U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
Cartis, Inc.
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(Name of Small Business Issuer in its charter)
Florida 65-0737412
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
277 Royal Poinciana Way, PMB 155
Palm Beach, FL 33480
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(Address of principal executive offices)
Issuer's telephone number: (230) 211-6825
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
None None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value
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(Title of class)
Copies of Communications Sent to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
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TABLE OF CONTENTS
Page No.
PART I
Item 1 Description of Business. 3
Item 2 Plan of Operation. 33
Item 3 Description of Property. 35
Item 4 Security Ownership of Certain Beneficial Owners
and Management. 35
Item 5 Directors, Executive Officers, Promoters and
Control Persons. 37
Item 6 Executive Compensation. 38
Item 7 Certain Relationships and Related Transactions. 41
Item 8 Description of Securities. 42
PART II
Item 1 Market Price of and Dividends on the
Registrant's Common Equity and Other Shareholder
Matters. 43
Item 2 Legal Proceedings. 44
Item 3 Changes In and Disagreements With Accountants. 44
Item 4 Recent Sales of Unregistered Securities. 44
Item 5 Indemnification of Directors and Officers. 48
PART F/S
Financial Statements.
PART III
Item 1 Index to Exhibits. 51
Item 2 Description of Exhibits. 52
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PART I
Item 1: Description of Business:
(a) Business Development
Cartis, Inc. (the "Company" or "Cartis") is incorporated in the State
of Florida. The Company was originally incorporated as Cobalter, Inc. on March
3, 1997 ("Cobalter"). The Company subsequently changed its name to Cartis, Inc
in January 1999. The Company is currently quoted on the National Quotations
Bureau's "Pink Sheets" under the symbol "CART" and has been since October 1999,
when it filed a 15c2-11 exemption request form due to phase- in implementation
of NASD Rule 6530 (the Eligibility Rule). The Company was quoted on the OTC
Bulletin Board under the symbol "CART" until October 1999, but was originally
quoted under the symbol "CBLT". Its executive offices are presently located at
277 Royal Poinciana Way, PMB 155, Palm Beach, FL 33480. Its telephone number is
(230) 211-6825 and its facsimile number is (230) 210-2445.
In October 1998, the Company entered into an agreement with CEFCA
s.a.r.l., a French company ("CEFCA") and Cartis International, Ltd., a Mauritius
company ("CIL") to acquire 100% of CEFCA and 80% of CIL in exchange for shares
of the Company (the "Acquisition Agreement").
In February 2000, the Company entered into an agreement with Herve
Gallion and Cyril Heitzler for the purchase of the remaining twenty percent
(20%) of the issued and outstanding Common Stock of CIL, such that CIL became a
wholly-owned subsidiary of the Company.
The Company is filing this Form 10-SB on a voluntary basis so that
the public will have access to the required periodic reports on the Company's
current status and financial condition. The Company will file periodic reports
in the event its obligation to file such reports is suspended under the
Securities and Exchange Act of 1934 (the "Exchange Act".)
Originally, the Company was formed to acquire a master license for
the United States from Eggspectations, Inc., which company operates a chain of
theme restaurants serving egg products in and around Montreal, Canada. The
Company never acquired such license and has since changed the focus of its
business.
Since October 1998, the Company has been engaged in the business of
developing water treatment systems. See Part I, Item 1. "Description of the
Business - (b) Business of Issuer."
It is the Company's intention to (i) to market its Portable Water
System ("PWS 300") product; (ii) to research and further develop its new
products; and (iii) to continue to improve the Cartis Process. See Part I, Item
1. "Description of the Business - (b) Business of Issuer."
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In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Christian Gutierrez in connection with his service as Secretary and
Treasurer of the Company. Mr. Gutierrez resigned his positions as Secretary and
Treasurer and the Company canceled the shares previously issued to Mr. Gutierrez
in November 1998 in connection with the Acquisition Agreement. For such
offering, the Company relied upon Section 4(2) of the Securities Act of 1933, as
amended (the "Act") and Section 359(f)(2)(d) of the New York Code. See Part I,
Item 1. "Description of Business - (b) Business of Issuer - Employees and
Consultants"; Part I, Item 7. "Certain Relationships and Related Transactions";
and Part II, Item 4. "Recent Sales of Unregistered Securities."
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Ronald H. Kutz in connection with his service as President of the
Company. Mr. Kutz resigned his positions as President and the Company canceled
the shares previously issued to Mr. Kutz in November 1998 in connection with the
Acquisition Agreement. For such offering, the Company relied upon Section 4(2)
of the Act and Section 517.061(11) of the Florida Code. See Part I, Item 1.
"Description of Business - (b) Business of Issuer - Employees and Consultants";
Part I, Item 7. "Certain Relationships and Related Transactions"; and Part II,
Item 4. "Recent Sales of Unregistered Securities."
In April 1998, the Company sold 1,000,000 shares of its Common Stock
to twenty-five (25) investors for a total of $50,000. For such offering, the
Company relied upon Section 3(b) of the Act, Rule 504 of Regulation D
promulgated thereunder ("Rule 504"), Section 517.061(11) of the Florida Code,
Section 10-5-9(13) of the Georgia Code, Section 359(f)(2)(d) of the New York
Code, Section 13.1-514(7)(b) of the Virginia Code and no code section for seven
(7) investors residing outside the United States. See Part II, Item 4. "Recent
Sales of Unregistered Securities."
In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
Chief Financial Officer and as a Director of CIL. For such offering, the Company
relied upon Section 4(2) of the Act. No state exemption was required, as all
recipients of shares are foreign residents. See Part I, Item I. "Description of
Business - (b) Business of Issuer - Contractual Relationships"; Part I, Item 1.
"Description of Business - (b) Business of Issuer - Employees and Consultants";
Part I, Item 4. "Security Ownership of Certain Beneficial Owners and
Management"; Part 1, Item 6. "Executive Compensation - Employee Contracts and
Agreements"; Part I, Item 7. "Certain Relationships and Related Transactions";
and Part II, Item 4. "Recent Sales of Unregistered Securities."
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In November 1998, the Company sold 3,000,000 shares of its Common
Stock to ten (10) investors for a total of $150,000. For such offering, the
Company relied upon Section 3(b) of the Act and Rule 504. No state exemption was
necessary, as none of the investors reside in the United States. See Part II,
Item 4. "Recent Sales of Unregistered Securities."
In January 1999, CIL entered into an employment agreement with Steve
Olivier to act as the Chief Financial and Administrative Officer of CIL. Mr.
Olivier is employed part-time averaging twelve (12) hours per week. As
compensation, Mr. Olivier received wages of 8,000 Mauritian Roupies per month
beginning in August 1999, which is approximately $300 per month. See Part I,
Item 1. "Description of Business - (b) Business of Issuer - Employees and
Consultants"; Part 1, Item 6. "Executive Compensation - Employee Contracts and
Agreements"; and Part I, Item 7. "Certain Relationships and Related
Transactions".
In January 1999, the Company issued a total of 350,000 shares of its
Common Stock to ten (10) persons for services related to the Acquisition, which
services were valued at a total of $17,500. No contracts for these services were
utilized. For such offering, the Company relied upon Section 4(2) of the Act and
Section 359(f)(2)(d) of the New York Code. No state exemption was necessary for
nine (9) of the persons, who are foreign residents. See Part I, Item 1.
"Description of Business - (b) Business of Issuer - Employees and Consultants";
and Part II, Item 4. "Recent Sales of Unregistered Securities."
In July 1999, the Company sold 10,000 shares of its Common Stock to
two (2) investors for a total of $35,000. For such offering, the Company relied
upon Section 4(2) of the Act and Rule 506 of Regulation D promulagated
thereunder ("Rule 506"). No state exemption was required, as both investors are
foreign residents. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
In August 1999, CIL entered into an employment agreement with Cyril
Heitzler to be the Exceutive Vice-President of CIL. As compensation, Mr.
Heitzler receives wages of 15,000FF per month and also a company car and housing
allowance of 4,300FF per month. See Part I, Item 1. "Description of Business -
(b) Business of Issuer - Employees and Consultants"; Part 1, Item 6. "Executive
Compensation - Employee Contracts and Agreements"; and Part I, Item 7. "Certain
Relationships and Related Transactions".
In August 1999, the Company sold 51,089 shares of its Common Stock to
two (2) investors for a total of $178,811. For such offering, the Company relied
upon Section 4(2) of the Act and Rule 506. No state exemption was required, as
both investors are foreign residents. See Part II, Item 4. "Recent Sales of
Unregistered Securities."
In September 1999, the Company sold 20,744 shares of its Common Stock
to one (1) investor for a total of $64,306. For such offering, the Company
relied upon Section 4(2) of the Act and Rule 506. No state exemption was
required, as the investor is a French resident. See Part II, Item 4. "Recent
Sales of Unregistered Securities."
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In November 1999, the Company sold 5,186 shares of its Common Stock
to one (1) investor for a total of $16,076. For such offering, the Company
relied upon Section 4(2) of the Act and Rule 506. No state exemption was
required, as the investor is a French resident. See Part II, Item 4. "Recent
Sales of Unregistered Securities."
In January 2000, the Company along with Reception Services With
Professionals - A.S.A.P., LLC, a French corporation ("ASAP") formed Cartis
France, SAS ("Cartis France") for the purpose of distributing the Company's
products in France. The Company owns forty-nine percent (49%) of the issued and
outstanding stock of Cartis France. ASAP owns the remaining fifty-one percent
(51%). Cartis France is not yet operational. See Part I, Item I. "Description of
Business - (b) Business of Issuer - Contractual Relationships."
In February 2000, Herve Gallion assigned the worldwide patents and
trademarks on the Company's products to the Company. An assignment of these
rights has yet to be recorded at the Swiss Institute of Industrial Property.
Under the terms of the agreement, Herve Gallion is to receive a royalty of five
percent (5%) of gross sales and services, payable monthly beginning January 1,
2001. See Part I, Item 1. "Description of Business - (b) Business of Issuer -
Patents, Copyrights and Trademarks"; Part I, Item 7. "Certain Relationships and
Related Transactions."
In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from Advanced Technologies
Development Company Limited ("ATD"). Herve Gallion is an officer, director and
also the beneficial owner of ATD. For such products, the Company issued
3,000,000 shares of its Common Stock to ATD. For such offering, the Company
relied upon Section 4(2) of the Act and no state exemption, as ATD is a foreign
corporation. See Part I, Item 1. "Description of Business - (b) Business of
Issuer - Employees and Consultants"; Part I, Item 4. "Security Ownership of
Certain Beneficial Owners and Management"; Part 1, Item 6. "Executive
Compensation - Employee Contracts and Agreements"; Part I, Item 7. "Certain
Relationships and Related Transactions"; and Part II, Item 4. "Recent Sales of
Unregistered Securities."
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents. See Part I, Item 1. "Description of Business - (b)
Business of Issuer - Contractual Relationships"; Part I, Item 1. "Description of
Business - (b) Business of Issuer - Employees and Consultants"; Part I, Item 4.
"Security Ownership of Certain Beneficial Owners and Management"; Part 1, Item
6. "Executive Compensation - Employee Contracts and Agreements"; Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities."
See (b) "Business of Issuer" immediately below for a description of
the Company's business.
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(b) Business of Issuer.
Background of the Industry
The Federal Safe Drinking Water Act of 1984 established the U.S.
Environmental Protection Agency ("EPA") as the agency responsible for setting
standards for drinking water and monitoring the public utilities. As of May
1992, the EPA has established Federally enforceable standards for eighty-nine
(89) contaminants that may be found in drinking water. In a report commissioned
by Ralph Nader, at least 2110 contaminants have been identified in the Nation's
water supplies.
The standards established by the EPA set up a Maximum Contaminant
Level ("MCL"), which represents the maximum level at which the contaminant can
be found in your drinking water and still be considered "safe" to consume. The
MCL standard fluctuates based upon the EPA's determination of how much of a
certain contaminate is safe, which determination is based partially on changing
technology. Therefore, water which is considered "safe" today, may not be
considered "safe" tomorrow, when new standards may be established.
Additionally, in August 1996, President Clinton signed the Safe
Drinking Water Act ("SWDA") Amendments of 1996. The SWDA Amendments require that
consumers receive more information about the quality of their drinking water
supplies and about the measures being instituted to protect them. The amendments
also provide new opportunities for public involvement and provide an increased
emphasis on protecting the sources of local drinking water.
However, activists have charged that new U.S. rules on safe drinking
water do not go far enough, and leave pregnant women, infants and the elderly at
risk. The Natural Resources Defenses Council ("NRDC"), an environmental activist
organization, said regulations released by the EPA contain loopholes that could
result in health risks to certain people.
Under the 1996 Safe Drinking Water Act, the EPA issued rules which
compel water companies to publish annual reports to their customers, informing
them of the pollutants contained in their drinking water. However, only
federally regulated contaminants need be disclosed in such reports.
Contaminants, which remain unregulated to date, need not be disclosed to
consumers in these reports, leaving consumers unaware of certain contaminants
present in their drinking water.
Doctors, both through the use of activist organizations such as the
Physicians for Social Responsibility and alone have expressed the importance of
informing the public of all contaminants present in drinking water. Those
doctors have opined that water pollution can be lethal to "at-risk" groups such
as pregnant women and HIV-AIDS sufferers, and are suspected to cause spontaneous
abortions in some women.
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Problems with drinking water can also occur after water leaves a
treatment and storage facility, while en route to a consumer's home or business.
Contaminants such as lead, Trihalomethanes and Asbestos are notoriously inserted
into the water supply after the treated water leaves the plant. Lead is know to
leach into our drinking water from plumbing in the consumer's establishment or
residence as well as form the municipal distribution system. Even end users with
copper plumbing can be at risk due to lead solder used to connect copper pipes.
Trihalomethanes are a byproduct produced by chlorine treatment which is known to
be a carcinogen.
Common Water Quality Problems include:
Aesthetics: Otherwise harmless contaminants like chlorine, sulfur, iron and
manganese cause taste, color, and odor problems.
Water Hardness: Hard water contains excessive levels of the minerals calcium and
magnesium, a condition found in eighty-five percent (85%) of the United States.
Hard water shortens the life of household plumbing and water-using appliances,
makes cleaning and laundering tasks more difficult and gradually decreases the
efficiency of water heaters.
Lead: Used extensively in plumbing materials (pipes and lead-based solder) until
the late 1980's, lead can leach into water supplies. Low levels of lead have
been linked to learning disabilities in young children and high levels can cause
hypertension in adults.
Biological Pathogens: Waterborne organisms can cause disease in humans. They
include cysts like Cryptosporidium and Giardia; bacteria like typhus, fecal
coliform and cholera; and viruses like influenza. These organisms typically
cause unpleasant intestinal disorders and can pose a significant threat to the
immune-impaired.
Nitrates: Nitrogen compounds are sometimes found in ground and surface water in
rural areas, often as a result of nitrogen-based fertilizer runoff. Excess
nitrate levels can interfere with the oxygen-carrying capacity of blood,
especially in babies, and have been linked to high incidences of miscarriages.
Heavy Metals: Metals like mercury, zinc, copper, and cadmium usually enter the
water supply as industrial waste and, inexcessive concentrations, can cause
physiological damage to humans, including damage to the central nervous system.
Radium/Radon: Naturally occurring radioactive elements such as radium and radon
have bben linked to cancer in humans. Radon is found in gaseous form, and is
absorbed through drinking, as well as through inhalation during washing or
showering.
VOC's: High concentrations of volatile organic compounds ("VOC's"), such as the
petroleum distillate benzene and the industrial degreasing compound
trichloroethylene have been linked to organ damage and cancer in humans.
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THM's: Trihalomethanes ("THM's") are by-products produced when chlorine reacts
with organic compounds in water. THM's are primarily absorbed through
inhalation, and have been linked to bladder and rectal cancer.
Asbestos: Asbestos is a fibrous mineral that contaminates water naturally or
through its past use in concrete water pipes. Asbestos has been linked to lung
and other forms of cancer.
Arsenic: Both a natural and manufacturing-induced ground water contaminant,
arsenic is linked to various cancers and may damage the circulatory and central
nervous systems.
Sediments: Solid particulates in water can settle out over time. The presence of
sediments in water is typically an aesthetic concern.
Low/High pH: pH refers to "potential hydrogen," and is a measure of acidity or
alkalinity on a 14-point scale (zero through six is acidic; seven is neutral;
and eight through 14 are alkaline). Extreme measures of acidity in water can be
corrosive, whereas high alkalinity can be the source of aesthetic problems.
It follows that, to some extent, water treatment has been left to the
end consumer. Common methods of treatment include: (i) bottled water; and (ii)
filtration systems.
Bottled Water
In a four (4) year test of one hundred three (103) brands of bottled
water conducted by the NRDC, it was found that a third (1/3) of the tested
brands contained bacteria or other chemicals exceeding the industry's own
guidelines or the most stringent state purity standards. This data begs the
question as to whether bottled water, in certain instances, may be worse for the
consumer than standard tap water.
Legislation has been initiated which would impose stricter labeling
requirements on the bottled water industry. Further, that proposed legislation
seeks to set standards for bacterial and chemical contamination which parallels
those standards set for tap water. Prior to the enactment of such legislation,
the bottled water industry has gone essentially unregulated.
Americans drink an estimated 3.4 billion gallons of bottled water
annually - about 12.7 gallons per person - and the numbers have increased nearly
ten percent (10%) per year, according to the industry.
Filtration Systems
Carbon Filters
Perhaps the most widely used item for improving drinking water
quality in the home is the replaceable cartridge type filter. The filter element
usually contains a wound fabric or layers of paper-like material which screens
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out turbidity and particulates from the water stream. Some replacement elements
also contain a layer of fine activated carbon laminated on paper to perform some
taste and odor removal function. Other cartridges are made with solid porous
activated carbon elements which offer the dual function of sediment removal as
well as adsorption of excess chlorine. These small filter units are usually
reasonably priced, however they lack many of the removal capabilities of more
sophisticated units and therefore only eliminate some of the contaminates found
in tap water, and can even cause additional contaminates if not properly
maintained. In fact, carbon can act as a harbor for non-pathogenic organic
species.
Distillers
A second product line to provide better water quality is the small
distiller, which produces limited quantities of de-mineralized water. This
equipment, like its larger commercial model, removes bacteria from the water and
most impurities producing what is commonly accepted as "safe, mineral-free
water". Distilled water however, is prone to new bacteria contamination and void
of useful minerals. Home distillers are of various designs, ranging from
counter-top single-batch versions to centrally located tanks for multiple home
uses. Automatic home distillers coupled with a storage water reservoir are
commonly used in North American homes. The daily supply of distilled water is
from three (3) to twelve (12) gallons per day. Based on the earth's solar
evaporation technology, today's state-of-the-art domestic distillers use recent
designs and materials to reach greater efficiency levels. The process involves
boiling water in a chamber to produce steam. Dissolved solids and unwanted
liquids with higher boiling points than water ideally remain behind in the
chamber while unwanted liquids that boil at lower temperatures than water are
discharged as vapors before the boiling point of water is reached. The cooled
steam condenses into mineral-free water that collects in a tank. Power
consumption of these systems is high and varies from three (3) to five (5)
kilowatt-hours of electricity per gallon of distilled water produced.
Reverse Osmosis
A French scientist originally discovered the process of osmosis in
1748 who observed that water would diffuse spontaneously through a pig bladder
membrane into a parallel chamber of alcohol. Osmosis and reverse osmosis ("RO"),
for the next 200 years was not much more than a laboratory topic because natural
membranes were scarce and unreliable. In the mid-1950's, the work of Dr. S.
Sourirajan at UCLA and others advanced the RO technology to the point where
artificial membranes could be manufactured. During this era, considerable work
was done on behalf of the U.S. Office of Saline Water to perfect methods of
water desalination. The movement of water from soils into plant roots is an
example of osmosis at work in nature. When a semi-permeable membrane, like a
living cell wall, separates two solutions with different solid concentrations,
the pure water will flow from the least concentrated solution through the
membrane and into the solution containing the higher solids concentration. The
flow will stop when the osmotic pressure on both sides of the membrane
equalizes. This is the natural process by which water is exchanged and supplied
within living matter.
