U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB AMENDED
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.)
11300 W. Olympic Boulevard, Suite 800,
Los Angeles, California 90064
(Address of Principal Executive Offices)
(604) 633-2342
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
Common Stock
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(Title of Class)
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TABLE OF CONTENTS
Cautionary Note: Forward Looking Statements
Glossary
Part I
Item 1. Description of Business.
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
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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
A. BUSINESS DEVELOPMENT
The Registrant is a development stage telecommunications company
with offices in Los Angeles, California and an office in
Vancouver, B.C. Canada.
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 that is planned
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.
A glossary of terms and acronyms unique to the nature of this
business can be found in Part III following the Financial
Statements.
The Registrant expects to develop and expand through strategic
partnerships and joint venture agreements with government
telephone companies or Post, Telegraph & Telecommunications (PTT)
and Internet Service Provider (ISP) companies. Several PTT
companies have expressed interest in working with the Registrant
to develop telecom programs with the Registrant. These include
Russia with Incomtel TG (Moscow), Malta with The M. Demajo Group,
and Indonesia with Elephantnet Inc.
The Registrant plans to 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 plans to 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 11300 W. Olympic Boulevard, Suite 800, Los Angeles,
California 90064, with an office at Suite 402, 609 West
Hastings Street, Vancouver, B.C. V6B 4W4.
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 was to consist 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.
Based on a verbal agreement negotiated during late December,
1999, and signed on January 7, 2000, the agreement with ICE was
rescinded due to lack of progress by both parties in financing
and developing the business opportunity envisioned by the
agreement with ICE. Mr. Martin resigned as Chief Executive
Officer and Director of the Registrant and the 10,300,000 shares
were not issued.
As a result of the rescission of the April 19, 1999 Agreement,
the Registrant ("LiteWave") and ICE may both pursue any business
activities they so choose, without interference from the other
party. Additionally, an agreement has been reached between
LiteWave and ICE whereby LiteWave will assign all its right,
title and interest in its Russian Federation Joint Venture IP
Telephony Project pursuant to an agreement between LiteWave and
NPO ZAO Crosna dated September 10, 1999 (the "Crosna Project"),
in return for ICE agreeing to the following: (1.) Paying to
LiteWave a total of US $1,100,000 from profits generated by the
Crosna Project as reimbursement of costs incurred by LiteWave to
date, at the rate of 20% of ICE's share of the Crosna Project
profits earned, payable monthly. (2.) Paying to LiteWave a bonus
of 10% of ICE's net profits earned (not including management
bonuses) should the Crosna Project process 200,000,000 minutes
of traffic in an eighteen month period commencing from the time
of full operation, either within the Russian Federation, or
originating from the Russian Federation to other countries. (3.)
Paying any proceeds of lease funds or any return credit or sale
proceeds for existing equipment toward the outstanding balance of
the amount due pursuant to paragraph 1. (4.) Accepting any
financial responsibility that LiteWave might have with respect to
the project, and indemnifying LiteWave from any further
responsibility for such claims by any or all of those parties.
There is no certainty that LiteWave will receive any proceeds
pursuant to paragraphs (1), (2) or (3) above.
At this time, the Registrant has not completed any major
financing, but continues to seek $2 to $3 million in equity
financing. Certain parties have advanced the necessary capital
to permit the Company to continue operations (see Item 2. Plan of
Operation). There is no guarantee that this will continue, and
the Company will need to raise further working capital to execute
its business plan. At December 31, 1999 the Company was in a
working capital deficit position of approximately $1,064,765,
including interest-free loans. At present, the Company has two
full time employees, though this may be increased as required and
funding permits.
B. BUSINESS OF THE REGISTRANT
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 up to 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 at the Command
Center. This will require the hiring of 6 to 8 diploma level
technicians based on 8 to 12 hour/day rotating shifts. 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 hiring management with 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, in Europe and Asia.
Sales and Marketing
Because of the plan to develop joint ventures, it is not
anticipated that the Registrant will initially require any sales
or marketing staff, but will utilize staff of its joint venture
partners. The Registrant anticipates entering into joint
ventures with entities that have sales and marketing staff
already in place, and who already have established relationships
with potential wholesale and retail customers. This represents a
significant cost saving to the Registrant. As the Registrant
establishes itself to provide outbound traffic from one country
to various others by installation of VoIP gateways, the
Registrant plans to market its services on a wholesale basis to
other carriers to provide inbound services to the established
gateways. 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 joint
venture partners. Once the initial network is deployed and
operational in at least four countries, the Registrant expects to
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 that are part
of the network control software obtained from suppliers 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 provided by the
Registrant. The Registrant will either purchase a switch, or
lease a portion of an existing switch from a third party, which
is standard industry practice. 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 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.
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, using software provided by the
equipment suppliers. 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 will also enable it to assure accurate
and timely billing and to reduce routing errors using tested and
proven software developed and supplied by the manufacturers of
the network equipment. The system tracks start and end times for
each call that permits accurate reporting of call duration data.
The system will also manage the call initiation approval and
routing management activities and provide operational reports to
facilitate management of all networks.
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 Crosna Group consists of four closely held joint
stock companies registered and located in the Russian Federation,
predominantly in Moscow. The core of the group is composed of
telecommunication systems design, manufacturing, research and
development, operating, and servicing companies; companies
providing a wide range of financial services including
banking, depository, registrar, broker and dealer services;
electrical motors and low voltage equipment manufacturers, and
consumer goods production lines. ZAO NPO Crosna is a
telecommunications operator providing satellite communication
with remote users with access to the Moscow city telephone
network. It also provides the Crosna Group Industrial
Division with a number of security infrastructure and
administrative services, and is used as a contractual party for
the Ministry of Defense and other governmental orders which have
certain tax exemptions.
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. 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
established 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.
Since then, an agreement has been reached between the Registrant
("LiteWave") and International Communications and Equipment Inc.
("ICE") whereby LiteWave will assign all its right, title and
interest in its Russian Federation Joint Venture IP Telephony
Project pursuant to an agreement between LiteWave and NPO ZAO
Crosna dated September 10, 1999 (the "Crosna Project"), in return
for ICE agreeing to the following: (1.) Paying to LiteWave a
total of US $1,100,000 from profits generated by the Crosna
Project as reimbursement of costs incurred by LiteWave to date,
at the rate of 20% of ICE's share of the Crosna Project profits
earned, payable monthly. (2.) Paying to LiteWave a bonus of 10%
of ICE's net profits earned (not including management bonuses)
should the Crosna Project process 200,000,000 minutes of traffic
in an eighteen month period commencing from the time of full
operation, either within the Russian Federation, or originating
from the Russian Federation to other countries. (3.) Paying any
proceeds of lease funds or any return credit or sale proceeds for
existing equipment toward the outstanding balance of the amount
due pursuant to paragraph 1. (4.) Accepting any financial
responsibility that LiteWave might have with respect to the
project, and indemnifying LiteWave from any further
responsibility for such claims by any or all of those parties.
There is no certainty that LiteWave will receive any proceeds
pursuant to paragraphs (1), (2) or (3) above. As a result
of this Agreement, LiteWave will not be required to expend any
further funds on the Crosna project
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. It is proposed that the registrant would
provide VoIP servers and M. Demajo would become the area managing
arm, providing facilities, operating staff, marketing personnel,
etc. as their contribution to the joint venture.
The first step in developing VoIP network and services for the M.
Demajo joint venture is to meet with Maltacom and establish an
agreement to participate in the joint venture. It is anticipated
that these meetings will commence once the Registrant has raised
further working capital to fund expansion (See Capital
requirements and Use of Funds), and is not expected to take place
until the second half of year 2000. Despite the Letter of
Intent, the Registrant cautions that there is no guarantee that
either the M. Demajo group or Maltacom will actually consummate a
joint venture agreement with the Registrant.
Based on proceeding in Malta, the Registrant will deploy a
standard model of its VoIP network in a limited number of
countries initially, but should be able to rapidly duplicate the
service in other countries. The base command center and network
control system for Malta would require a one time expenditure by
the Registrant of approximately $500,000. Establishment of the
command center to observe and manage network operations in real
time would take three months to install and test. Budgets and
time frames for installation of points of presence in different
countries will vary depending upon the volumes of traffic at each
location, the types of switch gear in each location, and the
infrastructure associated with each location. It is anticipated
that the marketing and selling costs for each location would
average $35,000 for each country, such costs being borne by the
other joint venture partner(s).
Typically, the costs to the Registrant of equipment and setup to
become operational averages $50,000 per point of presence for a
volume of one million minutes per month. A typical installation
can be set up and operational within sixty days of an agreement
being confirmed. Once an agreement is established, a site visit
takes place to establish a provisioning plan to install and test
the gateway with the local provider's switch. Concurrently,
bandwidth would be leased from fiber optic cable providers
sufficient to meet two to three year forecasted demand. Once
operations commence, operating costs would be covered by revenue
from the individual contracts, which could run between 6 and 20
cents per minute, depending on traffic volumes.
