed regions.
Dependence on Continued Growth and Viability of the Internet.
The Company's future success is substantially dependent upon continued
growth in the use of the Internet. The Internet's recent and rapid growth
must continue, and e-Commerce on the Internet must become widespread. None
of these can be assured. The Internet may prove not to be a viable
commercial marketplace. If use of the Internet does not continue to grow,
the Company's business, results of operations and financial condition
might be adversely affected, only because the continued requirement for
capital investment by large telephone carriers might be diminished, thereby
decreasing the availability of data communications capacity. Additionally,
to the extent that the Internet continues to experience significant growth
in the number of users and the level of use, there can be no assurance that
its technical infrastructure will continue to be able to support the
demands placed upon it. Furthermore, security and authentication concerns
with respect to transmission over the Internet of confidential information,
such as credit card numbers, may remain.
If use of the Internet and other online services does not continue to grow
or grows more slowly than expected, if the infrastructure for the Internet
and other online services does not effectively support growth that may
occur, or if the Internet and other online services do not become a viable
commercial marketplace, the Company's business, results of operations and
financial condition could be adversely affected.
Certain of the Company's competitors with other revenue sources may be able
to devote greater resources to marketing and promotional campaigns, adopt
more aggressive pricing policies and devote substantially more resources to
systems development than the Company or may try to attract traffic by
offering ancillary services for free. Increased competition may result in
reduced operating margins, loss of market share and diminished value in the
Company's brand recognition. There can be no assurance that the Company
will be able to compete successfully against current and future
competitors. Further, as a strategic response to changes in the
competitive environment, the Company may, from time to time, make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on its business, results of operations and
financial condition. New technologies and the expansion of existing
technologies may increase the competitive pressures on the Company by
enabling the Company's competitors to offer a lower-cost service.
Internet infrastructure failures or disruptions caused by increased
traffic, technical difficulties, vandalism or acts of God, among other
factors, may impede the Registrant's ability to provide VoIP services.
Repeated failures or disruptions may result in user dissatisfaction with
the Internet as a transmission medium, which may lead to a diminution of
the Registrant's customer base and a resultant impairment of the
Registrant's ability to generate revenues.
The Registrant will have to rely on local and long-distance
telecommunications companies to provide data communications capacity.
These providers may experience service disruptions or have limited
capacity, which could disrupt the provision of VoIP services.
The Registrant may not be able to replace or supplement these services
on a timely basis, if at all. In addition, because the Registrant must
rely on third-party telecommunications services providers for connection
to the Internet, the Registrant may not be able to control decisions
regarding the availability of, or our access to, services at any given
time.
The Registrant's success will depend to a large degree upon the efforts
of its management, technical and marketing personnel. The Registrant's
success will also depend on its ability to attract and retain additional
qualified management, technical and marketing personnel. Hiring
employees with the combination of skills and attributes required to
carry out the strategy is extremely competitive.
The Registrant does not have "key person" life insurance policies upon
any of its officers or other personnel. The loss of the services of key
personnel together with an inability to attract qualified replacements,
could adversely affect prospective growth.
The Registrant's intended establishment of operations in foreign
countries will entail significant expenditures and some knowledge of
each country's national and local laws, including tax and labor laws.
Furthermore, there are certain risks inherent in conducting business
internationally, including, among others, regulatory requirements,
difficulties in staffing and managing foreign operations, longer payment
cycles, different accounting practices, currency exchange rate
fluctuations, tariffs and other trade barriers, political instability
and potentially adverse tax consequences, any of which could adversely
affect growth opportunities.
The Registrant relies upon a combination of confidentiality and
non disclosure agreements and contractual provisions with its employees
and with third parties to establish and protect proprietary rights. The
Registrant has applied for federal trademark protection for "LiteWave
Corp." and intends to apply for federal trademark protection for all
domain names used. Legal standards relating to the validity,
enforceability and scope of protection of certain rights in Internet
related industries are uncertain and still evolving. The Registrant is
unable to assure investors as to the future viability or value of any of
its rights or those of other companies within the industry. The
Registrant is also unable to assure investors that the steps taken to
protect its rights will be adequate. Furthermore, the Registrant can
have no assurance that its proposed business activities will not
infringe upon the rights of others, or that other parties will not
assert infringement claims against the Registrant.
The Registrant will require substantial additional financing in order to
expand its network offerings beyond the initial venues, and to become a
meaningful competitor in the industry. There is no assurance that such
financing will be available. Moreover, if additional capital is raised
through borrowing or other debt financing, this would incur interest
expense.
Although there are currently few laws and regulations directly
applicable to the Internet and VoIP services, it is likely that new laws
and regulations will be adopted in the United States and elsewhere
covering issues such as privacy, pricing, taxes and characteristics and
quality of Internet services. The adoption of restrictive laws and
regulations could slow Internet growth or its use as a viable VoIP
commercial medium.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS
Plan of Operation.
Based upon the low monthly overhead associated with current operations,
the Registrant believes that it has sufficient cash on hand to meet its
anticipated needs for working capital, capital expenditures and business
expansion for the next six months of operations, before any revenues are
obtained. Should the business expand, and if the needs of the clientele
require further equipment support, the Registrant will need to raise
additional capital. Ian Lambert, the Secretary and a director of the
Registrant, has committed to make available and provide interest-free
(if converted into common stock of the Registrant) advances of the
Registrant's operating costs, until such time as the Registrant can
generate sufficient revenues and/or an alternate source of funding is
secured to meet operational requirements and repay the advances.
The Registrant has stated its intention to conduct a private placement of
up to one million common shares at a price of $2.00 per share, announced
August 18, 1999. As of this date, no subscription funds have been
received. The common shares to be issued by way of this private placement,
under Regulation D, Rule 506 and/or Regulation S, would be restricted
securities.
The Registrant's auditor has issued its opinion that the Registrant has
not established revenues sufficient to cover its operating costs and
allow it to continue as a going concern. In order to cover this
contingency, the Registrant has secured the previously-described
commitment from its Secretary and Director, Mr. Ian Lambert, that he
and/or his business associates will advance sufficient funds, in the
interim, so as to enable the Registrant's operations during such period.
Notwithstanding the foregoing, the auditor advises as at December 31,
1998 that due to no established source of revenue, there is substantial
doubt regarding the Registrant's ability to continue as a going concern,
and as such, the Registrant is substantially dependent upon its ability
to generate sufficient revenues to cover its operating costs.
If the Registrant needs to raise additional funds in order to fund
expansion, develop new or enhanced services or products, respond to
competitive pressures or acquire complementary products, businesses or
technologies, any additional funds raised through the issuance of equity
or convertible debt securities will reduce the percentage ownership of
the stockholders of the Registrant. Stockholders may also experience
additional dilution. Such securities may have rights, preferences or
privileges senior to those of the Registrant's Common Stock. The
Registrant does not currently have any contractual restrictions on its
ability to incur debt and, accordingly, the Registrant could incur
significant amounts of indebtedness to finance its operations. Any such
indebtedness could contain covenants which would restrict the
Registrant's operations. There can be no assurance that additional
financing will be available on terms favorable to the Registrant, or at
all. If adequate funds are not available or are not available on
acceptable terms, the Registrant may not be able to continue in
business, or to a lesser extent, not be able to take advantage of
acquisition opportunities, develop or enhance services or products or
respond to competitive pressures.
The Registrant intends to hire additional employees as and only if the
volume of business increases. The Registrant currently expects to
purchase its equipment, and on October 1, 1999, effected its initial
purchase of VoIP equipment from Clarent Corporation totaling $1.224
million in value. This equipment will be paid for from subscription
proceeds of a private placement of common shares at a price of $2.00 per
share.
As of the date of this filing, no sales revenue has been generated by
the Registrant. Accordingly, no table showing percentage breakdown of
revenue by business segment or product line is included.
Capital Requirements & Use of Funds
The Registrant is potentially seeking a total of $50,000,000 over the
next two to three years to execute its business plan in order to become
a significant entity in the global telecommunications industry. Funds
raised will be used to launch the Company's business plan and establish
international offices starting in the USA and Germany.
Corporate uses of funds shall include but not be limited to the
following:
*Purchase of telecommunications equipment including switches, compression
equipment, IP (Internet Protocol) servers, computers and software.
*Build out of switching facilities including property leases, facilities
charges, utilities etc.
*Purchase of office equipment and associated software as necessary to
increase efficiency, improve service, and expand market penetration.
*International market development, research, media trade shows, sales
tools and support toward further development of the Company's
international sales and service network of local strategic relations and
agents offshore.
*Product development, enhancements and implementation to current products
such as international direct connects, Voice over Internet Protocol
(VoIP).
*Pursue telecommunication licensing and the establishment of corporate
entities in strategic foreign countries to allow further exploitation of
those markets. Expenses include license fees, legal costs and corporate
development costs.
Administration and operational expenses
Capital is expected to be raised in stages, as the various strategic
partnerships and joint ventures undergo installation of VoIP equipment.
Initially, the Registrant will install, during the first phase of network
deployment in Russia, approximately $1.25 million worth of VoIP
equipment, primarily purchased from Clarent Corporation during October,
1999. This purchase will be funded from proceeds of a private placement
for a total of $2 million announced August 18, 1999.
The next phase of funding is anticipated to require approximately $2 to
$5 million, depending upon installation schedules negotiated under
planned joint ventures and partnerships.
The following discussion and analysis explains the financial condition
for the period from January 1, 1999 to June 30, 1999, which supplements
the financial statements and related notes for that period and the
audited financial statements for the fiscal year ended December 31,
1998.
Revenues. The Registrant does not anticipate that revenue generating
operations will commence until the fourth quarter of 1999. No revenues
were generated for the period January 1, 1999 to June 30, 1999, nor prior
to that date.
Expenses. For the period from January 1, 1999 to June 30, 1999, the
Registrant incurred expenses of $100,778 for consulting, including
$33,008 in fees to Messrs. Martin and Lambert, $18,259 for investor
relations, consultants fees of $49,511 for management and technical
planning; general and administrative expenses of $42,684, including
$31,302 for travel, $11,382 for office and miscellaneous; marketing and
advertising costs of $30,586, including $24,261 for marketing and
promotion, and $6,325 for newswire service; rent of $13,173; and $14,079
for telephone expenses. Expenses for the previous year ended December
31, 1998 were basically general and administrative, totalling $2,020. No
expenses were incurred in the previous two years. All operating capital
was advanced to the Registrant by Hemisphere & Associates, Ltd.
Net Loss. A net loss of $202,112 was incurred for the period January 1,
1999 to June 30, 1999. The total net loss since incorporation, through
to December 31, 1998, was $3,020.
Liquidity and Capital Resources. On June 30, 1999, Hemisphere and
Associates Ltd., had advanced a total of $213,406 as loans to the
Registrant to cover operating costs. Hemisphere has indicated that these
advances will be converted to restricted common stock as part of the
$2.00 private placement in the fourth quarter of 1999. As of June 30,
1999, working capital was $594, not including the loan payable of $213,406
which is to be repaid out of future financing proceeds. In the third and
fourth quarters, the expenditures are expected to rise dramatically,
particularly for the purchase of capital equipment for VoIP installations
for the Russian joint venture.
Results of Operations
At this time, the Registrant has not commenced revenue generating
operations. As noted previously, the Registrant does not anticipate
commencing operations until the fourth quarter of 1999. The Registrant also
cautions that while it does not foresee any such eventuality, delays in the
anticipated start of operations might occur.
Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise in some systems which use certain dates in
1999 to represent something other than a date. The effects of the Year
2000 Issue may be experienced before, on, or after January 1, 2000, and,
if not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations
including, among others, a temporary inability to process transactions,
send invoices or engage in similar business activities.
In an effort to evaluate and reduce its exposure in this area, the
Registrant intends to make an inquiry of vendors and other business
partners about their progress in identifying and addressing problems that
their computer systems may face in correctly processing date information
related to the Year 2000. Many of these third-party vendors and business
partners are located in foreign countries and do not have immediate access
to technical expertise necessary to audit their Year 2000 compliance. As a
mandatory business practice, the Registrant will seek to obtain statements
from a substantial majority, if not all, of its vendors that they are Year
2000 compliant or are unaffected by "date sensitive" information. With
respect to new equipment being acquired from companies such as Clarent, the
problem should be non-existent, since the vendor has designed this
equipment with the Y2K issue as a mission critical pre-condition. However,
other vendors located in developing countries, may require more lengthy
periods to determine their readiness, such that the Registrant estimates
that its analysis process will not be completed until November 30, 1999.
The Registrant believes that the primary business risks in the event of
Year 2000 problems, utilizing a worst-case scenario, would include, but not
be limited to: loss of potential revenues while certain suppliers of
telephone time correct their problems or are replaced by compliant
suppliers; increased operating costs during this transition; loss of
customers or persons utilizing the Registrant's services; as well as claims
of mismanagement, misrepresentation, or breach of contract, all for failure
to correctly anticipate and deal with the Year 2000 problem. These events
could have an adverse impact, potentially material, on the Registrant's
business, results of operations and overall financial condition. In
anticipation of these risks, the Registrant has formulated a contingency
plan which includes the identification of an alternate trunk carrier to
provide uninterrupted service to the various areas in question, and a back-
up provider of switching equipment in the unlikely event that the Clarent
product is non-compliant. To avoid any potential claims of mismanagement,
misrepresentation and/or breach of contract, the Registrant's management
will keep accurate and complete records of all of its accounts,
transmissions and commitments and dealings with third-party contractors,
customers and service providers.
ITEM 3. DESCRIPTION OF PROPERTY
The Registrant presently maintains its principal place of business at
3300 NE 191 Street, Suite 1015, Aventura, FL 33180, in space rented at the
rate of $1250 per month, on a month-to-month basis. Additionally, the
Registrant sub-lets space located at Suite 404, 110 Cambie Street,
Vancouver, B.C. Canada V6B 2M8. The rent for this space is $1500 per
month, on a month-to-month basis.
Management believes that this space is suitable for the Registrant's
needs in North America for the next twenty-four months. The Registrant
expects to establish an office in Berlin prior to the end of the first
quarter, 2000. Costs are unknown and need to be determined, but are
currently not expected to exceed $3,000 per month.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security ownership of certain beneficial owners. The table below
identifies any individual (including any "group") who is known to the
Registrant to be the beneficial owner of more than five percent of any
class of the small business issuer's voting securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Ken Martin 3,000,000 23.4%
12865 NE 85th, #362
Kirkland, WA 98033
</TABLE>
(b) Security ownership of management. The table below sets forth the
ownership by all directors and nominees, each of the named executive
officers of the Company, and all directors and executive officers of the
registrant as a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Michael Rogers Nil 0%
3300 NE 191 Street, #1015
Aventura, FL 33180
Common Ken Martin 3,000,000 23.4%
12865 NE 85th, #362
Kirkland, WA 98033
Common Canasia Data Corp. 150,000 1.2%
(Ian Lambert)
1220 Eastview Road
North Vancouver, B.C. V7J 1L6
Common All Officers and Directors 3,150,000 24.6%
as a Group (three persons)
(c) Changes in Control. There are no agreements between or among any of
the shareholders which would restrict the issuance of shares in a manner
that would cause any change of control of the Registrant. There are no
voting trusts, pooling arrangements or similar agreements in place between
or among any of the shareholders, nor do the shareholders anticipate the
implementation of such an agreement in the near term.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Directors and Executive Officers:
All directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their
successors are duly elected and qualified, unless they sooner resign or
cease to be directors in accordance with the Articles of Incorporation
of the Registrant. Executive officers are appointed and serve at the
pleasure of the Board of Directors.
Currently, the following persons are directors and executive officers.