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General
In 1993, the Company's two (2) principals, Herve Gallion and Cyril
Heitzler, joined forces to develop a new technology of water treatment based on
the theory of ionization of active carbon by pure silver. This process of water
purification was highly reliable scientifically, but not economically feasible
on an industrial basis due to the high production costs involved. At that time,
a liter of this product would have cost hundreds of thousands of dollars.
The technological breakthroughs necessary to manufacture the CARTIS
cartridge at competitive prices was accomplished in cooperation with G.R.E.M.I,
which is a research divisions of the French National Center for Scientific
Research ("CNRS") specializing in the ionization technology by "cold plasma
radio-frequency".
Today, after nearly seven (7) years of research and development
entailing large investments in R&D and in machinery and scientific equipment,
the CARTIS filtration process was born. Hundreds of Potable Water Systems have
already been produced, sold and installed over the past three (3) years in
Mauritius, the area of the world which was chosen to launch the product
commercially.
The CARTIS process, which was awarded a prize by the National Agency
for the Research Valoring ("A.N.V.A.R") has one (1) international patent
registered in 1997. The name CARTIS has also been trademarked.
The Company's main subcontractor for spare parts assembly is located
in the people's Republic of China. Phase D (Tianjin) Mechanical Industries Co.
Ltd. f/k/a FAS ("Phase D") is an industrial firm dealing with plastics and
electronics in China. Phase D agreed to manufacture all plastic parts of the PWS
300. Currently, orders are placed with the issuance of irrevocable letters of
credit. Phase D designs and manufactures molds for plastic components produced
by six (6) injection molding presses with a capacity of 20 to140 tons. Phase D
also produces electronic circuit boards and performs a range of fabrication and
assembly operations. Phase D employs 70 people including 15 professionals and 6
French-speaking natives of China. The present assembly capacity of PWS CARTIS
components is 5,000 units monthly.
The CARTIS Process
The Company's primary product, the PWS 300, is easily connected to
the water supply network of a house or an apartment. Its installation is simple
and requires only one and one half hours of a plumber's work.
First, the water is filtered through a standard preliminary filter
calibrated to 5 microns, for elimination of large impurities.
Second, the water undergoes treatment by Ultra Violet light located
in a stainless steel chamber also equipped with a quartz tube. The 25 Watt U.V.
Philips lamp destroys a large amount of bacteria. This is a well-established
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germicidal process. The more bacteria eliminated by the U.V. lamp, the longer
the useful life of the CARTIS cartridge.
Third, the water passes through an anti-limestone module which
prevents the deposit of limestone without eliminating calcium or magnesium, two
(2) essential minerals.
Last, the water is brought into contact with the CARTIS cartridge by
a regulator. By virtue of its active carbon compound, the cartridge eliminates
heavy metals, chlorine and the bad tastes and odors present in the water.
When water passes through the CARTIS cartridge, a physio-chemical
reaction generates an environment of active oxygen possessing high bactericidal
properties along with a remnant effect, which is the accepted characteristic of
potable water.
The PWS 300 is equipped with an electronic mechanism, which performs
the following functions:
- Lighting of the U.V lamp through detection, within 0.4 seconds of
water inflow.
- Operation of the U.V lamp (indicator)
- Switches off the U.V. lamp when water flow ceases
The next generation PWS 300 will be equipped with a new electronic
card which is expected to perform the following functions:
- Indication of wear in the CARTIS cartridge according to a number of
cubic meters (m3) of water flow through preset during installation
(indicator + alarm).
- Triggering of a general alarm in case of any malfunction,
- As an option for untreated well water, an electric valve by remote
control to shut off the water flow in an emergency.
- Digital monitoring of water consumption.
The life span of the CARTIS cartridge is of 250 m3, corresponding to
the needs in potable water of a family of four (4) persons for a period of about
two (2) years.
The CARTIS product is unique and competitively priced. Its
recommended end user price is approximately $1,500, which compares favorably to
other systems of lesser efficiency.
The uniqueness of the CARTIS device is due to its ability to produce
adequate amounts of potable water at an economical price without the use of
harmful chemicals, while preserving the water's natural minerals, providing
shelf life (the remnant effect) and preventing limestone deposits. Competing
systems filters use cumbersome methods, such as reverse osmosis, or limited
treatment, such as U.V lamp only systems or basic filters for solid particles.
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The PWS 300, currently the main CARTIS product, is the device that
better responds to the usual needs of water consumption in industrialized
countries. In such countries, the water in the supply network is of an
acceptable quality, but is far from perfect in terms of both its chemical
composition and its taste. For large requirements, the CARTIS system is equipped
with optional storage tanks of various sizes depending on need.
The PWS 300 is currently without match for converting water from any
water source (rivers, wells, etc...) into potable water. The water produced is
of comparable quality to bottled drinking water sold on the market with the
added advantage of a longer shelf life.
Other Products
The PWS 300 is the Company's main product. However, other devices
have been developed or are still in the design stage.
; SWIMMING POOL SYSTEM: THE SPS 10.
Testing sites of the Company's Swimming Pool System ("SPS 10") have
recently been introduced in Mauritius. The SPS 10 aims at replacing all water
treatment products utilized in a swimming pool. Its primary purpose is to
guarantee bathing in potable water free from chlorine, which irritates the eyes
and skin.
Inserted downstream of the traditional sand filtration system of the
swimming pool, the SPS 10 has a treatment capacity of 10 m3 per hour and
obviates the use of all customary chemical treatment products.
The CARTIS cartridge specially designed for swimming pools is
expected to have a lifespan of approximately three (3) years for an average
private pool.
All other systems presently in use necessitate the use of chlorine or
its derivatives. In addition to being irritating to the eyes and skin, they are
considerably more burdensome than the CARTIS system which requires almost no
maintenance.
; THE CARTIS WATER DISPENSER
The CARTIS cold and hot water dispenser is still in the design stage.
However, its technical specifications have already been defined. The CARTIS
dispenser, once on the market, should replace other water fountain services
currently on the market since better quality water will be provided at a
considerably lower cost directly from the available water supply.
Water contained in the water cooler is continuously pumped and
circulated through a built-in CARTIS cartridge, thereby providing
quasi-permanent use. Hot and cold water (80C and 8C respectively) is available
as needed through an electronic process (the Pelletier Effect) which does not
utilize a compressor; no CFC is involved. The device is powered by 12-volt
alternative current which is safe to use.
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HYDROPONICS: The HPS 10
Hydroponics refers to the widespread technology of vegetable
production in a controlled environment in greenhouses and above ground.
Soil-free and greenhouse cultivation techniques are expanding rapidly and the
quality of water is positively correlated to the yield. Various studies have
been carried out on the cultivation of tomatoes, flowers, and vegetables. Water
carries germs, which adhere to the vegetable during irrigation, causing a high
incidence of disease and loss.
Studies sponsored by CARTIS on soil-free cultivation of tomatoes have
been performed by Mont Desert-Alma, a subsidiary of ENL International, one of
the largest agricultural groups in the Indian Ocean rim countries. It was proven
that the destruction of bacteria after CARTIS treatment increased yield twofold.
The HPS 10 is fully developed, and will be marketed at the outset of
the initial testing period at beta sites.
; TELE-MONITORING
The next generation of PWS 300 appliances are expected to be equipped
by year-end with a system of tele-monitoring, which will provide a guarantee of
continuous performance.
The new generation PWS 300 will be connected to the telephone
network. A connection is automatically established with the maintenance
contractor as soon as the life expectancy of a cartridge expires or any
malfunction occurs in the device.
The PW300 coupled with a tele-monitoring service contract will
guarantee the continuous supply of potable water in the home.
Contractual Relationships
The CARTIS devices have been sold and installed in various locations
and businesses over the past three (3) years. To date, none of the approximately
900 end users have returned a single device since inception. The Company has
entered into agreements with the following organizations:
CEFCA s.a.r.l. is a French company situated near Orleans, France.
CEFCA is located in an industrial complex and occupies 1200 square meters. The
premises consist of a carbon powder manufacturing plant, the pre-production
workshops and the quality control department of Cartis. The employees of CEFCA
are scientists whose mission is to manufacture the CARTIS cartridge in
collaboration with the researchers of CNRS, in view of enhancing productivity
and reducing costs.
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In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
CFO and as a Director of CIL. For such offering, the Company relied upon Section
4(2) of the Act. No state exemption was required, as all recipients of shares
are foreign residents. See Part I, Item 1. "Description of Business - (b)
Business of Issuer - Employees and Consultants"; Part I, Item 4. "Security
Ownership of Certain Beneficial Owners and Management"; Part 1, Item 6.
"Executive Compensation - Employee Contracts and Agreements"; Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities."
Cartis International, Ltd., a wholly owned subsidiary of the Company
is based in Maritius and was established to manage the sales development of
CARTIS products.
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents. See Part I, Item 1. "Description of Business - (b)
Business of Issuer - Employees and Consultants"; Part I, Item 4. "Security
Ownership of Certain Beneficial Owners and Management"; Part 1, Item 6.
"Executive Compensation - Employee Contracts and Agreements"; Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities."
Cartis France SA was formed in January 2000 by the Company and ASAP
for the purpose of distributing the Company's products in France. The Company
owns forty-nine percent (49%) of the issued and outstanding stock of Cartis
France. ASAP owns the remaining fifty-one percent (51%). Cartis France is not
yet operational.
Business Strategy
The Company intends to exploit its leading edge technology to replace
the need for bottled water, for water filtration systems geared to human
consumption and for pool chemical additions. The Company also intends to create
a market for greenhouse vegetable production. CARTIS is capable of providing the
following unique features:
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- The CARTIS water treatment process is capable of converting virtually
any source of water supply into potable water.
- The CARTIS system removes limestone, which otherwise hardens water and
leaves damaging deposits inside pipes.
In the near future, tele-monitoring will guaranty the quality of
water supply twenty-four hours a day.
The Company has already installed CARTIS products in the following
locations:
PWS 300: Approximately 1500 end users to date. Clients include:
hospitals, high-end hotels, embassies, factory cafeterias, households, office
buildings, etc.
SPS 10: The device is currently installed in five (5) beta sites in
Mauritius and France.
Marketing and Distribution
Marketing
The Company has targeted international markets.
The Company believes that as a result of the worldwide diminishing
quality of water, the opportunities for the Company's water treatment products
will exist for years to come. In the US alone, the market for bottled water is
estimated at $4 billion annually, and the water filtration market is estimated
at $1.4 billion.
The rate of growth of water filtration products for human consumption
exceeds that of bottled water. Currently, the worldwide market for water
filtration for home use is estimated at more than $20 billion annually.
In management's opinion, drinking tap water is becoming increasingly
distasteful and suspect in the eyes of consumers. Opinion leaders led by
prominent members of the medical community believe that chlorine byproducts
present in water may cause certain forms of cancers, as well as arterial and
heart disease. Additionally, the dangers and frequency of lead in tap water, as
well as the presence of Cryptosporidium or Giardia, both harmful protozoa, have
made the consumer aware of the potential dangers associated with drinking tap
water. The typical target customer of the Company's products primarily seeks
clean, fresh tasting water.
In order to allow rapid expansion, the Company resorts to sub-
contracting for manufacturing and strategic alliances for sales and
distribution. See Part I, Item 1 "Description of Business - (b) Business of
Issuer - Contractual Relationships
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The Company will market its products and services to national (for
smaller countries) or regional (for larger countries) distributors. These
distributors would be affiliates of the Company in developed countries
primarily, or non-affiliates primarily in other countries.
Distribution
The National and Regional Distributors
These distributors will carry inventory for the territory, oversee
the hiring and training of a sales force and provide support and communication
with the field.
Sales Representatives
Sales representatives will be employed by the distributor with the
mission to identify Cartis Approved Retailers as well as to provide training,
support, including logistical support, and to oversee maintenance.
Cartis Approved Retailers
The retailers will sell and assure maintenance of the CARTIS products
to the end users, possibly with the intermediary step of established water
professionals or installers.
France was chosen as the first country to implement this sales
organization concept. Cartis France is a 49% affiliate of Cartis International.
The French partner is ASAP, SA, a well- established distributor.
Status of Publicly Announced New Products and Services
PWS 300: Today, after nearly seven (7) years of costly research and
development and the acquisition of a manufacturing plant and equipment, the
first units have been sold and installed in Mauritius, Madagascar and France.
The PWS 300 is equipped with an electronic mechanism, which performs
the following functions:
- Lighting of the U.V lamp through detection, within 0.4 seconds of
water inflow. ; Operation of the U.V lamp (indicator).
- Switching off the U.V. lamp when water flow ceases.
The next generation PWS 300 will be equipped with a new electronic
card which is expected to perform the following functions:
- Indication of wear in the CARTIS cartridge according to a number of
cubic meters (m3) of water flow-through preset during installation
(indicator + alarm).
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- Triggering of a general alarm in the event of malfunction,
- As an option for untreated well water, an electric valve with remote
shut off, to cease water flow in an emergency. ; Digital monitoring of
water consumption.
SPS 10: Several prototypes of the SPS 10 have recently been installed
in Beta sites in Mauritius and France. The SPS 10 aims to replace all water
treatment products utilized in a swimming pool. Its primary purpose is to
guarantee bathing in potable water, free from chlorine which can irritate the
eyes and the skin. Beta sites completion is expected by midyear 2000.
CARTIS WATER DISPENSER:The CARTIS water cooler is still in the design
stage. However, its technical specifications have already been defined. No
target date has yet been set for the market release of the product.
HPS 10: The HPS 10 is fully developed and will marketed at the outset
of the initial testing period at beta sites.
Competition
The Company competes with many other companies which supply water
filtration products. The "pour through" carafe type product normally kept in the
refrigerator and used in the kitchen is a competing product.
Several companies, including Brita, Discovery Engineering, Rubbermaid
and others compete in the pitcher or carafe products market segment. However,
these competing products merely rely on active carbon filtration process, a
significantly inferior technology to Cartis' cartridge. The Company has the only
water-dispensing unit that is actually a water filtration process.
The Company also competes with the bottled water industry, such as The
Perrier Group of America, Inc. (which includes Arrowhead Mountain Spring Water,
Poland Spring, Ozark Spring Water, Zephyrhills Natural Spring Water, Deer Park,
Great Bear and Mountain Ice) and Great Brands of Europe (which includes Evian
Natural Spring Water and Dannon Natural Spring Water). The Company also competes
with numerous regional bottled water companies located in the United States and
Canada.
The Company expects that more competitors will enter the water
filtration products market, resulting in even greater competition for the
Company. Many of the companies with whom the Company currently competes, or may
compete in the future, have greater financial, technical, marketing, and sales
resources, as well as greater name recognition than the Company. There can be no
assurance that the Company will have the resources required to respond
effectively to market or technological changes or to compete successfully in the
future.
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Sources and Availability of Raw Materials
Cartis products are manufactured from readily available components
including carbon and silver UV lamps, plastic parts and quartz tubes. The
Company believes that all raw materials necessary to produce CARTIS products are
readily available from numerous sources.
Dependence on Major Customers
The Company will depend upon two (2) companies (Cartis France and
Versatech) for future distribution of the Company's products. Currently, there
is no agreement in place between the Company and either of these distributors,
although the Company does own forty-nine percent (49%) of the stock of Cartis
France. The loss or interruption of either of these two (2) future arrangements
would seriously impede the Company's progress.
The Company is working toward implementing its marketing and
distribution plan outlined herein, by which it hopes to establish national and
regional distributors, sales representatives and retailers of Cartis products.
If such plan is successfully set in motion, the Company will become much less
dependent upon its existing arrangements.
Patents, Trademarks and Copyrights
In February 2000, Herve Gallion assigned the worldwide patents and
trademarks on the Company's products to the Company. An assignment of these
rights has yet to be recorded at the Swiss Institute of Industrial Property.
Under the terms of the agreement, Herve Gallion is to receive a royalty of 5% of
gross sales and services, payable monthly beginning January 1, 2001. See Part I,
Item 7. "Certain Relationships and Related Transactions."
Government Regulation
The Federal Safe Drinking Water Act of 1984 established the EPA as
the agency responsible for setting standards for drinking water and monitoring
the public utilities. As of May 1992, the EPA had established Federally
enforceable standards for eighty-nine (89) contaminants that may be found in
drinking water.
Additionally, in August 1996, President Clinton signed the SWDA
Amendments of 1996. The SWDA Amendments require that consumers receive more
information about the quality of their drinking water supplies and about the
measures being instituted to protect them. The amendments also provide new
opportunities for public involvement and provide an increased emphasis on
protecting the sources of local drinking water.
Under the 1996 SDWA, the EPA issued rules which compel water
companies to publish annual reports to their customers, informing them of the
pollutants contained in their drinking water. However, only federally regulated
contaminants need be disclosed in such reports. Contaminants which remain
unregulated to date need not be disclosed to consumers in these reports, leaving
consumers unaware of certain contaminants present in their drinking water.
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Legislation has been initiated which would impose stricter labeling
requirements on the bottled water industry. Further, that proposed legislation
seeks to set standards for bacterial and chemical contamination which parallels
those standards set for tap water. Prior to the enactment of such legislation,
the bottled water industry has gone essentially unregulated.
Effect of Existing or Probable Governmental Regulation on the Business
Future enactment of governmental legislation which would impact the
Company's business is not expected. This is primarily because the Company's
products are generally used after water has already passed through a traditional
filtration system and therefore already meets tap standards set by the Federal,
state and local governments.
However, in foreign countries, the Company's products may be impacted
by legislation that applies to filtration systems. The Company expects that its
products will meet or exceed any standard imposed upon it.
Cost of Research and Development
Most research and development on the Company primary product, the PWS
300, was completed prior to the formation of Cartis. However, further
development of the CARTIS process and its implementation in various applications
is ongoing.
For fiscal years 1999 and 1998, the Company amortized a government
grant in the amount of $23,088 and expended $49,178 of its revenues,
respectively, on research and development. These expenditures represented (1.5)%
and 104.2%, respectively, of the total revenues of the Company for such fiscal
years.
At the current time, none of the costs associates with research and
development are bourne directly by the customer; however there is no guarantee
that such costs will not be bourne by customers in the future and, at the
current time, the Company does not know the extent to which such costs will be
bourne by the customer, if at all.
Cost and Effects of Compliance with Environmental Laws
The Company's business is not subject to regulation under the state
and Federal laws regarding environmental protection and hazardous substances
control, including the Occupational Safety and Health Act, the Environmental
Protection Act, and Toxic Substance Control Act. The Company is unaware of any
bills currently pending in Congress which could change the application of such
laws so that they would affect the Company.
Employees and Consultants
At February 29, 2000, the Company employed four (4) executives all of
whom are employed on a full-time basis. Additionally, five (5) executives are
employed by the Company's affiliate, Cartis France. None of these employees are
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represented by a labor union for purposes of collective bargaining. The Company
considers its relations with its employees to be excellent.
The Company has employment agreements with Messrs. Cyril Heitzler and
Steve Olivier, who respectively are the Executive Vice-President of CIL and CFO
of CIL.
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Christian Gutierrez in connection with his service as Secretary and
Treasurer of the Company. Mr. Gutierrez resigned his positions as Secretary and
Treasurer and the Company canceled the shares previously issued to Mr. Gutierrez
in November 1998 in connection with the Acquisition Agreement. For such
offering, the Company relied upon Section 4(2) of the Act and Section 359(f)(2)
(d) of the New York Code. See Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Ronald H. Kutz in connection with his service as President of the
Company. Mr. Kutz resigned his positions as President and the Company canceled
the shares previously issued to Mr. Kutz in November 1998 in connection with the
Acquisition Agreement. For such offering, the Company relied upon Section 4(2)
of the Act and Section 517.061(11) of the Florida Code. See Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities."
In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
CFO and as a Director of CIL. For such offering, the Company relied upon Section
4(2) of the Act. No state exemption was required, as all recipients of shares
are foreign residents. See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Management"; Part 1, Item 6. "Executive Compensation -
Employee Contracts and Agreements"; Part I, Item 7. "Certain Relationships and
Related Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
In January 1999, CIL entered into an employment agreement with Steve
Olivier to act as the Chief Financial and Administrative Officer of CIL. Mr.
Olivier is employed part-time averaging twelve (12) hours per week. As
compensation, Mr. Olivier received wages of 8,000 Mauritian Roupies per month,
beginning in August 1999, which amounts to approximately $300 per month. See
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Part 1, Item 6. "Executive Compensation - Employee Contracts and Agreements";
and Part I, Item 7. "Certain Relationships and Related Transactions".