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, which has subsequently been assigned to ICE. 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 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 present management believes it possesses
substantial knowledge in global business. The Registrant is
planning to establish its technical operation and European
headquarters in France or Germany to facilitate the development
of working relationships and management of network control
command centers. By augmenting the management team with
European based, industry experienced personnel, and leveraging
management's relationships and knowledge of global business, 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
This section describes certain contact made by the registrant in
various European and Asian countries. These opportunities serve
only as examples of possible agreements that might result from
further discussions. However, there is no certainty the
Registrant will be successful in entering into any agreement with
any of the following contacts.
FRANCE
The Registrant has had several meetings in Paris with a potential
joint venture partner and French Telecom. Should an agreement be
reached between the parties, the Registrant has the opportunity
to carry up to 20,000,000 minutes per month through VoIP from
France. The terms of the agreement have not been fully
negotiated, but the Registrant would be prepared to provide
and install all necessary network equipment and gateways to
handle this volume of traffic at an expected cost of $1 to $1.5
million. It would be the Registrant's intent to have the joint
venture partner staff any marketing and administrative functions.
Typically, the Registrant would expect to earn between 1 and 3
cents per minute before depreciation, amortization, and interest
expenses.
RUSSIA
The Registrant entered into a joint venture Agreement with
government-licensed Crosna to create a VoIP platform in Moscow.
As previously noted, this agreement has been assigned to ICE
which will arrange and provide further funding. (See Agreements.)
In the continuing belief that excellent potential exists for
multiple providers in Russia, the Company has had discussions
with other entities interested or involved in providing VoIP
services to and from Russia, but as yet has made no joint
venture or acquisition arrangements.
MALTA
After numerous visits to Malta, strong affiliations have been
established and the Registrant is relying on its intended joint
venture associates, the Demajo Group and Maltacom (PTT) to help
the Registrant establish footholds throughout the region. To
date, no further detailed plans have been developed regarding an
implementation strategy, as the Registrant is presently seeking
an equity financing for adequate working capital prior to
formalizing any installation commitments in the Mediterranean.
(See Agreements.)
In order to take advantage of any of these marketing
opportunities, the Registrant will have to expend funds to travel
to and communicate with people in these jurisdictions. There are
no specific proposals in place at this time, but the registrant
incorporate and invest in capital equipment and overhead in one
or more areas. Finders fees and other transaction fees may be
payable by the registrant in cash or stock.
It is estimated that a startup in any specific country, including
installation of gateway equipment would total a minimum of
$50,000 from inception to operation of the first million minutes
per month of traffic volume.
STRATEGIC ALLIANCES
Management plans to utilize as many relationships and strategic
alliances that have already been formed as is possible. Many of
the relationships were formed as a result of the introductions
made since the original acquisition with ICE. Since that
agreement has been rescinded, the Registrant cannot be assured
that any of those contacts will be available to the Registrant.
Additionally, the Registrant will continue to seek other
partnerships that have global market reach and significant
compatibility with the Registrant's business goals.
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. Should such
financing not be raised, it would put the ability for the
Registrant to pursue its business plan and continue as a going
concern at substantial risk.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS
The following should be read in conjunction with the Selected
Financial Data and the Consolidated Financial Statements and
notes thereto appearing elsewhere in this report.
Revenue and expense transactions in Canadian funds are converted
to US dollars at the average rates in effect when the
transactions occurred. Asset and liability accounts are
converted at year-end closing rates, as at December 31, 1999.
Plan of Operation.
The Company is a development-stage company whose primary business
is the development and delivery of telecom network solutions,
products and services to the global marketplace, and the
potential 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 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
up to 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 planned 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 Company plans to deploy the initial phase of its VoIP network
in western European countries during the year 2000, carrying long
distance traffic for national and regional exchange carriers from
country to country. This initial deployment will be financed by
equity and/or debt financing.
Based upon the low monthly overhead associated with current
operations, the Registrant believes that it has sufficient cash
on hand and borrowing arrangements made 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 President and a director of the Registrant, has committed to
make available and provide advances of the Registrant's operating
costs up to a maximum of $200,000 over the next twelve months,
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 funding
agreement calls for an interest-free (if converted into Common
Stock of the Company) line of credit of up to $200,000, starting
in August, 2000, and limited to a maximum draw of $20,000 per
month. Sums borrowed under this agreement are convertible by Mr.
Lambert into Common Stock of the Company, at either 1) fifty
percent of the average "bid" price for the thirty-day period
immediately preceding the election to convert; or 2) prior to
listing on a public exchange, 75% of the then-most-recent private
placement share issuance price. The conversion price in either
case allows for recognition of the added risk associated with
stock that is restricted against transfer in the public
marketplace for a period of one year, as Mr. Lambert's stock
would be, should he elect to convert. (A copy of the Funding
Agreement is referenced herein as Exhibit 10.8).
It is anticipated that the Lambert advances would be sufficient
to maintain short term operating costs for up to twelve months,
depending upon the rate the business expands. If expansion is
rapid, the funding arrangements would likely be inadequate,
and other financing would be required to meet the Registrant's
needs. Should such other financing not be forthcoming, there is
substantial doubt regarding the Registrant's ability to continue
as a going concern.
To date, Hemisphere and Associates, Inc., a non-related party,
has caused to be loaned to the Registrant, on behalf of itself
and four independent lenders, a total of approximately
$1,024,614, at no interest. The lenders have recently been
offered the right to convert the loans to private placement
subscriptions for common stock to be issued at $0.625 per share,
for a total of approximately 1,635,000 shares, restricted
pursuant to Rule 144.
The Registrant had 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 and that private placement
has been cancelled. The Company has recently announced a private
placement of 2,000,000 shares at $0.625 per share (in which the
potential loan conversion above has been included). 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. Though he has indicated an intention to provide
necessary working capital, Lambert, who has not yet provided any
funding, is not under any obligation to provide further funding
over and above the $200,000 committed to the Registrant and he
may discontinue funding at any time should other financing be
arranged.
The Registrant's auditor has issued its opinion that there is
substantial doubt about the Registrant's ability to continue as a
going concern. The Registrant has not established revenues
sufficient to cover its operating costs and to allow it to
continue as a going concern. In order to cover this contingency,
the Registrant has secured the previously-described commitment
from its President and Director, Mr. Ian Lambert, that he will
advance sufficient interim funds, up to $200,000, so as to enable
the Registrant's operations during such period. Notwithstanding
the foregoing, the auditor advises in a Note to the Financial
Statements as at December 31, 1999 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 the Company will be able to secure adequate financing from
any source to pursue its current plan of operation, to meet its
obligations or to deploy and expand its network development
efforts over the next twelve months. Based upon its past
history, management believes that it may be able to obtain
funding from investors or lenders, but is unable to predict with
any certainty the amount and/or terms thereof. 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, may 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 is not
obligated to provide any further equipment over and above the
$350,000 expended, for the Crosna joint venture project, since it
has been assigned to ICE. The Registrant may be required in the
future to purchase and provide equipment for the new agreements,
but the amount is indeterminable at this time. Such agreements
will contain qualifications that the supply of such equipment
will be subject to the Registrant obtaining necessary financing
or raising equity capital to fund such a commitment.
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 will be seeking financing in the order of $2 to $3
million over the next twelve months to establish up to four
points of presence. Due to the divestiture of the Crosna
Agreement, the registrant will no longer need to raise large sums
up to $50,000,000 over the next two to three years. Funds raised
will be used to launch the Company's business plan and establish
international offices starting in the USA and Europe. There is
no guarantee that the Registrant will actually be able to
complete such financing within a twelve month period, or at all.
Should this funding not be raised, it would put the ability for
the Registrant to pursue its business plan at risk (See Risk
Factors).
This level of financing in the $2 to $3 million range can be
undertaken by way of a combination of private placements, vendor
equipment financing mechanisms, and debt financing secured by
Letters of Credit provided by carriers contracting with the
Registrant to carry VoIP based international traffic, and may
only be required in tranches of $50,000 per Point of Presence.
It is an industry norm for irrevocable Letters of Credits
("L/C's") to be provided by carriers as a guarantee of payment
for contracts with wholesale providers such as the Registrant,
committing to specific levels of VoIP traffic volume, typically
guaranteeing three months of the contract. The Registrant can
assign the proceeds of such L/C's to lending institutions to
provide security for debt financing. Such security often affords
debt at a maximum borrowing cost of prime plus two percent. Such
loans would typically be repaid over three years from operating
revenues. The L/C's may be drawn down if the providing exchange
carrier fails to pay the regularly scheduled invoices, usually
billed weekly.
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.
The next phase of funding is anticipated to require approximately
$2 to $3 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 December 31,
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 second half of
2000. No revenues were generated for the period January 1, 1999
to December 31, 1999, nor prior to that date.
Expenses. For the period from January 1, 1999 to December 31,
1999, the Company incurred expenses of $264,533 for consulting,
including $24,890 in fees to Messrs. Lambert and Lawson and
consultants fees of $239,643 for management and technical
planning; $41,860 for marketing and investor relations;
professional accounting and legal fees of $29,713; general and
administrative expenses of $52,227; $26,369 for miscellaneous
salaries; transfer agent and filing fees of $14,217; rent of
$32,450; travel costs of $202,915; website development cots of
$12,921; and $36,900 for telephone expenses. Expenses for the
previous year ended December 31, 1998 were basically general and
administrative, totaling $2,020. No expenses were incurred in
the previous two years. All operating capital was advanced to
the Registrant through loans arranged by Hemisphere & Associates,
Ltd., a non-related party.