Kenneth F. Martin: Chairman, Chief Executive Officer
Date Position Commenced: April 29, 1999
Term of Office: Annual
Address: 12865 NE 85th #362, Kirkland WA 98033
Age: 49
Experience: Chief Executive Officer, International Communications and
Equipment Inc. Negotiating and developing International Telecommunications
relationships with PTT's and International Contacts, 1996 to the
present. KMT Telecommunications Owner, 1986 to 1999. Built local area
networks and acted as consultant for various other businesses.
Michael Jack Rogers: Director
Date Position Commenced: September 16, 1999
Term of Office: Annual
Address: 3300 NE 191st Street, #1015, Aventura, FL 33180
Age: 40
Experience: President, Hemisphere Communications Corp., (Engineer,
construct, and sell VoIP private line services) Sept. 94 to present;
President, Lynx Telecommunications Corp., (authorized sales agent of
business tariffed services for Bell South) Sept. 94 to Feb. 98.
Ian Davidson Lambert: Chief Financial Officer, Secretary, Director
Date Position Commenced: February 26, 1999
Term of Office: Annual
Address: 1220 Eastview Road, North Vancouver, B.C. V7J 1L6
Age: 53
Experience: Owner, Canasia Data Corporation, (management services company)
1983 to present; Director, Covik Development Corp.,(oil & gas exploration)
April 1990 to present; Director, Trade Winds Resources Ltd., (mineral
exploration) April 1990 to present; Director, Dimensions West Energy
Inc., (oil & gas production) April 1990 to present; Director,
Quotemedia.com Inc., (financial internet portal) May, 1994 to present;
Director, Tasty Fries Inc., (vending machine manufacturer) September
1995 to present. All companies are arms length with the Registrant,
except Canasia Data, which is a shareholder of the Registrant.
Involvement in Certain Legal Proceedings: During the past five years, none
of the officers or directors of the Registrant has been subject to a
bankruptcy petition, criminal conviction, or any order, judgment or decree,
not subsequently reversed, suspended or vacated of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities, or found to be guilty of any securities laws
infractions.
(b) There are no significant employees who are not described as
executives above, and there are no family relationships among directors,
executive officers or any nominees to these positions.
ITEM 6. EXECUTIVE COMPENSATION.
Compensation of Officers
The Registrant has the following officers:
Ken Martin - Chairman and Chief Executive Officer.
Michael J. Rogers - proposed President and Chief Operating Officer.
Ian D. Lambert - Chief Financial Officer and Corporate Secretary.
Ken Martin and Ian Lambert provide executive, management and technical
services for the Registrant. During the period ended June 30, 1999,
Messrs. Martin and Lambert were paid salaries in the amount of $24,000
and $9,008, respectively. It is proposed that Mr. Michael Rogers, a
director of the Registrant will be appointed President and Chief
Operating Officer during the fourth quarter of 1999. For further
details of salary arrangements between the Registrant and Messrs.
Martin, Rogers and Lambert, refer to "Termination in Employment, Change
in Responsibilities and Employment Contracts".
Options Granted During the Most Recently Completed Fiscal Year
During the Registrant's most recently completed two quarters to June 30,
1999 and prior fiscal year ended December 31, 1998, there were no
incentive stock options granted to the executive officers.
Termination of Employment, Change in Responsibilities, and Employment
Contracts
The Registrant does not have any compensatory plan or arrangement which
will result from the resignation, retirement or other termination of
employment of an executive officer or from a change of control of the
Registrant or a change in an executive officer's responsibilities
following a change of control.
Pursuant to a proposed agreement yet to be finalized (the "Martin
Executive Employment Agreement") to be effective as at October 1, 1999,
Ken Martin, the Registrant's Chairman, Chief Executive Officer and a
director, will be employed by the Registrant and paid a base monthly salary
of $10,000. The term of the Martin Executive Employment Agreement will be
for one year, subject to earlier termination as provided therein.
Pursuant to a proposed agreement (the "Rogers Executive Employment
Agreement") dated October 1, 1999, it is proposed, subject to further
negotiation, that Michael Rogers will be appointed as the Registrant's
President, Chief Operating Officer as well as a director, to be employed
by the Registrant and paid a monthly salary of at least $10,000. The
term of the Rogers Executive Employment Agreement is proposed to be for
one year, subject to earlier termination as provided therein.
Pursuant to an agreement yet to be finalized (the "Lambert Executive
Employment Agreement") to be effective as at October 1, 1999, Ian
Lambert, the Registrant's Chief Financial Officer, Secretary and a
director, will be employed by the Registrant and paid a monthly salary
of $4,500. The term of the Lambert Executive Employment Agreement will
be for one year, subject to earlier termination as provided therein.
There were no payments made to any officers or directors prior to 1999.
Proposed Compensation.
The aggregate amount that the Registrant anticipates it will pay to its
executive officers during its current fiscal year is $151,632. Each of
the Executive Employment Agreements will contain provisions for
increases to the base salary based on the Registrant achieving positive
cash flow, and upon achieving certain monthly gross income targets. In
addition to the foregoing, the executive officers of the Registrant will
also be entitled to participate in any stock option, profit sharing,
medical reimbursement, insurance or other employee benefit plan as may
be in effect from time to time, subject to the participation standards
and other terms thereof. Reference should be made to further disclosure
under Item 7 - Certain Relationships and Related Transactions.
Compensation of Directors
Other than compensation proposed to be paid to Michael Rogers, Ken
Martin and Ian Lambert as disclosed under the previous sub-heading
"Compensation of Officers", none of the directors of the Registrant have
received any cash compensation, directly or indirectly, for their
services rendered during the most recently completed financial year.
The Registrant has no additional arrangements, standard or otherwise,
pursuant to which directors are compensated by the Registrant for their
services in their capacity as directors, or for committee participation,
involvement in special assignments or for services as consultants or
experts.
Other than as disclosed in Compensation of Officers, none of the
Registrant's directors have received any manner of compensation for
services provided in their capacity as directors during the Registrant's
most recently completed financial quarter ended June 30, 1999.
As at June 30, 1999, being a date within 135 days of this Registration
Statement, the Registrant had no outstanding incentive stock options and
share purchase warrants.
Proposed Annual Compensation Table
Name and Year Salary($) Bonus($) Other Annual
Principal Position Compensation
Ken Martin 1999 120,000 (1) Nil Nil
Chairman, CEO
Michael Rogers 1999 120,000 (2) Nil Nil
President, COO
Ian Lambert 1999 54,000 (3) Nil Nil
Secretary, CFO
Additional proposed terms:
(1) Decreases to a cash payment of $96,000 per annum, with the balance
accrued and payable once the Registrant achieves a positive cash
flow. Increases to $250,000 per annum once Registrant achieves
gross income derived from sales of $5 million monthly.
(2) Increases to $240,000 per annum once the Registrant achieves a
positive cash flow. Increases to $400,000 per annum once
Registrant achieves gross income derived from sales of $5 million
monthly.
(3) Increases to $120,000 per annum once Registrant achieves gross
income derived from sales of $5 million monthly.
Long-Term Compensation
As at June 30, 1999, being a date within 135 days of this Registration
Statement, the Registrant had no Long-Term Compensation plans or
agreements with any of its officers or directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Except as otherwise disclosed herein, no director, senior officer,
principal shareholder or any associate or affiliate, had any material
interest, direct or indirect, in any transaction since incorporation
that had or is anticipated to have a material affect on the business, or
any proposed transaction that would materially affect the business,
except for an interest arising from the ownership of common shares of
the Registrant where the member will receive no extra or special benefit
or advantage not shared on a pro rata basis by all holders of shares in
the Registrant's capital.
Ken Martin, (Chairman) and Ian Lambert (Secretary) are currently the
majority owners and principal management of the business, and they own
collectively 3,150,000 shares or 24.6% of the issued and outstanding
stock. The salary for these executive officers outlined in Compensation
of Officers was not established by arms length negotiations, however it
is believed that the terms of these transactions are no less favorable
to the Registrant than terms expected to be negotiated with unrelated
parties at arms length.
During the preceding year, the Registrant issued 340,000 common shares
under Rule 4(2), at a deemed value of $340 for minimal services rendered,
to former officers and directors of the Registrant.
ITEM 8. DESCRIPTION OF SECURITIES.
The Registrant's only class of stock is Common Stock. Each share has
equal and identical rights to every other share for purposes of
dividends, liquidation preferences, voting rights and any other
attributes of a company's common stock. No voting trusts or any other
arrangement for preferential voting exist among any of the shareholders,
and there are no restrictions in the bylaws or articles of incorporation
precluding issuance of further common stock or requiring any liquidation
preferences, voting rights or dividend priorities with respect to this
class of stock. As of June 30, 1999, there were 2,500,000 shares issued
and outstanding, and an agreement in place effective April 29, 1999 with
the shareholders of ICE to issue a further 10,300,000 shares for
acquisition of ICE assets, for a current total of 12,800,000 shares issued
and outstanding. Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at a meeting of shareholders. The
holders are not entitled to vote their shares cumulatively. Accordingly,
the holders of more than 50% of the issued and outstanding shares of Common
Stock can elect all of the directors of the Registrant.
All shares of common Stock are entitled to participate ratably in
dividends when and as declared by the Registrant's Board of Directors
out of the funds legally available therefor. Any such dividends may be
paid in cash, property or additional shares of Common Stock. The
Registrant has not paid any dividends since its inception and presently
anticipates that no dividends will be declared in the foreseeable
future. Any future dividends will be subject to the discretion of the
Registrant's Board of Directors and will depend upon, among other
things, future earnings, the operating and financial condition of the
Registrant, its capital requirements, general business conditions and
other pertinent facts. Therefore, there can be no assurance that any
dividends on the Common Stock will be paid in the future.
Holders of Common Stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions. In
the event of the dissolution, whether voluntary or involuntary, of the
Registrant each share of Common Stock is entitled to share ratably in
any assets available for distribution to holders of the equity
securities of the Registrant after satisfaction of all liabilities.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED SHAREHOLDER MATTERS.
A. Market Information
The Common Stock of the Registrant's securities were eligible to be
quoted on the National Association of Securities Dealers (NASD) Over-
The-Counter Bulletin Board ("OTC BB"), on October 20, 1998
Trading History
The following table sets for the periods indicated, the high and low
trading prices of the Registrant's common stock and the quarterly volume
as reported for each quarterly period since the Registrant's stock was
eligible to be quoted on October 20, 1998:
1999:
3rd Quarter High Low Volume for Quarter
July 1 - Sep 30 5 1/8 1 1/2 2,027,200
2nd Quarter High Low Volume for Quarter
Apr 1 - Jun 30 9 2 7/16 1, 834,200
1st Quarter High Low Volume for Quarter
Jan 1 - Mar 31 2 3/8 1 392,300
1998:
4th Quarter High Low Volume for Quarter
Oct 1 - Dec 31 1 1/4 11/16 26,200
(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the
Registrant's Common Stock.
(ii) There is currently no common stock of the Registrant which could be
sold under Rule 144 under the Securities Act of 1933 as amended or that
the Registrant has agreed to register for sale by security holders.
(iii) There is currently no common equity that is being or is proposed
to be publicly offered by the Registrant, the offering of which could
have a material effect on the market price of the issuer's common
equity.
B. Holders
As of the date of this filing, the Registrant has 12,800,000 shares
issued and outstanding of which 2,000,000 shares are free trading shares
and 10,800,000 are restricted. There are approximately 100 public
shareholders.
Applicability of Low-Priced Stock Risk Disclosure Requirements.
The securities of the Registrant will be considered low-priced or
"designated" securities under rules promulgated under the Exchange Act.
Penny Stock Regulation Broker-dealer practices in connection with
transactions in "Penny Stocks" are regulated by certain rules adopted by
the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the
NASDAQ system). The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides
information about penny stocks and the risk associated with the penny
stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation
of the broker- dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock
held in the customer's account. In addition, the penny stock rules
generally require that prior to a transaction in a penny stock, the
broker-dealer must make a written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may
have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock
rules. The stock currently has a trading price of less than $5.00 per
share and will not be traded on any national exchanges. Therefore, the
Registrant's stock is subject to the penny stock rules and investors may
find it more difficult to sell their securities, should they desire to
do so.
C. Dividend Policy
The Registrant has not paid any dividends to date. In addition, it does
not anticipate paying dividends in the immediate foreseeable future. The
Board of Directors of the Registrant will review its dividend policy
from time to time to determine the desirability and feasibility of
paying dividends after giving consideration to the Registrant's
earnings, financial condition, capital requirements and such other
factors as the board may deem relevant.
D. Reports to Shareholders
The Registrant intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic
reports as the Registrant may determine to be appropriate or as may be
required by law. Upon the effectiveness of this Registration
Statement, the Registrant will be required to comply with periodic
reporting, proxy solicitation and certain other requirements by the
Securities Exchange Act of 1934.
Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the
Registrant is Alexis Stock Transfer Inc., 42450 Bob Hope Drive, Suite
225, Rancho Mirage, California 92270.
ITEM 2. LEGAL PROCEEDINGS.
To the best knowledge of the officers and directors of the Registrant,
neither the Registrant nor any of its officers or directors are parties
to any material legal proceeding or litigation and such persons know of
no other material legal proceeding or litigation contemplated or
threatened. There are no judgments against the Registrant or its
officers or directors. None of the officers or directors have been
convicted of a felony or misdemeanor relating to securities or
performance in corporate office.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
None, other than the issuance to the shareholders of ICE of 10,300,000
shares for the acquisition of the assets of ICE previously described
herein.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX of the Registrant's Articles of Incorporation provides that
no director of the Registrant shall have personal liability to the
Registrant or to its stockholders for damages for breach of fiduciary
duty as a director or officer in such capacity. This limitation on
personal liability shall not apply to acts or omissions which involve
intentional misconduct, fraud, a knowing violation of law, or unlawful
payment of dividends in violation of Nevada Revised Statute 78.300:
(Liability of Directors for Unlawful Distributions) as follows:
So far as permitted by the Nevada Business Corporation Act, the Company may
indemnify its directors and officers against expenses and liabilities they
incur to defend, settle or satisfy any civil or criminal action brought
against them on account of their being or having been Company directors or
officers unless, in any such action, they are adjudged to have acted with
gross negligence or to have engaged in willful misconduct.
Section 78.751(1) of the Nevada Revised Statutes (NRS) authorizes a Nevada
corporation to indemnify any director, officer, employee, or corporate
agent who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the
right of the corporation due to his or her corporate role. Section
78.751(1) extends this protection against expenses, including attorney's
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which 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.
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his of her actions were not opposed to
the corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification
must not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he or she be indemnified against expenses, including
attorneys fees, actually and reasonably incurred by him in connection with
the defense.
Section 78.751(4) of the NRS limits indemnification under Section 78.751(1)
and 78.751(2) to situations in which either (i) the stockholders; (ii) the
majority of a disinterested quorum of directors; or (iii) independent legal
counsel determine that indemnification is proper under the circumstances.
Pursuant to Section 78.175(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section 78.751(6)(b)
extends the rights to indemnification and advancement of expenses to former
directors, officers, employees and agents, as well as their heirs,
executors, and administrators.
Regardless of whether a director, officer, employee or agent has the right
to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his or her behalf against liability resulting from
his or her corporate role.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to officers, directors or persons controlling the Company
pursuant to the foregoing, the Company has been informed that in the
opinion of the U.S. Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is
therefore unenforceable.