In January 1999, the Company issued a total of 350,000 shares of its
Common Stock to ten (10) persons for services related to the Acquisition, which
services were valued at a total of $17,500. No contracts for these services were
utilized. For such offering, the Company relied upon Section 4(2) of the Act
and Section 359(f)(2)(d) of the New York Code. No state exemption was necessary
for nine (9) of the persons, who are foreign residents. See Part II, Item 4.
"Recent Sales of Unregistered Securities."
In August 1999, CIL entered into an employment agreement with Cyril
Heitzler to be the Exceutive Vice-President of CIL. As compensation, Mr.
Heitzler receives wages of 15,000FF per month and also a company car and housing
allowance of 4,300FF per month. Part 1, Item 6. "Executive Compensation -
Employee Contracts and Agreements"; and Part I, Item 7. "Certain Relationships
and Related Transactions".
In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from ATD. Herve Gallion is an
officer, director and also the beneficial owner of ATD. For such products, the
Company issued 3,000,000 shares of its Common Stock to ATD. For such offering,
the Company relied upon Section 4(2) of the Act and no state exemption, as ATD
is a foreign corporation. See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Management"; Part 1, Item 6. "Executive Compensation -
Employee Contracts and Agreements"; Part I, Item 7. "Certain Relationships and
Related Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents. See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Management"; Part 1, Item 6. "Executive Compensation -
Employee Contracts and Agreements"; Part I, Item 7. "Certain Relationships and
Related Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
Facilities
The Company maintains its executive offices at 277 Royal Poinciana
Plaza, PMB 155, Palm Beach, FL 33480. Its telephone number is (230) 211-6825 and
its facsimile number is (230) 210-2445.
CEFCA leases approximately 4,382 meters squared as space for the
manufacturing of CARTIS product. The lease is for a term of nine (9) years
commencing July 16, 1998 and ending July 15, 2007. The Company pays monthly
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rent in the amount of 12,000 French Francs plus taxes. See Part I, Item 3.
"Description of Property."
Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
1. History of Losses. Although the Company has been in business since
March, 1997, it is mostly recently starting to exit the development stage as it
is beginning to widely distribute products that utilize the CARTIS system. As of
December 31, 1999, the Company had total assets of $594,320, a net loss of
$163,438 with revenues of $82,585 and stockholders equity of $196,193. Due to
the Company's operating history and limited resources, among other factors,
there can be no assurance that profitability or significant revenue will occur
in the future. Moreover, the Company expects to continue to incur operating
losses through at least the second quarter of fiscal 2001, and there can be no
assurance that losses will not continue thereafter. The ability of the Company
to establish itself as a going concern is dependent upon the receipt of
additional funds from operations or other sources to continue those activities.
The Company is subject to all of the risks inherent in the operation of a
development stage business and there can be no assurance that the Company will
be able to successfully address these risks. See Part I, Item 1. "Description of
Business."
2. Minimal Assets. Working Capital and Net Worth. As of December 31,
1999, the Company's total assets in the amount of $594,320, consisted,
principally, of the sum of $22,000 in cash, $443,000 in inventory and $119,000
in property and equipment. As a result of its minimal assets and a net loss from
operations, in the amount of $163,438, as of December 31, 1999, the Company had
a net worth of $196,193. Further, there can be no assurance that the Company's
financial condition will improve. Even though management believes, without
assurance, that it will obtain sufficient capital with which to implement its
expansion plan, the Company is not expected to proceed with its expansion
without an infusion of capital. In order to obtain additional equity financing,
management may be required to dilute the interest of existing shareholders or
forego a substantial interest of its revenues, if any. See Part I, Item 1.
"Description of Business"
3. Need for Additional Capital. Without an infusion of capital or
profits from operations, the Company is not expected to proceed with its
expansion as planned. Accordingly, the Company is not expected to overcome its
history of losses unless sales exceed the current levels and/or additional
equity and/or debt financing is obtained. While the Company anticipates the
receipt of increased operating revenues, such increased revenues cannot be
assured. Further, the Company may incur significant unanticipated expenditures
which deplete its capital at a more rapid rate because of among other things,
the stage of its business, its limited personnel and other resources and its
lack of a widespread client base and market recognition. Because of these and
other factors, management is presently unable to predict what additional costs
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might be incurred by the Company beyond those currently contemplated. The
Company has no identified sources of additional capital funds, and there can be
no assurance that resources will be available to the Company when needed. See
Part I, Item 1. "Description of Business - (b) Business of Issuer."
4. Dependence on Management. The possible success of the Company is
expected to be largely dependent on the continued services of its President,
Herve Gallion. Virtually all decisions concerning the marketing, distribution
and sales of the Company's products and services will be made or significantly
influenced by the Company's officers. These officers are expected to devote only
such time and effort to the business and affairs of the Company as may be
necessary to perform their responsibilities as executive officers. The loss of
the services of any of these officers would adversely affect the conduct of the
Company's business and its prospects for the future. The Company presently has
no employment agreements with any of its officers. See Part I, Item 1.
"Description of Business - (b) Business of Issuer and Part I, Item 5.
"Directors, Executive Officers, Promoters and Control Persons."
5. Limited Distribution Capability. The Company's success depends in
large part upon its ability to distribute its products and services. As compared
to the Company, which lacks the financial, personnel and other resources
required to compete with its larger, better-financed competitors, virtually all
of the Company's competitors or potential competitors have much larger budgets
for securing customers. Although the Company has entered into some agreements
for the marketing and distribution of its products, these have produced only
limited revenues to date. Depending upon the level of operating capital or
funding obtained by the Company, management believes, without assurance, that it
will be possible for the Company to attract additional customers for its
products and services. However, in the event that only limited funds are
available from operations or obtained, the Company anticipates that its limited
finances and other resources may be a determinative factor in the decision to go
forward with planned expansion. Until such time, if ever, as the Company is
successful in generating sufficient cash flow from operations or securing
additional capital, of which there is no assurance, it intends to continue
marketing its products through its current distribution arrangements. However,
the fact that these arrangement have not thus far produced significant revenue
may adversely impact the Company's chances for success. See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Sales and Marketing-
Distribution of Products."
6. Inability to expand its Infrastructure. The Company may be
required to expand and adapt its infrastructure as the number of units ordered
and number of different products produced increases. The expansion and
adaptation of the Company's infrastructure will require substantial financial,
operational and management resources. There can be no assurance, however, that
the Company will be able to expand or adapt its infrastructure to meet
additional demand or customers' changing requirements on a timely basis, at a
commercially reasonable cost, or at all, or that the Company will be able to
deploy successfully any necessary infrastructure expansion. Any failure of the
Company to expand its infrastructure, as needed, on a timely basis or to adapt
to changing customer requirements or evolving industry standards could have a
material adverse effect on the Company's overall business, financial condition
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and results of operations. See Part I, Item 1. "Description of Business," (b)
"Business of Issuer."
7. High Risks and Unforeseen Costs Associated with the Company's
Expanded Entry into the water purification Industry. There can be no assurance
that the costs for the establishment of Partnership arrangements and creation of
a client base for its products and services will not be significantly greater
than those estimated by Company management. Therefore, the Company may expend
significant unanticipated funds or significant funds may be expended by the
Company without development of additional markets for its products. There can be
no assurance that cost overruns will not occur or that such cost overruns will
not adversely affect the Company. Further, unfavorable general economic
conditions and/or a downturn in customer confidence could have an adverse affect
on the Company's business. Additionally, competitive pressures and changes in
customer mix, among other things, which management expects the Company to
experience in the uncertain event that it achieves commercial viability, could
reduce the Company's gross profit margin from time to time. Accordingly, there
can be no assurance that the Company will be capable of establishing itself in a
commercially viable position in local, state, nationwide and international Water
Purification markets. See Part I, Item 1. "Description of Business," (b)
"Business of Issuer."
8. Significant Customer and Product Concentration. To date, a limited
number of customers and distributors have accounted for substantially all of the
Company's revenues with respect to product sales. The Company has entered into a
limited number of distributorship agreements. Therefore, there is no assurance
that the Company will be able to obtain adequate distribution of its products to
the intended end user. The Company's ability to achieve revenues in the future
will depend in significant part upon its ability to improve existing products,
develop new products and provide support to existing and new distributors, as
well as the condition of its distributors. As a result, any cancellation,
reduction or delay may materially adversely affect the Company's business,
financial condition and results of operations. There can be no assurance that
the Company's revenues will increase in the future or that the Company will be
able to support or attract customers. See "Part I, Item. 1. "Description of
Business - (b) Business of Issuer - Marketing and Distribution- Distribution;
and - Dependence on Major Customers" and Part I, Item 2. Management's Discussion
and Analysis of Financial Condition or Plan of Operation - Revenues."
9. Fluctuations in Results of Operations. The Company has experienced
and may in the future experience significant fluctuations in revenues, gross
margins and operating results. As with many developing businesses, the Company
expects that some orders may not materialize or delivery schedules may have to
be deferred as a result of changes in customer requirements, among other
factors. As a result, the Company's operating results for a particular period to
date have been and may in the future be materially adversely affected by a
delay, rescheduling or cancellation of even one purchase order. Moreover,
purchase orders are often received and accepted substantially in advance of
shipment, and the failure to reduce actual costs to the extent anticipated or an
increase in anticipated costs before shipment could materially, adversely affect
the gross margins for such order, and as a result, the Company's results of
operations. A delay in a shipment near the end of a particular quarter, due,
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for example, to an unanticipated shipment rescheduling, to cancellations or
deferrals by customers or to unexpected manufacturing difficulties, may cause
net revenues in a particular quarter to fall significantly below the company's
expectations and may materially adversely affect the Company's operating results
for such quarter.
A large portion of the Company's expenses are fixed and difficult to
reduce should revenues not meet the Company's expectations, thus magnifying the
material adverse effect of any revenue shortfall. Furthermore, announcements by
the Company or its competitors of new products and technologies could cause
customers to defer purchases of the Company's products or a reevaluation of
products under development, which would materially adversely affect the
Company's business, financial condition and results of operations. Additional
factors that may cause the Company's revenues, gross margins and results of
operations to vary significantly from period to period include: product
development, patent processing, manufacturing efficiencies, costs and capacity
and the timing of availability of new products by the Company or its customers,
usage of different distribution and sales channels; customization of systems;
and general economic and political conditions. In addition, the Company's
results of operations are influenced by competitive factors, including the
pricing and availability of and demand for, competitive products. All of the
above factors are difficult for the company to forecast, and these or other
factors could materially adversely affect the Company's business, financial
condition and results of operations. As a result, the Company believes that
period-to-period comparisons are not necessarily meaningful and should not be
relied upon as indications of future performance. See Part I, Item. 2.
"Management's Discussion and Analysis of Financial Condition or Plan of
Operation."
10. Potential for Changes or Unfavorable Interpretation of Government
Regulation. In the unlikely event the government were to regulate the water
purification industry, it might have a material adverse effect on the sale of
such products by the Company to such customers. It is more likely that the
government would regulate the bottled water industry, as water which the Company
normally treats has already passed through the standard tap water treatment
process and is therefore already in compliance with Federal, state and local
standards.
The regulatory environment in which the Company operates is subject
to change. Regulatory changes, which are affected by political, economic and
technical factors, could significantly impact the Company's operations by
restricting development efforts by the Company and its customers, making current
products obsolete, making the water purification products more costly or
increasing the opportunity for additional competition. Any such regulatory
changes could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company might deem it
necessary or advisable to alter or modify its products to operate in compliance
with such regulations. Such modifications could be extremely expensive and,
especially if subject to regulatory review and approval, time-consuming. See
Part I, Item 1. "Description of Business," (b) "Business of Issuer -
Governmental Regulation."
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11. No Assurance of Product Quality. Performance and Reliability. The
Company expects that its distributor and their customers will continue to
establish demanding specifications for quality, performance and reliability.
Although the Company attempts to only deal with manufacturers who adhere to good
manufacturing practice standards, there can be no assurance that problems will
not occur in the future with respect to quality, performance, reliability and
price. If such problems occur, the Company could experience increased costs,
delays in or cancellations or rescheduling of orders or shipments and product
returns and discounts, any of which would have a material adverse effect on the
Company's business, financial condition or results of operations.
12. Future Capital Requirements. The Company's future capital
requirements will depend upon many factors, including the development of new
water purification products, possible requirements to maintain adequate
manufacturing facilities, the progress of the Company's research and development
efforts, expansion of the Company's marketing and sales efforts and the status
of competitive products and services. The Company believes that it will require
additional funding in order to fully exploit its plan for operations. There can
be no assurance, however, that the Company will secure such additional
financing. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. If additional funds are
raised by issuing equity securities, further dilution to the existing
stockholders will result. If adequate funds are not available, the Company may
be required to delay, scale back or eliminate its research and development or
manufacturing programs or obtain funds through arrangements with partners or
others that may require the Company to relinquish rights to certain of its
existing or potential products or other assets. Accordingly, the inability to
obtain such financing could have a material adverse effect on the Company's
business, financial condition and results of operations. See Part I, Item 2.
"Management's Discussion and Analysis of Financial Condition or Plan of
Operation."
13. Uncertainty Regarding Protection of Proprietary Rights. The
Company attempts to protect its intellectual property rights through patents,
trademarks, secrecy agreements, trade secrets and a variety of other measures.
However, there can be no assurance that such measures will provide adequate
protection for the Company's trade secrets or other proprietary information,
that additional disputes with respect to the ownership of its intellectual
property rights will not arise, that the Company's trade secrets or proprietary
technology will not otherwise become known or be independently developed by
competitors or that the Company can otherwise meaningfully protect its
intellectual property rights. There can be no assurance that any patent owned by
the Company will not be invalidated, circumvented or challenged, that the rights
granted thereunder will provide competitive advantages to the Company or that
any of the Company's pending or future patent applications will be issued with
the scope of the claims sought by the Company, if at all. Furthermore, there can
be no assurance that others will not develop similar products, duplicate the
Company's products or design around the patents owned by the Company or that
third parties will not assert intellectual property infringement claims against
the Company. In addition, there can be no assurance that foreign intellectual
property laws will adequately protect the Company's intellectual property rights
abroad. The failure of the Company to protect its proprietary rights could have
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a material adverse effect on its business, financial condition and results of
operations.
Litigation may be necessary to protect the Company's intellectual
property rights and trade secrets, to determine the validity of and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
infringement, invalidity, right to use or ownership claims by third parties or
claims for indemnification resulting from infringement claims will not be
asserted in the future. If any claims or actions are asserted against the
Company, the Company may seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that a license
will be available under reasonable terms or at all. In addition, should the
Company decide to litigate such claims, such litigation could be extremely
expensive and time consuming and could materially adversely affect the Company's
business, financial condition and results of operations, regardless of the
outcome of the litigation. See Part I, Item 1. Description of Business - (b)
Business of Issuer - Patents, Trademarks and Copyrights."
14. Ability to Grow. The Company expects to grow through
acquisitions, internal growth and by expansion of its Partnership relationships.
There can be no assurance that the Company will be able to create a greater
market presence, or if such market is created, to expand its market presence or
successfully enter other markets. The ability of the Company to grow will depend
on a number of factors, including the availability of working capital to support
such growth, existing and emerging competition, one or more qualified strategic
alliances and the Company's ability to maintain sufficient profit margins in the
face of pricing pressures. The Company must also manage costs in a changing
regulatory environment, adapt its infrastructure and systems to accommodate
growth within the niche market which it has created.
The Company also plans to expand its business, in part, through
acquisitions. Although the Company will continuously review potential
acquisition candidates, it has not entered into any agreement, understanding or
commitment with respect to any additional acquisitions at this time. There can
be no assurance that the Company will be able to successfully identify suitable
acquisition candidates, complete acquisitions on favorable terms, or at all, or
integrate acquired businesses into its operations. Moreover, there can be no
assurance that acquisitions will not have a material adverse effect on the
Company's operating results, particularly in the fiscal quarters immediately
following the consummation of such transactions, while the operations of the
acquired business are being integrated into the Company's operations. Once
integrated, acquisitions may not achieve comparable levels of revenues,
profitability or productivity as at then existing Company products or otherwise
perform as expected. The Company is unable to predict whether or when any
prospective acquisition candidate will become available or the likelihood that
any acquisitions will be completed. The Company will be competing for
acquisition and expansion opportunities with entities that have substantially
greater resources than the Company. In addition, acquisitions involve a number
of special risks, such as diversion of management's attention, difficulties in
the integration of acquired operations and retention of
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personnel, unanticipated problems or legal liabilities, and tax and accounting
issues, some or all of which could have a material adverse effect on the
Company's results of operations and financial condition. See Part I, Item 1.
"Description of Business (b) "Business Issuer."
15. Competition. The water filtration industry is highly competitive,
with several major companies involved. The Company will be competing with these
larger competitors in international, national, regional and local markets. In
addition, the Company may encounter substantial competition from new market
entrants. Many of the Company's competitors or potential competitors have
significantly greater name recognition and have greater marketing, financial and
other resources than the Company. There can be no assurance that the Company
will be able to complete effectively against such competitors in the future. See
Part I. Item 1. "Description of Business," (b) "Business of Issuer-
Competition."
The Company competes with many other companies that supply water
filtration products. One competitive product would be the "pour through" carafe
type product normally kept in the refrigerator and used in the kitchen.
Several companies, including Brita, Discovery Engineering (Pur),
Rubbermaid and others compete in the pitcher or carafe products market segment
which, are directly competitive to the CARTIS Water Dispenser. However, the
Company has the only water dispensing unit which is actually a water filtration
process, making delivery of water unnecessary and refilling of pitcher units a
thing of the past. The leading company in the pitcher category is Brita.
The Company also competes with other companies that supply bottled
water, including The Perrier Group of America, Inc. (which includes Arrowhead
Mountain Spring Water, Poland Spring, Ozark Spring Water, Zephyrhills Natural
Spring Water, Deer Park, Great Bear and Mountain Ice) and Great Brands of Europe
(which includes Evian Natural Spring Water and Dannon Natural Spring Water). The
Company also competes with numerous regional bottle water companies located in
the United States and Canada.
The Company expects that more competitors will enter the water
filtration products market, resulting in even greater competition for the
Company. Many of the companies with whom the Company currently competes, or may
compete in the future, have greater financial, technical, marketing, and sales
resources, as well as greater name recognition than the Company. There can be no
assurance that the Company will have the resources required to respond
effectively to market or technological changes or to compete successfully in the
future, although it's alliances provide certain advantages in these regards as
does the Company's patent position.
16. Possible Adverse Affect of Fluctuations in the General Economy
and Business of Customers. Historically, the general level of economic activity
has significantly affected the demand for new technology products. There can be
no assurance that an economic downturn would not adversely affect the demand for
the Company's products and services.
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17. Lack of Working Capital Funding Source. Other than revenues from
the sale of its products, which revenues have yet to produce a significant net
profit, the Company has no current source of working capital funds, and should
the Company be unable to secure additional financing on acceptable terms, its
business, financial condition, results of operations and liquidity would be
materially adversely affected.
18. Uncertainty of Market Acceptance. The future operating results of
the Company depend to a significant extent upon the continued development of
products and services deemed necessary, useful, convenient, affordable and
competitive. There can be no assurance that the Company has the ability to
continuously introduce propriety products and services into the marketplace
which will achieve the market penetration and acceptance necessary for the
Company to grow and become profitable on a sustained basis, especially given the
fierce competition that exists from companies more established and well financed
than the Company. See "Part I, Item 1. "Description of Business -(b) Business of
Issuer - Competition."
19. International Operations; Risks of Doing Business in Developing
Countries. The Company anticipates that international sales will result from its
various contacts overseas and that these sales will account for more of its
revenues from product sales for the foreseeable future. The Company's
international sales may be denominated in foreign or United States currencies.
The Company does not currently engage in foreign currency hedging transactions.