Net Loss. For the period from January 1, 1999 to December 31,
1999, the Company recorded a loss from operations totaling
$1,064,085 for the year. The total net loss since incorporation
through to December 31, 1998, was $3,020.
Liquidity and Capital Resources. On December 31, 1999,
Hemisphere and Associates Ltd., in conjunction with four
independent lenders, had advanced a total of $1,021,614 as loans
to the Registrant to cover operating costs. As of December 31,
1999, the working capital deficiency was $1,064,765, including
the loan payable of $1,021,614.
A. 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 second half of 2000.
The Registrant also cautions that while it does not foresee any
such eventuality, delays in the anticipated start of operations
might occur.
B. Capital Resources
The Registrant had a working capital deficiency of $1,086,322 at
March 31, 2000. The Registrant is pursuing a private placement
at $0.625 per share to finance business development and settle
the outstanding notes payable of $1,050,862 at March 31, 2000.
In the meantime, the Company is meeting its obligations through
funds loaned by non-related third parties. The Company
anticipates that it will be able to raise further funds through
share issuances once its Form 10-SB registration statement is
completed and the Registrant is listed for trading on the NASD
Over The Counter Bulletin Board.
The Company has made no specific commitments for capital
expenditures, but anticipates further requirements to expend
funds on equipment acquisition once new agreements are signed for
VoIP installations.
C. Liquidity
The Company is illiquid at the present time and is dependent upon
a shareholder to provide funds to maintain its activities, though
the Registrant expects to be able to raise funds through the
issuance of shares over the next two to four months.
D. Year 2000 Computer Issue
Neither the Registrant nor any of its suppliers experienced any
problems related to the Year 2000 issues and no funds were
expended relating to this issue.
ITEM 3. DESCRIPTION OF PROPERTY
The Registrant sub-lets space located at 11300 W. Olympic
Boulevard, Suite 800, Los Angeles, California 90064 at the rate
of US$500 per month on a month-to-month basis and office space at
Suite 402, 609 West Hastings Street, Vancouver, B.C. Canada V6B
4W4. The rent for this space is US$750 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 Europe
prior to the end of the year 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 (2)
Owner ownership
Common(1) Hemisphere and Associates, Inc. 320,000 7.65%
Common(1) Vista Financial Corp. 320,000 7.65%
Common(1) Eivissa Capital Corp. 320,000 7.65%
Common(1) El Coyote Capital Corp. 320,000 7.65%
Common(1) Torquay Holdings, Ltd. 400,000 9.57%
(1) As of the date of this filing, these shares have not
been issued. However, pursuant to conversion rights
associated with loans made to the Registrant, the
holders have the option to convert loans made to the
Company, totaling approximately US$1,050,000, in a
private placement at a rate of US$0.625 per share, for
a total of 1,680,000 shares of the Company's Common
Stock.
(2) Assuming full conversion of the US$1,050,000 loans.
</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 Canasia Data Corp. 100,000 4%
(Ian Lambert)
1220 Eastview Road
North Vancouver, B.C. V7J 1L6
Common Harvey Lawson
464 Somerset Street
North Vancouver, B.C. V7N 1G3 NIL NIL
Common All Officers and Directors
as a Group (three persons) 100,000 4%
</TABLE>
(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.
Ian Davidson Lambert: President, 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.
Harvey Lawson
Date Position Commenced: January 18, 2000
Term of Office: Annual
Address: 464 Somerset Street, North Vancouver, BC Canada V7N 1G3
Age: 51
Experience: Director and Officer, Regeena Resources Inc. (Mining)
1998 to present; Director, Spectrum Ventures Inc. (Wine Importer)
1998 to 1999; Financial Planner 1993 to 1998; Lecturer in
Financial Management in Hong Kong, Singapore and Canada 1978 to
1993
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.
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.
Summary Compensation
The Registrant has the following officers:
Ian D. Lambert - President
Harvey M. Lawson - Secretary
Ian Lambert and Harvey Lawson provide executive, management and
technical services for the Registrant. During and for the year
ended December 31, 1999, a private company wholly-owned by Mr.
Ian Lambert received or was due a total of $24,628 of
compensation, in accordance with a management employment
agreement approved by the directors in October, 1999, at a rate
of $4,500 per month. During and for the year ended December 31,
1999, Mr. Lawson was paid $262 for consulting services. During
and for the year ended December 31, 1999, Mr. Ken Martin, former
CEO and Director was paid a total of $48,000 for service rendered
through September 30, 1999. For further details of salary
arrangements between the Registrant and Mr. Lambert and Mr.
Lawson, refer to "Termination of Employment, Change in
Responsibilities and Employment Contracts".
Options Granted During the Most Recently Completed Fiscal Year
During the Registrant's most recently completed quarter to March
31, 2000, and prior fiscal years ended December 31, 1999 and
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 an agreement (the "Lambert Executive Employment
Agreement") effective at October 1, 1999, Ian Lambert, the
Registrant's President 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.
Pursuant to an agreement (the "Lawson Employment Agreement") to
be effective at January 18, 2000, Harvey Lawson, the Registrant's
Secretary and a Director, will be employed by the Registrant and
paid a monthly salary of $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.
Compensation
The aggregate amount that the Registrant anticipates it will pay
to its current executive officers during its current fiscal year
is $60,000. Each of the Executive Employment Agreements will
contain provisions for increases to the base salary based on the
Registrant achieving positive cash flow, and upon achieving
certain monthly gross income targets. In addition to the
foregoing, the executive officers of the Registrant will
also be entitled to participate in any stock option, profit
sharing, medical reimbursement, insurance or other employee
benefit plan as may be in effect from time to time, subject to
the participation standards and other terms thereof. Reference
should be made to further disclosure under Item 7 - Certain
Relationships and Related Transactions.
Compensation of Directors
Other than compensation proposed to be paid to Ian Lambert and
Harvey Lawson as disclosed under the previous sub-heading
"Compensation of Officers", none of the directors of the
Registrant have received any cash compensation, directly or
indirectly, for their services rendered during the most recently
completed fiscal year. The members of the Company's Board of
Directors are reimbursed only for actual expenses incurred in
attending Board meetings. The Registrant has no additional
arrangements, standard or otherwise, pursuant to which directors
are compensated by the Registrant for their services in their
capacity as directors, or for committee participation,
involvement in special assignments or for services as consultants
or experts.
Other than as disclosed in Compensation of Officers, none of the
Registrant's directors have received any manner of compensation
for services provided in their capacity as directors during the
Registrant's most recently completed quarter ended March 31, 2000
or years ended December 31, 1999 and 1998.
As at ended March 31, 2000, being a date within 135 days of this
Registration Statement, the Registrant had no outstanding
incentive stock options and share purchase warrants.
Annual Compensation Table
Name and Year Salary($) Bonus($) Other
Principal Position Annual
Compensation
Ian Lambert 2000 54,000(1) Nil Nil
President
Harvey Lawson 2000 6,000 Nil Nil
Secretary
Additional terms:
(1) Increases to $120,000 per annum once Registrant achieves
gross income derived from sales of $5 million monthly.
Long-Term Compensation
As at March 31, 2000, 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.
Ian Lambert (President) and Harvey Lawson (Secretary) are
currently the principal management of the business, and they own
collectively 100,000 shares or 4% 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 year ended December 31, 1998, 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 September 30, 1999, there were 2,500,000 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 as reported
for each quarterly period since the Registrant's stock was
eligible to be quoted on October 20, 1998:
Quarter Ending: High ask per share: Low bid per share:
--------------- ------------------- ------------------
March 31, 2000 $3.00 $0.50
December 31, 1999 $3.375 $0.375
September 30, 1999 $5.125 $1.50
June 30, 1999 $9.00 $2.4375
March 31, 1999 $2.375 $1.00
December 31, 1998 $1.25 $0.6875
The above quotations reflect inter-dealer prices, without retail
mark-up, markdown, or commission and may not necessarily
represent actual transactions.
(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 2,500,000
shares issued and outstanding of which 2,000,000 are free trading
shares and 500,000 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
During the year ended December 31, 1998, 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 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX of the Registrant's Articles of Incorporation and
Article 7 of the Registrant's Bylaws provide 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.
PART F/S
Financial Statements.
The following financial statements are attached to this
report and filed as a part hereof.
1) Financial Statements as of
March 31, 2000 (unaudited)
2) Audited Financial Statements as of
December 31, 1999
3) Audited Financial Statements as of
December 31, 1998
4) Audited Financial Statements as of
December 31, 1997
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited Prepared by Management)
MARCH 31, 2000
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services Of Nevada, Inc.)