<PAGE>
PART F/S
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited Prepared by Management)
JUNE 30, 1999
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
BALANCE SHEETS
(Unaudited Prepared by Management)
</TABLE>
<TABLE>
<S> <C> <C>
(Audited)
June 30, December 31,
1999 1998
ASSETS
Accounts receivable $ 1,514 $ -
Advances receivable 21,220 -
Capital assets (Note 3) 10,020 -
----------- ------------
$ 32,754 $ -
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank indebtedness $ 5,914 $ -
Accounts payable and
accrued liabilities 16,226 680
Loan payable (Note 4) 213,406 -
----------- ------------
235,546 680
----------- ------------
Stockholders' deficit
Capital stock (Note 5)
Authorized
25,000,000 common shares
with a par value of $0.001
Issued
2,500,000 common shares
(December 31, 1998
2,500,000 common shares) 2,500 2,500
Additional paid in capital 840 840
Deficit accumulated during
the development stage (206,132) (4,020)
----------- ------------
(202,792) (680)
----------- ------------
$ 32,754 $ -
=========== ============
History and organization of the Company (Note 1)
Subsequent events and commitments (Note 8)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited Prepared by Management)
<TABLE>
<S> <C> <C> <C> <C> <C>
Cumulative
Amounts From
Inception on Three Month Period Ended Six Month Period Ended
June 30, 1989 June 30, June 30, June 30, June 30,
to June 30, 1999 1999 1998 1999 1998
EXPENSES
Amortization $ 812 $ - $ - $ 812 $ -
Consulting 100,778 2,680 - 100,778 -
General and
administrative 45,704 1,493 - 42,684 -
Marketing and
advertising 30,586 308 - 30,586 -
Rent 13,173 - - 13,173 -
Telephone 14,079 - - 14,079 -
---------- --------- --------- --------- ---------
Loss for the period $ (205,132) $ (4,481) $ - $(202,112) $ -
========== ========= ========= ========= =========
Basic and dilutive
Loss per share $ (0.01) $ - $ (0.08) $ -
========== ========= ========= ========= =========
Weighted average number of
common shares
outstanding 2,500,000 2,000,000 2,500,000 2,000,000
========== ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(Unaudited Prepared by Management)
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Capital Stock Additional During the
--------------------- Paid-in Development
Shares Amount Capital Stage Total
Balance, December 31,
1995, 1996 and 1997 2,000,000 $ 2,000 $ - $ (2,000) $ -
Shares issued for
services 500,000 500 840 - 1,340
Loss for the year - - - (2,020) (2,020)
--------- --------- ---------- ---------- ----------
Balance, December 31,
1998 2,500,000 2,500 840 (4,020) (680)
Loss for the period - - - (202,112) (202,112)
--------- --------- ---------- ---------- ----------
Balance, June 30,
1999 2,500,000 $ 2,500 $ 840 $ (206,132) $ (202,792)
========= ========= ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited Prepared by Management)
<TABLE>
<S> <C> <C> <C>
Cumulative
Amounts From
Inception on
June 30, 1989 June 30, June 30,
to June 30, 1999 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (205,132) $ (202,112) $ -
Adjustment to reconcile loss to net
cash used in operating activities:
Amortization 812 812 -
Issuance of common shares
for services 1,340 - -
Changes in non-cash working capital items
Increase in accounts receivable (1,514) (1,514) -
Increase in accounts payable
and accrued liabilities 16,226 15,546 -
----------- ---------- ----------
Net cash used in operating activities (188,268) (187,268) -
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (10,832) (10,832) -
----------- ---------- ----------
Net cash used in investing activities (10,832) (10,832) -
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances receivable (21,220) (21,220)
Loan payable 213,406 213,406 -
Issuance of capital stock 1,000 - -
----------- ---------- ----------
Net cash provided by financing
activities 193,186 192,186 -
----------- ---------- ----------
Change in cash and cash equivalents
for the period (5,914) (5,914) -
Cash and cash equivalents
at the beginning of period - - -
----------- ---------- ----------
Cash and cash equivalents
at the end of period $ (5,914) $ (5,914) $ -
=========== ========== ==========
Cash and cash equivalents consists of:
Cash and cash equivalents $ - $ - $ -
Bank indebtedness (5,914) (5,914) -
----------- ---------- ----------
$ (5,914) $ (5,914) $ -
=========== ========== ==========
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes - - -
=========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited Prepared by Management)
JUNE 30, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized on June 30, 1989, under the laws of the State of
Nevada, as Homefront Safety Services of Nevada, Inc. and issued 10,000
common shares for $1,000 in cash. The Company currently has no operations
and, in accordance with SFAS#7, is considered a development stage company.
On April 26, 1999, the Company changed its name to Litewave Corp.
In the opinion of management, the accompanying financial statements contain
all adjustments necessary (consisting only of normal recurring accruals) to
present fairly the financial information contained therein. These
statements do not include all disclosures required by generally accepted
accounting principles and should be read in conjunction with the audited
financial statements of the Company for the year ended December 31, 1998.
The results of operations for the six months ended June 30, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation
The Company accounts for foreign currency transactions and translation of
foreign currency financial statements under Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52").
Transaction amounts denominated in foreign currencies are translated at
exchange rates prevailing at transaction dates. Carrying values of
monetary assets and liabilities are adjusted at each balance sheet date to
reflect the exchange rate at that date. Non monetary assets and
liabilities are translated at the exchange rate on the original transaction
date. Gains and losses from restatement of foreign currency monetary and
non-monetary assets and liabilities are included in income. Revenues and
expenses are translated at the rates of exchange prevailing on the dates
such items are recognized in earnings.
Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes".
A deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expenses (benefit) result from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Financial instruments
The Company's financial instruments consist of accounts receivable,
advances receivable, bank indebtedness, accounts payable and accrued
liabilities and note payable. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest, currency
or credit risks arising from these financial instruments. The fair value
of these financial instruments approximate their carrying values, unless
otherwise noted.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the year. Actual results could differ from these estimates.
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"). Under FAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
Capital assets
Capital assets, being computer equipment, are recorded at cost less
accumulated amortization. Amortization will be provided for over their
useful life using the declining balance method at a rate of 30% per annum.
New accounting standards
In June 1998, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company does not
anticipate that the adoption of the statement will have a significant
impact on its financial statements.
Comprehensive income
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This statement
establishes rules for the reporting of comprehensive income and its
components. The adoption of SFAS 130 had no impact on total stockholders'
equity as of December 31, 1998.
3. CAPITAL ASSETS
Accumulated Net
Cost Amortization Book Value
Computer equipment $ 10,832 $ 812 $ 10,020
======== ============ ==========
4. LOAN PAYABLE
The loan payable is a short-term loan that is non-interest bearing and has
no fixed terms of repayment.
5. CAPITAL STOCK
Additional paid-in capital
The excess of proceeds received for common shares over their par value of
$0.001, less share issue costs, is credited to additional paid in capital.
6. INCOME TAXES
The Company's total deferred tax asset at June 30 is as follows:
(Audited)
June 30, 1999 December 31, 1998
Tax benefit of net operating
loss carryforward $ 42,868 $ 424
Valuation allowance (42,868) (424)
----------- ----------
$ - $ -
=========== ==========
The Company has a net operating loss carryforward of approximately $204,132
(1998 - $Nil). The valuation allowance increased by $42,444 from $424
during the six month period ended June 30, 1999.
The operating loss carryforwards expire as follows:
2005 $ 2,020
2006 202,112
----------
$ 204,132
==========
The Company provided a full valuation allowance on the deferred tax asset
because of the uncertainty regarding realizability.
7. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING,
AND INVESTING ACTIVITIES
The significant non-cash transactions for the year ended December 31, 1998
consisted of the Company issing 500,000 common shares at a deemed value of
$1,340 as consideration for services rendered.
There were no significant non-cash transactions for the period ended June
30, 1999.
8. SUBSEQUENT EVENTS AND COMMITMENTS
a) On April 19, 1999, the Company entered into an agreement to
purchase all the assets, intellectual property and technology of
International Communications and Equipment, Inc. As consideration for the
purchase, the Company will issue 10,300,000 common shares.
b) On September 10, 1999, the Company entered into a joint venture
agreement with Crosna Research & Production Association ("Crosna"),
incorporated under the laws of the Russian Federation, to set up an
Internet Protocol-telephone network in a number of regions of the Russian
Federation. The agreement calls for the Company to incorporate a company
under the laws of the Russian Federation and contribute, in phases, up to
$30,000,000 of equipment to the new company.
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
DAVIDSON & COMPANY
CHARTERED ACCOUNTANTS
A Partnership of Incorporated Professionals
Suite 1270 Tel (604) 687-0947
Stock Exchange Tower Fax (604) 687-6172
609 Granville Street
Vancouver, B.C., Canada V7Y 1G6
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
Homefront Safety Services of Nevada, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Homefront Safety Services
of Nevada, Inc. as at December 31, 1998 and the related statements of
operations, stockholders' deficit and cash flows for the year then ended
and the cumulative amounts from incorporation on June 30, 1989 to December
31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998 and
the results of its operations and its cash flows for the year then ended
and the cumulative amounts from incorporation on June 30, 1989 to December
31, 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Homefront Safety Services of Nevada, Inc. will continue as a going concern.
As discussed in Note 2 to the financial statements, the Company has no
established source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in regard to
these matters are also described in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
The audited financial statements as at December 31, 1997 and for the year
then ended were audited by another auditor who expressed an opinion without
reservation on those statements in his audit report dated November 2, 1998.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
September 27, 1999
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
BALANCE SHEETS
AS AT DECEMBER 31
<TABLE>
<S> <C> <C>
1998 1997
ASSETS $ - $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 680 $ -
----------- -----------
Stockholders' deficit
Capital stock (Note 4)
Authorized
25,000,000 common shares
with a par value of $0.001
Issued
2,500,000 common shares
(1997 2,000,000 common shares) 2,500 2,000
Additional paid in capital 840 -
Deficit accumulated during
the development stage (4,020) (2,000)
----------- -----------
(680) -
$ - $ -
=========== ===========
History and organization of the Company (Note 1)
Subsequent events (Note 7)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
Cumulative
Amounts From
Inception on Year Ended December 31,
June 30, 1989
to December 31, ---------------------------------------
1998 1998 1997 1996
EXPENSES
General and
administrative $ 3,020 $ 2,020 $ - $ -
---------- --------- --------- ---------
Loss for the period $ 3,020 $ 2,020 $ - $ -
========== ========= ========= =========
Basic and dilutive
Loss per share $ (0.01) $ - $ -
========== ========= ========= =========
Weighted average number
of common shares
outstanding 2,069,863 2,000,000 2,000,000
========== ========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Capital Stock Additional During the
--------------------- Paid-in Development
Shares Amount Capital Stage Total
Balance, December 31,
1995, 1996 and 1997 2,000,000 $ 2,000 $ - $ (2,000) $ -
Shares issued for
services 500,000 500 840 - 1,340
Loss for the year - - - (2,020) (2,020)
--------- --------- ---------- ---------- ----------
Balance, December 31,
1998 2,500,000 2,500 840 (4,020) (680)
========= ========= ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
Cumulative
Amounts From
Inception on
June 30, 1989 Year Ended December 31,
to December 31, --------------------------------------
1998 1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (3,020) $ (2,020) $ - $ -
Adjustment to reconcile loss to net
cash used in operating activities:
Issuance of common shares
for services 1,340 1,340 - -
Changes in non-cash working capital items
Increase in accounts payable
and accrued liabilities 680 680 - -
----------- ---------- ---------- ----------
Net cash provided by
operating activities (1,000) - - -
----------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 1,000 - - -
----------- ---------- ---------- ----------
Net cash provided by financing
activities 1,000 - - -
----------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - - - -
----------- ---------- ---------- ----------
Change in cash position for the period - - - -
----------- ---------- ---------- ----------
Cash, beginning of period - - - -
----------- ---------- ---------- ----------
Cash, end of period $ - $ - $ - $ -
=========== ========== ========== ==========
Cash paid during the period for:
Interest expense $ - $ - $ - $ -
Income taxes - - - -
=========== ========== ========== ==========
Supplemental disclosure for non-cash operating, financing and investing activities (Note 5)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized on June 30, 1989, under the laws of the State of
Nevada, as Homefront Safety Services of Nevada, Inc. and issued 10,000
common shares for cash proceeds of $1,000. The Company currently has no
operations and, in accordance with SFAS#7, is considered a development
stage company.
2. GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of revenue. Without realization of additional capital, it would be
unlikely for the company to continue as a going concern. It is
management's plan to seek additional capital through a merger with an
existing operating company.
3. SIGNIFICANT ACCOUNTING POLICIES
Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes".
A deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expenses (benefit) result from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the year. Actual results could differ from these estimates.
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"). Under FAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
New accounting standards
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company does not
anticipate that the adoption of the statement will have a significant
impact on its financial statements.
Reporting on costs of start-up activities
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial reporting
of start-up costs and organization costs. It requires costs of start-up
activities and organization costs to be expensed as incurred. SOP 98-5 is
effective for fiscal years beginning after December 15, 1998 with initial
adoption reported as the cumulative effect of a change in accounting
principle. The Company does not anticipate that the statement will have a
significant impact on its future financial statements.
Comprehensive income
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This statement
establishes rules for the reporting of comprehensive income and its
components. The adoption of SFAS 130 had no impact on total stockholders'
equity as of December 31, 1998.
4. CAPITAL STOCK
Authorized share capital
On July 16, 1998, the State of Nevada approved the Company's restated
Articles of Incorporation, which increased its authorized capital from
10,000 common shares to 25,000,000 common shares. The par value was
unchanged at $0.001 per share.
Additional paid-in capital
The excess of proceeds received for common shares over their par value of
$0.001, less share issue costs, is credited to additional paid-in capital.
Stock split
On July 25, 1998, the Company implemented a 200:1 stock split. The number
of outstanding common shares increased from 10,000 common shares to
2,000,000 common shares. Stockholders' equity has been restated to give
retroactive recognition to the stock split for all periods presented by
reclassifying from additional paid-in capital to common shares the par
value of the additional shares arising from the split. In addition, all
references to number of shares and per share amounts of common shares have
been restated to reflect the stock split.
Restricted shares
On November 10, 1998, the Company issued 500,000 common shares at a deemed
value of $1,340 for services rendered. These shares are restricted for a
period of one year from the date of issuance. Of these, 340,000 common
shares were issued at a deemed value of $340 to former officers and
directors of the Company.
5. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING AND
INVESTING ACTIVITIES
The significant non-cash transaction for the year ended December 31, 1998
consisted of the Company issuing 500,000 common shares at a deemed value of
$1,340 as consideration for services rendered.
There were no significant non-cash transactions for the years ended
December 31, 1997 and 1996.
6. INCOME TAXES
The Company's total deferred tax asset at December 31 is as follows:
1998 1997
Tax benefit of net operating
loss carryforward $ 424 $ -
Valuation allowance (424) -
-------- -------
$ - $ -
======== =======
The Company has a net operating loss carryforward of approximately $2,020
(1997 - $Nil). The valuation allowance increased to $424 from $Nil during
the year ended December 1998. The Company provided a full valuation
allowance on the deferred tax asset because of the uncertainty regarding
realizability.
The operating loss carryforwards of $2,020 expire in 2005.
7. SUBSEQUENT EVENTS
The following events occurred subsequent to year end:
a) On April 19, 1999, the Company entered into an agreement with
International Communications and Equipment, Inc. ("ICE") to acquire all the
assets, intellectual property and technology of ICE in exchange for issuing
10,300,000 common shares of the Company.
b) The Company changed its name from Homefront Safety Services of
Nevada, Inc. to Litewave Corp. on April 26, 1999.
c) On September 10, 1999, the Company entered into a joint venture
agreement with Crosna Research & Production Association ("Crosna"), a
company incorporated under the laws of the Russian Federation, to set up an
Internet Protocol-telephone network in a number of regions of the Russian
Federation. The agreement calls for the Company to incorporate a company
under the laws of the Russian Federation and contribute, in phases, up to
$30,000,000 of equipment to the new company.