As a result, a decrease in the value of foreign currencies relative to the
United States dollar could result in losses from transactions denominated in
foreign currencies. With respect to the Company's international sales that are
United States dollar-denominated, such a decrease could make the Company's
products less price-competitive. Additional risks inherent in the Company's
international business activities include changes in regulatory requirements,
costs and risks of local customers in foreign countries, availability of
suitable export financing, timing and availability of export licenses, tariffs
and other trade barriers, political and economic instability, difficulties in
staffing and managing foreign operations, difficulties in managing distributors,
potentially adverse tax consequences, foreign currency exchange fluctuations,
the burden of complying with a wide variety of complex foreign laws and treaties
and the possibility of difficulty in accounts receivable collections. Some of
the Company's customer purchase agreements may be governed by foreign laws,
which may differ significantly from U.S. laws. Therefore, the Company may be
limited in its ability to enforce its rights under such agreements and to
collect damages, if awarded. There can be no assurance that any of these factors
will not have a material adverse effect on the Company's business, financial
condition and results of operations. See "Part I, Item 1. "Description of
Business - (b) Business of Issuer - Sales and Marketing - Distribution of
Products."
20. Potential Year 2000 Problems. The "Year 2000" issue affects the
Company's installed computer systems, network elements, software applications,
and other business systems that have time-sensitive programs that may not
properly reflect or recognize the year 2000. Because many computers and computer
applications define dates by the last two digits of the year, "00" may not be
properly identified as the year 2000. This error could result in miscalculations
or system failures. The Year 2000 issue may also affect the systems and
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applications of the Company's suppliers. There can be no assurance that systems
operated by third parties providing services to the Company will be Year 2000
compliant. See Part I, Item 2. "Management's Discussion and Analysis or Plan of
Operation - Impact of the Year 2000 Issue."
21. No Dividends. While payments of dividends on the Common Stock
rests with the discretion of the Board of Directors, there can be no assurance
that dividends can or will ever be paid. Payment of dividends is contingent
upon, among other things, future earnings, if any, and the financial condition
of the Company, capital requirements, general business conditions and other
factors which cannot now be predicted. It is highly unlikely that cash dividends
on the Common Stock will be paid by the Company in the foreseeable future. See
Part I, Item 8. "Description of Securities - Description of Common Stock -
Dividend Policy."
22. No Cumulative Voting. The election of directors and other
questions will be decided by a majority vote. Since cumulative voting is not
permitted and a majority of the Company's outstanding Common Stock constitute a
quorum, investors who purchase shares of the Company's Common Stock may not have
the power to elect even a single director and, as a practical matter, the
current management will continue to effectively control the Company. See Part I,
Item 8. "Description of Securities - Description of Common Stock."
23. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Management."
24. Potential Anti-Takeover and Other Effects of Issuance of
Preferred Stock May Be Detrimental to Common Shareholders. Potential
Anti-Takeover and Other Effects of Issuance of Preferred Stock May Be
Detrimental to Common Shareholders. The Company is authorized to issue shares of
preferred stock. ("Preferred Stock"). The issuance of Preferred Stock does not
require approval by the shareholders of the Company's Common Stock. The Board of
Directors, in its sole discretion, has the power to issue shares of Preferred
Stock in one or more series and to establish the dividend rates and preferences,
liquidation preferences, voting rights, redemption and conversion terms and
conditions and any other relative rights and preferences with respect to any
series of Preferred Stock. Holders of Preferred Stock may have the right to
receive dividends, certain preferences in liquidation and conversion and other
rights; any of which rights and preferences may operate to the detriment of the
shareholders of the Company's Common Stock. Further, the issuance of any shares
of Preferred Stock having rights superior to those of the Company's Common Stock
may result in a decrease in the value of market price of the Common Stock
provided a market exists, and additionally, could be used by the Board of
Directors as an anti-takeover measure or device to prevent a change in control
of the Company. See Part I, Item 1. "Description of Securities - Description of
Preferred Stock."
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25. No Secondary Trading Exemption. Secondary trading in the Common
Stock will not be possible in each state until the shares of Common Stock are
qualified for sale under the applicable securities laws of the state or the
Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or to obtain or verify an exemption for the secondary
trading of, the Common Stock in any particular state, the shares of Common Stock
could not be offered or sold to, or purchased by, a resident of that state. In
the event that a significant number of states refuse to permit secondary trading
in the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
26. Possible Adverse Effect of Penny Stock Regulations on Liquidity
of Common Stock in any Secondary Market. Although trading volume indicates that
a secondary trading market has developed to a limited extent for the shares of
Common Stock of the Company, the Common Stock is expected to come within the
meaning of the term "penny stock" under 17 CAR 240.3a51-1 because such shares
are issued by a small company; are low-priced (under five dollars); and are not
traded on NASDAQ or on a national stock exchange. The SEC has established risk
disclosure requirements for broker-dealers participating in penny stock
transactions as part of a system of disclosure and regulatory oversight for the
operation of the penny stock market. Rule 15g-9 under the Securities Exchange
Act of 1934, as amended, obligates a broker-dealer to satisfy special sales
practice requirements, including a requirement that it make an individualized
written suitability determination of the purchaser and receive the purchaser's
written consent prior to the transaction. Further, the Securities Enforcement
Remedies and Penny Stock Reform Act of 1990 require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure
instrument that provides information about penny stocks and the risks in the
penny stock market. Additionally, the customer must be provided by the
broker-dealer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and the salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. For so long as the Company's Common Stock is considered
penny stock, the penny stock regulations can be expected to have an adverse
effect on the liquidity of the Common Stock in the secondary market, if any,
which develops.
27. Conflicts of Interest. The officers, directors and employees of
the Company are involved in businesses, investments, and have other
relationships which may conflict with the business of the Company. A substantial
portion if not all of the opportunities obtained by the Company will be brought
to the attention of the Company through the efforts of its officers, directors
and employees. These potential conflicts include, but are not limited to, missed
opportunities or opportunities taken advantage of in their roles in those other
businesses, investments and relationships rather than their roles in the
Company.
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Item 2. Plan of Operation
The Company intends to manufacture its PWS 300 in France. During
fiscal 1999, the Company entered into an exclusive distribution agreement with
an independent third party, which had minimum purchase requirements. The
distributor purchased approximately one-half (1/2) of the initial requirement
under the contract. The distributor failed to purchase the balance of its
initial requirement. The Company unilaterally terminated and cancelled the
distribution agreement per its terms.
In January 2000, the Company and ASAP formed Cartis France for the
purpose of distributing the PWS 300 product in France. The Company plans to
establish distribution channels in the United States and other parts of the
world in fiscal 2000. The Company intends to seek additional capital to fund
operations and to develop these distribution channels.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize the date using 00 as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium (Year 2000) approaches. All
software used for the Company's systems is supplied by software vendors or
outside service providers. The Company has confirmed with such providers that
its present software is Year 2000 Compliant.
The Company believes, after investigation, that all products that it
is currently in the process of developing (directly or through vendors) are Year
2000 compliant. The Company believes, after investigation, that its own software
operating systems are Year 2000 compliant.
The Company believes that it has disclosed all required information
relative to Year 2000 issues relating to its business and operations. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely also will be timely converted or that any such failure to
convert by another company would not have an adverse affect on the Company's
systems.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things
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as future capital expenditures (including the amount and nature thereof), demand
for the Company's products and services, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-SB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
Item 3. Description of Property
Its executive offices are presently located at Cartis Center, Old
Moka Road, Bell Village, Republic of Mauritius. Its telephone number is (230)
211-6825 and its facsimile number is (230) 210-2445.
CEFCA leases approximately 4,382 square meters as space for the
manufacturing of CARTIS product. The lease is for a term of nine (9) years
commencing July 16, 1998 and ending July 15, 2007. The Company pays monthly rent
in the amount of 12,000 French Francs plus taxes.
The Company owns no real property and its personal property consists
of furniture and fixtures, an automobile and leasehold improvements with an
original cost of $141,000 through December 31, 1999.
The Company currently employs its capital reserves in a checking
account. Activity is monitored on a monthly basis.
Item 4. Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth information as of March 31, 2000,
regarding the ownership of the Company's Common Stock by each shareholder known
by the Company to be the beneficial owner of more than five percent (5%) of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group. Except as otherwise indicated, each of the shareholders
has sole voting and investment power with respect to the share of Common Stock
beneficially owned.
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Name and Address of Title of Amount and Nature of Percent of
Beneficial Owner Class Beneficial Owner (1) Class
- ----------------------- ------- -------------------- ----------
Herve Gallion(2)(3)(4) Common 9,400,000 70.0%
Cyril Heitzler(4) Common 500,000 3.7%
Patrick Martin N/A 0 0%
Steve Olivier N/A 0 0%
All Executive Officers and
Directors as a Group
[four (4) persons] Common 9,900,000 73.7%
- ----------
(1) The percentages are based upon 13,437,019 shares of Common Stock
outstanding as of March 31, 2000. Said officers and directors own
(including those beneficially held) no options to purchase shares of the
Company's Common Stock.
(2) In October 1998, the Company entered into an agreement with CEFCA and CIL
to acquire 100% of the issued and outstanding shares of CEFCA as well as
80% of the issued and outstanding shares of CIL in exchange for shares of
the Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the
Acquisition Agreement. Herve Gallion currently serves as the Company's
President and Chairman, as the principal owner and manager of Cator
Holding, Ltd. as the owner and manager of Aquartis, Ltd. and as the
Executive Manager of CIL. Cyril Heitzel, the Company's current Secretary,
Treasurer and Director, also serves as the Managing Director of CEFCA and
as the Managing Director of CIL. Steve Olivier, who currently serves as a
Director of the Company, also serves as the CFO and as a Director of CIL.
For such offering, the Company relied upon Section 4(2) of the Act. No
state exemption was required, as all recipients of shares are foreign
residents. See Part 1, Item 6. "Executive Compensation - Employee Contracts
and Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
(3) In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from ATD. Herve Gallion is
an officer, director and also the beneficial owner of ATD. For such
products, the Company issued 3,000,000 shares of its Common Stock to ATD.
For such offering, the Company relied upon Section 4(2) of the Act and no
state exemption, as ATD is a foreign corporation. See Part 1, Item 6.
"Executive Compensation - Employee Contracts and
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Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
(4) In February 2000, the Company purchased the remaining 20% of the issued and
outstanding common shares of CIL. As a result, CIL became a wholly owned
subsidiary of the Company. The remaining shares were owned by Herve Gallion
and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares of
its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr.
Heitzler are both foreign residents. See Part 1, Item 6. "Executive
Compensation - Employee Contracts and Agreements"; Part I, Item 7. "Certain
Relationships and Related Transactions"; and Part II, Item 4. "Recent Sales
of Unregistered Securities."
There are no arrangements which may result in the change of control
of the Company by such certain beneficial owners and management.
Item 5. Directors, Executive Officers, Promoters and Control Persons:
Executive Officers and Directors
Set forth below are the names, ages, positions, with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- ----------- --- -------------------
Herve Gallion 56 President, Chairman
Cyril Heitzler 32 Secretary, Treasurer and Director
Patrick Martin 46 Director
Steve Olivier 37 Director
All directors hold office until the next annual meeting of the
Company's shareholders and until their successors have been elected and qualify.
Officers serve at the pleasure of the Board of Directors. The officers and
directors will devote such time and effort to the business and affairs of the
Company as may be necessary to perform their responsibilities as executive
officers and/or directors of the Company.
Family Relationships
There are no family relationships between or among the executive
officers and directors of the Company.
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Business Experience
Herve Gallion. Mr. Gallion, age 56 is the founder of Cartis, Inc., where he
currently serves as Chief Executive Officer and President since November 17,
1998. Prior to that date, from 1992 to 1998, Mr. Gallion was a private
entrepreneur dedicated to research and development of the technology that
preceded the creation of Cartis, Inc. Mr. Gallion has managed companies over the
past thirty (30) years. Prior to Cartis, Inc., from 1966 to 1992, Mr. Gallion
was founder and manager of an auto parts distribution company, registered under
his name, founder and manager of SCAME S.A., a manufacturer and distributor of
fertilizers, owner and manager of SIF, s.c.p., a professional training company.
Mr. Gallion attended the La Salle School in Lyon, France, until June 1962.
Cyril Heitzler. Mr. Heitzler, age 32 is the co-founder of Cartis, Inc., where he
currently serves as General Manager of CIL, the wholly owned manufacturing
subsidiary of Cartis, Inc., since January 8, 1999. Mr. Heitzler is also a
Director of Cartis, Inc. and has been since November 17, 1998. From 1997 until
January 8, 1999, Mr. Heitzler was the General Manager of CEFCA. From 1995 until
1997, Mr. Heitzler was the Technical Vice-President of TEDECO Ltd. (Mauritius),
an assembly plant of water products. In June 1989, Mr. Heitzler graduated from
Lycee La Mache in Lyon, France with a professional degree in Mechanics. In June
1990, he graduated from Lycee St. Joseph in Nancy, France with a Baccalaureate.
In June 1991, Mr. Heitzler graduated from the Frederique Fays Institute,
Villeurbanne, France with a professional degree in Production.
Patrick Martin. Mr. Martin is the Chairman and CEO of Cartis France since
January 14, 2000 and a Director of Cartis, Inc. since November 17, 1998. Since
June 1990, Mr. Martin is the General Manager of SORENA, s.a.r.l, a company that
specializes in gas and water distribution. Since September 14, 1988, he is the
General Manager of ASAP s.a.r.l., a holding company. Since December 4, 1997, Mr.
Martin is the General Manager of HBP Associes, a company that specializes in the
distribution of telephone and computer services. Since December 31, 1984, Mr.
Martin is the General Manager of M.B.Associes, a company that specializes in the
distribution of gas and water. Mr. Martin attended high school in Lyon, France.
Steve Olivier. Mr. Steve Olivier, age 41, is the Chief Administrative and
Financial Officer of CIL, a wholly-owned subsidiary of Cartis, Inc. since
January 1, 1999. Mr. Olivier has been a Director of Cartis, Inc. since February
10, 1999. From June 1997 until he joined Cartis, Mr. Olivier was the Chief
Administrative and Financial Officer of TEDECO, Ltd. (Mauritius), an assembly
plant of water products. From January 1996 to June 1997, Mr. Olivier was an
accountant at TOPIKO Ltd. (Mauritius). From June 1985 until December 1995, he
was an accountant at SCOTT & Co, Ltd. (Mauritius). In December 1987, Mr. Olivier
completed Advance Accounting Practice, Quantitative Analysis, Management
Accounting and System Analysis & Design in the Level 2 of the Chartered
Association of Certified Accountants (AACA). In December 1984, he completed the
level 1 of the Association of International Accountants. Mr. Olivier completed
his high school education at St. Mary's College (Mauritius) in June 1976.
37
<PAGE>
Item 6. Executive Compensation
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Year Annual Annual Annual LT Comp LT LTIP All
Post Comp Comp Comp Rest Comp Payouts Other
Salary Bonus Other Stock Options (1)
($)
- ---------------------------------------------------------------------------------------------------
Herve 1997 180,000FF $0 91,200FF
Gallion, 1998 180,000FF $0 91,200FF
President and 1999 180,000FF $0 91,200FF
Chairman
- ---------------------------------------------------------------------------------------------------
Cyril 1997 180,000FF $0 86,400FF
Heitzler, 1998 180,000FF $0 86,400FF
Secretary, 1999 180,000FF $0 86,400FF
Treasurer and
Director
- ---------------------------------------------------------------------------------------------------
Patrick 1997 $0 $0 $0
Martin, 1998 $0 $0 $0
Director 1999 $0 $0 $0
- ---------------------------------------------------------------------------------------------------
Steve Olivier, 1997 0
Director 1998 0
1999 40,000
Mauritian
Roupies
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) All other compensation includes: automobile expenses and living expenses as
well as the reimbursement for expenses.
Employee Contracts and Agreements
In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
CFO and as a Director of CIL. For such offering, the Company relied upon
38
<PAGE>
Section 4(2) of the Act. No state exemption was required, as all recipients of
shares are foreign residents. See Part I, Item 7. "Certain Relationships and
Related Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
In January 1999, CIL entered into an employment agreement with Steve
Olivier to act as the Chief Financial and Administrative Officer of CIL. Mr.
Olivier is employed part-time averaging twelve (12) hours per week. As
compensation, Mr. Olivier received wages of 8,000 Mauritian Roupies per month,
beginning in August 1999, which amounts to approximately $300 per month. See
Part I, Item 7. "Certain Relationships and Related Transactions".
In August 1999, CIL entered into an employment agreement with Cyril
Heitzler to be the Exceutive Vice-President of CIL. As compensation, Mr.
Heitzler receives wages of 15,000FF per month and also a company car and housing
allowance of 4,300FF per month. See Part I, Item 7. "Certain Relationships and
Related Transactions".
In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from ATD. Herve Gallion is an
officer, director and also the beneficial owner of ATD. For such products, the
Company issued 3,000,000 shares of its Common Stock to ATD. For such offering,
the Company relied upon Section 4(2) of the Act and no state exemption, as ATD
is a foreign corporation. See Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents. See Part I, Item 7. "Certain Relationships and
Related Transactions"; and Part II, Item 4. "Recent Sales of Unregistered
Securities."
Key Man Life Insurance
The Company does not have nor does it intend to apply for Key Man
Life Insurance.
Employee and Consultants Stock Purchase and Stock Option Plans
There is currently no employee or consultant stock purchase or stock
option plan in place, although the Company plans to adopt such plans and to
submit such plans to the shareholders within a twelve (12) month period.
39
<PAGE>
Compensation of Directors
The Company has no standard arrangements for compensating the
Directors of the Company for their attendance at meetings of the Board of
Directors.
Item 7. Certain Relationships and Related Transactions
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Christian Gutierrez in connection with his service as Secretary and
Treasurer of the Company. Mr. Gutierrez resigned his positions as Secretary and
Treasurer and the Company canceled the shares previously issued to Mr. Gutierrez
in November 1998 in connection with the Acquisition Agreement. For such
offering, the Company relied upon Section 4(2) of the Act and Section
359(f)(2)(d) of the New York Code. See Part II, Item 4. "Recent Sales of
Unregistered Securities."
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Ronald H. Kutz in connection with his service as President of the
Company. Mr. Kutz resigned his positions as President and the Company canceled
the shares previously issued to Mr. Kutz in November 1998 in connection with the
Acquisition Agreement. For such offering, the Company relied upon Section 4(2)
of the Act and Section 517.061(11) of the Florida Code. See Part II, Item 4.
"Recent Sales of Unregistered Securities."
In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
CFO and as a Director of CIL. For such offering, the Company relied upon Section
4(2) of the Act. No state exemption was required, as all recipients of shares
are foreign residents. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
In January 1999, CIL entered into an employment agreement with Steve
Olivier to act as the Chief Financial and Administrative Officer of CIL. Mr.
Olivier is employed part-time averaging twelve (12) hours per week. As
compensation, Mr. Olivier received wages of 8,000 Mauritian Roupies per month,
beginning in August 1999, which amounts to approximately $300 per month.
In August 1999, CIL entered into an employment agreement with Cyril
Heitzler to be the Exceutive Vice-President of CIL. As compensation, Mr.
Heitzler receives wages of 15,000FF per month and also a company car and housing
allowance of 4,300FF per month.
40
<PAGE>
In February 2000, Herve Gallion assigned the worldwide patents and
trademarks on the Company's products to the Company. An assignment of these
rights has yet to be recorded at the Swiss Institute of Industrial Property.
Under the terms of the agreement, Herve Gallion is to receive a royalty of five
percent (5%) of gross sales and services, payable monthly beginning January 1,
2001.
In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from ATD. Herve Gallion is an
officer, director and also the beneficial owner of ATD. For such products, the
Company issued 3,000,000 shares of its Common Stock to ATD. For such offering,
the Company relied upon Section 4(2) of the Act and no state exemption, as ATD
is a foreign corporation. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
Item 8. Description of Securities
Description of Capital Stock
The Company's authorized capital stock consists of 50,000,000 shares
of Common Stock, $.0001 par value per share and 10,000,000 shares of Preferred
Stock, $.0001 par value per share. As of February 29, 2000, the Company had
13,437,019 shares of its Common Stock outstanding and no shares of its Preferred
Stock outstanding.
Description of Common Stock
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any, to be distributed to holders of the
41
<PAGE>
Preferred shares. All shares of the Company's Common Stock issued and
outstanding are fully- paid and nonassessable.
Dividend Policy
Holders of shares of Common Stock are entitled to share pro rata in
dividends and distribution with respect to the Common Stock when, as and if
declared by the Board of Directors out of funds legally available therefore,
after requirements with respect to preferential dividends on, and other matters
relating to, the Preferred shares, if any, have been met. The Company has not
paid any dividends on its Common Stock and intends to retain earnings, if any,
to finance the development and expansion of its business. Future dividend policy
is subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, capital requirements and the
financial condition of the Company.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Company's Common and
Preferred Stock is Interwest Transfer Co., Inc. which is located at 1981 E.