(A Development Stage Company)
BALANCE SHEETS
(Unaudited Prepared by Management)
<TABLE>
<S> <C> <C>
March 31, December 31,
2000 1999 Audited
ASSETS
Accounts receivable $ 5,733 $ 5,733
----------- ------------
$ 5,733 $ 5,733
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank indebtedness $ 2,408 $ 4,771
Accounts payable and
accrued liabilities 38,785 44,113
Note payable (Note 4) 1,050,862 1,021,614
----------- ------------
1,092,055 1,070,498
----------- ------------
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 (1,089,662) (1,068,105)
----------- ------------
(1,086,322) (1,064,765)
----------- ------------
$ 5,733 $ 5,733
=========== ============
History and organization of the Company (Note 1)
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>
Cumulative
Amounts From
Inception on Three Month Period Ended
June 30, 1989 March 31, March 31,
to March 31, 2000 2000 1999
EXPENSES
Accounting and legal $35,862 $ 6,149 $ -
Consulting 275,783 11,250 2,680
General and
administrative 53,140 913 912
Marketing and
advertising 41,860 - 308
Rent 33,481 1,031 175
Salaries, Benefits 26,369 - -
Telephone, Utilities 37,674 774 406
Transfer Agent, Filing Fees 14,900 683 -
Travel 202,915 - -
Website Development 13,678 757 -
Write-down of capital assets 353,000 - -
---------- --------- ---------
Loss for the period $(1,088,662) $(21,557) $(4,481)
========== ========= =========
Basic loss per share $ (0.01) $ (0.01)
========== ========= =========
Weighted average number of
common shares outstanding 2,500,000 1,000,000
========== ========= =========
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,
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 year - - - (1,064,085) (1,064,085)
--------- --------- ---------- ---------- ----------
Balance, December 31,
1999 2,500,000 2,500 840 (1,068,105) (1,064,765)
Loss for the period - - - (21,557) (21,557)
--------- --------- ---------- ---------- ----------
Balance, March 31,
2000 2,500,000 $ 2,500 $ 840 $(1,089,662) $(1,086,322)
========= ========= ========== ========== ==========
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 March 31, March 31,
to March 31, 2000 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (1,086,662) $ (21,557) $(4,481)
Adjustment to reconcile loss to net
cash used in operating activities:
Issuance of common shares
for services 1,340 - -
Write-down of capital assets 353,000 -
Changes in non-cash working capital items
Increase in accounts receivable (5,733) - -
Increase (decrease)in accounts payable
and accrued liabilities 38,785 (5,328) 5,143
----------- ---------- ----------
Net cash used in operating activities (701,270) (26,885) 662
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital stock 1,000 -
Note payable 1,050,862 29,248 -
---------- ---------- ----------
Net cash provided by financing
activities 1,051,862 29,248 -
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (353,000) - -
Acquisition of other assets - - (662)
----------- ---------- ----------
Net cash used in investing activities (353,000) - (662)
----------- ---------- ----------
Increase (decrease) in cash
for the period (2,408) 2,363 -
Cash, beginning of period - (4,771) -
----------- ---------- ----------
Cash, end of period $ (2,408) $ (2,408) $ -
=========== ========== ==========
Cash and cash equivalents consists of:
Cash and cash equivalents $ - $ - $ -
Bank indebtedness (2,408) (2,408) -
----------- ---------- ----------
$ (2,408) $ (2,408) $ -
=========== ========== ==========
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes - - -
=========== ========== ==========
Supplemental disclosure for non-cash operating, financing and investing activities (Note 9)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
LITEWAVE CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
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. On
April 26, 1999, the Company changed its name from Homefront Safety
Services of Nevada, Inc. to Litewave Corp.
The accompanying financial statements have been prepared by
the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations, changes in stockholders' equity and cash flows at March
31, 2000 and for the periods then ended have been made. These
financial statements should be read in conjunction with the audited
financial statements of the Company for the year ended December 31,
1999. The results of operations for the period ended March 31,
2000 are not necessarily indicative of the results to be expected
for the year ending December 31, 2000.
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 equity financings.
March 31, December 31,
2000 1999
Deficit accumulated during the $(1,089,622) $(1,068,105)
development stage
Working capital deficiency (1,086,322) (1,064,765)
3. SIGNIFICANT ACCOUNTING POLICIES
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.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments
with original maturities of three months or less.
Loss per share
Loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings Per Share". Due
to the Company's simple capital structure, with only common stock
outstanding, only basic loss per share is presented. Basic loss
per share is computed by dividing losses applicable to common
stockholders by the weighted average number of common shares
outstanding during the period.
<PAGE>
LITEWAVE CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Income taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). 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.
Capital assets
Capital assets are stated at cost unless the future
undiscounted cash flows expected to result from either the use of
an asset or its eventual disposition is less than its carrying
amount in which case an impairment loss is recognized based on the
fair value of the assets.
Amortization of capital assets is based on the estimated
useful lives of the assets and is computed using the straight-line
method as follows:
Computer equipment 3 years
Accounting for derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board
("FASB") 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. In June 1999, the FASB issued SFAS 137 to defer the
effective date of SFAS 133 to fiscal quarters of fiscal years
beginning after June 15, 2000. The Company does not anticipate
that the adoption of the statement will have a significant impact
on its financial statements.
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.
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 March 31, 2000.
<PAGE>
LITEWAVE CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Financial instruments
The Company's financial instruments consist of accounts
receivable, note receivable, bank indebtedness, accounts payable
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, except for the note
payable whose fair value is not readily determinable, approximate
their carrying values.
4. CAPITAL ASSETS
In 1999, the Company entered into a Technology Purchase and
Assignment Agreement whereby the Company would purchase the assets
of International Communications and Equipment, Inc. ("ICE") through
the issuance of common shares of the Company.
In 1999, the Company also incurred expenses towards a joint
venture project with NPO ZAO Crosna (the "Crosna Project") to
develop an internet protocol telephone network in Russia. The
Company purchased capital assets, which consisted of computer
equipment, of $353,000 in anticipation of the joint venture.
During 1999, management decided to write-off the carrying
value of the capital assets to $Nil to reflect an impairment in
value.
5. NOTE RECEIVABLE
During the period ended March 31, 2000, the Technology
Purchase and Assignment Agreement with ICE was cancelled and the
Company's rights, titles and interest in the Crosna Project
including capital assets (Note 4) were assigned to ICE in exchange
for a note receivable of $1,100,000. The note receivable is
unsecured, non-interest bearing and is to be repaid from a portion
of the profits of the Crosna Project assigned to ICE.
Due to the uncertainty of collecting the $1,100,000 note
receivable, management has taken a full provision of $1,100,000
against the note receivable.
6. NOTE PAYABLE
The note payable is unsecured, non-interest bearing with no
fixed terms of repayment. The fair value of the note payable is
not determinable as it has no repayment terms and is non-interest
bearing.
<PAGE>
LITEWAVE CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
7. CAPITAL STOCK
On June 30, 1989, the Company issued 10,000 common shares for
proceeds of $1,000.
On November 10, 1998, the Company issued 500,000 common shares
at a deemed value of $1,340 for services rendered, of which 340,000
common shares were issued at a deemed value of $340 to former
officers and directors of the Company.
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.
8. RELATED PARTY TRANSACTIONS
During the period ended March 31, 2000, the Company paid
$11,250 (1999 - $2,680) in consulting fees to directors, a former
director and to a company related by a common director.
9. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING AND
INVESTING ACTIVITIES
There were no non-cash transactions for the periods ended
March 31, 2000 and March 31, 1999.
<PAGE>
LITEWAVE CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
10. INCOME TAXES
The Company's total deferred tax asset is as follows:
March 31, December 31,
2000 1999
Tax benefit of net operating $ 410,400 $ 405,120
loss carryforward
Valuation allowance (410,400) (405,120)
$ - $ -
The Company has a net operating loss carry forward of
approximately $1,080,000 which expires in 2006 and 2007. The
Company provided a full valuation allowance on the deferred tax
asset because of the uncertainty regarding realization.
11. 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 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. Although the change in date has occurred, it is not possible
to conclude that all aspects of the Year 2000 Issue that may affect
the entity, including those related to customers, suppliers, or
other third parties, have been fully resolved.
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
We have audited the accompanying balance sheets of Litewave Corp.