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may
incorrectly recognize the year 2000 as some other date, resulting in
errors. The effects of the Year 2000 Issue may be experienced before, on,
or after January 1, 2000 and, if not addressed, the impact on operations
and financial reporting may range from minor errors to significant systems
failure which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
<PAGE>
Part III
GLOSSARY OF TERMS:
Backbone - The network of lines and routes over which lnternet traffic
is carried
Bit - One Binary Digit represented as either 0 or 1
Byte - Eight Bits
Buffer Size - Pre-determined size of temporary data storage capacity.
Checksum - Number calculated using the values within a packet to
validate the information contained therein
Circuit Switch - Telecom switch on a traditional voice telephone network
Compression - Techniques used to represent data in shortened form.
DSP - Digital Signal Processing - the process by which a device
processes a digital signal into sound or data.
End Station - Destination station to which a call is sent on the network
Expiry Date - The date on which an agreement, letter of intent, grant,
option, warrant, contract, etc., ceases to be in force.
Fiber Optics - A form of telecom line material designed to handle high
volumes of voice and data
Frame Relay - Low-overhead protocol similar to IP in application
Full Duplex - Simultaneous bi-directional communication
Gateway - device to bridge two network designs and allow
interoperability
Header - component of a packet which contains address and other
information about the packet
Host - A computer designed for running applications over a network.
Hybrid - A combination of media types (e.g. two-pair and four-pair) on
a single circuit
Intranet - internal network based on the architecture and interface of
the internet
IP Address - Internet Protocol Address - the unique, 32-Bit number used
to identify a given computer on a network or the Internet
IP telephony - Technology that uses the lnternet Protocol to carry
voice conversations
Latency - The time elapsed between the transmission of a message and
its receipt
Line - The generic term for a physical connection between two points.
Modem Modulation demodulation - the device that converts signals
between analog and digital for transmission over the Public Switched
Telephone Network.
Moore's Law - The rule attributed to the founder of Intel stating that
processing speed doubles every 18 months.
Multiplexing - The technique of combining a number of signals into a
single signal.
NASD - National Association of Securities Dealers
OCR - Optical Character Recognition The ability of a device, such as a
scanner, to translate or convert a letter or word into digital signal.
Octet - The eight-Bit space reserved for representation of up to 256
values.
Option - a right, granted by a company, to certain individuals or
groups, to purchase a designated number of shares in the company at a
specific predetermined price for a set period of time.
OTC - Over The Counter. Refers to the listing of the Registrant's
shares for trading on the National Association of Securities Dealers
(NASD) Bulletin Board market.
Polling - The activity of checking a line for incoming data.
Port - A physical or virtual socket for connecting a line with a
device
Protocol - An agreement between parties on how to conduct a given
activity
Router - A device that uses internal algorithms and tables to route
packets to the appropriate destination
Routing Table - A table of paths from which a given router can choose
to deliver a packet
Switch - A device used to direct and complete calls on the Public
Switched Telephone Network
Standards - Universally accepted collections of protocols and
configurations by which industry abides.
Virtual Circuit - A circuit created between two points on a temporary
basis.
Warrant - A certified right to purchase treasury shares in stated
quantities, prices and time limits.
Word - Four bytes.
<PAGE>
Acronyms common to the industry:
ACTA American Carriers Telecommunication Assoc.
ANI Automatic Number Identification
ATM Asynchronous Transfer Mode
CAGR Compound Annual Growth Rate
CLEC Competitive Local Exchange Carrier
CO Central Office
CPU Central Processing Unit
DSP Digital Signal Processing
FCC Federal Communications Commission
IEEE Institute of Electrical and Electronics Engineers
ILEC Incumbent Local Exchange Carrier
IP Internet Protocol
IPvX Internet Protocol, Version X
ISDN Integrated Services Digital Network
ISP Internet Service Provider
ITSP Internet Telephony Service Provider
ITU International Telecommunication Union
IXC Interexchange Carrier
K Kilobytes
LAN Local Area Network
LEC Local Exchange Carrier
MAN Metropolitan Area Network
Mbps Megabits per second
Ms Millisecond (one thousandth of a second)
NAP Network Access Point
NSP National / Network Service Provider
POP Point of Presence
POTS Plain Old Telephone Service
PSTN Public Switched Telephone Network
PTT Post Telegraph & Telephone
RAM Random Access Memory
RBOC Regional Bell Operating Company
ROW Right Of Way
RSP Regional Service Provider
RX Receive
TDM Time Division Multiplexing
TX Transmit
VoN Voice over Internet
VoIP Voice over Internet Protocol
WAN Wide Area Network
XDSL Digital Subscriber Line
<PAGE>
INDEX TO EXHIBITS
Exhibit 3.1 Articles of Incorporation filed June 30, 1989.
Exhibit 3.2 Certificate of Amendment of Articles of Incorporation filed
July 16, 1998, increasing authorized capital stock in the
Corporation to 25 million shares at $0.001 par value.
Exhibit 3.3 Certificate of Amendment of Articles of Incorporation
effecting a split of 200 for 1, effective July 25, 1998
Exhibit 3.4 Certificate of Amendment of Articles of Incorporation filed
May 10, 1999, changing the name of the Corporation from
Homefront Safety Services of Nevada, Inc. to LITEWAVE CORP.
Exhibit 3.5 Bylaws of the Corporation.
Exhibit 10.1 Technology Purchase and Assignment Agreement, dated April
19, 1999, to acquire the assets of and the world-wide rights
to the technology agreement between the Corporation and
International Communications and quipment of Florida Inc.
(ICE).
Exhibit 10.2 Letter of Intent, dated May 27, 1999, from ZAO NPO Crosna of
the Russian Federation covering the installation and
operation of Voice-over-the-Internet Protocol technology for
long distance telephone traffic to and from the Russian
Federation.
Exhibit 10.3 Protocol of Intentions Agreement between the Corporation and
ZAO NPO Crosna, dated June 22, 1999, respecting the
organization of international and inter-city VoIP
communications channels in the territory of the Russian
Federation.
Exhibit 10.4 Agreement, dated September 10, 1999, between Crosna and the
Corporation entitled "Principles for Setting up the IP
Telephone Network and Providing IP Telephone Services in the
Territory of the Russian Federation"; establishing a 50/50
joint venture.
Exhibit 10.5 Letter of Interest, Dated May 20, 1999, from the firm
P.P.H.U. Andromeda of Warsaw, Poland for the installation
and operation of VoIP technology for long distance telephone
traffic to and from Poland utilizing their
telecommunications license.
Exhibit 10.6 Letter of Intent, dated June 15, 1999, between the
Corporation and M. Demajo Group of Companies of Valletta,
Malta, to form a joint venture with in order to provide VoIP
network and services, pre-paid calling cards, Internet
Service Provider access and other telephony services.
Exhibit 27 Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
LiteWave Corp.
/s/ Kenneth Martin Dated: November 12, 1999
Kenneth Martin,
Chairman, Chief Executive Officer
/s/ Michael Rogers Dated: November 12, 1999
Michael Rogers,
Director
/s/ Ian Lambert Dated: November 12, 1999
Ian Lambert,
Chief Financial Officer, Secretary, Director
<PAGE>
Exhibit 3.1 Articles of Incorporation
FILED
IN THE STATE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
June 30, 1989
ARTICLES OF INCORPORATION
HOMEFRONT SAFETY SERVICES OF NEVADA, INC. (No. 5753-89)
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under and pursuant to the
laws of the State of Nevada, and we do hereby certify that:
I
The name of the Corporation is:
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
II
The principal office and place of business in Nevada of this
Corporation shall be located at the offices of Harry Paul Marquis,
Chartered, 501 South Rancho Drive, Suite G-46, Las Vegas, Nevada 89106.
Offices for the transaction of business of the corporation, and
where meetings of the Board of Directors and of the Shareholders may be
held, may be established and maintained in any other part of the State of
Nevada, or in any other state, territory or possession of the United States
of America, or in any foreign country.
III
The nature of the business and objects and purposes proposed to
be transacted, promoted, or carried on by the corporation are:
(a) To engage in any lawful activity.
IV
The members of the governing Board of the Corporation shall be
styled Directors, and the number thereof shall not be less than two (2),
except that, in cases where all the shares of the Corporation are owned
beneficially and of record by either one or two Shareholders, the number of
Directors may not be less than the number of Shareholders, but shall be of
full age and at least one shall be a citizen of the United States. The
names and addresses of the first Board of Directors, which shall consist of
two (2) persons and who shall hold office until his successors are duly
elected and qualified is:
NAME ADDRESS
JOHN BARR 501 South Rancho Drive, G-46
Las Vegas, Nevada 89106
DON HOKE 501 South Rancho Drive, G-46
Las Vegas, Nevada 89106
V
The number of Directors of the Corporation may be increased or
decreased from time to time as shall be provided in the By-Laws of the
Corporation.
VI
A. This Corporation is authorized to issue 10,000 shares of stock
with a par value of $.00l per share, said shares being non-assessable.
B. Shareholders shall be pre-emptive rights.
VII
This Corporation shall have perpetual existence.
VIII
The names and post office addresses of the incorporators of the
Corporation shall be as follows:
NAME ADDRESS
Loretta Gillespie 501 South Rancho Drive
Suite G-46
Las Vegas, Nevada 89106
Lisa Steiner 501 South Rancho Drive
Suite G 46
Las Vegas, Nevada 89106
IX
Except as hereinafter provided, the officers and Directors of the
Corporation shall not be personally liable to the Corporation or its
stockholders for damages for breach of fiduciary duty as a director or
officer. This limitation on personal liability shall not apply to acts or
omissions which involved intentional misconduct, fraud, knowing violation
off the law, or unlawful payments of dividends prohibited by Nevada Revised
Statutes Section 78.300.
We, the undersigned, for the purposes of forming a corporation
under the laws of the State of Nevada, do make, file and record this
Certificate, and do certify that the facts herein stated are true; and we
have accordingly hereunto set our hands and seals this 29th day of June,
1989.
/s/ Loretta Gillespie
LORETTA GILLESPIE
/s/ Lisa Steiner
LISA STEINER
<PAGE>
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On the 29 day of June, 1989, before me, the undersigned, a Notary Public in
and for the County of Clark, State of Nevada, personally appeared Loretta
Gillespie and Lisa Steiner, and for each for herself duly acknowledged to
me that she is one of the persons named in and who executed the above and
foregoing instrument and that she, and each of them, executed the same
freely and voluntarily and for the uses and purposed therein mentioned.
/s/ Candy Post
NOTARY PUBLIC
Notary Public-State of Nevada
CLARK COUNTY
My Appointment Expires Mar. 8, 1992
<PAGE>
Exhibit 3.2 Certificate of Amendment of Articles (16 Jul 98)
FILED
IN THE OFFICE OF THE
THE SECRETARY OF STATE OF THE
STATE OF NEVADA
JUL 16, 1998
No. c5753-89
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
of
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
We the undersigned M. ZAPARA, PRESIDENT and MARIA CONTERARS, SECRETARY of
HOMEFRONT SAFETY SERVICES OF NEVADA, INC. do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 16, day of December, 1993, adopted a
resolution to amend the original articles as follows:
Article VI is hereby amended to read as follows:
The total authorized capital stock is increased to Twenty-Five (25)
million shares at $.001 par value per share.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is Ten Thousand (10,000);
that the said change(s) and amendment have been consented to and approved
by a majority vote of the stockholder holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
/s/ M. Zapara
President
/s/ Maria Conterars
Secretary
<PAGE>
Exhibit 3.3 Certificate of Amendment of Articles (21 Aug 99)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 21, 1998
No. C5753.-89
WAIVER OF NOTICE OF
and
MINUTES, SPECIAL MEETING OF
BOARD OF DIRECTORS
OF
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
BE IT KNOWN that a Special Meeting of the Board of Directors of the
Corporation, was held on July 10, 1998, at 611 S. Palm Canyon Dr.,
Palm Springs, CA 92264.
There were present the following:
M. Zapara, Gina Zapara and John Jones
M. Zapara acted as President and Gina Zapara acted as Secretary.
John Jones recommended that the Corporation declare a forward stock
split. Upon motion duly made, seconded and unanimously carried, it was
RESOLVED, that the Corporation declare a 200 for 1 forward
stock split effective July 25 1998.
There being no further business to come before the meeting, upon
motion duly made, seconded and unanimously carried, it was adjourned.
Signing of these MINUTES constitutes WAIVER OF NOTICE of the Meeting
by the signatories.
/s/ M. Zapara /s/ Gina Zapara
M. Zapara, President Gina Zapara, Secretary
<PAGE>
Exhibit 3.4 Certificate of Amendment of Articles (10 May 99)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 10, 1999
No. C5753.-89
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
HOMEFRONT SAFETY SERVICES OF NEVADA INC.
The undersigned, being the President and the Secretary of Homefront
Safety Services of Nevada, Inc., a Nevada Corporation, hereby certify
that by majority vote of the Shareholders and the Board of Directors at
a meeting held on April 26, 1999, it was voted and adopted as a
resolution to amend the original Articles of Incorporation as follows:
The undersigned further certify that ARTICLE ONE of the original
Articles of Incorporation filed on June 30, 1989 is ameded to
read as follows:
ARTICLE ONE, NAME is amended to read:
The name of the Corporation is:
"LITEWAVE CORP."
The undersigned hereby certify that they have on this 26th day of April,
1999, executed this Certificate amending the original Articles of
Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ Ian Lambert
Ian D. Lambert, President
/s/ Shirley Bethurum
Shirley Bethurum, Secretary
<PAGE>
Exhibit 3.5 Bylaws of the Corporation
BYLAWS
OF
HOMEFRONT SAFETY SERVICES OF NEVADA, INC
(the "Corporation")
Article I.
Office
The Board of Directors shall designate and the Corporation shall
maintain a principal office. The location of the principal office may be
changed by the Board of Directors. The Corporation also may have offices
in such other places as the Board may from time to time designate. The
location of the initial principal office of the Corporation shall be
designated by resolution.
Article II.
Shareholders Meetings
I. Annual Meetings
The annual meeting of the shareholders of the Corporation shall be
held at such place within or without the State of Nevada as shall be set
forth in compliance with these Bylaws. The meeting shall be held on the
31 '~ of December of each year. If such day is a legal holiday, the
meeting shall be on the next business day. This meeting shall be for the
election of Directors and for the transaction of such other business as
may properly come before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by
statute, may be called by the President upon written request of the
holders of 50% or more of the outstanding shares entitled to vote at
such special meeting. Written notice of such meeting stating the place,
the date and hour of the meeting, the purpose or purposes for which it
is called, and the name of the person by whom or at whose direction the
meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day, and
hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, which shall be delivered
not less than ten or more than fifty days before the date of the
meeting, either personally or by mail to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to
the shareholder at his address as it appears on the books of the
Corporation, with postage thereon prepaid. Attendance at the meeting
shall constitute a waiver of notice thereof.
4. Place of Meeting
The Board of Directors may designate any place, either within or
without the State of Nevada, as the place of meeting for any annual
meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of
Nevada, as the place for the holding of such meeting. If no designation
is made, or if a special meeting is otherwise called, the place of
meeting shall be the principal office of the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more than
sixty days prior to any meeting as the record date for the purpose of
determining shareholders entitled to notice of and to vote at such
meetings of the shareholders. The transfer books may be closed by the
Board of Directors for a stated period not to exceed fifty days for the
purpose of determining shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any
other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further
notice. At a meeting resumed after any such adjournment at which a
quorum shall be present or represented, any business may be transacted,
which might have been transacted at the meeting as originally noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting, may
vote at such meeting in person or by proxy. Except as may otherwise be
provided in the currently filed Articles of incorporation, every
shareholder shall be entitled to one vote for each share standing in his
name on the record of shareholders. Except as herein or in the currently
filed Articles of Incorporation otherwise provided, all corporate action
shall be determined by a majority of the vote's cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person or
by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No
proxy shall be valid after six months from the date of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders, may
be taken without a meeting if a consent in wilting, setting forth the
action so taken, shall be signed by a majority of the shareholders
entitled to vote with respect to the subject matter thereof
Article III.