Murray Holladay Road, Suite 100, Salt Lake City, UT 84117, telephone (801)
272-9294, facsimile (801) 277-3147.
PART II.
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
a) Market Information.
The Common Stock of the Company currently is quoted on the Pink
Sheets and has been since the Company submitted an exemption application with
NASD on September 30, 1999. Between October 9, 1998 and September 30, 1999, the
Company traded on the OTC Bulletin Board. Initially, it traded under the symbol
"CBLT" until its name change January 28, 1999. At that time, its trading symbol
changed to "CART". The high, low and average bid information for each quarter
since October 1998 to the present are as follows:
Quarter High Bid Low Bid
- ---------------------------------------------------
Fourth Quarter 1998 0.15 0.125
First Quarter 1999 3.25 0.97
Second Quarter 1999 5.00 3.25
Third Quarter 1999 5.50 1.50
Fourth Quarter 1999 4.00 1.63
42
<PAGE>
Please note that over-the-counter market quotations have been
provided herein. The quotations reflect inter-dealer prices, without retail
markup, mark-down or commission and may not represent actual transactions.
(b) Holders.
As of February 29, 2000 the Company had 70 shareholders of record of
its 13,437,019 outstanding shares of Common Stock, 9,437,019 of which are
restricted Rule 144 shares and 4,000,000 of which are free-trading. As of the
date hereof, the Company has outstanding options to purchase no shares of Common
Stock. Of the Rule 144 shares, 5,000,000 shares have been held by affiliates of
the Company for more than one (1) year.
(c) Dividends.
The Company has never paid or declared any dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings
No legal proceedings have been initiated either by or against the
Company to date.
Item 3. Changes in and Disagreements with Accountants
The Company has used the firm of Durland & Company, CPAs, P.A. since
inception. Their address is 340 Royal Palm Way, 3rd Floor, Palm Beach, FL 33480.
There has been no change in the Company's independent accountant during the
period commencing with the Company's retention of Durland & Company, CPAs, P.A.
through the date hereof.
Item 4. Recent Sales of Unregistered Securities
The Company relied upon Section 4(2) of the Act and Rule 506 for
several transactions regarding the issuance of its unregistered securities. In
each instance, such reliance was based upon the fact that (i) the issuance of
the shares did not involve a public offering, (ii) there were no more than
thirty-five (35) investors (excluding "accredited investors"), (iii) each
investor who was not an accredited investor either alone or with his purchaser
representative(s) has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the prospective
investment, or the issuer reasonably believes immediately prior to making any
sale that such purchaser comes within this description, (iv) the offers and
sales were made in compliance with Rules 501 and 502, (v) the securities were
subject to Rule 144 limitations on resale and (vi) each of the parties was a
sophisticated purchaser and had full access to the information on the Company
necessary to make an informed investment decision by virtue of the due diligence
conducted by the purchaser or available to the purchaser prior to the
transaction.
43
<PAGE>
The Company relied upon Section 3(b) of the Act and Rule 504 for
several transactions regarding the issuance of its unregistered securities. In
each instance, such reliance was based on the following: (i) the aggregate
offering price of the offering of the shares of Common Stock and warrants did
not exceed $1,000,000, less the aggregate offering price for all securities sold
with the twelve months before the start of and during the offering of shares in
reliance on any exemption under Section 3(b) of, or in violation of Section 5(a)
of the Act; (ii) no general solicitation or advertising was conducted by the
Company in connection with the offering of any of the shares; (iii) the fact
that the Company had not been since its inception (a) subject to the reporting
requirements of Section 13 or 15(d) of the Securities Act of 1934, as amended,
(b) and an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, or (c) a development stage company that either had no
specific business plan or purpose or had indicated that its business plan was to
engage in a merger or acquisition with an unidentified company or companies or
other entity or person.
The Company relied upon Florida Code Section 517.061(11) for several
Rule 504 or Rule 506 transactions. In each instance, such reliance is based on
the following: (i) sales of the shares of Common Stock were not made to more
than thirty-five (35) persons; (ii) neither the offer nor the sale of any of the
shares was accomplished by the publication of any advertisement; (iii) all
purchasers either had a preexisting personal or business relationship with one
or more of the executive officers of the Company or, by reason of their business
or financial experience, could be reasonably assumed to have the capacity to
protect their own interests in connection with the transaction; (iv) each
purchaser represented that he was purchasing for his own account and not with a
view to or for sale in connection with any distribution of the shares; and (v)
prior to sale, each purchaser had reasonable access to or was furnished all
material books and records of the Company, all material contracts and documents
relating to the proposed transaction, and had an opportunity to question the
executive officers of the Company. Pursuant to Rule 3E-500.005, in offerings
made under Section 517.061(11) of the Florida Statutes, an offering memorandum
is not required; however each purchaser (or his representative) must be provided
with or given reasonable access to full and fair disclosure of material
information. An issuer is deemed to be satisfied if such purchaser or his
representative has been given access to all material books and records of the
issuer; all material contracts and documents relating to the proposed
transaction; and an opportunity to question the appropriate executive officer.
In the regard, the Company supplied such information and was available for such
questioning (the "Florida Exemption").
The Company relied upon Geogia Code Section 10-5-9(13) for several
transactions. In each instance such reliance is based on the following: (i) the
number of Georgia purchasers did not exceed fifteen (15); (ii) the securities
were not offered for sale by means of any form of general or public
solicitations or advertisements; (iii) a legend was placed upon the
certificates; and (iv) each purchaser represented that he purchased for
investment. (the "Georgia Exemption").
The Company relied upon Nevada Code Section 90.530(11) for several
Rule 504 or Rule 506 transactions. In each instance, the following transactions
are exempt from NRS 90.460 and 90.560, except as otherwise provided in such
subsection. A transaction pursuant to an offer to sell securities of an issuer
44
<PAGE>
if: (a) the transaction is part of an issue in which there are no more than
twenty-five (25) purchasers in Nevada, other than those designated in subsection
10, during any twelve (12) consecutive months; (b) no general solicitation or
general advertising is used in connection with the offer to sell or sale of the
securities; (c) no commission or other similar compensation is paid or given,
directly or indirectly, to a person, other than a broker-dealer licensed or not
required to be licensed under such chapter, for soliciting a prospective
purchaser in Nevada; and (d) one of the following conditions is satisfied: (1)
the seller reasonably believes that all the purchasers in Nevada, other than
those designated in subsection 10, are purchasing for investment; or (2)
immediately before and immediately after the transaction, the issuer reasonably
believes that the securities of the issuer are held by 50 or fewer beneficial
owners, other than those designated in subsection 10, and the transaction is
part of an aggregate offering that does not exceed $500,000 during any twelve
(12) consecutive months. The administrator may by rule or order as to a security
or transaction or a type of security or transaction, withdraw or further
condition the exemption set forth in such subsection or waive one or more of the
conditions of the exemption. (the "Nevada Exemption").
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Christian Gutierrez in connection with his service as Secretary and
Treasurer of the Company. Mr. Gutierrez resigned his positions as Secretary and
Treasurer and the Company canceled the shares previously issued to Mr. Gutierrez
in November 1998 in connection with the Acquisition Agreement. For such
offering, the Company relied upon Section 4(2) of the Act and Section
359(f)(2)(d) of the New York Code.
For purposes of Section 359(f)(2)(d) of the New York Code, the facts
upon which the Company relied are: (i) (i) the securities were sold in a limited
offering to not more than forty (40) persons. The Company filed a Form M-11 in
New York.
In April 1998, the Company issued 1,000,000 shares of its Common
Stock to Ronald H. Kutz in connection with his service as President of the
Company. Mr. Kutz resigned his positions as President and the Company canceled
the shares previously issued to Mr. Kutz in November 1998 in connection with the
Acquisition Agreement. For such offering, the Company relied upon Section 4(2)
of the Act and the Florida exemption.
In April 1998, the Company sold 1,000,000 shares of its Common Stock
to twenty-five (25) investors for a total of $50,000. For such offering, the
Company relied upon Section 3(b) of the Act, Rule 504, the Florida Exemption,
the Georgia Exemption, Section 359(f)(2)(d) of the New York Code, Section
13.1-514(7)(b) of the Virginia Code and no code section for seven (7) investors
residing outside the United States. A Form D was filed with the SEC.
For purposes of Section 359(f)(2)(d) of the New York Code, the facts
upon which the Company relied are: (i) (i) the securities were sold in a limited
offering to not more than forty (40) persons. The Company filed a Form M-11 in
New York.
45
<PAGE>
For purposes of Section 13.1-514(7)(b) of the Virginia Code, the
facts upon which the Company relied are: (i) the Company sold to not more than
thirty-five (35) persons in Virginia; (ii) the Company believed that the
investor was purchasing for investment; and (iii) the securities were not
offered to the general public by advertisement or general solicitation.
In October 1998, the Company entered into an agreement with CEFCA and
CIL to acquire 100% of the issued and outstanding shares of CEFCA as well as 80%
of the issued and outstanding shares of CIL in exchange for shares of the
Company. In connection with this agreement, the Company issued 900,000,
2,300,000 and 1,800,000 shares of its Common Stock to Herve Gallion, Cator
Holding, Ltd. and Aquartis, Ltd. respectively in connection with the Acquisition
Agreement. Herve Gallion currently serves as the Company's President and
Chairman, as the principal owner and manager of Cator Holding, Ltd. as the owner
and manager of Aquartis, Ltd. and as the Executive Manager of CIL. Cyril
Heitzel, the Company's current Secretary, Treasurer and Director, also serves as
the Managing Director of CEFCA and as the Managing Director of CIL. Steve
Olivier, who currently serves as a Director of the Company, also serves as the
CFO and as a Director of CIL. For such offering, the Company relied upon Section
4(2) of the Act. No state exemption was required, as all recipients of shares
are foreign residents.
In November 1998, the Company sold 3,000,000 shares of its Common
Stock to ten (10) investors for a total of $150,000. For such offering, the
Company relied upon Section 3(b) of the Act and Rule 504. No state exemption was
necessary, as none of the investors reside in the United States. A Form D was
filed with the SEC.
In January 1999, the Company issued a total of 350,000 shares of its
Common Stock to ten (10) persons for services related to the Acquisition, which
services were valued at a total of $17,500. No contracts for these services were
utilized. For such offering, the Company relied upon Section 4(2) of the Act,
Rule 506 and Section 359(f)(2)(d) of the New York Code. No state exemption was
necessary for nine (9) of the persons, who are foreign residents.
For purposes of Section 359(f)(2)(d) of the New York Code, the facts
upon which the Company relied are: (i) (i) the securities were sold in a limited
offering to not more than forty (40) persons. The Company filed a Form M-11 in
New York.
In July 1999, the Company sold 10,000 shares of its Common Stock to
two (2) investors for a total of $35,000. For such offering, the Company relied
upon Section 4(2) of the Act and Rule 506. No state exemption was required, as
both investors are foreign residents. A Form D was filed with the SEC.
In August 1999, the Company sold 51,089 shares of its Common Stock to
two (2) investors for a total of $178,811. For such offering, the Company relied
upon Section 4(2) of the Act and Rule 506. No state exemption was required as
the investors were both foreign residents. A Form D was filed with the SEC.
46
<PAGE>
In September 1999, the Company sold 20,744 shares of its Common Stock
to one (1) investor for a total of $64,306. For such offering, the Company
relied upon Section 4(2) of the Act and Rule 506. No state exemption was
required, as the investor is a French resident. A Form D was filed with the SEC.
In November 1999, the Company sold 5,186 shares of its Common Stock
to one (1) investor for a total of $16,076. For such offering, the Company
relied upon Section 4(2) of the Act and Rule 506. No state exemption was
required, as the investor is a French resident. A Form D was filed with the SEC.
In February 2000, the Company purchased the machinery and equipment
necessary to manufacture the Company's products from ATD. Herve Gallion is an
officer, director and also the beneficial owner of ATD. For such products, the
Company issued 3,000,000 shares of its Common Stock to ATD. For such offering,
the Company relied upon Section 4(2) of the Act and no state exemption, as ATD
is a foreign corporation.
In February 2000, the Company purchased the remaining 20% of the
issued and outstanding common shares of CIL. As a result, CIL became a wholly
owned subsidiary of the Company. The remaining shares were owned by Herve
Gallion and Cyril Heitzler, each owning 10%. The Company issued 500,000 shares
of its Common Stock to each person. For such offering, the Company relied upon
Section 4(2) of the Act and no state exemption, as Mr. Gallion and Mr. Heitzler
are both foreign residents.
Item 5. Indemnification of Directors and Officers
The Florida Statutes ("FS") provide that: (1) A corporation shall
have the power to indemnify any person who was or is a party to any proceeding
(other than an action by, or in the right of, the corporation), by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
The termination of any contender or its equivalent shall not, of itself, create
a presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have the power to indemnify any person, who
was or is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of fact that he is or was a director,
officer, employee, or agent of another corporation, or is or was serving at the
request of the corporation as a director, director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other enterprise,
against expenses and amounts paid in settlement not exceed, in the judgment of
the board of directors, the estimated expense of litigating the proceeding to
47
<PAGE>
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized is such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnify for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of any
claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under subsection (1) or subsection (2),
unless pursuant to a determination by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subsection (1) or subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in which
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to the proceeding;
(c) By independent legal counsel:
1. Selected by the board of directors prescribed in paragraph
(a) or the committee prescribed in paragraph (b); or
2. If a quorum of the directors cannot be obtained for
paragraph (a) and the committee cannot designate under paragraph (b), selected
by majority vote of the full board of directors (in which directors who are
parties may participate); or
(d) By the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil
or criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
48
<PAGE>
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in another capacity
while holding such office. However, indemnification or advancement of expenses
shall not be made to or on behalf of any director, officer, employee, or agent
if a judgment or other final adjudication establishes that his actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute:
(a) A violation of the criminal law, unless the director, officer
employee, or agent had reasonable cause to believe his conduct was lawful or had
no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of ss.607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board of or of
the shareholders in the specific case, a director, officer, employee, or agent
of the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses
incurred in seeking court ordered indemnification or advancement of expenses, if
it determines that:
(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, or agent is fairly and reasonably
entitled to indemnification or advancement of expenses, regardless of whether
such person met the standard of conduct set forth in subsection (1), subsection
(2), or subsection (7).
(10) For purposes of this section, the term "corporation" includes,
in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, or
49
<PAGE>
agent of a constituent corporation, or is or was serving at the request of a
constituent corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, is in the
same position under this section with respect to such constituent corporation of
its separate existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to any
employee benefit plan), and expenses actually and reasonably incurred with
respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation" includes
any service as a director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term ""not opposed to the best interest of the corporation"
describes the actions of a person who acts in good faith and in a manner he
reasonably believes to be in the best interests of the participants and
beneficiaries of an employee benefit plan.
(12) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
PART F/S
The Financial Statements of the Company required by Regulation S-X
commence on page F-1 hereof.
50
<PAGE>
Cartis, Inc.
Audited Consolidated Financial Statements
For the Years Ended June 30, 1998 and 1999
For the Six Months Ended December 31, 1998 and 1999
(Unaudited)
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Operations and Comprehensive Loss.................F-4
Consolidated Statements of Stockholders' Equity..............................F-5
Consolidated Statements of Cash Flows........................................F-6
Notes to Consolidated Financial Statements...................................F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Cartis, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheet of Cartis
International, Inc., (the "Company") as of June 30, 1999 and the related
consolidated statements of operations and comprehensive loss, stockholders'
equity and cash flows for the two years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 1999 and the results of their operations and their cash flows for the
two years then ended, in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 4 to the
consolidated financial statements, the Company has experienced net losses since
inception. The Company's financial position and operating results raise
substantial doubt about its ability to continue as a going concern. Management's
plans with regard to these matters are also described in Note 4. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Durland & Company
Durland & Company, CPAs, P.A.
Palm Beach, Florida
February 8, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
Cartis, Inc.
Consolidated Balance Sheets
June 30, 1999 December 31, 1999
------------------------- ------------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 0 $ 22,031
Accounts receivable 70,698 1,756
VAT tax receivable 18,824 5,386
Inventory 0 442,667
Prepaid expenses 618 0
------------------------- ------------------------
Total current assets 90,140 471,840
------------------------- ------------------------
PROPERTY AND EQUIPMENT
Furniture and fixtures 18,557 18,683
Automobiles 15,581 15,687
Leasehold improvements 106,254 106,979
Less accumulated depreciation (12,623) (22,674)
------------------------- ------------------------
Net property and equipment 127,769 118,675
------------------------- ------------------------
OTHER ASSETS
Deposits 3,779 3,805
------------------------- ------------------------
Total other assets 3,779 3,805
------------------------- ------------------------
Total Assets $ 221,688 $ 594,320
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ 57 $ 0
Accounts payable 2,734 2,597
Accounts payable - related party 75,103 351,712
Accrued Expenses
Trade 9,118 1,554
Payroll and payroll taxes 9,561 6,042
Deferred revenue 30,389 0
Current portion of long-term debt 4,509 4,767
------------------------- ------------------------
Total current liabilities 131,471 366,672
LONG-TERM DEBT
Note payable 4,702 2,125
------------------------- ------------------------
Total long-term debt 4,702 2,125
------------------------- ------------------------
Total Liabilities 136,173 368,797
------------------------- ------------------------
Minority interest in consolidated subsidiary 467 29,330
------------------------- ------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value,
authorized 10,000,000 shares;
0 issued and outstanding shares 0 0
Common stock, $0.0001 par value,
authorized 50,000,000 shares;
9,350,000 and 9,437,019 issued
and outstanding shares 935 944
Additional paid-in capital 302,675 596,861
Accumulated comprehensive income (loss) (11,332) (30,944)
Deficit (207,230) (370,668)
------------------------- ------------------------
Total stockholders' equity 85,048 196,193
------------------------- ------------------------
Total Liabilities and Stockholders' Equity $ 221,688 $ 594,320
========================= ========================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
Cartis, Inc.
Consolidated Statements of Operations and Comprehensive Loss
Year Ended Six Months Ended
June 30, December 31,
---------------------------------- --------------------------------
1999 1998 1999 1998
---------------- -------------- ------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES
Sales $ 1,548,799 $ 47,178 $ 82,585 $ 66,053
Cost of sales (1,387,321) (6,809) (8,973) (6,665)
---------------- -------------- ------------- --------------
Gross Profit 161,478 40,369 73,612 59,388
OPERATING EXPENSES
Salaries 34,710 2,229 42,621 14,728
Depreciation 12,532 2,193 10,070 5,802
General and administrative 119,050 15,869 150,914 45,074
Research and development, net of reimbursements (23,088) 49,178 0 0
Professional fees 195,819 361 3,000 177,500
---------------- -------------- ------------- --------------
Total operating expenses 339,023 69,830 206,605 243,104
---------------- -------------- ------------- --------------
Loss from operations (177,545) (29,461) (132,993) (183,716)
---------------- -------------- ------------- --------------
OTHER INCOME AND EXPENSE
Interest income 4,170 0 403 0
Interest expense (3,927) 0 (1,985) (1,525)
---------------- -------------- ------------- --------------
Total other income and expense 243 0 (1,582) (1,525)
---------------- -------------- ------------- --------------
Income before minority interest (177,302) (29,461) (134,575) (185,241)
Minority interest share of income (467) 0 (28,863) 0
---------------- -------------- ------------- --------------
Net loss (177,769) (29,461) (163,438) (185,241)
Other comprehensive income (loss):
Foreign currency translation gain (loss) (11,337) (95) (19,612) (2,382)
---------------- -------------- ------------- --------------
Comprehensive loss $ (189,106) $ (29,556) $ (183,050) $ (187,623)
================ ============== ============= ==============
Net loss per common share $ (.10) $ (0.01) $ (0.02) $ (0.19)
================ ============== ============= ==============
Weighted average number of common
shares outstanding 3,109,563 8,997,998 9,419,925 1,031,315
================ ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Cartis, Inc.