(formerly Homefront Safety Services of Nevada, Inc.) as at
December 31, 1999 and 1998 and the related statements of
operations, changes in stockholders' deficit and cash flows for
the years then ended and the cumulative amounts from inception on
June 30, 1989 to December 31, 1999. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with United States
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 audits provide 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, 1999 and 1998 and the results of its operations,
changes in stockholders' deficit and cash flows for the years
then ended and the cumulative amounts from inception on June 30,
1989 to December 31, 1999 in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming
that Litewave Corp. (formerly 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.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
March 22, 2000
(except as to Note 6 which is as of May 2, 2000)
<PAGE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
BALANCE SHEETS
AS AT DECEMBER 31
<TABLE>
<S> <C> <C>
1999 1998
ASSETS
Current
Accounts Receivable $ 5,733 $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank Indebtedness $ 4,771 $ -
Accounts payable and accrued liabilities 44,113 680
Note Payable (Note 5) 1,021,614 -
----------- -----------
Total Current Liabilities 1,070,498 680
----------- -----------
Stockholders' deficit
Capital stock (Note 6)
Authorized
25,000,000 common shares
with a par value of $0.001
Issued
2,500,000 common shares
(1998 - 2,500,000 common shares) 2,500 2,500
Additional paid in capital 840 840
Deficit accumulated during
the development stage (1,068,105) (4,020)
----------- -----------
(1.064,765) (680)
----------- -----------
$ 5,733 $ -
=========== ===========
History and organization of the Company (Note 1)
Subsequent event (Note 10)
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
<TABLE>
<S> <C> <C> <C>
Cumulative
Amounts From
Inception on Year Ended December 31,
June 30, 1989
to December 31, -----------------------
1999 1999 1998
EXPENSES
Accounting & legal $ 29,713 $ 29,713 $ -
Consulting 264,533 264,533 -
General and
administrative 52,227 49,207 2,020
Marketing and
Promotion 41,860 41,860 -
Rent 32,450 32,450 -
Salaries & Benefits 26,369 26,369 -
Telephone & Utilities 36,900 36,900 -
Transfer Agent &
Filing Fees 14,217 14,217 -
Travel 202,915 202,915 -
Website Development 12,921 12,921 -
---------- --------- ---------
Write-down of
capital assets (Note 4) (353,000) (353,000) -
---------- --------- ---------
Loss for the period $(1,067,105) $(1,064,085) $ (2,020)
=========== ========== =========
Basic loss per share $ (0.43) $ (0.01)
=========== ========== =========
Weighted average number
of common shares
outstanding 2,500,000 2,069,863
=========== ========== =========
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
<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,
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 year - - - (1,064,085) (1,064,085)
--------- --------- --------- -------- ----------
Balance, December 31,
1999 2,500,000 2,500 840 (1,068,105) (1,064,765)
========= ======== ======= =========== ===========
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
<TABLE>
<S> <C> <C> <C> <C>
Cumulative
Amounts From
Inception on
June 30, 1989 Year Ended December 31,
to December 31, ----------------------
1999 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $(1,067,105) $(1,064,085) $ (2,020)
Adjustments to reconcile loss to net
cash used in operating activities:
Issuance of common shares
for services 1,340 - 1,340
Write-down of capital assets 353,000 353,000 -
Changes in non-cash working capital items
Increase in accounts receivable (5,733) (5,733) -
Increase in accounts payable
and accrued liabilities 44,113 43,433 680
---------- ---------- -------
Net cash used in
operating activities (674,385) (673,385) -
---------- ---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 1,000 - -
Note Payable 1,021,614 1,021,614 -
----------- ---------- -------
Net cash provided by financing
activities 669,614 668,614 -
---------- ---------- -------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
Acquisition of Capital Assets (353,000) (353,000) -
---------- ---------- -------
Net cash used in
investing activities (353,000) (353,000) -
---------- ---------- -------
Decrease in cash and cash
equivalents for the period (4,771) (4,771) -
---------- ---------- -------
Cash and cash equivalents,
beginning of period - - -
---------- ---------- -------
Cash and cash equivalents,
end of period $ (4,771) $ (4,771) $ -
========== ========== =======
Cash consists of:
Cash & cash equivalents $ - $ - $ -
Bank Indebtedness (4,771) (4,771) -
---------- ---------- -------
$ (4,771) $ (4,771) $ -
Cash paid during the period for:
Interest expense $ - $ - $ -
Income taxes - - -
========== ========== =======
Supplemental disclosure for non-cash operating, financing and
investing activities (Note 8)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 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 cash proceeds of $1,000. On
April 26, 1999, the Company changed its name from Homefront
Safety Services of Nevada, Inc. to Litewave Corp.
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 equity financings.
1999 1998
Deficit accumulated during the
development stage $ (1,068,105) $ (4,020)
Working capital deficiency (1,064,765) (680)
3. SIGNIFICANT ACCOUNTING POLICIES
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.
Cash and equivalents
Cash and equivalents include highly liquid investments with
original maturities of three months or less.
Loss per share
Loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings Per Share". Due
to the Company's simple capital structure, with only common stock
outstanding, only basic loss per share is presented. Basic loss
per share is computed by dividing losses applicable to common
stockholders by the weighted average number of common shares
outstanding during the period.
Income taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). 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.
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Income taxes (cont'd.....)
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.
Capital Assets
Capital Assets are stated at cost unless the future undiscounted
cash flows expected to result from either the use of an assets or
its eventual disposition is less than its carrying amount in
which case an impairment loss is recognized based on the fair
value of the assets.
Amortization of capital assets is based on the estimated useful
lives of the assets and is computed using the straight-line
method as follows:
Computer Equipment 3 years
Accounting for derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board ("FASB")
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. In June 1999, the FASB issued SFAS 137 to
defer the effective date of SFAS 133 to fiscal quarters of fiscal
years beginning after June 15, 2000. The Company does not
anticipate that the adoption of the statement will have
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 adoption by the Company of SOP 98-5
during the current period had no effect on its financial
statements.
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.
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, 1999.
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Financial instruments
The Company's financial instruments consist of accounts
receivable, bank indebtedness, accounts payable 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, except for the note payable
whose fair value is not readily determinable, approximate their
carrying values.
4. CAPITAL ASSETS
During the current year, the Company entered into a Technology
Purchase and Assignment Agreement whereby the Company would
purchase the assets of International Communications and
Equipment, Inc. ("ICE") through the issuance of common shares of
the Company.
The Company also incurred expenses towards a joint venture
project with NPO ZAO Crosna (the "Crosna Project") to develop an
internet protocol telephone network in Russia. The Company
purchased capital assets, which consisted of computer equipment,
of $353,000 in anticipation of the joint venture.
Subsequent to year end, the Company assigned the capital assets
to ICE in exchange for a note receivable (Note 10). Management
has decided to write off the carrying value of the capital assets
to $Nil to reflect the impairment in value.
5. NOTE PAYABLE
The note payable is unsecured, non-interest bearing with no fixed
terms of repayment. The fair value of the note payable is not
determinable as it has no repayment terms and is non-interest
bearing.
6. CAPITAL STOCK
On June 30, 1989, the Company issued 10,000 common shares for
proceeds of $1,000.
On November 10, 1998, the Company issued 500,000 common shares at
a deemed value of $1,340 for services rendered, of which 340,000
common shares were issued at a deemed value of $340 to former
officers and directors of the Company.
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.
<PAGE>
LITEWAVE CORP.
(formerly Homefront Safety Services of Nevada, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
7. RELATED PARTY TRANSACTIONS
During the year ended December 31, 1999, the Company entered into
the following transactions with related parties:
a) Paid $5,941 (1998 - $Nil) in administration fees to an
individual related to a director of the Company.
b) Paid $39,390 (1998 - $Nil) in consulting fees to
directors, a former director and to a company related by a common
director.
8. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, FINANCING
AND INVESTING ACTIVITIES
There were no significant non-cash transactions for the year
ended December 31, 1999.
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.
9. INCOME TAXES
The Company's total deferred tax asset at December 31 is as
follows:
1999 1998
Tax benefit of net operating
loss carryforward $ 405,120 $ 424
Valuation allowance (405,120) (424)
--------- --------
$ - $ -
The Company has a net operating loss carryforward of
approximately $1,066,105 (1998 - $2,020) which expire in 2006 and
2005, respectively. The valuation allowance increased to
$405,120 from $424 during the year ended December 31, 1999. The
Company provided a full valuation allowance on the deferred tax
asset because of the uncertainty regarding realizability.
10. SUBSEQUENT EVENT
Subsequent to year end, the Technology Purchase and Assignment
Agreement with ICE was cancelled and the Company's rights, titles
and interest in the Crosna Project including capital assets (Note
4) were assigned to ICE in exchange for a note receivable of
$1,100,000. The note receivable is unsecured, non-interest
bearing and is to be repaid from a portion of the profits of the
Crosna Project assigned to ICE.
Due to the uncertainty of collecting the $1,100,000 note
receivable, management has taken a full provision of $1,100,000
against the note receivable.
11. 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 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. Although the change in date has occurred, it
is not possible to conclude that all aspects of the Year 2000
Issue that may affect the entity, including those related to
customers, suppliers, or other third parties, have been fully
resolved.
<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>
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
Board of Directors November 2, 1998
Homefront Safety Services of Nevada, Inc.
Palm Springs, California
I have audited the accompanying Income Statement of Homefront Safety
Services of Nevada, Inc., (A Development Stage Company), for the year ended
December 31, 1997. These financial income statements are the responsibility
of the Company's management. My responsibility is to express an opinion on
these financial income statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial income statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
income statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial income statement presentation. I believe
that my audit provides a reasonable basis for my opinion.
In my opinion, the financial income statements referred to above present
fairly, in all material respects, the results of the operations of Homefront
Safety Services of Nevada, Inc., (a Development Stage Company), for the
year ended December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial income statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial income 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 3. The financial income statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
Certified Public Accountant
<PAGE>
<TABLE>
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<S> <C>
Year
Ended
Dec. 31,
1997
INCOME:
Revenue $ 0
EXPENSES:
General, Selling
and Administrative $ 0
Total Expenses $ 0
Net Profit/Loss(-) $ 0
Net Profit/Loss (-)
per weighted
share (Note 1) $ .0000
=======
Weighted average
number of common
shares 2,000,000
=========
See accompanying notes to financial income statements & audit report
<PAGE> -2-
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized June 30, 1989, under the laws of the State of
Nevada, as Homefront Safety Services of Nevada, Inc. The company currently
has no operations and, in accordance with SFAS #7, is considered a
development stage company.
On June 30, 1989, the company issued 10,000 shares of $.001 par value
common stock for $ 1,000. in cash.