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by its
Board of Directors. The Board of Directors may adopt such rules and
regulations for he conduct of their meetings and the management of the
Corporation as they appropriate under the circumstances. The Board shall
have authority to authorize changes in the Corporation's capital
structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number between
one and five, as the Directors may by resolution determine from time to
time. Each of the Directors shall hold office until the next annual
meeting of shareholders and until his successor shall have been elected
and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without
other notice than by this Bylaw, immediately after and, at the same
place as the annual meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order of
the Chairman of the Board or the President. The Secretary shall give
notice of the time, place and purpose or purposes of each special
meeting by mailing the same at least two days before the meeting or by
telephone, telegraphing or telecopyzng the same at least one day before
the meeting to each Director. Meeting of the Board of Directors may be
held by telephone conference call.
5. Quorum
A majority of the members of the Board of Directors shall constitute
a quorum for the transaction of business, but less than a quorum may
adjourn any meeting from time to time until a quorum shall be present,
whereupon the meeting may be held, as adjourned, without further notice.
At any meeting at which every Director shall be present, even though
without any formal notice, any business may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall have
one vote. The act of a majority of Directors present at a meeting shall
be the act of the full Board of Directors, provided that a quorum is
present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in the
case of death, resignation, or removal of any Director, or if the
authorized number of Directors is increased, or if the shareholders
fail, at any meeting of the shareholders, at which any Director is to be
elected, to elect the full authorized number of Director to be elected
at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the shareholders
holding a majority of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less
than a quorum, to hold office until the next annual meeting or until his
successor is duly elected and qualified, except that any directorship to
be filled by election by the shareholders at the meeting at which the
Director is removed. No reduction of the authorized number of Directors
shall have the effect of removing any Director prior to the expiration
of his term of office.
9. Resignation
A Director may resign at any time by delivering written notification
thereof to the President or Secretary of the Corporation. A resignation
shall become effective upon its acceptance by the Board of Directors;
provided, however, that if the Board of Directors has not acted thereon
within ten days from the date of its delivery, the resignation shall be
deemed accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action(s) taken unless his dissent
shall be placed in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favor of such action.
11. Compensation
By resolution of the Board of Directors, the Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors or a stated salary as Director. No such payment shall preclude
any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the Directors
are incapacitated or otherwise unable to attend the meetings and
function as Directors, the remaining members of the Board of Directors
shall have all the powers necessary to function as a complete Board, and
for the purpose of doing business and filling vacancies shall constitute
a quorum, until such time as all Directors can attend or vacancies can
be filled pursuant to these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a Chairman of the
Board, who shall preside at all meetings of the Board of Directors, and
shall perform such other duties as may be prescribed from time to time
by the Board of Directors. The Chairman may by appointment fill any
vacancies on the Board of Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President, one or more Vice
Presidents, and a Secretary Treasurer, each of whom shall be elected by
a majority of the Board of Directors. Such other Officers and assistant
Officers as may be deemed necessary may be elected or appointed by the
Board of Directors. In its discretion, the Board of Directors may leave
unfilled for any such period as it may determine any office except those
of President and Secretary. Any two or more offices may be held by the
same person. Officers may or may not be Directors or shareholders of the
Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of
Directors shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting
of the shareholders. If the election of Officers shall not be held at
such meeting, such election shall be held as soon thereafter as
convenient. Each Officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner
hereinafter provided.
3. Resignations
Any Officer may resign at any time by delivering a written resignation
either to the President or to the Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors whenever
in its judgment the best interests of the Corporation will be served
thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
Officer or agent shall not of
itself create contract rights. Any such removal shall require a majority
vote of the Board of Directors, exclusive of the Officer in question if
he is also a Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be created, may
be filled by the Board of Directors for the un-expired portion of the
term.
6. President
The President shall be the chief executive and administrative Officer
of the Corporation. He shall preside at all meetings of the stockholders
and, in the absence of the Chairman of the Board, at meetings of the
Board of Directors. He shall exercise such duties as customarily pertain
to the office of President and shall have general and active supervision
over the property, business, and affairs of the Corporation and over its
several Officers, agents, or employees other than those appointed by the
Board of Directors. He may sign, execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds and other obligations,
and shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the Bylaws.
7 Vice President
The Vice President shall have such powers and perform such duties as
may be assigned to him by the Board of Directors or the President. In
the absence or disability of the President, the Vice President
designated by the Board or the President shall perform the duties and
exercise the powers of the President. A Vice President may sign and
execute contracts and other obligations pertaining to the regular course
of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors and, to the extent ordered by
the Board of Directors or the President, the minutes of meetings of all
committees. He shall cause notice to be given of meetings of
stockholders, of the Board of Directors, and of any committee appointed
by the Board. He shall have custody of the corporate seal and general
charge of the records, documents and papers of the Corporation not
pertaining to the performance of the duties vested in other Officers,
which shall at all reasonable times be open to the examination of any
Directors. He may sign or execute contracts with the President or a Vice
President thereunto authorized in the name of the Corporation and affix
the seal of the Corporation thereto. He shall perform such other duties
as may be prescribed from time to time by the Board of Directors or by
the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and
disbursement of funds of the Corporation. He shall endorse on behalf of
the Corporation for collection checks, notes and other obligations, and
shall deposit the same to the credit accounts to any Director of the
Corporation upon application at the office of the Corporation during
business hours; and, whenever required by the Board of Directors or the
President, shall render a statement of his accounts. He shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or by the Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such powers
as may be assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the Corporation
shall be fixed from time to time by the Board of Directors, except that
the Board of Directors may delegate to any person or group of persons
the power to fix the salaries or other compensation of any subordinate
Officers or agents. No Officer shall be prevented from receiving any
such salary or compensation by reason of the fact that he is also a
Director of the Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or agent
of the Corporation shall execute to the Corporation a bond in such sums
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the
accounting for all property, moneys or securities of the Corporation,
which may come into his hands.
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers, agent
or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation and such
authority may be general or confined to specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the Corporation,
no negotiable paper or other evidence of its obligation under any loan
or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated or transferred as
security for the payment of any loan, advance, indebtedness or liability
of the Corporation unless and except as authorized by the Board of
Directors. Any such authorization may be general or confined to specific
instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select, or
as may be selected by an Officer or agent of the Corporation authorized
to do so by the Board of Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidence of
indebtedness of the Corporation shall be signed by such Officer or
Officers or such agent or agents of the Corporation and in such manner
as the Board of Directors from time to time may determine. Endorsements
for deposits to the credit of the Corporation in any of its duly
authorized depositories shall be made in such manner as the Board of
Directors may from time to time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be in the form
of an appropriate legal writing, which shall be signed by the President
or Vice President and by the Treasurer or by the Secretary, and sealed
with the seal of the Corporation. The seal may be facsimile, engraved or
printed. Where such bond or debenture is authenticated with the manual
signature of an authorized Officer of the Corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the Corporation's Officers
named thereon may be facsimile. In case any Officer who signed, or whose
facsimile signature has been used on any such bond or debenture, shall
cease to be an Officer of the Corporation for any reason before the same
has been delivered by the Corporation, such bond or debenture may
nevertheless be adopted by the Corporation and issued and delivered as
though the person who signed it or whose facsimile signature has been
used thereon had not ceased to be such Officer.
Article VI
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by certificates
prepared by the Board of Directors and signed by the President. The
signatures of such Officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a
registrar other than the Corporation itself or one of its employees. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be
canceled except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by
his legal representative, who shall furnish proper evidence of authority
to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares.
The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all
purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or more
transfer agents and registrars for the transfer and registration of
certificates of stock of any class, and may require that stock
certificates shall be countersigned and registered by one or more of
such transfer agents and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any certificate
theretofore issued by it alleged to have been lost or destroyed. The
Board of Directors may require the owner of such a certificate or his
legal representative to give the Corporation a bond in such sum and with
such sureties as the Board of Directors may direct to indemnify the
Corporation as transfer agents and registrars, if any, against claims
that may be made on account of the issuance of such new certificates. A
new certificate may be issued without requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such
consideration as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the determination of the Board of
Directors as to the value of any property or services received in full
or partial payment of shares shall be conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder thereof, in fact, and shall not
be bound to recognize any equitable or other claim to or on behalf of
this Corporation to any and all of the rights and powers incident to the
ownership of such stock at any such meeting, and shall have power and
authority to execute and deliver proxies and consents on behalf of this
Corporation in connection with the exercise by this Corporation of the
rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other
person or persons.
Article VII.
Indemnification
No Officer or Director shall be personally liable for any obligations
of the Corporation or for any duties or obligations arising out of any
acts or conduct of said Officer or Director performed for or on behalf
of the Corporation. The Corporation shall and does hereby indemnify and
hold harmless each person and his heirs and administrators who shall
serve at any time hereafter as a Director or Officer of the Corporation
from and against any and all claims, judgments and liabilities to which
such persons shall become subject by reason of his having heretofore or
hereafter been a Director or Officer of the Corporation, or by reason of
any action alleged to have heretofore or hereafter taken or omitted to
have been taken by him as such Director or Officer, and shall reimburse
each such person for all legal and other expenses reasonably incurred by
him in connection with any such claim or liability, including power to
defend such persons from all suits or claims as provided for under the
provisions of the Nevada Revised Statutes; provided, however, that no
such persons shall be indemnified against, or be reimbursed for, any
expense incurred in connection with any claim or liability arising out
of his own negligence or willful misconduct. The rights accruing to any
person under the foregoing provisions of this section shall not exclude
any other right to which he may lawfully be entitled, nor shall anything
herein contained restrict the right of the Corporation to indemnify or
reimburse such person in any proper case, even though not specifically
herein provided for. The Corporation, its Directors, Officers, employees
and agents shall be fully protected in taking any action or making any
payment, or in refusing so to do in reliance upon the advice of counsel.
Article VIII.
Notice
Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of the Articles of
Incorporation, or under the provisions of the Nevada Statutes, a waiver
thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute a waiver of notice of such meetings, except where attendance
is for the express purpose of objecting to the holding of that meeting.
Article IX.
Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws adopted
by a majority of the entire Board of Directors at any regular or special
meeting. Any Bylaw adopted by the Board may be repealed or changed by
the action of the shareholders.
Article X.
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied
by resolution of the Board of Directors.
Article XI.
Dividends
The Board of Directors may at any regular or special meeting, as they
deem advisable, declare dividends payable out of the surplus of the
Corporation.
Article XII.
Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall
bear the name of the Corporation and the year of incorporation per
sample affixed hereto.
Date: June 30, 1989
/s/ Maria Contreras
Maria Contreras, Secretary
<PAGE>
Exhibit 10.1 Technology Purchase Agreement
TECHNOLOGY PURCHASE AND ASSIGNMENT AGREEMENT
This agreement (the "Agreement") dated as of April 19, 1999 is by
and between Litewave Corp., a Nevada corporation ("Litewave"), formerly
known as Homefront Safety Services of Nevada, Inc. ("Homefront"),
having its principal offices at 110 Cambie Street, Suite 404,
Vancouver, BC V6B 2M8, and the shareholders and principals of
International Communications and Equipment, Inc., a Nevada corporation
("ICE"), all of whom are listed on Exhibit A (collectively, the
"Shareholders") to this Agreement, and having its principal offices at
12865 NE 85th Street, Suite 362, Kirkland, WA 98033.
RECITALS:
A. Litewave desires to acquire all of the assets, intellectual
property and technology of ICE (collectively, the "assets of ICE") and
the Shareholders of ICE desire to exchange all of their assets of ICE
for authorized but unissued shares of Litewave common stock as
hereinafter provided.
B. It is the intention of the parties hereto that: (i) Litewave
shall acquire all of the assets of ICE in exchange solely for the
number of shares of Litewave's authorized but unissued shares of Common
Stock, par value $0.001 ("Common Stock"), set forth below (the
"Exchange"); (ii) the Exchange shall qualify as a tax free
reorganization under Section 368(a)(1)(C) of the Internal Revenue Code
of 1986, as amended, and related sections thereunder; and (iii) the
Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as
amended, and under the applicable securities laws of each state or
jurisdiction where the Shareholders reside.
C. The board of directors of Litewave deems it to be in the best
interest of Litewave and its shareholders to acquire all of the assets
of ICE.
D. The Shareholders of ICE deem it to be in the best interest of
ICE to exchange all of the assets of ICE for shares of Litewave,
authorized but unissued, as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this
Agreement, the parties hereto agree as follows:
SECTION 1. EXCHANGE OF SHARES
1.1 Exchange of Shares. Litewave and the Shareholders of ICE hereby
agree that the Shareholders shall, on the Closing Date (as hereinafter
defined), exchange all of the Assets of ICE for 10,300,000 shares of
Litewave, which will be restricted against resale for a period in
compliance with Rule 144. The ICE assets being tendered will represent all
of the assets of ICE. The number of shares of ICE owned by each
Shareholder and the number of shares of Litewave Common Stock which
each will receive in the Exchange are set forth in Exhibit A hereto.
1.2 Delivery of Shares. On the Closing Date, the Shareholders will
deliver to Litewave the documents representing the assets of ICE, duly
endorsed (or with executed stock powers) so as to make Litewave the sole
owner thereof. Simultaneously, Litewave will deliver certificates
representing the Litewave Shares to the Shareholders subject to certain
conditions as set forth in Section 8 of this Agreement. The Exchange shall
not be effected unless one hundred (100%) percent of the assets of ICE are
delivered to Litewave on the Closing Date (as is more fully set forth
in Section 8 of this Agreement).
1.3 Investment Intent. The Litewave Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
resold unless the Litewave Shares are registered under the Act or an
exemption from such registration is available. The Shareholders represent
and warrant that each of them is acquiring the Litewave Shares for his own
account, for investment, and not with a view to the sale or
distribution of the Litewave shares. Each certificate representing the
Litewave Shares will have a legend thereon incorporating language or
substantially similar language, as follows:
"The Shares represented by the certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and may not
be sold or transferred in the absence of an effective Registration
Statement for the shares under the Act unless in the opinion of
counsel satisfactory to the Company, registration is not required
under the Act."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ICE
ICE hereby represents and warrants as follows:
2.1 Organization and Good Standing: Ownership of Assets. ICE is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada. There are no outstanding rights, options or
other agreements obligating ICE to issue, sell or transfer any interests,
rights or other assets of ICE except as listed on Schedule 2.1
attached hereto and made a part hereof.
2.2 Corporate Authority. ICE has the corporate power to enter into
this Agreement and to perform its respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized by the
Shareholders of ICE. The execution and performance of this Agreement will
not constitute a material breach of any agreement, indenture, mortgage,
license or other instrument or document to which ICE is a party and
will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ICE or its properties. The execution and
performance of this Agreement will not violate or conflict with any
provision of the Articles of Incorporation or By-Laws of ICE.
2.3 Ownership of Shares. Except as set forth on Schedule 2.3, the
Shareholders are the owners of record and beneficially of all of the Assets
of ICE, which Assets are free and clear of all rights, claims, liens and
encumbrances, and have not been sold, pledged, assigned or otherwise
transferred except pursuant to this Agreement. The Assets represent
all of the Assets of ICE.
2.4 Access to Records. The corporate financial records, minute books
and other documents and records of ICE as of March 31, 1999 have been made
available to Litewave prior to the Closing hereof.
2.5 No Material Adverse Changes. Since March 31, 1999 there has not
been:
(i) any material adverse change in the financial
position of ICE except changes arising in the ordinary course
of business, which changes will in no event materially or
adversely affect the financial position of ICE;
(ii) any damage, destruction or loss materially affecting
the assets, prospective business, operations or condition
(financial or otherwise) of ICE whether or not covered by
insurance;
(iii) any sale of an asset (other than in the ordinary
course of business) or any mortgage or pledge by ICE of any
properties or assets, other than as set forth in Section 2.12
below; or
(iv) adoption of any pension, profit sharing, retirement
or similar plan or arrangement.