Consolidated Statements of Stockholders' Equity
Additional Accumulated Total
Number of Common Paid-In Comprehensive Stockholders'
Shares Stock Capital Income (Loss) Deficit Equity
-------------- ------------- ------------- ------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE, July 7, 1997 0 0 $ 0 $ 0 $ 0 $ 0
Year Ended June 30, 1998
7/97 - stock issued for cash 1,000 17,013 0 0 0 17,013
Other comprehensive income (loss) 0 0 0 (95) 0 (95)
Net loss 0 0 0 0 (29,461) (29,461)
-------------- ------------- ------------- ------------- ---------- --------------
BALANCE, June 30, 1998 1,000 17,013 0 (95) (29,461) (12,543)
Year Ended June 30, 1999
7/98 - stock issued for cash 2 2 0 0 0 2
10/98 - stock issued for cash 4,000 72,212 0 0 0 72,212
11/98 - reverse merger 8,994,998 (88,327) 285,210 0 0 196,883
1/99 - stock issued for services 350,000 35 17,465 0 0 17,500
Other comprehensive income (loss) 0 0 0 (11,237) 0 (11,237)
Net loss 0 0 0 0 (177,769) (177,769)
-------------- ------------- ------------- ------------- ---------- --------------
BALANCE, June 30, 1999 9,350,000 935 302,675 (11,332) (207,230) 85,048
6 Mos. Ended December 31, 1999
7/99-11/99 - stock issued for cash 87,019 9 294,186 0 0 294,195
Other comprehensive income (loss) 0 0 0 (19,612) 0 (19,612)
Net loss 0 0 0 0 (163,438) (163,438)
-------------- ------------- ------------- ------------- ---------- --------------
BALANCE, December 31, 1999 9,437,019 944 $ 596,861 $ (30,944) $ (370,668) $ 196,193
============== ============= ============= ============= ========== ==============
(unaudited)
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
Cartis, Inc.
Consolidated Statements of Cash Flows
Year Ended Six Months Ended
June 30, December 31,
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- -------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (177,769) $ (29,461) $ (163,438) $ (185,241)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation 12,532 2,193 10,070 5,802
Minority interest share of income 467 0 28,863 0
Stock issued for services 17,500 0 0 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (70,698) 0 68,942 0
(Increase) decrease in accounts receivable - related parties 19,433 (19,435) 15,336 16,658
(Increase) decrease in VAT receivable (5,498) (13,326) 13,438 (13,015)
(Increase) decrease in inventory 0 0 (442,667) 0
(Increase) decrease in deposits and other assets (4,397) 0 618 (5,026)
Increase (decrease) in accounts payable - trade (31,659) 34,392 (136) 56,462
(Increase) decrease in accounts payable - related party 75,105 0 261,274 0
Increase (decrease) in accrued expenses 9,118 0 (7,565) 2,440
Increase (decrease) payroll taxes 7,374 2,186 (3,518) 2,703
Increase (decrease) deferred revenue 30,389 0 (30,389) 0
(Increase) decrease foreign currency translation gain (loss) (12,701) (137) (20,616) (6,409)
------------- ------------- -------------- -------------
Net cash used by operating activities (130,804) (23,588) (269,788) (125,626)
------------- ------------- -------------- -------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (111,168) (15,579) 0 (106,772)
------------- ------------- -------------- -------------
Net cash used by investing activities (111,168) (15,579) 0 (106,772)
------------- ------------- -------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (decrease) in cash overdraft (22,097) 22,154 (57) (22,154)
Payments on automobile loan (5,028) 0 (2,319) (1,241)
Issuance of common stock for cash 269,097 17,013 294,195 269,097
------------- ------------- -------------- -------------
Net cash provided by financing activities 241,972 39,167 291,819 245,702
------------- ------------- -------------- -------------
Net increase (decrease) in cash 0 0 22,031 13,304
CASH, beginning of period 0 0 0 0
------------- ------------- -------------- -------------
CASH, end of period $ 0 $ 0 $ 22,031 $ 13,304
============= ============= ============== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Payment of interest in cash $ 3,927 $ 0 $ 1,985 $ 1,525
============= ============= ============== =============
Non-Cash Financing Activities:
Fixed asset acquisition through incurrence of debt $ 0 $ 14,239 $ 0 $ 0
============= ============= ============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-6
<PAGE>
Cartis, Inc.
Notes to Consolidated Financial Statements
(Information with respect to the six months
ended December 31, 1998 and 1999 is unaudited)
(1) Summary of Significant Accounting Principles
The Company Cartis, Inc. is a Florida chartered corporation that conducts
business from its offices in Palm Beach, Florida, Orleans, France,
Lyon, France and Port Louis, Mauritius. The Company was incorporated
on March 5, 1997, 1997, as Cobalter, Inc., and changed its name to
Cartis, Inc. on November 18, 1998. The Company is principally
involved in the development of water treatment systems through its
French subsidiary, S.A.R.L. CEFCA ("CEFCA"), and the sale of the
systems through its Mauritius subsidiary, Cartis International. The
following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Use of estimates In preparing the consolidated financial
statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the
date of the statements of financial condition, and revenues and
expenses for the year then ended. Actual results may differ
significantly from those estimates.
b) Significant acquisition In October 1998, Cartis, Inc. issued
5,000,000 shares of common stock to acquire substantially all the
issued and outstanding shares of the common stock of CEFCA, a French
company, and 80% of the issued and outstanding shares of Cartis
International ("CIL"), a Mauritius company, in a reverse merger.
c) Principles of consolidation The consolidated financial statements
include the accounts of Cartis, Inc. and its wholly owned subsidiary
and majority owned subsidiary.Inter-company balances and transactions
have been eliminated.
d) Net loss per common share Basic net loss per weighted average
common share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period.
e) Property and equipment All property and equipment are recorded at
cost and depreciated over their estimated useful lives, using the
straight-line method. Upon sale or retirement, the costs and related
accumulated depreciation are eliminated from their respective
accounts, and the resulting gain or loss is included in the results
of operations. Repairs and maintenance charges which do not increase
the useful lives of the assets are charged to operations as incurred.
Depreciation expense was $5,802, $10,070, $2,193 and $12,532 for the
periods ended December 31, 1998 and 1999 and June 30, 1998 and 1999,
respectively.
f) Cash and equivalents The company considers investments with an
initial maturity of three months or less as cash equivalents.
g) Inventories Inventories are stated at the lower of cost (first-in,
first-out method) or market.
h) VAT tax receivable In France, as in many other countries, the
government charges a Value Added Tax, (VAT), that is similar in
nature to sales tax in the U.S. There are three major differences.
First is that VAT is charged at each point of sale. Second is that
there are no exemptions from the collection of VAT. Finally, each
company files a VAT return with the government monthly reflecting the
gross VAT collected and VAT paid. If the VAT paid is greater than the
amount collected, the Company receives a refund from the government
approximately five months later.
F-7
<PAGE>
Cartis, Inc.
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Principles (Continued)
i) Revenue recognition The Company recognizes revenue when the
purchaser accepts the goods.
j) Interim financial information The financial statements for the six
months ended December 31, 1999 and 1998 are unaudited and include all
adjustments which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. The results for the six months are not indicative of a full
year results.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock
are to be determined by the Board of Directors prior to issuance. The
Company has 9,350,000 and 9,437,019 (unaudited) shares of common
stock issued and outstanding at June 30, 1999 and December 31, 1999.
In April 1998, the Company issued 2,000,000 to its officers for
services rendered to the Company. In April 1998, the Company issued
under Regulation D Rule 540 Placement for 1,000,000 for $50,000 in
cash. In September 1998, 3,000,000 shares were issued for $150,000 in
cash. In November 1998, the 2,000,000 shares issued for services were
donated to the Company. In November 1998, the Company issued
5,000,000 shares for 4,000 of the 4,000 shares issued and outstanding
of S.A.R.L. CEFCA, a French company, and 1.6 shares of the 2 shares
issued and outstanding of Cartis International, a Mauritius company.
In January 1999, the company issued 350,000 shares to third parties
for services rendered. From July 1999 through December 1999, the
Company issued 87,019 (unaudited) shares for cash.
(3) Income Taxes Deferred income taxes (benefits) are provided for
certain income and expenses which are recognized in different periods
for tax and financial reporting purposes. The Company had net
operating loss carry- forwards for income tax purposes of
approximately $371,000, which expire $29,000 on June 30, 2018,
$178,000 on June 30, 2019 and $164,000 on June 30, 2020.
The amount recorded as a deferred tax asset, cumulative as of June
30, 1999 and December 31, 1999, is approximately $67,000 and
$124,000, respectively, which represents the amount of tax benefits
of the loss carry-forwards. The Company has established a valuation
allowance for this deferred tax asset of $67,000 and $124,000, as the
Company has no history of profitable operations.
The significant components net deferred tax asset are:
June 30, 1999 December 31, 1999
--------------- --------------------
(unaudited)
Net operating losses $ 67,000 $ 124,000
Valuation allowance (67,000) (124,000)
--------------- --------------------
Net deferred tax asset $ 0 $ 0
=============== ====================
(4) Going Concern As shown in the accompanying consolidated financial
statements, the Company incurred net losses totaling $177,000 for the
year ended June 30, 1999 and $163,000 for the six months ended
December 31, 1999 and reflects positive working capital of
approximately $110,000 as of December 31, 1999, (unaudited). This
working capital includes approximately $443,000 of inventory. The
Company also has had only one customer historically, see Note 8.
These conditions raise substantial doubt as to the ability of the
Company to continue as a going concern. The ability of the Company to
continue as a going concern is dependent upon increasing
F-8
<PAGE>
Cartis, Inc.
Notes to Consolidated Financial Statements
(4) Going Concern (Continued) sales and obtaining additional capital and
financing. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern. The Company is currently negotiating with several
parties for an infusion of capital.
(5) Related Party Transactions In October 1998, the Company's subsidiary,
CEFCA, received an exclusive license from its current president and
chairman to manufacture CARTIS products, in both France and in a
country of its choice. In exchange for such rights, the Company
agreed to pay royalties in the amount of 3% of gross sales and
services, payable monthly. The term of the license is 20 years. The
patent was assigned to the Company in February 2000. (See Note 10.)
In October 1998, the Company entered into a five-year exclusive
service and supply contract with Advanced Technology Development,
Ltd., ("ATD"), a company primarily owned and managed by the Company's
president, whereby ATD will be the exclusive supplier of machinery
and production supplies necessary to manufacture the CARTIS product.
The contract was canceled in February 2000 (see Note 10).
In October 1998, ATD entered into an exclusive distribution agreement
with Cartis International whereby ATD will provide Cartis
International with all Cartis products necessary to the commercial
needs of Cartis International, based on an agreed upon price. In
addition, the Company's subsidiary, Cartis International, received an
exclusive right to use the brand name CARTIS and to sell CARTIS
products worldwide. The term of these contracts was for a period of
three years. These contracts were canceled in February 2000. Cartis
International owed ATD $75,105 as of June 30, 1999 and $336,378 as of
December 31, 1999 for products received.
The Company received advances from shareholders during November 1999
in the amount of $15,334. These advances are non interest bearing and
are due on demand.
(6) Long-Term Debt In 1999, S.A.R.L. CEFCA purchased an automobile
through a bank loan. The loan bears approximately 6.6% interest, with
monthly payments in the amount of approximately $440 per month. Under
the loan agreement, the Company is obligated to pay approximately
$4,800 and $4,400 in 2000 and 2001, respectively.
(7) Commitments In September 1998, S.A.R.L. CEFCA entered into two
operating leases, one for its office space and the other for a
security service. The office lease expires 2017 and the security
lease expires 2003. Minimum lease payments are as follows:
2000 $ 24,724
2001 24,724
2002 24,724
2003 23,186
2004 22,674
Thereafter 71,800
-----------
$ 191,832
===========
In August 1999, the Company entered into an employment agreement with
its general manager, who is also a stockholder. This contract carries
no termination clause and pays him approximately $27,000 in salary
and $8,000 in living expenses per year. In January 1999, the Company
entered into an employment agreement with its part-time CFO. This
agreement carries no termination clause and pays him approximately
$4,000 per year.
F-9
<PAGE>
Cartis, Inc.
Notes to Consolidated Financial Statements
(8) Concentration of Customers and Suppliers The Company's source of
revenue to date has been one customer under a marketing agreement
with Cartis International. This customer purchased a portion of its
contractual minimum required in 1998 and 1999. It subsequently
unilaterally canceled the agreement due to its inability to complete
its obligations under the agreement. The Company is currently seeking
another party to act as a distributor or, alternatively, seeking
funding to allow the Company to market the product to end users
itself.
(9) Government Grants The Company has received a government grant for
research and development. The grant was in the total amount of
$46,427 and was received in the fiscal years ending June 30, 1998 and
1999 and is applied to reduce research and development expenses.
(10) Subsequent Events In January 2000, the Company and A.S.A.P., LLC
formed Cartis France, S.A., (CF). The Company owns 49% of CF and
A.S.A.P. owns 51% of CF. This Company was formed to distribute the
Company's products in France.
In February 2000, the following events occurred: The Company
purchased the remaining 20% minority interest from Cartis
International through the issuance of 1,000,000 shares of restricted
common stock. Cartis, Inc. purchased all of the machinery and
equipment necessary to manufacture the Company's products from ATD in
exchange for 3,000,000 shares of common stock.
Cartis International acquired the Cartis patents and Cartis trademark
from a founder for a royalty of 5% of gross sales relating to
products and services from the use of the patent, payable monthly
beginning January 1, 2001.
F-10
<PAGE>
PART III
Item 1. Index to Exhibits
Item No. Description
<TABLE>
<S> <C> <C>
3.(i).1 * Articles of Incorporation of Cobalter, Inc. dated March 5, 1997.
3.(i).2 * Articles of Amendment to Articles of Incorporation changing Company's name to
Cartis, Inc. dated January 27, 1999.
3.(ii).1 * Bylaws of Cobalter, Inc. dated April 1, 1997.
10.1 * Lease between CEFCA s.a.r.l. and Jacques Cottet dated July 16, 1998 in French.
10.2 * Lease between CEFCA s.a.r.l. and Jacques Cottet dated July 16, 1998 translated into
English.
10.3 * Acquisition Agreement between the Company, CEFCA s.a.r.l. and Cartis
International, Ltd. dated October 29, 1998.
10.4 * Acquisition Contract for the CARTIS Patent and CARTIS Trademark between the
Company and Herve Gallion dated February 19, 2000 in French.
10.5 * Acquisition Contract for the CARTIS Patent and CARTIS Trademark between the
Company and Herve Gallion dated February 19, 2000 translated into English.
10.6 * Purchase Contract of Equipment CARTIS and the Production Rights of CARTIS
Process between the Company and Advanced Technologies Development Company Limited
dated February 21, 2000 in French.
10.7 * Purchase Contract of Equipment CARTIS and the Production Rights of CARTIS Process
between the Company and Advanced Technologies Development Company Limited dated
February 21, 2000 translated into English.
10.8 * Agreement of Sale of Cartis International, Ltd. Shares to Cartis, Inc. between the
Company, Herve Gallion and Cyril Heitzler dated February 18, 2000 in French.
10.9 * Agreement of Sale of Cartis International, Ltd. Shares to Cartis, Inc. between the
Company, Herve Gallion and Cyril Heitzler dated February 18, 2000 translated into
English.
10.10 * Employment Contract between Steve Olivier and Cartis International, Ltd. dated
January 1, 1999 in French.
</TABLE>
51
<PAGE>
<TABLE>
<S> <C> <C>
10.11 * Employment Contract between Steve Olivier and Cartis International, Ltd. dated
January 1, 1999 translated into English.
10.12 * Employment Contract between Cyril Heitzler and Cartis International, Ltd. dated
January 8, 1999 in French.
10.13 * Employment Contract between Cyril Heitzler and Cartis International, Ltd. dated
January 8, 1999 translated into English.
27.1 * Financial Data Sheet.
</TABLE>
- -------------------------------
(* Filed herewith)
Item 2. Description of Exhibits
The documents required to be filed as Exhibits Number 2 and 6 and in
Part III of Form 1-A filed as part of this Registration Statement on Form 10-SB
are listed in Item 1 of this Part III above. No documents are required to be
filed as Exhibit Numbers 3 , 5 or 7 in Part III of Form 1-A and the reference to
such Exhibit Numbers is therefore omitted.
52
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Cartis, Inc.
(Registrant)
Date: April 10, 2000 By:/s/ Herve Gallion
--------------------------------------
Herve Gallion, President & Chairman
By:/s/ Cyril Heitzler
--------------------------------------
Cyril Heitzler, Secretary, Treasurer and Director
By:/s/ Patrick Martin
--------------------------------------
Patrick Martin, Director
By:/s/ Steve Olivier
--------------------------------------
Steve Olivier, Director
53
EXHIBIT 3.(i)
ARTICLES OF INCORPORATION
OF
COBALTER, INC.
The undersigned subscriber to these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation under the laws of the
State of Florida.
ARTICLE I. NAME
The name of the corporation shall be: Cobalter, Inc. The principal place of
business of this corporation shall be 265 Sunrise Avenue, Suite 204, Palm Beach,
Florida 33480.
ARTICLE II. NATURE OF BUSINESS
This corporation may engage or transact in any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.
ARTICLE III. CAPITAL STOCK
The maximum number of shares of stock that this corporation is authorized
to have outstanding at any one time is 50,000,000 shares of common stock having
$.0001 par value per share and 10,000,000 shares of preferred stock.
ARTICLE IV. ADDRESS
The street address of the initial registered office of the corporation
shall be 265 Sunrise Avenue, Suite 204, Palm Beach, Florida 33480, and the name
of the registered agent of the corporation at that address is Donald F.
Mintmire.
ARTICLE V. TERM OF EXISTENCE
This corporation is to exist perpetually.
ARTICLE VI. DIRECTORS
This corporation shall have no Directors, initially. The affairs of the
Corporation will be managed by the shareholders until such time Directors are
designated as provided by the Bylaws.
ARTICLE VII. INCORPORATOR
The name and street address of the incorporator to these Articles of
Incorporation is:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue
Suite 204
Palm Beach, Florida 33480.
<PAGE>
ARTICLE VIII. EFFECTIVE DATE
The corporation shall commence its existence on March 3, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal on
this 4th day of March, 1997.
/s/ Donald F. Mintmire
-----------------------------
Donald F. Mintmire
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 4th day of March,
1997, by Donald F. Mintmire, who is personally known to me and who (did/did not)
take an oath.
/s/ Lisa R. Coppa
------------------------
Notary Public
Donald F. Mintmire, having been designated to act as Registered Agent,
hereby agrees to act in this capacity.
/s/ Donald F. Mintmire
-----------------------------
Donald F. Mintmire
EXHIBIT 3.(i).2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
COBALTER, INC.
Pursuant to the provision of section 607.1006, Florida Statutes, this
corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment(s) adopted: (indicate article number(s) being amended,
added or deleted)
ARTICLE I. NAME. The name of the corporation shall be changed from
Cobalter, Inc. to Cartis, Inc. The principal place of business of this
corporation shall be 277 Royal Poinciana Way, Suite 155, Palm Beach, FL 33480.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the
amendment if not contained in the amendment itself, are as follows:
N/A
<TABLE>
<S> <C>
THIRD: The date of each amendment's adoption: November 18, 1998.
FOURTH: Adoption of Amendment(s) check one:
________ The amendment(s) was/were approved by the shareholders. The number of votes
cast for the amendment(s) was/were sufficient for approval.
________ The amendment(s) was/were approved by the shareholders through voting groups.
The following statements must be separately provided for
each voting group entitled to vote separately on the
amendment(s):
"The number of votes cast for the amendment(s) was/were sufficient for approval by
----------------------------------------------------------."
(Voting Group)
____x____ The amendment(s) was/were adopted by the board of directors
without shareholder action and shareholder action was not
required.
________ The amendment(s) was/were adopted by the incorporators without shareholder action
and shareholder action was not required.
Signed this 18th day of November, 1998.
</TABLE>
<PAGE>
BY: /s/ Michael Aubry
----------------------------------------------
(By the Chairman or Vice Chairman of the
Board of Directors, President, or other officer
if adopted by the shareholders)
OR
(By a director if adopted by the directors)
OR
(By an incorporator if adopted by the incorporators)
Michel Aubry
- -----------------------
Typed or printed Name
Secretary and Treasurer
- -----------------------------
Title
EXHIBIT 3.(ii).1
BY-LAWS
OF
COBALTER, INC.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Florida shall
be located in the City of Palm Beach. The Corporation may have such other
offices, either within or without the State of Florida, as the business of the
Corporation may require from time to time.