On July 16, 1998, the State of Nevada approved the Company's restated
Articles of Incorporation, which increased its capitalization from 10,000
common shares to 25,000,000 common shares. The par value was unchanged at
$.00l.
On July 25, 1998, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common shares from 10,000 shares to
2,000,000 shares.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average number of
common shares outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - 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.
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
<PAGE> -3-
HOMEFRONT SAFETY SERVICES OF NEVADA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 1997
NOTE 5 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are
immaterial to the financial statements and, accordingly, have not been
reflected therein. The officers and directors of the Company are involved
in other business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 6 - OFFICERS ADVANCES
While the Company is seeking additional capital through a merger with an
existing operating company, an officer of the Company has advanced funds on
behalf of the Company to pay for any costs incurred by it. These funds are
interest free.
Part III
GLOSSARY OF TERMS:
Backbone - The network of lines and routes over which Internet 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 Internet 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 Equipment 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 Agreement, dated January 7, 2000 Letter of Intent between
the Corporation and International Communications and
Equipment Inc. ("ICE") to rescind the Agreement dated April
19, 1999 between the two parties, and provide the terms for
the assignment of the Crosna Russian project to ICE .
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 10.7 Officer/Director Employment Agreement dated October 1, 1999
between the Corporation and its President, Ian Lambert
Exhibit 10.8 Funding Agreement, dated July 6, 2000, between the Company
and its President, Ian Lambert
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/ Ian Lambert Dated: August 9, 2000
Ian Lambert,
President, Director
/s/ Harvey Lawson Dated: August 9, 2000
Harvey Lawson,
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>
EXHIBIT "A"
LIST OF ICE SHAREHOLDERS
</TABLE>
<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 Intent
LITEWAVE CORP.
Suite 404, 110 Cambie Street, Vancouver, BC
V6B 2M8
January 7, 2000
INTERNATIONAL COMMUNICATIONS AND EQUIPMENT INC.
12865 NE 85th St., Suite 362
Kirkland, WA 98033
Attention: Mr. Ken Martin
LETTER OF INTENT
Dear Mr. Martin:
This Letter of Intent sets forth the understanding of the principal
terms and conditions upon which LiteWave Corp. ("LTWV"), a Nevada
corporation whose shares are publicly traded, will agree to terminate
its interest in the assets, Intellectual Property, Contacts and
Technology (the "Assets") acquired from International Communications
and Equipment Inc. ("ICE"), a Nevada corporation, pursuant to the
Technology Purchase and Assignment Agreement between LTWV and ICE
dated April 19, 1999 (the "April 19, 1999 Agreement").
1. Whereas LTWV has not yet been able to raise all of the necessary
financing required to pursue the opportunities contemplated upon the
execution of the April 19, 1999 Agreement, and the Closing has not yet
been effected by way of issuance of 10,300,000 restricted common
shares of LTWV (the "Restricted Shares"), both parties agree to
rescind the April 19, 1999 Agreement. LTWV will return the Assets to
ICE, LTWV will not issue and the shareholders and principals of ICE
will not receive the Restricted Shares.
2. As a result of the rescission of the April 19, 1999 Agreement,
LTWV and ICE may both pursue any business activities they so choose,
without interference from the other party.
This Letter of Intent also serves as a basis for the terms and
conditions of an agreement between LTWV and ICE whereby LTWV will
assign all its right, title and interest in its Russian Federation
Joint Venture IP Telephony Project pursuant to an agreement between
LTWV and NPO ZAO Crosna dated September 10, 1999 (the "Crosna
Project"), in return for ICE agreeing to the following:
Paying to LTWV a total of US $1,100,000 from profits generated by the
Crosna Project as reimbursement of costs incurred by LTWV to date, at
the rate of 20% of ICE's share of the Crosna Project profits earned,
payable monthly.
INTERNATIONAL COMMUNICATIONS AND EQUIPMENT INC.
January 7, 2000
Paying to LTWV a bonus of 10% of ICE's net profits earned (not
including management bonuses) should the Crosna Project process
200,000,000 minutes of traffic in an eighteen month period commencing
from the time of full operation, either within the Russian Federation,
or originating from the Russian Federation to other countries.
Pay any proceeds of lease funds or any return credit or sale proceeds
for existing equipment toward the outstanding balance of the amount
due pursuant to paragraph 1.
4. Accepting any financial responsibility that LTWV might have with
Michael Rogers, Gerry Fitzgerald, Tony Mueting and/or Hemisphere
Communications Inc., and indemnifying LTWV from any further
responsibility for such claims by any or all of those parties.
5. Accepting any financial responsibility that LTWV might have with
Clarent Corp., and indemnifying LTWV from any further responsibility
for such claims by Clarent.
Both parties further agree to execute any and all such agreements
necessary to effect the nature of and precise terms intended by this
Letter of Intent. Should you agree to these terms, please indicate
you acceptance by signing hereunder.
Yours very truly,
LITEWAVE CORP.
Per: /s/ Ian Lambert
Ian D. Lambert, Authorized Signatory
INTERNATIONAL COMMUNICATIONS AND EQUIPMENT INC.
Per: /s/ Ken Martin
Ken Martin, Authorized Signatory
CC: Christopher Dieterich
<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
<PAGE>
Exhibit 10.7 Officer/Director Employment Agreement - Ian Lambert
October 1, 1999
OFFICER/ DIRECTOR EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of this 1st day of October, 1999, between LiteWave Corp., a Nevada
corporation (the "Company"), whose principal place of business is 3300
NE 191w Street, #1015, Aventura, FL, 33180, and Ian Lambert, an
individual (the "Executive"), whose address is 1220 Eastview Road,
North Vancouver, B.C. V7J 1L6
RECITALS
WHEREAS, the Executive is desirous of being employed by the Company;
and
WHEREAS, the Company has agreed to hire the Executive, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.
2. Employment. The Company hereby employs the Executive in the
capacity of Chief Financial Officer, Corporate Secretary, and
Director, and the Executive hereby accepts such employment, upon the
terms and conditions hereinafter set forth.
3. Duties During Employment Period. During the Tem" (including any
renewals thereof as defined in Section 5 of this Agreement, the
Executive shall:
A. diligently devote the Executive's time and efforts to the
business and affairs of the Company. The Executive shall have such
duties and powers that are commensurate and consistent with those of a
Chief Financial Officer, Corporate Secretary, and Director, subject to
the authority and directions of the Company's Board of Directors; and
B. devote attention and render services to the Company and shall be
employed by the Company according to the terms and conditions of this
Agreement.
4. Compensation and Benefits
A. Salary. The Executive shall be paid a base salary (the "Base
Salary"), payable bi-monthly, in arrears, at an annual rate of no less
than Fifty-Four Thousand Dollars ($54,000) per year. Further, the Base
Salary shall increase to One Hundred and Twenty Thousand Dollars
($120,000) per year when the Company reaches a gross income derived
from sales of Five Million Dollars ($5,000,000) monthly.
B. Bonus. As additional compensation, the Executive shall be
entitled to receive a bonus ("Bonus") for each fiscal year during the
Term and each Renewal Term in the amount as to be determined by the
Company's Board of Directors.
C. Employee Benefits. The Executive shall be entitled to participate
in all benefit programs of the Company currently existing or hereafter
made available to executives and/or other executive employees,
including, but not limited to, pension and other retirement plans,
including any 401K Plan, group life insurance, dental,
hospitalization, surgical and major medical coverage, sick leave,
salary continuation, vacation and holidays, long-term disability, and
other fringe benefits.
D. Dental and Medical Insurance. The Company shall provide dental,
hospitalization, surgical and major medical coverage for the Executive
and Executive's family.
E. Vacation. During each year of the Term, and each year of any
Renewal Term, the Executive shall be entitled to four (4) weeks of
vacation time to be utilized or paid for each year, or accrue and
carry over into the following year; provided, however, that the
Executive shall evidence reasonable judgment with regard to
appropriate vacation scheduling.
F. Business Expense Reimbursement. The Executive shall be provided
with Company credit cards, either American Express or Visa/Master
Card, for business travel and entertainment, and the Executive shall
be entitled to receive proper reimbursement for all reasonable,
out-of-pocket expenses incurred directly by the Executive (in
accordance with the policies and procedures established by the Company
for its executive officers), including first class accommodations for
air travel, in performing services hereunder.
G. Portable Cellular Telephone. The Company shall provide the
Executive with a portable cellular telephone by the Company, and the
Company shall also be responsible for all costs and expenses in
connection with such telephones, including, but not limited to,
monthly service charges and maintenance, usage charges and long
distance, whether these be incurred for personal or Company business.
H. Stock. The Executive shall:
1. receive One Hundred Fifty Thousand (150,000) shares of the
Company's common stock upon the signing of this Agreement.; and
2. receive Two Hundred Fifty Thousand (250,000) options at $2.00 per
share upon the signing of this Agreement; and
3. receive such other options as may be determined, from time to time,
by the Company's Board of Directors.
The Executive shall have the right to sell or transfer any or all of
the shares, or options, without restrictions, except for those imposed
by the Securities Exchange Commission.