2.6 Taxes. As of December 31, 1998, ICE has filed all material
tax, governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and has (or will have) paid or
made adequate provisions for all taxes or assessments which had become
due as of December 31, 1998, and there are no deficiency notices
outstanding.
2.7 Compliance with Laws. ICE has complied with all federal,
state, county and local laws, ordinances, regulations, inspections,
orders, judgments, injunctions, awards or decrees applicable to it or
its business which, if not complied with, would materially and
adversely affect the business of ICE.
2.8 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will not:
(i) violate any provision of the Articles of Incorporation
or By-Laws of ICE;
(ii) violate, conflict with or result in the breach of any
of the terms of, result in a material modification of,
otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time, or
both constitute) a default under any contract or other
agreement to which ICE is a party or by or to which it or any
of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or
decree of any court, arbitrator or governmental or regulatory
body against, or binding upon, ICE or upon the properties or
business of ICE; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein
which could have a materially adverse effect on the business or
operations of ICE.
2.9 Actions and Proceedings. ICE is not a party to any
material pending litigation or, to its knowledge, any governmental
investigation or proceeding not reflected in the ICE Financial
Statements, and to its best knowledge, no material litigation, claims,
assessments or Non-governmental proceedings are threatened against ICE
except as set forth on Schedule 2.10 attached hereto and made a part
hereof.
2.10 Agreements. Schedule 2.10 sets forth any material contract
or arrangement to which ICE is a party or by or to which it or its
assets, properties or business are bound or subject, whether written
or oral.
2.11 Brokers or Finders. No broker's or finder's fee will be
payable by ICE in connection with the transactions contemplated by
this Agreement, nor will any such fee be incurred as a result of any
actions by ICE or any of its Shareholders.
2.12 Real Estate. Except as set forth on Schedule 2.12, ICE owns
no real property nor is a party to any leasehold agreement.
2.13 Tangible Assets. ICE has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures,
projects, owned or leased by ICE, any related capitalized items or
other tangible property material to the business of ICE (the "Tangible
Assets"), other than as set forth in Section 2.12. ICE holds all
rights, title and interest in all the Tangible Assets owned by it on
the Balance Sheet or acquired by it after the date on the Balance
Sheet free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other encumbrances. All
of the Tangible Assets are in good operating condition and repair and
are usable in the ordinary course of business of ICE and conform to
all applicable laws, ordinances and government orders, rules and
regulations relating to their construction and operation, except as
set forth on Schedule 2.13 hereto.
2.14 Liabilities. ICE did not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation
or responsibility, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued or absolute, contingent or
otherwise, including, without limitation, any liability on account of
taxes, any governmental charge or lawsuit (all of the foregoing
collectively defined to as "Liabilities"), which are not fully, fairly
and adequately reflected on the Financial Statement except for a
specific Liabilities set forth on Schedule 2.14 attached hereto and
made a part hereof. As of the date of Closing, ICE will not have any
Liabilities, other than Liabilities fully and adequately reflected on
the Financial Statements except for Liabilities incurred in the
ordinary course of business and as set forth in Schedule 2.14. To the
best knowledge of the Shareholders, there is no circumstance,
condition, event or arrangement which may hereafter give rise to any
Liabilities not in the ordinary course of business.
2.15 Operations of ICE. From March 31, 1999 through date of
Closing, hereto ICE has not and will not have:
(i) any materially adverse change in the financial
position of ICE except changes arising in the ordinary
course of business, which changes will in no event
materially and adversely affect the financial position of
ICE for the period ended March 31, 1999, and will be
consistent with the representations made by ICE to Litewave;
(ii) declared or paid any dividend or declared or made
any distribution of any kind to any shareholder, or made any
direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock;
(iii) made any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance otherwise
than in the ordinary course of business;
(iv) except in the ordinary course of business,
incurred or assumed any indebtedness or liability (whether
or not currently due and payable);
(v) disposed of any Assets of ICE except in the
ordinary course of business, except as described in Schedule
2.13;
(vi) materially increased the annual level of
compensation of any executive employee of ICE;
(vii) increased, terminated, amended or otherwise
modified any plan for the benefit of employees of ICE.
(viii) issued any equity securities or rights to
acquire such equity securities; or
(ix) except in the ordinary course of business, entered
into or modified any contract, agreement or transaction,
except as described in Schedule 2.13.
2.16 Capitalization. ICE has not granted, issued or agreed to
grant, issue or make any commitments of any character relating to the
Assets of ICE except as set forth on Schedule 2.16 attached hereto and
made a part hereof. ICE has no subsidiaries or other entities except
as listed on Schedule 2.16 attached hereto, setting forth the shares
or percentage interest owned by ICE.
2.17 Full Disclosure. No representation or warranty by ICE in
this Agreement or in any document or schedule to be delivered by them
pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished by ICE pursuant hereto or in connection
with the negotiation, execution or performance of this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state any fact necessary to make any statement
herein or therein not materially misleading or necessary to a complete
and correct presentation of all material aspects of the business of
ICE.
2.18 Minimum Gross Sales and/or Net Worth. The gross sales of ICE
are no less than those of ICE on March 31, 1999, and the net worth of
ICE will not be any less than at March 31, 1999, on the date of
Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF LITEWAVE
Litewave hereby represents and warrants as follows:
3.1 Organization and Good Standing. Litewave is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Nevada. It has the corporate power to own its own
property and to carry on its business as now being conducted and is
duly qualified to do business in any jurisdiction where so required
except where the failure to so qualify would have no material negative
impact.
3.2 Corporate Authority. Litewave has the corporate power to
enter into this Agreement and to perform its respective obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Litewave and the shareholders
as required by Nevada law. The execution and performance of this
Agreement will not constitute a material breach of any agreement,
indenture, mortgage, license or other instrument or document to which
Litewave is a party and will not violate any judgment, decree, order,
writ, rule, statute, or regulation applicable to Litewave or its
properties. The execution and performance of this Agreement will not
violate or conflict with any provision of the respective Articles of
Incorporation or By-Laws of Litewave.
3.3 The Litewave Shares. As of the Closing Date, there are
approximately 30 shareholders of record that are the owners of
2,500,000 shares of Litewave Common Stock, and zero (0) shares of
Preferred Stock, none of whom owns in excess of 5% of the issued and
outstanding shares, except as may be set forth on Schedule 3.3
attached hereto and made a part hereof. There are no outstanding
warrants, issued stock options, stock rights or other commitments of
any character relating to the issued or unissued shares of either
Common Stock or Preferred Stock of Litewave, other than those which are
set forth on Schedule 3.3 attached hereto. The Litewave shares on said
schedule 3.3 represent all of the outstanding capital stock of
Litewave.
At the Closing, the Litewave Shares to be issued and delivered to
the ICE Shareholders hereunder will when so issued and delivered,
constitute valid and legally issued shares of Litewave Common Stock,
fully paid and non-assessable.
3.4 Financial Statement: Books and Records. Schedule 3.4
consists of the financial statements (balance sheet, income statement
and Notes) of Litewave (f.k.a. Homefront) for the fiscal period ended
December 31, 1998, and for the preceding 2-year period (collectively
the "Financial Statements"). The Financial Statements fairly
represent the financial position of Litewave as at such date and the
results of their operations for the periods then ended. The Financial
Statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis with prior periods
except as otherwise stated therein. The books of account and other
financial records of Litewave are in all respects complete and correct
in all material respects and are maintained in accordance with good
business and accounting practices.
3.5 No Material Adverse Changes.
Since December 31, 1998, there has not been:
(i) any materially adverse change in the financial
position of Litewave except changes arising in the ordinary
course of business, which changes will in no event
materially and adversely affect the financial position of
Litewave, and the past audit for the fiscal year ended
December 31, 1998 will be consistent with the
representations made by Litewave to ICE.
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations or
condition (financial or otherwise) of Litewave whether or not
covered by insurance;
(iii) any declaration setting aside or payment of
any dividend or distribution with respect to any redemption
or repurchase of Litewave capital stock;
(iv) any sale of an asset (other than in the ordinary
course of business) or any mortgage pledge by Litewave of any
properties or assets; or
(v) an adoption or modification of any pension, profit
sharing, retirement, stock bonus, stock option or similar
plan or arrangement.
(vi) except in the ordinary course of business,
incurred or assumed any indebtedness or liability, whether
or not currently due and payable;
(vii) any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance otherwise
than in the ordinary course of business;
(viii) any material increase in the annual level of
compensation of any executive employee of Litewave;
(ix) except in the ordinary course of business, entered
into or modified any contract, agreement or transaction,
except as described in Schedule 3.5;
(x) an issuance of any equity securities or rights to
acquire equity securities other than as set forth in
Schedule 3.5.
3.6 Taxes. Litewave has timely filed all material tax,
governmental and/or related forms and reports (or extensions thereof)
due or required to be filed and has paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing
Date, and there are no deficiencies outstanding.
3.7 Compliance with Laws. Litewave has complied with all
federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, which, if not complied with, would
materially and adversely affect the business of Litewave or the trading
market for the Litewave Shares and specifically, and to the best of its
knowledge, Litewave complied with provisions for registration under the
Securities Act of 1933 and all applicable blue sky laws in connection
with its public stock offering and there are no outstanding, pending
or threatened stop orders or other actions or investigations relating
thereto.
3.8 Actions and Proceedings. Litewave is not a party to any
material pending litigation or, to its knowledge, any governmental
proceedings are threatened against Litewave, except as set forth on
Schedule 3.8 attached hereto and made a part hereof.
3.9 Periodic Reports. Litewave has delivered to ICE true and
complete copies of all forms filed pursuant to SEC Rules and
Regulations under the Securities Exchange Act of 1934, as amended. As
of their respective dates, such reports and statements did not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstance under which they were made, not
misleading. Schedule 3.9 sets forth all of the documentation of such
reports Litewave has delivered to ICE.
3.10 Disclosure. Litewave has (and at the Closing it will have)
disclosed in writing all events, conditions and facts materially
affecting the business, financial conditions or results of operation
of Litewave all of which have been set forth herein. Litewave has not
now and will not have, at the Closing, withheld disclosure of any such
events, conditions, and facts which they have knowledge of or have
reasonable grounds to know may exist. Litewave has identified all oral
and written agreements between Litewave and third parties affecting the
business credit and/or stock pledges of Litewave which have been fully
disclosed to ICE in writing on Schedule 3.10.
3.11 Capitalization. The authorized Capital Stock of Litewave
consists of 25,000,000 shares of Common Stock of which 2,500,000
shares of Common Stock are issued and outstanding and has authorized
Nil shares of Preferred Stock, par value $0.00l per share, of which
zero (0) shares are issued and outstanding.
3.12 Access to Records. The corporate financial records, minute
books, and other documents and records of Litewave have been made
available to ICE prior to the Closing hereof.
3.13 No Breach. The execution, delivery and performance of this
of this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) violate any provision of the Articles of
Incorporation or By-Laws of Litewave;
(ii) violate, conflict with or result in the breach of
any of the terms of, result in a material modification of,
otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any contract or other
agreement to which Litewave is a party or by or to which it
or any of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, Litewave or upon
the securities, properties or business to Litewave; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated
herein.
3.14 Brokers or Finders. No broker's or finder's fee will be
payable by Litewave in connection with the transactions contemplated by
this Agreement, nor will any such fee be incurred as a result of any
actions of Litewave.
3.15 OTC Bulletin Board. Litewave shares are listed on the OTC
Bulletin Board under the symbol "LTWV". No representation is being
made by Litewave of any value as to the trading of the shares of
Litewave, At the Closing Date, Litewave documentation and reports
required to be filed with the SEC as discussed above shall have been
updated and shall be current in all material respects, except as may
appear on Schedule 3.15.
3.16 Authority to Execute and Perform Agreements. Litewave has
the full legal right and power and all authority and approval required
to enter into, execute and deliver this Agreement and to perform fully
its obligations hereunder. This Agreement has been duly executed and
delivered and is the valid and binding obligation of Litewave
enforceable in accordance with its terms, except as may be limited by
bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and the performance by Litewave of this Agreement,
in accordance with its respective terms and conditions will not:
(i) require the approval or consent of any
governmental or regulatory body or the approval or consent
of any other person;
(ii) conflict with or result in any breach or violation
of any of the terms and conditions of, or constitute (or
with any notice or lapse of time or both would constitute) a
default under, any order, judgment or decree applicable to
Litewave, or any instrument, contract or other agreement to
which Litewave is a party or by or to which Litewave is bound
or subject; or
(iii) result in the creation of any lien or other
encumbrance on the assets or properties of Litewave.
3.17 Full Disclosure. No representation or warranty by Litewave
in this Agreement or in any document or schedule to be delivered by
them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished by Litewave pursuant hereto or
in connection with the negotiation, execution or performance of this
Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any fact necessary to make any
statement herein or therein not materially misleading or necessary to
complete and correct presentation of all material aspects of the
business of Litewave.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Obligation of ICE and its
Shareholders. All obligations of ICE and its Shareholders under this
Agreement are subject to the fulfillment, prior to or as of the
Closing Date, as indicated below, of each of the following conditions:
(a) The representations and warranties by or on behalf
of Litewave contained in this Agreement or in any certificate
or document delivered pursuant to the provisions hereof
shall be true in all material respects at and as of Closing
Date as though such representations and warranties were made
at and as of such time.
(b) Litewave shall have performed and complied in all
material respects, with all covenants, agreements, and
conditions set forth in, and shall have executed and
delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them
prior to or at the Closing.
(c) On or before the Closing, the Board of Directors
and the shareholders of Litewave shall have approved, in
accordance with Nevada law, the execution, delivery and
performance of this Agreement and the consummation of the
transaction contemplated herein and authorized all of the
necessary and proper actions to enable Litewave to comply
with the terms of the Agreement.
(d) The Exchange shall be permitted by Nevada law and
Litewave shall have sufficient shares of Litewave Common Stock
authorized to complete the Exchange.
(e) At the Closing, all instruments and documents
delivered to ICE and the Shareholders pursuant to provisions
hereof shall be reasonably satisfactory to legal counsel for
ICE.
(f) At the Closing, Litewave shall have delivered to
ICE an opinion of counsel dated as of the Closing to the
effect that:
(i) Litewave is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Nevada;
(ii) This Agreement has been duly authorized
executed and delivered by Litewave and is a valid and
binding obligation of Litewave enforceable in accordance
with its terms;
(iii) Litewave, through its Board of Directors
and its shareholders, has taken all corporate action
necessary for performance under this Agreement;
(iv) The documents executed and delivered to ICE
and the ICE Shareholders hereunder are valid and
binding in accordance with their terms to the shares of
Litewave Shares to be issued pursuant to Section 1.1
hereof, and such Shares will be duly and validly
issued, fully paid and non-assessable; and
(v) Litewave has the corporate power to execute,
deliver the Shares and perform under this Agreement.
(g) The shares of restricted Litewave Common Stock to
be issued to the Shareholders of ICE at Closing will be
validly issued, non-assessable and fully paid under Nevada
corporation law and will be issued in a non-public offering
and isolated transaction in compliance with all federal and
state securities laws, bearing a restrictive legend, as is
more fully set forth above.
(h) This transaction must have been approved by ICE.
Litewave shall have performed the following financial
commitments:
(i) Provide financing commitments in the
aggregate amount of US$800,000, by way of a
debt, equity or a combination of both, at the
rate of US $100,000 per month for a total of
eight months, or until an alternative source
for major financing is secured.