The Registered Office of the Corporation may be, but need not be,
identical with its principal office in the State of Florida and the address of
the Registered Office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders shall
be held at such time and place each year as the Board of Directors shall
determine for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the election of directors
shall not be held at any annual meeting, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special meeting of
the shareholders to be held as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETING. Special meetings of the shareholders may
be called by the President, by the Board of Directors or by the holders of not
less than one-fifth (1/5) of the voting power of all shareholders of the
Corporation.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place within or without the State of Florida as the place of meeting for any
annual meeting, or any place either within or without the State of Florida as
the place of meeting for any special meeting called by the Board of Directors.
SECTION 4. NOTICE OF MEETINGS AND WAIVER. Written or printed notice
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
Chairman of the Board, the President, or the Secretary, or the officer or
persons calling the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail in a sealed envelope
addressed to the shareholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. Notice of any shareholders' meeting
may be waived in writing by any shareholder at any time before or after the
meeting.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders
shall meet at any time and place, either within or without the State of Florida,
and consent to the holding of a meeting, such meeting shall be valid without
call or notice, and at such meeting any corporate action may be taken.
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<PAGE>
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Directors of the Corporation may fix in advance a date, not exceeding
sixty (60) and not less than ten (10) days prior to the date of any meeting of
shareholders, or to the date for the payment of any dividend or for the
allotment of rights, or to the date when any exchange or reclassification of
shares shall be effective, as the record date for the determination of
shareholders entitled to receive payment of any such dividend or to receive any
such allotment of rights, or to exercise rights in respect of any exchange or
reclassification of shares; and the shareholders of record on such date shall be
the shareholders entitled to notice of and to vote at, such meeting, or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights in the event of an exchange or reclassification of shares,
as the case may be. If no record date is fixed by the Board of Directors, the
date on which notice of the meeting is mailed shall be deemed to be the record
date for the determination of shareholders entitled to vote at such meeting.
Transferees of shares which are transferred after the record date shall not be
entitled to notice of or to vote at such meeting.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the Corporation shall at least ten (10) days before
each meeting of shareholders, make a complete list of the shareholders entitled
to vote at such meeting, arranged in alphabetical order, with the address and
the number of shares held by each shareholder, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the office of the
Corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the meeting. The original share ledger or stock transfer
book, or a duplicate thereof kept in this State, shall be prima facie evidence
as to who are the shareholders entitled to examine such list or share ledger or
stock transfer book or to vote at any meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares of the
Corporation, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders; provided, that if less than a majority of the
outstanding shares are represented at said meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder
may vote 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
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy, and such proxy may be withdrawn at any time.
SECTION 10. VOTING OF SHARES. Each outstanding share of Common Stock
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the By-Laws of such corporation may prescribe, or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
2
<PAGE>
Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy. Shares standing in the
name of a guardian, conservator, or trustee may be voted by such fiduciary,
either in person or by proxy.
Shares standing in the name of a trustee may be voted by him, either
in person or by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
Shares standing in the joint names of four (4) or more fiduciaries
shall be voted in the manner determined by the majority of such fiduciaries,
unless the instrument or order appointing such fiduciaries otherwise directs.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares (except that if the right to vote be expressly given in writing to the
pledgee and notice thereof delivered to the Corporation in writing by the
pledgee, the shareholder shall not have the right to vote the shares so pledged)
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Unless prohibited by the
Articles of Incorporation, any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted.
SECTION 13. ADJOURNMENTS. If a meeting is adjourned to another time
or place, notice of the adjourned meeting need not be given if the time and
place thereof are announced at the meeting at which the adjournment is taken.
The Corporation may transact any business which might have been transacted at
the original meeting. If the adjournment is for more than thirty (30) days or a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS AND EXECUTIVE COMMITTEE. The business and
affairs of the Corporation shall be managed by its Board of Directors. The Board
of Directors may, by resolution passed by a majority of the whole Board,
designate two (2) or more of its number to
3
<PAGE>
constitute an Executive Committee, who, to the extent provided in the
resolution, shall have and exercise the authority of the Board of Directors in
the management of the Corporation.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by resolution passed by the Board or by the shareholders (any such
resolution of either the Board of Directors or shareholders being subject to any
later resolution by either of them) but in no event shall such number be less
than one. No resolution shall have the effect of shortening the term of any
incumbent director. Directors shall be elected at the annual meeting of
shareholders and shall continue in office until their successors shall have been
elected and qualified. Directors need not be residents of Florida nor need they
be the holder of any shares of the capital stock of the Corporation.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held without other notice than this By-Law, 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, either within or
without the State of Florida, for holding of additional regular meetings without
other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board, the
President or any two (2) directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Florida, as the place for holding any special meeting of
the Board of Directors called by them.
SECTION 5. NOTICE. Written notice of any special meeting shall be
given to each director at least two (2) days before the meeting, either by
personal delivery, telegram, cablegram, or facsimile. Any director may waive
notice of any meeting. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, and a waiver of any and all
objections to the place of meeting, the time of meeting, or the manner in which
it was called or convened, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The purpose of and the business to
be transacted at any special meeting of the Board of Directors must be specified
in the notice or waiver or notice of such a meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by or
in the manner prescribed in the By-Laws shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, provided, that
if less than a majority of the directors are present at that meeting, a majority
of the directors present may adjourn the meeting from time to time without
further notice.
SECTION 7. MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the Directors of a corporation or any action which may be
taken at such meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by a majority of all
directors and such consent shall have the same effect as a unactual vote.
4
<PAGE>
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
or in a directorship to be filled by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office or until the next succeeding annual meeting of
shareholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the Board of Directors for a
term of office continuing until the next election of the directors by the
shareholders.
SECTION 10. COMPENSATION. Directors may by resolution of the Board of
Directors, establish a fixed sum and expenses of attendance, if any, for
attendance at each regular or special meeting of the Board of Directors. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 11. REMOVAL. At a meeting of shareholders called expressly
for that purpose, directors may be removed, with or without cause, by a vote of
the majority of the shares then entitled to vote at an election of directors.
ARTICLE IV
OFFICERS
SECTION 1. CLASSES. The officers of the Corporation shall be a
President, a Treasurer, and a Secretary, and such other officers and assistant
officers as from time to time may be deemed necessary by the Board of Directors
and elected in accordance with the provisions of this Article. Any two (2) or
more offices may be held by the same person, except that the offices of
President and Secretary may not be held by the same person. The failure to elect
a President, Secretary or Treasurer shall not affect the existence of this
Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Vacancies may be
filled or new offices created and filled at any meeting of the Board of
Directors. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death, his resignation or his
removal from office in the manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the principal executive
officer of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. He shall preside at all meetings of the
5
<PAGE>
shareholders and of the Board of Directors. He may sign, with the Secretary or
any other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors have
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. VICE PRESIDENT. In the absence of the President or in the
event of his inability or refusal to act, the Vice President shall perform the
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Vice President shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
SECTION 7. TREASURER. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and deposit all such
monies in the name of the Corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with the provisions of Article V
of these By-Laws; and (c) in general perform all the duties from time to time
assigned to him by the President or the Board of Directors. Nothing herein shall
require the Board of Directors to require a bond.
SECTION 8. SECRETARY. The Secretary shall: (a) keep the minutes of
the shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these By-Laws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all certificates for shares prior to the issue
thereof and to all documents, the execution of which on behalf of the
Corporation under this seal is duly authorized in accordance with the provisions
of these By-Laws; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, or Vice President, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
Board of Directors; (f) sign with the President, or Vice President, certificates
for shares for the Corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (g) have personal charge of the stock
transfer books of the Corporation; and (h) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
Assistant Treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant Secretaries,
as and if authorized by the Board of Directors, may sign with the President or
Vice President certificates for shares of the Corporation, the issue of which
shall have been authorized by a resolution of the Board of Directors. The
6
<PAGE>
Assistant Treasurers and Assistant Secretaries in general shall perform such
duties as shall be assigned to them by the Treasurer or Secretary, respectively,
or by the President or the Board of Directors.
SECTION 10. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he or she is also a
director of the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECK AND DEPOSITS
SECTION 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 instruments in the name of and on behalf of the Corporation and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents, of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
7
<PAGE>
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President and Secretary. All
certificates for shares shall be consecutively numbered. The name of the persons
owning the shares represented thereby with the number of shares and date of
issue shall be entered on the books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in the 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.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only by the registered holder thereof 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
share. The person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the Corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the
resolution of the Board of Directors.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall if needed provide a corporate seal which
shall be in the form of a circle and shall have inscribed thereon appropriate
wording.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these By-Laws, or under the provisions of the Articles of
Incorporation, or under the provisions of the corporation laws of the State of
Florida or other jurisdiction, 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.
8
<PAGE>
ARTICLE XI
AMENDMENTS
The Board of Directors shall have the power and authority to alter,
amend or rescind the By- Laws of the Corporation at any regular or special
meeting at which a quorum is present by a vote of a majority or the whole Board
of Directors, subject to the power of the shareholders to change or repeal such
By-Laws at any annual or special meeting of shareholders at which a quorum is
present, by a vote of a majority of the stock represented at such meeting,
provided, that the notice of such meeting shall have included notice of any
proposed alteration, amendment or rescission.
I certify that these are the By-Laws adopted by the Board of
Directors of the Corporation.
BY: /s/ Donald F. Mintmire
----------------------------------
Donald F. Mintmire, Secretary
April 1, 1997
9
EXHIBIT 10.1
B A I L C O M M E R C I A L
ENTRE LES SOUSSIGNES
Monsieur COTTET JACQUES
de Nationalite francaise
Ne le 24 Octobre 1939 a Saint Jean de Braye (45)
Demeurant 159 Rue des Chanterelles 45160 OLIVET
Marie sous le regime de la communaute legale a
Madame COTTET MARYSE
Ci-apres denomme "Le Bailleur"
D'une part
ET
LA SARL CEFCA
Societe a responabilitee
au capital de 1000.000 Francs
don't le siege social est 616 Rue de l'Anguille 45160 OLIVET
immatricule au RCS Orleans B 416 625 096
respresentee par son gerant Monsieur HEITZLER CYRIL
Ci-apres denomme "le Preneur"
D'autre part.
CECI EXPOSE, IL A ETE CONVENU ET ARRETE CE QUI SUIT
Par les presentes le bailleur donne bail a loyer, conformement aux dispoditions
du decret n(degree) 53.960 du 30 septembre 1953 a la SARL CEFCA, preneur qui
accepte les biens immobiliers ci-apres designes, sis 616 Rue de l'Anguille 45160
OLIVET.
DESIGNATION
Les Locaux dans lesquels le fonds de commerce est exploite se situent sur un
terrain d'une superfice de 4.382 m2.
- des ateliers pour une contenance de .........................700 m2
- des bureaux pour une contenance de........................... 55 m2
- des vestiaires pour une contenance de........................ 45 m2
- un magasin pour une contenance de............................ 45 m2
<PAGE>
selon plan.
Tels que lesdits biens existent dans leur etat actuel, le preneur declarant les
biens connaitre pour les avoir visites en vue du present bail.
Un droit de passage est consenti par le preneur au profit au profit de Monsieur
et Madame COTTET Jacques, qui les a acquis par devant Maitre BOITELLE, Notaire a
Orleans.
DUREE
Le present bail est consenti et accepte pour une duree de 9 annees entieres
consecutives a compter de la date des presentes.
CONGE PERIODE TRIENNALE
Conformement aux dispositions de l'article 3.1 du decret du 30 septmebre 1953,
le preneur aura la faculte de donner conges a L'expiration de chaque periode
triennale; la bailleur aura la meme faculte s'il entend invoquer les
dispositions des articles 10, 13, et 15 du meme decret, afin de reconstructruire
l'immeuble existant, de le surelever ou d'executer des travaux prescrits ou
autorises dans le cadre d'une operation de restauration immobiliere.
La partie qui voudra mettre fin au bail dans l'un ou l'autre des cas ci-dessus
prevus devra donner conge a l'autre par acte extrajudiciare au moins six mois
avant ;'expiration de la periode triennale en cours.
DESIGNATION DES LIEUX LOUES
Les lieux loues devront servir exclusivement a l'activite de TRAITEMENT DE L'EAU
Les adjonctions d'activites connexes ou complementaires ainsi que l'exercice
dans les lieux loues d'une ou plusieurs activites differentes de celles prevues
ci-dessus ne seront possibles que dans le conditions fixees aux articles 34 a
34-8 inclus du decret du 30 septembre 1953.
CHARGES ET CONDITIONS:
Le present bail est consenti et accepte sous les charges et conditions
ordinaires et de droit et en outre sous celled suivantes que le preneur s'oblige
a executer sans pouvoir exiger aucune indecrite, ni diminutica de loyer ci-apres
fixe.
<PAGE>
ETAT DES LIEUX
Le preneur prendra les lieux loues dans leur etat au jour de l'entree en
jouissance.
Dans le mois de l'entree en jouisssance, un etat des lieux sera dresse
contradictoirment entre kes parties aux frais du preneur; a defaut le preneur
sera repute avoir recles lieux en parfait etat.
ENTRETIEN ET REPARATIONS
Le preneur tiendra les lieux loues de facon constante en parfait etat de
reparations locatives et de menu entretien au sens de l'article 1754 du Code
Civil, le bailleur s'obligeant de son cote a executer et prendre en charge les
grosses reparations visees a l'article 606 du Code Civil.
Quant aux reparations autres que celles enumerees aux articles 606 et 1754 du
Code Civil, elles seront faites du consentement et sous l'autorite du Bailleur,
mais le preneur en supportera la charge financiere.
Si de telles reparations deviennent necessaires au cours du bail, le Preneur
sera tenu d'en informer la Bailleur.
En cas de refus du Bailleur de faire executer les travaux lui incombant a
l'expiratior d'un delai de 15 hours suivant la sommation faite par huissier et
rappelant la presente clause, le Preneur pourra se faire autoriser par le
President du Tribunal de Grande Instance du lieu de situation des biens,
statuant en refere, a proceder lui-meme a l'execution desdites reparations.
Le preneur ne pourra pretendre a auone indemnite ni reduction de loyer au cas ou
la duree des travaux, qu'elle que soit leur nature, execerait quarante jours.
AMELIORATIONS
Le preneur supportera la charge de toutes les transformations ou ameliorations
necessitees par l'exercice de son activite, y compris celle des travaux
prescrits par l'autorite administrative.
Il ne pourra toutefois faire dans les lieux loues sans l'autorisation expresse
et par ecrit du Bailleur aucune demolition, aucun percement de mur ou de
cloison, aucun changement de distribution ni aucune surelevation; ces travaux,
s'ils sont autorises, auront lieus sous la surveillance de l'architecte du
Bailleur don't les honoraires seront a la charge du Preneur.
OCCUPATION-JOUISSANCE
Le preneur devra jouir des biens loues en bon pere de famille suivant leur
destination.
Il veillera a ne rien faire ni laisser faire qui puisse apporter aucun trouble
de jouissance au voisinage; notamment quant aux bruits, odeurs et fumees etc,
d'une facon generale, ne devra commettre aucuns abus de jouissance.
Il derva satisfaite a toutes les charges de ville et reglement sanitaires, de
voirie, d'hygiene, de securite, de salubrite ou de police, ainsi qu'a celles qui
pourraient etre imposees par tous les plans d'urbanisme ou d'amenagement, et a
celles qui seraient crees en remplacement, de maniere que le Bailleur ne puisse
jamais etre inquiete ou recherche a ce sujet.
<PAGE>
Il ne pourra rien faire ni laisser faire qui puisse deteroire les lieux loues et
devra sous peine d'etre personnellement responsable preveninle Bailleur sans
retard et par ecrit de toute atteinte qui serait porteea sa propriete et toutes
degradations et deteriorations qui viendraient a etre causees ou a se produire
aux biens loues et qui rendraient necessaires des travaux incombant au Bailleur.
Il gardera les lieux loues et tiendra constamment garnis de meubles, materiels
en valeur et quantite suffisantes pour repondre du paiement exact des loyers et
de l'accomplissement des charges du present bail.
Il ne modifiera pas, en quoi que ce soit, l'aspect exterieur de l'immeuble par
des adjonctions sur les facades ou des elements de decorations visibles de
l'exterieur ou encore des panneaux publicitaires, sans l'accord edit du Bailleur
et sous reserve du strict respect permanent de toute reglementation en vigeur
s'y rapportant.
Il fera ramoner les cheminees et conduits, s'il en est, a ses frais au moins une
fois par an.
Il Il n'exigera pas oue le Bailleur fasse garder et entretenir l'immeable par un
concierge ou gardien, et ne reclamera aucune indemnite en cas de suppression de
ces services.
Il n'elevera, contre le bailleur, aucune reclamation pour l'interruption dans le
service des eaux, de l'electricite, du gaz ou du telephone provenant, soit de
travaux ou de reparations, soit de gelees, soit de tout autre cas de force
majeure.
En cas d'expropriation pour cause d'utilite publique, il ne pourra rien etre
reclame au Bailleur, tous les droits du Preneur etant reserves contre la partie
expropriante.
En cas de destruction de l'immeuble, totale ou partielle, par vetuste vice de
construction, cas fortiut ou toutes autre cause independante de la volonte du
Bailleur, le present bail sera resilie de plein droit et sans indemnite.
CESSION -SOUS LOCATION
Le preneur s'engage a exploiter personnellement son commerce et a occuper
personnellement le local, consequence du caractere "intuitu personae" du contrat
a son egard.
Ainsi, toute operation en contradiction de cette obligation - notamment la mise
en location-gerance du fonds, la constitution d'usufruit sur le fonds, la
sous-location du local, la cession du droit au bail ou du fonds, directe ou
indirecte, resultant par exemple d'un changement de majorite dans le capital
social du Preneur ou d'un apport en societe du droit au bail dans le cadre de
l'article 34-3-1 du decret, pour lequelle Breneur doit requerir l'agrement
expres ecrit et prealable du bailleur.
En cas d'agrement du Bailleur, le Preneur adressera une copiede l'acte au
Bailleur des la conclusion de l'operation a laquelle intervient le Bailleur.
Le cedant restera garant et repondant solidaire du Cessionnaire tant pour le
paiement du loyer, des charges et accessoires que pour le respect des conditions
du bail. Cette disposition s'appliquera a toutes les cessions successives.
Toute cession devra s'effectuer par acte sous seing prive.
<PAGE>
DROIT DE PREEMPTION
Le bailleur se reserve un droit de preemption en cas de cession du bail, objet
des presentes. La signification devra lui en etre fait par lettre recommandee
avec accuse de reception. Il devra prendre position dans un delai d'un mois.
Faute pour lui d'avoir donne reponse dans ce delai, il perdra le benefice de
droit.
En cas de faillite ou reglement judiciaire, le syndic ne pourra ceder le bail
qu'aux conditions indiquees au precedent alinea.
DROIT DE PREFERENCE AU PROFIT DU PRENEUR
Un droit de preference en cas de cession des murs, est accorde a prix egal par
le bailleur au preneur. La signification devra lui en etre fait par lettre
recommandee avec accuse de reception. Il devra prendre position dans un delai
d'un mois. Faute pour lui d'avoir donne reponse dans ce delai, il perdra le
benefice de droit.
CONDITIONS ET CHARGES
Le Preneur acquittera les contributions personnelles mobilieres, les taxes
professionionelles, locatives et autres, de toute nature le concernant
personellement ou relatives a son activite, auxquelles les locataires sont ou
pourrant etre assujettis.
Il supportera notamment la taxe d'enlevement des ordures menageres, la taxe
d'ecoulement a l'egout, la taxe de blayage, la taxe fociere, toutes nouvelles
contributions, taxes municipales ou autres et augmentations d'impots pouvant
etre crees de quelque nature et sous quelque denominations que ce soit et
remboursera au Bailleur les sommes qui pourraient etre avancees par lui a ce
sujet.
Il satisfera a toutes les charges de ville, de police et de voirie, don't les
locataires sont ordinairement tenus, le tout de maniere que le Bailleur ne
puisse aucunement etre inquiete ni recherche a ce sujet.