I. Insurance and Disability Payments. The Company agrees to obtain at
its sole expense, and for the benefit of the Executive's heirs, life
insurance policies on the Executive in the amount of no less than ten
(10) times Executive's current rate of salary. Furthermore, the
Company agrees to provide, at its sole expense, a disability policy
for the Executive which shall provide for payments equal to one
hundred percent (100%) of Executive's current salary.
J. Computers. Executive will be provided with a fixed location
computer to be selected by the Executive to be used by the Executive
at the location selected by Executive. The Company will also provide
Executive with a laptop computer to his specification. Executive will
have the option to return such computers the Company upon Executive's
employment termination, or at his option, he may retain such computers
for his personal benefit upon his departure from the Company.
5. Term. The term of employment hereunder will commence on the
Effective Date and end one (1) year from such Effective Date (the
"Term"), unless terminated pursuant to Section 6, of this Agreement,
provided that the Executive and the Company may, upon mutual written
consent, renew this Agreement for such duration as may be mutually
agreed upon by the parties ("Renewal Term"). For purposes of this
Agreement, "Effective Date" shall mean October 1, 1999.
6. Consequences of Termination of Employment.
A. Death. In the event of the death of the Executive during the Term
or Renewal Term of this Agreement, salary shall be paid to the
Executive's designated beneficiary, or, in the absence of such
designation, to the estate or other legal representative of the
Executive for a period of one (1) year from and after the date of
death. The Company shall also be obligated to pay to the Executive's
estate or heirs, as the case may be, any accrued or declared Bonus.
Other death benefits will be determined in accordance with the terms
of the Company's benefit programs and plans.
B. Disability.
1. In the event of the Executive's disability, as hereinafter
defined, the Executive shall be entitled to compensation in accordance
with the Company's disability compensation practice for senior
executives, including any separate arrangement or policy covering the
Executive, but in all events the Executive shall continue to receive
the Executive's salary for a period, at the annual rate in effect
immediately prior to the commencement of disability, of not less than
one (1) year from the date on which the disability has deemed to occur
as hereinafter provided below. Any amounts provided for in this
Section 6B shall be offset by other long-term disability benefits
provided to the Executive by the Company.
2. "Disability," for the purposes of this Agreement, shall be deemed
to have occurred in the event
i) the Executive is unable by reason of sickness or accident to
perform the Executive's duties under this Agreement for a cumulative
total of twelve (12) weeks within any one calendar year; or
ii) the Executive is unable to perform Executive's duties for ninety
(90) consecutive days; or
iii) the Executive has a guardian of the person or estate appointed by
a court of competent jurisdiction. Termination due to disability shall
be deemed to have occurred upon the first day of the month following
the determination of disability as defined in the preceding sentence.
Anything herein to the contrary notwithstanding, if, following a
termination of employment hereunder due to disability as provided in
the preceding paragraph, the Executive becomes re-employed by a third
party, whether as an executive or as a consultant, any salary, annual
incentive payments or other benefits earned by the Executive from such
employment shall offset any salary continuation due to the Executive
hereunder commencing with the date of re-employment.
C. Termination by the Company for Cause.
1. Nothing herein shall prevent the Company from terminating
employment for "Cause" as hereinafter defined. The Executive shall
continue to receive salary only for the period ending with the date of
such termination as provided in this Section 6G. Any rights and
benefits the Executive may have in respect of any other compensation
shall be determined in accordance with the terms of such other
compensation arrangements or such plans or programs.
2. "Cause" shall mean:
(a) committing or participating in an injurious act of fraud, gross
neglect, intentional misrepresentation, or embezzlement against the
Company; or
(b) committing or participating in any other injurious act of omission
wantonly or willfully against the Company, monetarily or otherwise.
3. Notwithstanding anything else contained in this Agreement, this
Agreement will not be deemed to have been terminated for Cause unless
and until there shall have been delivered to the Executive a notice of
termination stating that the Executive committed one of the types of
conduct set forth in this Section 6C contained in this Agreement and
specifying the particulars thereof and the Executive shall be given a
thirty (30) day period to cure such conduct set forth in Section 6G.
D. Termination by the Company Other than for Cause. The foregoing
notwithstanding, the Company may terminate the Executive's employment
for whatever reason it deems appropriate; provided, however, that in
the event such termination is not based on Cause, as provided in
Section 6C above, or if Executive's employment is terminated under
Sections 6F or 6G hereof, the Company shall continue to be obligated
to pay to Executive all salary and current and future Bonuses and
Executive shall be entitled to all stock options earned or not yet
earned through the Term (and any Renewal Term) of this Agreement and
Company will register all shares owned by the Executive, his family,
and companies controlled by the Executive or his family as well as all
options at Company's expense.
E. Voluntary Termination. In the event the Executive terminates the
Executive's employment on the Executive's own volition (except as
provided in Section 6F and/or Section 6G prior to the expiration of
the Term or Renewal Term of this Agreement, including any renewals
thereof), such termination shall constitute a voluntary termination
and in such event the Executive shall be limited to the same rights
and benefits as provided in connection with Section 6A.
F. Constructive Termination of Employment. A termination by the
Company without Cause under Section 6D shall be deemed to have
occurred upon the occurrence of one or more of the following events
without the express written consent of the Executive:
1. a significant change in the nature or scope of the authorities,
powers, functions, duties or responsibilities attached to Executive's
position as described in Section 3; or
2. a change in Executive's principal office to a location outside the
Dade-Broward County, Florida area; or
3. A five percent (5%) reduction in the Executive's salary below the
salary in effect immediately prior to such reduction or a reduction in
any Bonus announced to Executive by the Company's Board of Directors;
or
4. A material breach of this Agreement by the Company; or
5. A material reduction of the Executive's benefits under any employee
benefit plan, program or arrangement (for Executive individually or as
part of a group) of the Company as then in effect or as in effect on
the Effective Date of this Agreement, which reduction shall not be
effectuated for similarly situated employees of the Company; or
6. Failure by a successor company to assume the obligations of the
Company under this Agreement; or
7. If at any time Executive is not a member of the Board of
Directors of the Company.
G. Termination Following a Change of Control.
1. In the event that a "Change in Control," as hereinafter defined,
of the Company shall occur at any time during the Term or Renewal Term
hereof, the Executive shall have the right to terminate the
Executive's employment under this Agreement upon thirty (30) days
written notice given at any time within one (1) year after the
occurrence of such event, and such termination of the Executive's
employment with the Company pursuant to this Section 6G1, then, in any
such event, such termination shall be deemed to be a termination by
the Company other than for Cause and the Executive shall be entitled
to such compensation and benefits as set forth in Section 6D of this
Agreement.
2. For purposes of this Agreement, a "Change in Control" of the
Company shall mean a change in control:
a) as set forth in Section 280G of the Internal Revenue Code; or
b) the occurrence of any of the following:
i) any person, group or organization, other than the Executive, is or
becomes the beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the combined
voting power of the Company's outstanding securities then having the
right to vote at elections of directors; or
ii) the individuals who at the Effective Date of this Agreement
constitute the Board of Directors cease for any reason to constitute a
majority thereof unless the election, or nomination for election, of
each new director was approved by the Executive; or
iii) there is a failure to elect two or more (or such number of
directors as would constitute a majority of the Board of Directors)
candidates nominated by management of the Company to the Board of
Directors; or
iv) the business or over fifty percent (50%) of the business revenues
of the Company for which the Executive's services are principally
performed is/ are disposed of by the Company pursuant to a partial or
complete liquidation of the Company, a sale of assets (including stock
of a subsidiary of the Company) or otherwise.
Anything herein to the contrary notwithstanding, this Section 6G2 will
not apply where the Executive gives the Executive's explicit written
waiver stating that for the purposes of this Section 6G2 a Change in
Control shall not be deemed to have occurred. The Executive's
participation in any negotiations or other matters in relation to a
Change in Control shall in no way constitute such
a waiver which can only be given by an explicit written waiver as
provided in the preceding sentence.
An "Attempted Change in Control" shall be deemed to have occurred if
any substantial attempt, accompanied by significant work efforts and
expenditures of moneys made to accomplish a Change in Control, as
described in Section 6G2 above, whether or not such attempt is made
with the approval of a majority of the then current members of the
Board of Directors.
3. In the event that, within twelve (12) months of any Change in
Control of the Company or any Attempted Change in Control of the
Company, the Company terminates the employment of the Executive under
this Agreement, for any reason other than for Cause as defined in
Section 6C2, then, in any such event, such termination shall be deemed
to be a termination by the Company other than for Cause and the
Executive shall be entitled to such compensation and benefits as set
forth in Subsection 6D of this Agreement.
4. For purposes of this Section 6G, the Executive's employment shall
be deemed constructively terminated in the event one or more of the
following events occurs without the express written consent of the
Executive:
a) Significant change in the nature or scope of the authorities,
powers, functions, duties or responsibilities attached to Executive's
position as described in Section 3; or
b) A five percent (5%) reduction in the Executive's salary below the
salary in effect immediately prior to such reduction or a reduction in
any Bonus announced to Executive by the Company's Board of Directors;
or
c) Material breach of this Agreement by the Company; or
d) Material reduction of the Executive's benefits under any employee
benefit plan, program or arrangement (for Executive individually or as
part of a group) of the Company as then in effect or as in effect on
the Effective Date of this Agreement, which reduction shall not be
effectuated for similarly situated employees of the Company; or
e) Failure by a successor company to assume the obligations of
Company under this Agreement; or
f) Change in the Executive's principal office to a location outside
the Dade-Broward County, Florida area; or
g) Executive is not re-elected in his current capacity or is not
re-elected to be a director of the Company; or
h) The Company's Board of Directors elects any chairman without the
express written consent of the Executive.