4.2 Conditions Precedent to the Obligations of Litewave and
Litewave Shareholders. All obligations of Litewave under this Agreement
are subject to the fulfillment, prior to or at Closing, of each of the
following conditions:
(a) The representations and warranties by ICE and its
Shareholders, contained in this Agreement or in any
certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects at and as of
the Closing as though such representations and warranties
were made at and as of such time;
(b) ICE and its Shareholders shall have performed and
complied with, in all material respects, with all covenants,
agreements, and conditions set forth in, and shall have
executed and delivered all documents required by this
Agreement to be performed or complied or executed and
delivered by them prior to or at the Closing;
(c) ICE shall deliver on behalf of its Shareholders to
Litewave a letter commonly known as an "Investment Letter,"
or investment representations acknowledging that the shares
of Litewave Common Stock are being acquired for investment
purposes.
(d) ICE and its Shareholders shall deliver an opinion
of its legal counsel to Litewave to the effect that:
(i) ICE is a corporation duly organized validly
existing and in good standing under the laws of the
State of Nevada and is duly qualified to do business in
any jurisdiction where so required except where the
failure to so qualify would have no material adverse
impact on the company;
(ii) ICE has the corporate authority to carry on
its business as now being conducted; and
(iii) This Agreement has been duly authorized,
executed and delivered by ICE.
SECTION 5. COVENANTS
5.1 Corporate Examinations and Investigations. Prior to the
Closing Date, the parties acknowledge that they have been entitled,
through their employees and representatives, to make such
investigation of the assets, properties, business and operations,
books, records and financial condition of the other as they each may
reasonably require. No investigations, by a party hereto shall,
however, diminish or waive any of the representations, warranties,
covenants or agreements of the party under this Agreement.
5.2 Expenses. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein, other than as set forth in Section
4.1(i) above.
5.3 Further Assurances. The parties shall execute such
documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof
and the transactions contemplated hereby. Each such party shall use
its best efforts to fulfill or obtain the fulfillment of the
conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution
and delivery of which are necessary or appropriate to the Closing.
5.4 Confidentiality. In the event the transactions contemplated
by this Agreement are not consummated, Litewave, ICE and their
respective Shareholders agree to keep confidential any information
disclosed to each other in connection therewith for a period of three
(3) years from the date hereof; provided, however, such obligation
shall not apply to information which:
(i) at the time of the disclosure was public
knowledge;
(ii) after the time of disclosure becomes public
knowledge (except due to the action of the receiving party);
or
(iii) the receiving party had within its possession
at the time of disclosure.
(iv) is ordered disclosed by a Court of proper jurisdiction.
5.5 Asset Documents. At the Closing, the ICE and/or its
Shareholders shall have delivered the documents representing the
Assets duly endorsed so as to make Litewave the sole owner thereof. At
such Closing, Litewave shall issue to the Shareholders the Litewave
Shares.
5.6 Investment Letters. The ICE Shareholders shall have
delivered to Litewave an "Investment Letter" agreeing that the shares
are being acquired for investment purposes only and not with the view
to public resale or distribution.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ICE AND
LITEWAVE
Notwithstanding any right of either party to investigate the
affairs of the other party and/or its Shareholders, each party has the
right to rely fully upon representations, warranties, covenants and
agreements of the other party and its Shareholders contained in this
Agreement or in any document delivered to one by the other or any of
their representatives, in connection with the transactions
contemplated by this Agreement. All such representations, warranties,
covenants and agreements shall survive the execution and delivery
hereof and the closing hereunder for 3 years following the Closing.
SECTION 7. INDEMNIFICATION
For a period of three (3) years from the Closing, Litewave, ICE
and their respective Shareholders agree to indemnify and hold harmless
the other, at all times after the date of this Agreement, against and
in respect of any liability, damage, or deficiency, all actions,
suits, proceedings, demands, assessments, judgments, costs and
expenses, including attorneys' fees, incident to any of the foregoing,
resulting from any material misrepresentation made by any indemnifying
party to an indemnified party, an indemnifying party's breach of
covenant or warranty or an indemnifying party's non-fulfillment of any
agreement hereunder, or from any material misrepresentation or
omission from any certificate furnished or to be furnished hereunder.
SECTION 8. DOCUMENTS AT CLOSING AND THE CLOSING
8.1 Documents at Closing At the Closing, the following
transactions shall occur, all of such transactions being deemed to
occur simultaneously:
(a) ICE will deliver, or will cause to be delivered, to
Litewave the following:
(i) a certificate executed by the Shareholders of ICE
to the effect that all representations and warranties made
by ICE under this Agreement are true and correct as of the
Closing, the same as though originally given to Litewave on
said date;
(ii) a certificate from the State of Nevada dated at or
about the Closing to the effect that ICE is in good
standing under the laws of said State;
(iii) Investment Letters or investment representations
in the form executed by each ICE Shareholder;
(iv) Certificates representing all the Assets of ICE to
be exchanged for Litewave Shares;
(v) all other items, the delivery of which is a
condition precedent to the obligations of ICE, as set forth
in Section 4 hereof.
(b) Litewave will deliver or cause to be delivered to ICE
and the ICE Shareholders:
(i) stock certificates representing those shares of
Litewave Shares to be issued as a part of the Exchange as
described in Section I hereof;
(ii) a certificate from Litewave executed by the
President or Secretary of Litewave, to the effect that all
representations and warranties of Litewave made under this
Agreement are true and correct as of the Closing, the same
as though originally given to ICE on said date;
(iii) certified copies of resolutions by Litewave
Board of Directors authorizing this transaction; and an
opinion of Litewave counsel as described in Section 4 above;
(iv) certificates from the Nevada Secretary of State
dated at or about the Closing Date that Litewave is in good
standing under the laws of said State;
(v) all other items, the delivery of which is a
condition precedent to the obligations of Litewave, as set
forth in Section 4 hereof.
8.2 The Closing. The Closing shall take place at the conclusion
of the Escrow or at such other later time or place as may be agreed
upon by the parties hereto. At the Closing, the parties shall provide
each other with such documents as may be necessary.
SECTION 9. MISCELLANEOUS
9.1 Waivers. The waiver of a breach of this Agreement or the
failure of any party hereto to exercise any right under this Agreement
shall in no way constitute waiver as to future breach whether similar
or dissimilar in nature or as to the exercise of any further right
under this Agreement.
9.2 Amendment. This Agreement may be amended or modified only
by an instrument of equal formality signed by the parties or the duly
authorized representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by
operation of law.
9.4 Notice. Until otherwise specified in writing, the mailing
addresses and fax numbers of the parties of this Agreement shall be as
follows:
To: Litewave Corp.:
Mr. Ian Lambert, Director
110 Cambie Street, Suite 404
Vancouver, BC V6B ZM8
Fax (604) 688-9519
cc: Christopher Dieterich
11300 West Olympic Boulevard, Suite 800
Los Angeles, California 90064
To: International Communications and Equipment Inc.
Mr. Ken Martin
12685 NE 85th Street, Suite 362
Kirkland, WA 98033
Fax: (425) 885-7441
Any notice or statement given under this Agreement shall be deemed to
have been given if sent by registered mail addressed to the other party
at the address indicated above or at such other address which shall have
been furnished in writing to the addressor.
9.5 Governing Law. This Agreement shall be construed, and the
legal relations be the parties determined, in accordance with the laws
of the State of Nevada, thereby precluding any choice of law rules which
may direct the application of the laws of any other jurisdiction.
9.6 Arbitration.
(a) All disputes and differences arising in connection with
or relating to the provisions of this Agreement, including what
constitutes a dispute or difference, shall be settled and finally
determined by arbitration unless agreement in writing has been
reached between the parties within ninety (90) days after either
party shall have given written notice to the other party of the
existence of a dispute or difference which it desires to have
arbitrated. Such notice shall state the point or points in
dispute.
(b) Arbitration shall be conducted in Los Angeles,
California, in accordance with the rules of the American
Arbitration Association augmented by the rights of Civil Discovery
included in the Federal Rules of Civil Procedure by three (3)
arbitrators, one of whom shall be selected by Litewave, one by ICE,
and a Chairman of the Arbitration Court selected by the two
arbitrators so selected. The applicable law shall be as provided
above. Each party shall notify the other party of the arbitrator
selected by it within sixty (60) days of the giving of written
notice referred to above. In the event that the two arbitrators
selected by the parties are unable to reach agreement as to the
third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association. Arbitration shall be held in the
jurisdiction of the party against which or whom the arbitration is
instituted. Each party shall be given the opportunity to present
to the arbitrators its evidence, witnesses and arguments, and the
right to be represented by counsel of its selection when the other
party be represented by counsel, of its selection when the other
party presents its evidence, witnesses and arguments. In the event
one of the parties shall fail, after reasonable notice, to appear
and participate in the arbitration proceedings as normally
interpreted by the above-mentioned rules, the arbitrators shall be
entitled to make their decision and award on the basis of evidence,
witnesses and arguments presented by the party appearing.
(c) The decision and the award of the arbitrators shall be in
writing and shall be final and binding upon the parties hereto.
Judgment upon the award rendered my be entered in any court having
jurisdiction thereof, or application may be made to such court for
a judicial acceptance of the award and an order of enforcement, as
the case may be. The expenses of arbitration shall be borne n
accordance with the determination of the arbitrators with respect
thereto. Pending decision by the arbitrators with respect to the
dispute or difference undergoing arbitration, all other obligations
of the parties hereto shall continue as stipulated herein, and all
monies not directly involved in such dispute or difference shall be
paid when due. All parties will have the right to appeal as if the
award had been rendered in Federal District Court.
9.7 Publicity. No publicity release or announcement concerning
this Agreement or the transactions contemplated hereby shall be issued
by either party hereto at any time from the signing hereof without
advance approval in writing of the form and substance by the other
party.
9.8 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection
with the consummation of the transactions contemplated herein contain
the entire agreement among the parties with respect to the purchase of
the ICE Assets, the issuance of the Litewave Shares and any transactions
related thereto, and supersede all prior agreements, written or oral,
with respect thereto.
9.9 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.10 Severability of Provisions. The invalidity or
unenforceability of any term, phrase, clause, paragraph, restriction,
covenant, agreement or provision of this Agreement shall in no way
affect the validity or enforcement of any other provision or any part
thereof.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an
original copy hereof, but all of which together shall consider but one
and the same document.
9.12 Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors,
successors and assigns.
9.13 Press Releases. The parties will mutually agree as to the
wording and timing of any informational releases concerning this
transaction prior to and through Closing.
SECTION 10. ESCROW PENDING CLOSING
The parties anticipate the utilization of an Escrow Agent, agreed
to be the law firm of Dieterich & Associates, as represented by
Christopher H. Dieterich, to effect the transaction contemplated by this
Agreement, with the Escrow to close on or before August 31, 1999. The
Notes, Shares, Financial Statements and all supporting Schedules to this
Agreement and the Financial Statements, Cash Payments and Financial
Commitments and similar documentation necessary or incident to Closing,
will be delivered to the Escrow Agent. Following receipt in escrow of
these items, both parties are then committed to this Agreement, and may
suffer damages if there is a breach. Either party may demand
arbitration under paragraph 9.6 for actual damages or specific
performance at that time. Upon receipt of the items, the Escrow Agent
will transfer relevant documents, funds, and financial instruments to
the appropriate party. If, during the escrow period, either party
determines that a material misrepresentation has occurred, or that a
condition precedent has not been met, the transaction may be canceled
with no further obligation of either party to the other. The parties
will execute this Agreement prior to completion of all Schedules,
however the Schedules must be provided to Escrow prior to Closing. Any
party may cancel this Agreement upon review of the relevant Schedules,
with no liability assessed against either party for cancellation. There
will be no remedies for breach of this agreement other than as set forth
in paragraph 9.6.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Litewave Corporation
a Nevada corporation
By: /s/ Ian D. Lambert
Ian D. Lambert, Director
International Communications and Equipment Inc.
a Nevada corporation
By: /s/ Ken Martin
Ken Martin, CEO
<PAGE>
<PAGE>
EXHIBIT "A"
LIST OF ICE SHAREHOLDERS
<TABLE>
<S> <C> <C> <C>
Name of Shareholder Approximate Percentage Number of Shares of Number of Shares of
of ICE of Holding ICE Common Stock Litewave Common Stock
- ------------------- ---------------------- ------------------- ---------------------
Ken Martin 29.1 3,000,000 3,000,000
Michael Rogers 24.3 2,500,000 2,500,000
Joanne Gilman 0.1 10,000 10,000
Rosemary Harer 0.1 10,000 10,000
David Scott 0.1 10,000 10,000
Randy Fitzhugh 0.1 10,000 10,000
Steve McCowan 0.05 5,000 5,000
Mike Herman 0.05 5,000 5,000
Victor Voldemarov 3.9 400,000 400,000
Sigfrid Lietzman 0.1 10,000 10,000
Todd Moore 1.2 125,000 125,000
J. Brian Walsh 1.9 200,000 200,000
Cuno von Buckwaldt 1.9 200,000 200,000
Harold Hartz 1.9 200,000 200,000
Will Robertson 0.5 50,000 50,000
Anthony Mueting 1.0 100,000 100,000
Torquay Holdings Ltd. 4.1 425,000 425,000
Canasia Data Corporation 1.5 150,000 150,000
Vista Financial Ltd. 0.5 50,000 50,000
Chariot Group Ltd. 0.5 50,000 50,000
Jahwula Ventures Ltd. 0.5 50,000 50,000
El Coyote Capital Corp. 0.5 50,000 50,000
Jupiter Financial
Services Inc. 0.2 25,000 25,000
Kyline Investment Corp. 0.1 15,000 15,000
Aberdeen Holdings Limited 3.4 350,000 350,000
Laiy Limited 3.4 350,000 350,000
Clyde Resources Ltd. 3.4 350,000 350,000
Melbourne Investments Ltd.3.4 350,000 350,000
Iguana Investments Ltd. 3.4 350,000 350,000
Albury Capital
Corporation 4.4 450,000 450,000
Eivissa Capital
Corporation 4.4 450,000 450,000
---- --------- ---------
TOTAL: 100.0 10,300,000 10,300,000
</TABLE>
<PAGE>
EXHIBITS
A List of ICE Shareholders (See table above)
SCHEDULES
ICE Schedules
ICE Warrants and Options currently in existence - None
2.3 ICE Ownership of Shares - None
2.9 ICE Claims, Litigation, Government actions pending - None
2.10 ICE Significant contracts - attached
2.11 ICE Brokers Agreements due by ICE contract - None
2.12 ICE List of Real Estate Owned and List of Leases - None
2.13 ICE List of exceptions to the Tangible Assets on balance sheets -
None
2.14 ICE List of undisclosed Liabilities - None
2.16 ICE List of Subsidiaries - None
Litewave Schedules
3.3 Litewave list of 5% or greater shareholders, and outstanding
warrants and options
3.4 Litewave Financial Statements
3.5 List of transactions of Litewave for contracts and in which stock
has been issued or committed
3.8 Litewave List of Pending Actions not disclosed in financial
statements
Litewave list of periodic reports filed with SEC or Broker/Dealers
3.10 Litewave list of third party agreements affecting business credit and
stock pledges
3.14 Litewave list of brokers due pursuant to Litewave contracts
3.15 Litewave list of exceptions to any current SEC filings
Schedule 2.10 - ICE Significant contracts
Lebanon
San Marino
<PAGE>
Exhibit 10.2 Letter of Intent / 27 May 99 / Crosna
CROSNA
27.05.99 MOSCOW
To Mr. C.E.O Litewave corp K.F. Martin
Letter of intent
We are ready to confirm our possibility to intriduce your
tecnology of digital packeting cjmpressing telecommunication on
the russion market.
Also we are ready to propose our experience and possibilities
for our cooperation in russion telecommunication systems.
We are looking forward to your visit to sign all necessary
documents. Best regards.
General director /s/ A.Romanovskiy
A.Romanovskiy
<PAGE>
Exhibit 10.3 Protocol of Intentions Agreement
PROTOCOL OF INTENTIONS
Moscow June, 22, 1999
In June, 21-22, 1999 there were the meetings between
representatives of LiteWave corporation and the JSC NPO
Crosna companies in Moscow.
From LiteWave corporation the participants were as
follows:
* William R. Robertson, Presidentl/COO;
* Harald Hartz;
* Ken Martin.
From the JSC NPO Crosna the participants were as follows:
* Romanovsky A. G., General Director;
* Demchenko L. M., Deputy of General Director.
During the meetings the parties expressed their intention
to develop a cooperation in a field of organization of
international and inter-city communication channels at the
territory of Russia and CIS using the LiteWave corporation
equipment and have agreed as follows:
1. The LiteWave corporation shall provide the JSC NPO
Crosna with information on VoIP equipment with the purpose to
determine the specifications to this equipment concerning the
terms of application at the territory of Russia and CIS.
2. The JSC PO Crosna shall study the juridical
questions (a receipt of licenses, ets.) and determine the
conditions of VoIP equipment use.
3. The JSC NPO Crosna shall discuss with Internet
providers and companies having the telecommunication networks
at the territory of Russia the questions on international and
inter-city traffic organization on the basis of LiteWave
corporation technologies.
From LiteWave corporation From JSC NPO Crosna
/s/ William R. Robertson /s/ A.G. Romanovsky
William R. Robertson, A.G. Romanovsky,
President/COO General Director
<PAGE>
Exhibit 10.4 Agreement between Crosna and Company/IP Network
Principles
for Setting up the IP-Telephone Network and Providing IP-
Telephone Services in the
Territory of the Russian Federation
Moscow
September 10, 1999
"LiteWave Corporation", a corporation incorporated in the State
of Nevada, having its registered office located at: 12865 N.E.
85th Street Suite 362 Kirkland, WA 98033, (hereinafter referred
to as the Corporation "LiteWave",) represented by Chief
Executive Officer Ken Martin on the one part, and Joint-Stock
Company "Crosna Research & Production Association" incorporated
in accordance with the current Law of the Russian Federation,
having its registered office at 123557, Moscow, Presnensky Val
27 (hereinafter referred to as ZAO NPO "Crosna") represented by
Director General A.G. Romanovsky on the other part, both
referred to as the "Parties", concluded these Principles on the
following:
WHEREAS ZAO NPO "Crosna" has expert knowledge and professional
skills in setting up communication networks and providing
communication services, including local and long-distance
networks using facilities of radio access and data transmission,
WHEREAS Corporation "LiteWave" has up-to-date telecom equipment
necessary to provide IP-telephone services and intends to
introduce this equipment in the territory of the Russian
Federation, and
WHEREAS the Parties have common commercial interests in setting
up the IP telephone network to meet the needs of clients in the
territory of the Russian Federation and outside it,
the Parties agreed on the following:
1. The Parties agree to set up the IP-telephone network in a
number of regions of the Russian Federation and provide services
on its use. Towards this end a new legal person - a resident of
the Russian Federation with 100% foreign investments as an
authorized capital (hereinafter referred to as the "Associated
Company" or AC) - shall be registered.
2. This AC shall be instituted as a limited liability company.
The objective for which the AC will be established is to lease
the equipment delivered by the Corporation "LiteWave" for
setting up the IP-telephone network.
3. The Corporation "LiteWave" will be the founder of the AC and
shall provide duly executed documents required for registration
of the AC in accordance with the Law of the Russian Federation.
3.1 The authorized capital of the AC shall be formed as a sum of
the basic equipment and money contribution necessary for the AC
to implement the equipment, carry out start-and-adjusting works
and put the equipment into operation, as well as to cover
expenses of the AC connected with personnel remuneration and
other expenses due to its activities, including by not limited
to certification of the equipment and personnel training, until
appropriate profit performances are achieved.
Terms and procedure for the payment of the authorized capital
shall be determined separately and account for recommendations
of ZAO NPO "Crosna".
3.2 All the expenses in Connection with registration of the AC
shall be borne by the founder. ZAO NPO 'Crosna" undertakes to do
all organizational work on institution of the AC without
indemnity.
3.3 The solo executive body of management of the AC (Director
Genera]) and Chief Accountant shall be appointed as proposed by
LiteWave.
3.4 Deputy General Director and Chief Financial Officer shall
be appointed by the Corporation "I.iteWave' without prior
agreement with ZAO NPO "Crosna".
4. The Parties agree to provide for other terms for
establishment of the AC in the constituent documents.
5. In order to Set up the IP-telephone network in the
territory of the Russian federation and provide successful
activities of the AC. ZAO NPO 'Crosna" got license No.12690
authorizing it to provide telematic services.
6. Technical base for The. IP-telephone network shall be built
up on the basis of the equipment of the Corporation "LiteWave"
for the amount up to USD 30,000,00o delivered to the territory
of the Russian Federation and for the entire project as a
contribution to the authorized capital of the instituted AC.
ZA0 NPO "Crosna' shall provide services on the use of the IP-
telephone system using its license.
6.1 ZAO NPO "Crosna" undertakes to make out a list of
perspective legions of Russia fur introduction of the .IP-
telephone network and a schedule of installation of the
equipment.
6.2 ZAO NPO "Crosna" undertakes to do its best in order to
minimize, within the limits defined by the current Law of the
Russian Federation, the expenses connected with delivery by the
Corporation "LiteWave" of the equipment intended to he a
contribution to the authorized capital. The Corporation
"LiteWave" undertakes to follow instructions of ZAO NPO "Crosna"
in drawing up a specification of the equipment to be delivered
and routes of its delivery to destination points in order to
minimize additional expenses.
7. The Corporation 'LiteWave" shall be responsible for
formation of the authorized capital, including delivery of the
basic equipment for the IP-telephone network intended to be a
contribution to the authorized capital. within the deadlines as
agreed between Parties and in such a manner as to meet the
requirements of the law regulating registration matters.
Upon completion of the mounting and start-and-adjusting works,
the equipment delivered will be offered for lease to ZAO NPO
"Crosna". The rent shall be established as part of proceeds from
IP-telephone services provided in the territory of the Russian
Federation.
8. ZAO NPO "Crosna" undertakes to:
- lease premises for installation of the equipment;
-- conclude agreements with Internet providers. owners of
switching and non-switching networks and other counterparts
necessary to provide IP-telephone services
in the territory of the Russian Federation:
- obtain necessary permissions of competent bodies for the
importation of the
equipment, its certification arid registration of the AC (State
Telecom Committee of
Russian Federation, Ministry for Antimonopoly Policy and
Assistance to Business of
Russian Federation and others);
- promote IP-telephone. networks.
9. In its effort to build up the IP-telephone network, the AC
shall conclude a contractor's agreement under which ZAO NPO
"Crosna" or one of companies of the 'Crosna" Group shall be
bound to perform design works and to install and put into
operation the IP-telephone facilities and then to transfer them
to the AC, the Corporation "LiteWave' being responsible for
chief-mounting works, if any.
10. Acting on the basis of its license. ZAO NPO "Crosna" shall
provide IP-telephone services to clients and make. necessary
settlements with them.
11. As it is agreed between the Parties that 50% of the net
profit from IP-telephone services in the territory of the
Russian Federation ZAO NPO "Crosna" shall transfer to the
Corporation "LiteWave" and vice versa, the Corporation
"LiteWave" shall transfer 50% of the net profit flout IP-
telephone services provided outside the territory of the Russian
Federation to ZAO NPO "Crosna". The Parties shall conclude
counter-contracts on providing services for bringing the
outgoing traffic to the end user. In doing so. the Parties shall
take necessary steps consistent with an appropriate law, to
avoid double taxation.
These 50% of the net profit from IP-telephone cervices in the
territory of the Russian Federation to be transferee to the
Corporation "LiteWave" shall include the rent for the AC and
that part of net profit which is due to the Corporation "Lite
Wave" under the contract on providing IP-telephone services.
12. The Parties agree to provide IP-services under the same
trade mark and in accordance with the mutually agreed marketing
policy.
13. The Principles agreed upon by the Parties shall be.
reflected and defined exactly by separate contracts and
constituent documents of the AC.
14. The Parties further agree that ZAG NPO "Crosna" shall have
the right to involve companies of the "Crosna" Group in
implementing the terms of the present Principles In this case
ZAO NPO "Crosna" shall be responsible fur their compliance with
these Principles.
15. Each of the Parties undertakes to fulfill its partner
obligations in a proper manner, render mutual assistance in
managerial decision making in order to implement the aims of
these Principles, and to provide all requested information about
its activities under these Principles to the other Party.
16. Each Party shall keep confidential all the information
obtained from the other Party, avoid taking steps that may
involve damage to the other Party, advise in advance the other
Party of the actions which may affect its interests and shall
not transfer rights and obligations under these Principles to a
third party without prior consent of the other Party,
17. The present Principles is drawn up and signed in six
original copies (3 in Russian and 3 in English) for each of the
Parties. Both texts are identical.
/s/ A.G.Romanovsky /s/ Ken Martin
Director General Chief Executive Officer
ZAO NPO "Crosna" "LiteWave Corporation"
A.G.Romanovsky Ken Martin
<PAGE>
Exhibit 10.5 Letter of Interest/PPHU Poland
PRZEDSIEBIORSTWO PRULJUKCYJNO-HANDLOWO-USLUGOWE
"ANDROMEDA"
tel/fax: (0-22) 775-45-74, 713-20-05
te1. korn. (0) 602-382-320
NIP: 531-100-19-61
Regon: 010017553
Rank: PK0 BP X O/Warszawa
Nowy Dwor Maz. dn. 1999-05-20
LITEWAVE CORPORAtION
[email protected]
DEAR MISTER MARTIN.
FURTHER TO RECENT DISCUSSIONS AND TELECOM, WE TODAY GIVE YOU
AN OVERV1EW ABOUT THE STEPS AND THE ABILITIES WE HAVE OVER
HERE.
AFTER NEGOTIATIONS WITH THE ISP (National PTT) WE CAN HAVE THE
NECESSARY LINES AND A 2 MEGA SUPPLY FROM THE ISP, WHICH IS
MORE THAN YOU HAVE DEMANDED. WE OURSELVES HAVE A
TELECOMMUNICATION LICENSE, ISSUED ON ThE LATEST PERMISSION FOR
OUR FIRM. STATING THAT WE CAN WORK IN THE WHOLE COUNTRY. TO
RENT A OFFICE IN WARSAW OR IN THE OUTSKIRTS OF THE CAPITOL
WILL NOT BE A PROBLEM, IF WE MAY SUGGEST, BECAUSE OF KNOWING
OUR MENTALITY, IT IS NOT OF NEED TO HAVE IT IN CENTER OF TOWN.
BUT ANYHOW WILL BE NO PROBLEM.
THE SUPPLYING AND NECESSARY PAPER AND DOCUMENTATION WORK OVER
HERE, CAN EXTEND TO MAX. 2-3 MONTH.
IF ANY FURTHER INFORMATION IS WANTED BY YOUR SIDE, PLEASE DO
NOT HESITATE TO CONTACT US.
COPY OF LATEST PERMISSION OF OUR FIRM YOU SEE ATTACHED ON NEXT
PAGE.
KINDEST REGARDS
/s/ MAREK FIJALKOWSKI
/s/ HARTMUT STROBEL
<PAGE>
Exhibit 10.6 Letter of Intent, June 15, 1999 / Malta
LETTER OF INTENT TO FORM A JOINT VENTURE
AGREEMENT
Date: 6-15-99
This document shall constitute the intent to form an agreement
to complete a business arrangement between LiteWave Corporation,
(LWC) located at 1933 West 11th St. Suite E, Upland, CA, 91786,
USA (Tele 909-985-3000 (Fax 909-985-2262, and the Demajo Group
(MDG) of Companies located at Demajo House, Archbishop Street,
Valletta VLT 09, Malta (Tele (356)233121, (Fax (356) 250603.
IT IS THE INTENTION OF LWC THAT THE CONTRIBUTION OF LWC WILL BE:
1. Commence with the installation of VoIP servers in the
following countries (not in the shown order)
* Lebanon
* Syria
* Jordan
* Libya
* Iraq
* Iran
* Turkey
* Cyprus
* Egypt
* And various countries in Africa and the Middle East
2. The M. Demajo Group of Companies will be assigned by LWC
to become the area managing arm, and where necessary and
agreed, marketing and facilities provider, for the
mutually beneficial telephony operations in these
countries. Such involvement will include, but not be
limited to the elements of consideration as outlined in
this document. Such services may include Voice over
Internet Protocol, Pre-paid calling cards, ISP access and
other services as needed or requested by either party.
3. It is our intention that MDG shall work with Maltacom to
assign them the joint operating agreement that will allow
them to become the hub for some applications that offer an
economic advantage to all parties including the sharing of
revenues by and between LWC and the JV Partnership with
MDG. It is also expected that Maltacom may be invited to
become a partner m the JV agreement with MDG allowing them
to share in revenues generated by the operations of the JV
between LWC and MDG. It should be noted that Maltacom
Management have already been verbally invited to
participate in the IV if they so wish.
4. LWC's partnership with MDG will allow an additional
agreement to allow both Maltacom and MDG to assign one or
more persons to become technically competent operatives in
the areas of gateway installation, maintenance, and
operation of such equipment to be located in a place
suitable to all parties.
5. While LWC considers the current top priorities for service
installation, and maintenance to be Turkey and Egypt,
other countries are being considered.
6. In addition, LWC and the JV with MDG plans to offer
ventures outside of Malta including calling cards, pre-
paid cards, re-charging ability by phone and with possible
voice activation operations, and other added services as
they become available.
7. The percentage of the sharing of the profits resulting
from the Joint Venture activity and the relative
allocation of costs shall be determined prior to the
finalization of the Joint Venture agreement.
8. It is understood that there shall be a sharing of stock
shares in LWC in the form of stock options issued upon the
completion of the agreement with Maltacom between the JV
(LWC and MDG) and that firm. It is the intention of the
agreement to allow MDG one million options with a strike
price equal to 75% of the average trading price of the
stock determined based on the trading having taken place
over the prior 90 days as of the close of the agreement.
Such options shall have a restriction of one year or until
registration rights are confirmed by the public
corporation Lite Wave Corporation as ratified by its Board
of Directors. MDG shall have the final decision on whether
it wishes to exercise this option or to forego this entire
or any part of this option. Transfer of option rights is
subject to both the formal request of MDG and the
agreement and ratification of the Board of Directors of
LiteWave Corporation.
9. Revenue sharing between LWC and MDG as well as that of the
JV and Maltacom shall be determined as part of the
agreement between the IV of LWC and MDG and potentially
Maltacom. It is understood that MDG shall be entitled to
additional shareholding in the form of promoter's rights.
The quantum of this right is yet to be determined.
10. If it is found to be preferable, LWC and MDG may together
operate a formal company registered in Malta in lieu of
the IV mentioned in this document. Such action is subject
to the approval and ratification of both Boards of
Directors. Furthermore, MDG may delegate the participation
of their responsibility in such agreement to any of its
wholly owned member companies subject to the agreement and
ratification of the Boards of Directors of both firms.
Signed for and on behalf of the parties to this letter of
intent:
/s/ Ken Martin
Date: 6-15-99
Ken Martin, CEO LiteWave Corp.
/s/ Brian Walsh
Date: 6-15-99
Brian Walsh, Director of European Operations
/s/ Norman J. Miller
Date: 6-15-99
Norman J. Miller, Deputy Managing Director, Joseph Cachia &
Sons Ltd.
/s/ John Darmanin
Date: 6-15-99
John Darmanin, Business Development Manager, Demajo Group
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