5. Anything in this Section 6G to the contrary notwithstanding, in no
event will any action or non-action by the Executive at any time prior
to the first anniversary date of the applicable Change in Control or
Attempted Change in Control (including any action or non-action prior
to the Effective Date of this Agreement) be deemed consent to any of
the events described in this Section 6G.
7. Non-Disclosure of Confidential Information.
A. Executive acknowledges that the Company's trade secrets, private
or secret processes, as they exist from time to time, business records
and plans, inventions, acquisition strategy, price structure and
pricing, discounts, costs, computer programs and listings, source code
and/or subject code, copyright, trademark, proprietary information,
formulae, protocols, forms, procedures, methods for operating the
Company's business, credit and financial data concerning the Company's
clients, sales presentations, revenues, acquisitions, practices and
plans and information which is embodied in written or otherwise
recorded form, and other information of a confidential nature not
known publicly or by other companies selling to the same markets
(collectively, the "Confidential Information") are valuable, special
and unique assets of the Company, access to and knowledge of which
have been provided to Executive by virtue of Executive's association
with the Company. In light of the highly competitive nature of the
industry in which the Company's business is conducted, Executive
agrees that all Confidential Information, heretofore or in the future
obtained by Executive as a result of Executive's association with the
Company, shall be considered confidential.
B. The Executive agrees that the Executive shall:
1) hold in confidence and not disclose or make available to any
third party any such Confidential Information obtained directly or
constructively from the Company, unless so authorized in writing by
the Company;
2) exercise all reasonable efforts to prevent third parties from
gaining access to the Confidential Information;
3) take such protective measures as may be reasonably necessary to
preserve the confidentiality of the Confidential Information.
C. Excluded from the Confidential Information, and therefore not
subject to the provisions of this Agreement, shall be any information
which the Executive can show:
1) at the time of disclosure, is in the public domain; or
2) after the disclosure, enters the public domain by way of printed
publication through no fault of the Executive; or
3) was in his possession at the time of disclosure and which was not
acquired directly or indirectly from the Company; or
4) was acquired, after disclosure, from a third party who did not
receive it from the Company, and who had the right to disclose the
information without any obligation to hold such information
confidential.
D. Upon written request of the Company, Executive shall return to
the Company all written materials containing the Confidential
Information.
8. Covenants as Essential Elements of this Agreements: Survival of
Covenants, It is understood by and between the parties hereto that the
foregoing covenants by Executive contained in Section 7 of this
Agreement shall be construed to be agreements independent of any other
element of Executive's relationship with the Company. The existence of
any other claim or cause of action, whether predicated on any other
provision in this Agreement, or otherwise, as a result of the
relationship between the parties, shall not constitute a defense to
the enforcement of the covenants in Section 7 of this Agreement
against Executive.
9. Remedies and Enforcement.
A. Executive acknowledges and agrees that the Company's remedy at
law for a breach of any of the provisions of Section 7 herein would be
inadequate and the breach shall be per se deemed as causing
irreparable harm to the Company. In recognition of this fact, in the
event of a breach by Executive of any of the provisions of Section 7,
Executive agrees that, in addition to any remedy at law available to
the Company, including, but not limited to monetary damages, the
Company, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available to the Company.
B. It is further expressly understood and agreed that the provisions
of this Agreement shall apply whether this Agreement is terminated by
Company or Executive or upon its expiration or termination.
C. Nothing herein contained shall be construed as prohibiting
Company or Executive from pursuing any other remedies available to it/
him for any breach or default of this Agreement.
10. Litigation-Attorneys' Fees. In connection with any litigation
arising out of the enforcement of this Agreement or for its
interpretation, the prevailing party shall be entitled to recover its
costs, including reasonable attorneys' fees, at the trial and all
appellate levels from the other party hereto, who was the adverse
party to such litigation; however, the Company will advance to the
Executive a minimum of $10,000, if the Company tiles any litigation as
a result of this Agreement to cover Executive's legal costs and
continue to fund Executive's legal defense fees to the extent required
to defend against the Company's actions. In addition, the Company
agrees to pay for any and all legal work or representation required to
defend and or settle any claims made by or against Executive as a
result of his employment with the Company.
11. Freedom to Contract. The Executive represents and warrants that
the Executive has the right to negotiate and enter into this
Agreement, and that this Agreement does not breach, interfere with or
conflict with any other existing contractual agreement
12. Effect on Prior Agreements. This Agreement supersedes any and all
prior oral or written agreements, concerning the subject matter
hereof, in their entirety between the parties, which shall be void and
of no further force and effect after the date of this Agreement.
13. Notices. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent
postage prepaid by registered or certified mail, return receipt
requested, by overnight delivery, or by courier to the addresses of
the respective parties set forth in the preamble of this Agreement.
14. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provision
hereunder shall not affect its rights thereafter to enforce the same,
nor shall a waiver by either party of any breach of any provision
hereof be taken or held to be a waiver of any other preceding or
succeeding breach of any term or provision of this Agreement. No
extension of time for the performance of any obligation or act shall
be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
15. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the contents hereof and
supersedes all prior agreements and understandings between the parties
with respect to such matters, whether written or oral. Neither this
Agreement nor any term or provision hereof may be changed, waived,
discharged or amended in any manner other than by an instrument in
writing, signed by the party against which the enforcement of the
change, waiver, discharge or amendment is sought.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which shall constitute one agreement.
17. Binding Effect/Assignment. This Agreement shall be binding upon
the parties hereto, their heirs, legal representatives, successors and
assigns. This Agreement shall not be assignable by the Executive but
shall be assignable by the Company in connection with the sale,
transfer or other disposition of its business or to any of the
Company's affiliates controlled by or under common control with the
Company, with the written approval of Executive.
18. Governing Law. Venue. Waiver of Jury Trial. The parties agree
that this Agreement shall be deemed made and entered into in the State
of Florida and shall be governed and construed under and in accordance
with the laws of the State of Florida without giving effect to any
principles of conflicts of law. Company and Executive acknowledge and
agree that the U.S. District for the Southern District of Florida, or
if such court lacks jurisdiction, the Judicial Circuit (or its
successor) in and for Dade County, Florida, shall be the exclusive
venue and proper forum in which to adjudicate any case or controversy
arising either, directly or indirectly, under or in connection with
this Agreement in these courts, they will not contest or challenge the
jurisdiction or venue of these courts. The parties further agree and
hereby waive and release any right to a trial by jury in any action
arising out of the interpretation, enforcement or breach of this
Agreement.
19. Headings. The headings of the sections are for convenience only
and shall not control or affect the meaning or construction or limit
the scope or intent of any of the provisions of this Agreement.
20. Survival. Any termination of this Agreement shall not affect the
ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
21. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
22. Construction. This Agreement shall be constructed within the fair
meaning of each of its terms and not against the party drafting the
document.
23. Service Restriction. Nothing in this Agreement will prevent or
restrict Executive from serving on the Board of Directors of any
public or private companies and receive compensation from such
service.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, UNDERSTAND ITS
TERMS AND CONDITIONS, HAVE HAD THE OPPORTUNITY TO CONSULT WITH
INDEPENDENT COUNSEL OF THEIR
OWN CHOICE AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LiteWave Corp.
EXECUTIVE
By: /s/ Ian Lambert
<PAGE>
Exhibit 10.8 Funding Agreement, dated July 6, 2000, between the
Company and its President, Ian Lambert
FUNDING AGREEMENT
This agreement is entered into between LiteWave Corp. (the
"Company") and Ian D. Lambert ("Investor") with respect to funds
to be provided to the Company by Investor.
The Company is currently a development stage company and as
such may require additional funding and capital in the course of
its growth to continue its operations and expansion.
Investor, an officer and director of the Company, agrees to
provide funds to the Company under the following terms acceptable
to the Company:
Maximum Funding Available $200,000
Maximum Amount per Advance $20,000 per month
First Date Available August 1, 2000
Interest Rate None, as long as the loan
is converted into Company
Common Stock, at the
discretion of the
Investor, otherwise at
10% simple
Repayment Proportional, one year
from first drawdown
Convertibility Rights:
The Investor may elect to convert the amounts advanced into
Common Stock of the Company, according to the following terms and
conditions:
1) Subsequent to the Company being listed on a public
exchange: The per-share price shall be fifty percent of the
average "bid" price for the thirty-day period immediately
preceding Investor's election to convert. As an example, if the
bid price for the immediately-preceding 30-day period is $1.00,
the stock will be issued at the rate of $0.50 per share (without
interest).
2) Prior to the Company being listed on a public exchange:
The price per share will be 75% of the then-most-recent private
placement price for sales of Common Stock.
Accepted and agreed this 6th day of July, 2000.
LITEWAVE CORP.
/s/ Ian D. Lambert /s/ Harvey M. Lawson
_____________________________ _____________________________
President and Director Secretary and Director
INVESTOR
/s/ Ian D. Lambert
________________________________
Ian D. Lambert