ASSURANCES
Le Preneur fera son affaire personnelle de s'assurer contre tous les dommages
causes aux amenagement qu'il effectuera dans les locaux donnes abail, ainsi que
ceux causes aux mobilier, materiel, marchandises, tous objets lui appartenant ou
don't il sera detenteur a quelques titres que ce soit, en renoncant et faisant
renoncer sa ou ses compagnies d'assurances a tous recours contre le Bailleur et
ses assureurs.
Il assurera les risques propres a son exploitation a une comagnie notoirement
solvable (incendie, explosion, degats des eaux, vol etc) ainsi que les risques
locatifs.
Le Preneur devra declarer dans un delai de 7 jours ouvres a son prpre assurer
d'une part, au Bailleur, d'autre part, tout sinistre affectant les biens de ce
dernier, quelqu'en soit l'importance et meme s'il n'en resulte aucun degat
apparent.
Il fera garantir les consequences pecuniaires des responsabilites qu'il pourrait
encourir a l'egard des voisins et des tiers en general.
<PAGE>
Le Bailleur s'engage de son cote a renoncer et a faire renoncer des assureurs
subrges a tous recours contre le Preneur et ses assureurs sous reserve de
reciprocite.
Il est rappele, d'autre part, que les abandons de recours reciproques indiques
ci-dessus seront sans effet si le responsable des dommages a commis une faute
dolosive, inentionnalle ou lourde.
Le Preneur devra justifier de l'ensemble de ces contrats, du paiement des primes
afferentes a premiere demande du Bailleur.
Dans le cas ou les merchandises entreposees entraineraient par leur nature pour
le Bailleur, le paiement d'une surprime d'assurance, celle-ci lui serait
remboursee par le Preneur.
VISITE DES LIEUX
Le Preneur devra laisser le Bailleur, son architecte, tous entrepreneurs et
ouvrers penetrer dans les lieux loues pour constater leur etat, en presence du
Preneur.
Il devra laisser visiter par le Bailleur ou d'eventuels locataires en fin de
bail ou en cas de resiliation, pendant une preriode de six mois precedent la
date prevue pour sont depart; il devra souffrir l'apposition d'ecriteaux ou
d'affiches aux emplacements covenant au Bailleur pendant le meme periode.
LOYERS
Le present bail est consenti et accepte moyennant un loyer mensuel des 12.000
Francs (douze mille francs) en principal hors taxes.
Le present loyer est soumis a la TVA.
Les charges seront payees par le Preneur par provision a chaque echeance et
soldees en fin d'annee sur justification de decompte par le Bailleur.
Le loyer sera paye chaque mois, par avance et le premier paiement aura lieu
retroactivement a la date des presentes pour effet au Premier Septembre 1998.
<PAGE>
REVISION DU LOYER
Le loyer ci-dessus fixe sera soumis a indexation annuelle qui ne pourra, en
ancun cas, etre confundue avec la revision legale des loyers. En consequence,
ledit loyer sera augumente ou diminue de plein droit et sans l'accomplissement
d'acune formalite judiciare ou extrajudiciare chaque annee, a la date
anniversaire d'entree en jouissance proportionnelement a la variation de
l'indice national du cout de la construction tel qu'il a ete etabli par
l'Institut National de la statistique et des etudes eEconomiques (INSEE), (base
de 100 au quatrieme trimestre de l'annee 1953)
Sera retenu comme indice de reference, l'indice 1016, dernier indice publie lors
de la prise d'effet du bail.
L'indice de comparaison servant de calcul de la revision sera le dernier indice
publie a la date anniversaire de la prise d'effet du bail.
En cas de cessation dudit indice, sans qu'un autre indice, avec un coefficient
de reaccordement, lui soit legalement substitue , ou bien si ledit indice se
revele ou devient pour une raison quelconque inapplicable, il sera fait
application de l'indice le plus voison parmi ceux existants alors ou
applicables. A defaut pour les parties de se mettre d'accord sur cet indice le
plus voison, dans un delai de trois mois a compter de la date a lacquelle une
des deux parties aura propose a l'autre; par ecrit, un expert pris sur la liste
de ceux le plus souvent designes comme experts par le Tribunal de Grande
Instance du siege du fonds de commerce, en matiere d'estimation de fonds de
commerce et de loyers commerciaux.
Chaque fois que, par le jeu de cette clause, le loyer se trouvera augmente ou
diminue de plus qu'un quart par rapport au prix precedement fixe
contractuellement ou par decision judicaire, chaque partie pourra saisir le juge
afin qu'il adapte le jeu de l'echelle mobile a la valeur locative.
DEPOT DE GARANTIE
Pour garantir l'execution des obligations incombant au preneur, celui-ci verse
au Bailleur qui le reconnait une somme de 24.000 francs (vingt quatre mille
francs) correspondant a 2 termes de loyer.
Ce depot devra etre verse a convenance du bailleur et a premiere demande de
celui-ci.
Cette somme est destine a garantir l'execution par le Preneur des charges,
clauses et obligations lui incombant en vertu du present bail.
Cette somme restera aux mains du Bailleur jusqu'a l'expiration du bail en
garantie du reglement de toute somme que le Preneur pourrait devoir au Bailleur
a sa sortie.
Dans le cas de resiliation du present bail par suite d'inexecution d'une des
conditions ou pour une cause quelconque imputable au Preneur, le depot de
garantie ne sera productive d'aucun interet.
Il est expressement convenu qu'en cas de variation du loyer en vertu de la
clause ci-dessus stipulee ou de toute autre revision legale, cette somme devra
etre diminuee ou augmentee dans la meme proportion pour etre mise en harmonie
avec le nouveau loyer. En consequence, le Preneur versera lors du premiere terme
augmente la somme necessaire pour completer ce depot de garantie.
<PAGE>
SOLIDARITE ET INDIVISIBILTE
Les obligations resultant du present bail pour le Preneur, constitueront pour
ses ayants-cause et ses ayants-droit et pour toute personne tenue au paiement et
a l'execution une charge solidaire et indivisible.
CLAUSE DE NON CONCURRENCE
Le Bailleur s'interdit d'exploiter, directement ou indirectement y compris par
la location a un tiers, dans le rste de l'immeuble oules immeubles adjacents,
l'un des commerces que le Preneur a declare exercer.
CLAUSE RESOLUTOIRE
A defaut d'execution parfaite par le Preneur de l'une quelconque, si minime
soit-elle, de ses obligations issues du present contrat, le contrat est resilie
de plein droit un mois apres l'emmission d'un commandement d'executer reste
infructueux, reproduisant cette clause avec volonte d'en user, sans qu'il soit
besoin d'autre formalitie.
L'expulsion du Preneur et de tous occupants de son chef, pourra avoir lieu en
vertu d'une simple ordonnace de refere, sans prejudice de tous depens, dommages
et interets et sans que l'effet de la presente caluse puisse etre annule par des
offres reelles, passe le delai susindique.
En ce cas, une indemnite d'occupation mensuelle egale a la valeur d'un quart
d'une annuite du loyer sera due au Bailleur. Le depot de guarantie restera
acquis au Bailleur.
TOLERANCE ET MODIFICATIONS
Les presentes experiment l'integralite de l'accord conclu entre les parties
relativement au present bail. Tout accord anterieur, ecrit ou oral s'y
rappaportant doit etre considere comme nul.
De meme, toute modification des presentes ne pourra resulter que d'un document
ecrit bilateral. Elle ne pourra en aucun cas etre deduite de tolerances . Le
Bailleur pourra a tout instant exiger le respect de toutes les clauses du
present bail.
<PAGE>
ENRISTREMENT
Les parties requierent l'enregistrement des presentes au droit fixe prevu par
l'article 739 du Code General des Impots.
FRAIS
Tous les frais, droits et honoraires des presentes et leurs suites seront
supportes par le Preneur qui s'y oblige.
ELECTION DE DOMICILE
Pour l'execution des presentes, les parties font election de domicile:
- le Bailleur a son domicile personnel
- le Preneur dans les lieux loues.
FAIT EN 6 EXAMPLAIRES LE 16 JULLIET 1998
LE BAILLEUR LE PRENEUR
/s/ Jacques Cottet /s/ Cyril Heitzler
- ----------------------- ---------------------
EXHIBIT 10.2
COMMERCIAL LEASE
BETWEEN THE UNDERSIGNED
Mr. JACQUES COTTET
of French Nationality
Born October 24, 1939 at Saint Jean de Braye (45)
Residing at 159 Rue des Chanterelles 45160 OLIVET
Married by legal common law to
Mrs. MARYSE COTTETT
Hereafter referred to as the "lessor"
As one party
AND
THE CEFCA SARL
Company with limited responsibility
At a capital of 100 000 Francs
Of which the head office is located at 616 Rue de l'Anguille 45160 OLIVET
Registered at RCS Orleans B 416 625 096
Represented by its manager Mr. CYRIL HEITZLER
Hereafter referred to as the "lessee"
As second party
THIS EXPOSED; THE FOLLOWING WAS CONVENED AND SETTLED
By those present, the lessor leases, conforming to the disposition stated in
decree # 53.960 of September 30th, 1953, to lessee, SARL CEFCA to accept the
property business stated below, located at 616 Rue de l'Anguille 45160 OLIVET.
DESIGNATION
The premises in which the business is operating is situated on
terrain surface of 4.382m2.
- - workshop capacity of. ..............................700m2
- - office capacities of.................................55m2
- - locker capacities of.................................45m2
- - store capacity of....................................45m2
according to plan.
As mentioned places exist in their actual condition, the lessee will declare
these places visited and seen for the current lease.
A right of passage is consented by the lessee to profit Mr. and Mrs. COTTETT to
facilitate access to their house situated at the end of the courtyard, unless
the house is sold.
<PAGE>
PROPERTY ORIGIN
The places leased by those present belong to Mr. JACQUES COTTETT, which he
acquired in front of attorney BOITELLE, an Orleans Notary.
LENGTH
The present lease is consented and accepted for a duration of nine whole
consecutive years counting from the date of the signing.
TRIENNIAL NOTICE PERIOD
In accordance with the disposition of Article 3.1 of the decree of September
30th, 1953, the lessee will have full responsibility to give notice of the
expiration each triennial. The lessor will have the same responsibility
understanding the dispositions of articles 10, 13 and 15 of the same decree,
invoked to rebuild the existing building, to renovate or undergo authorized
construction in a property restoration operation.
The party that will want to stop the lease described below will have to give
notice to the other party through an extra judiciary act in less then six months
before the expiration of the current triennial period.
DESTINATION OF THE RENTAL PROPERTY
The rental property must serve exclusively for water treatment activity.
The additional connected activity, the exercised on the rental property, for
several different activities performed other then those expected will only be
possible following the fixed conditions in Articles 34-8, included in the
September 30th, 953 decree.
CHARGES AND CONDITIONS
The present lease is consented and accepted under ordinary charges and condition
by law, as well as those following below, where the lessee is obligated to
execute, without power to request indemnity, or rental reduction.
CONDITIONS OF RENTALS
The lessee will accept the rental property in their existing conditions the day
of entry.
During the month of entry, a rental condition will be drawn up after hearing
both parties, which will paid by the lessor, with the exception being if the
lessee receives the rental property in perfect condition.
MAINTENANCE AND REPAIR
The lessee will keep the rental property in perfect condition, free local
repairs and maintenance under Article 1754 of the civil code. The lessor is
obligated to undertake major repairs under Article 606 of the civil code.
<PAGE>
As to the other repairs stated in Article 606 and 1754 of the civil code, they
will be performed with consent and authorization of the lessor, and the lessee
will be responsible for all costs.
Should any of these repairs become necessary during the lease agreement, the
lessee will need to inform the lessor.
In case of a refusal by the lessor to execute the work incumbent of him, within
fifteen days of the summation by the bailiff, while recalling the present
clause, the lessee can be authorized by a judge of high authority in such
situation, ruling a judgment to proceed on the reparations in question.
The lessee can not claim any indemnity or rent reduction during the
construction, whatever the nature, past forty days.
AMELIORATIONS
The lessee shall support all transformation charges necessary for its activity
needs, including the construction stipulated by the administrative authority.
The lessee shall not demolish anything without the written authorization of the
lessor, including wall or partition drilling, re-distribution of floor
elevation. These constructions, if authorized, will give the lessor the right
for surveillance of the architecture, of which the lessee will pay the charges.
OCCUPATION-USE
The lessee shall use the rentals with care. He will not engage in, or let
anything be done to bring trouble to the neighborhood, particularly for sounds,
smells, smoke, or in general fashion abuse its use.
The lessee shall satisfy all city, sanitary, police security and health
regulation charges, as well as the regulations which could be imposed by urban
management, and those which could be created for replacement, in a manner where
the lessor will never be responsible for these matters.
The lessee shall not engage in, or let anything happen to deteriorate the rental
and will personally be responsible to warn the responsible to warn the lessor
without delay through writing, of any deterioration or degradation which might
be caused to the rental property, that immediate repair by the lessor.
The lessee shall keep the rental furnished with valued materials responding to
the exact rental payment and accomplished charges of the present lease.
The lessee shall not modify in any way the exterior of the building by adding
walls or decorations visible from the outside, or put up publicity panels,
without written agreement from the lessor under the strict and permanent
reservations of all regulations which might follow.
The lessee shall sweep the chimney and pipes, if any, at his own costs once a
year.
The lessee shall not demand of the lessor to have the building guarded by a
concierge or guardian, and will not ask for any indemnity in case of suppression
of these services.
<PAGE>
The lessee shall not raise any complaint for service interruption of water,
electricity, gas or phone, resulting of construction or any other outside force.
In case of expropriation for public use occurrence, the lessee will not complain
to the lessor, all the lessee's rights being reserved against the expropriating
party.
In case of destruction of the building, total or partial, whether it is from age
or building defect, fortuitous or by any other cause not intended by the lessor,
the present lease will be cancelled in full right without indemnity.
RENTAL TRANSFER
The lessee personally undertakes the use of his business, whatever its nature,
"intuit personae" with consideration to the contract.
Thus, all contradicting operation of this obligation, notably the rental
management of the business, the constitution of the usufruct of the business,
subletting of the property, the ending of the right to lease, or of the
business, direct or indirectly, resulting in, for example. The changing of the
majority of the share capital of the lessee, or of a company contribution to the
lease or to the business is forbidden. The only exception being in the right of
transfer of the lease in Article 34-3-1 of the September 30th, 1953 decree, to a
successor in the business, conforming to the Article 3-1 of the decree, for
which the lessee must require written and prior consent of the lessor.
If the lessor agrees, the lessee will address a copy of the act to the lessor of
the operation conclusions, which involve the lessor.
The assignor will remain guarantor and sole respondent of the assignee for the
rental payments, charges and accessories with respect to the conditions of the
lease. This disposition applies to all successive transfers. All transfers must
take place under private agreement.
PRE-EMPTIVE RIGHT
The lessor reserves the pre-emptive right in case of a lease transfer. The
signification willhave to be sent by certified mail with acknowledgment of
receipt. It will have to take place within a month. If the lessor does not
respond within one month, he will loose the benefit of rights.
In case of a bankruptcy of judicial regulation, the trustee will stop the lessee
except under the indicated conditions in the previous paragraph.
RIGHT OF PREFERENCE FOR BENEFIT OF THE LESSEE
A right of preference in case of a wall transfer, is given at the same price to
the lessee by the lessor. It will be done by a certified letter with
acknowledgment of receipt. It must take place within one month. If the lessor
does not respond within one month, he will loose the benefit of rights.
CONDITIONS AND CHARGES
The lessee will pay all personal services, professional taxes, rental and other,
of any nature concerning personal activity of which the tenants are or could be
subjugated.
<PAGE>
He will notably support the household garbage taxes, sweeping taxes, property
taxes, all new additions, municipal taxes, or other tax increases which might be
created of certain nature and some denominations, and will reimburse the lessor
the amounts advanced to him for that subject.
He will satisfy all city charges, police and garbage collection, of which the
tenants are ordinarily responsible for, in any manner which the lessor could not
be bothered or wanted for.
INSURANCE
The lessee must personally insure himself against all damage caused by
development which will affect the rental property, as well as those caused by
development which will affect the renta; property, as well as those caused
against personal property, material, merchandise, or any other items he owns or
keep for any reason, to renounce these and his insurance company at all recourse
against the lessor and his insurers.
He will insure all proper risks at his use to a notorious and credited company
(for fires, explosions, water damage etc.) As well as for rental risks.
The lessee must declare within seven business days prior to the insurer as well
as to the lessor all accidents affecting these goods, whatever the importance,
or should there never be an appearant damage.
The lessee will guarantee all financial consequences of the responsibility,
which he could encounter concerning the neighbors or third parties in general.
The lessor will on his part renounce his subrogated insurers at all recourse
against the lessee and his insurers under the reservation of reciprocation.
The lessor is reminded that the abandoning of the reciprocated recourse stated
above will not be valid if the responsible party for the damages committed an
intentional or severe fault.
The lessee will have to justify the entirety of his contracts and payment of
premiums according to the lessor's first demand.
In the case where merchandise stored in storage brings extra costs, insurance
related, for the lessor, the lessee would reimburse him.
VISITATION OF RENTALS
The lessee will allow the lessor, his architect, all contractors and workers to
penetrate the rentals to determine their condition, with the presence of the
lessee.
He will allow the lessor to visit with potential lessees, when the lease is
almost due, or in cancellation, for a period of six months prior to the lessee's
departure. He will support the written apposition or posting in convenient
places for the lessor during the same period.
RENT
<PAGE>
The present lease is consented and accepted averaging a monthly payment of 12
000 Francs (twelve thousand Francs) in principal without taxes.
The present rent is submissive to V.A.T. (Value added tax.)
The charges will paid by the lessee through a provision at the end of the year
by justification of the detailed bill by the lessor.
The rent will be paid each month, in advance, and the first payment will
retrospectively take place on September 1, 1998.
REVISION OF RENT
The rent , as stated above, will be submissive to an annual adjustment, which
will not under any circumstance, be confused with the legal revision of the
rent. Consequently, the rent will be increased or decreased in full right and
without any judicial formality each year, at the anniversary date of entry,
proportional to the variation of the national index of construction cost
established by the National Institute of Statistics and Economical Studies
(INSEE), (based on 100 in the 4th trimester of the year 1953.)
Retained as a reference index, the last one published for rents is in the 1016
index.
The comparison index serving to calculate the revision will be the last
published index for the anniversary date taking effect from the lease.
In the circumstance of suspension of the aforementioned index, without
coefficent and connecting index following, it will be legally substituted, or if
the index is revealed or inapplicable, the most used by the court division of
commerce, for business material estimation and commercial rent.
Each time this clause is used, the rent will be raised or lowered by more than a
quarter as opposed to the proceeding set contract. Or by a judge's decision.
Each party ill be able to take up the issue with the judge in order to use the
"stepladder" for reaching the rental value.
SECURITY DEPOSIT
To guarantee the execution of the lessee's obligations, he will pay the lessor a
sum of 24 000 Francs (twenty four thousand francs) corresponding to two monthly
leasing terms.
This deposit will be made at the convenience of the lessor at his first demand.
This sum is used to guarantee the execution of the charges by the lessee's
clauses and obligations expected in virtue of him for present lease.
This sum will remain at the disposition of the lessor until the lease expires in
guarantee of the regulations, should the lessee owe the lessor at his departure.
In case of termination of the present lease due to th e non-execution of one of
the conditions for one reason or another attributable to the lessee, the deposit
will guarantee the lessor the needs for damages/interest, without prejudice of
all others.
<PAGE>
The formal agreement given as a security deposit is not productive of any
interest.
It is formally agreed that in case of rental variation in the claude in virtue
stipulated above, or of any other legal revision, this sum will have to increase
or decrease in the same proportion to be in harmony with the new rent.
Consequently, the lessee will first increased term, this guarantee deposit,
SOLIDARITY AND INDIVISIBLITY
The resulting obligation of the present lease for the lessee, will constitute
for his successor or party entitled, or any other person held for payment to the
execution of a solidarity and indivisible charge.
NON COMPETITION CLAUSE
The lessor is forbidden to exploit directly or indirectly, included the rental
to a third party, in the rest of the building or buildings adjacent to, a
business which the lessee claims to exercise.
RESOLUTION CLAUSE
In case of fault of perfect execution by the lessee, even minimal, of the
obligation issues present in the contract, the contract will be terminated in
full right month after the emission of the unsuccessful command to execute,
without the needs for other formalities.
The eviction of the lessee and the other occupants of his use, will have right
by virtue of a simple order of summary proceedings without prejudice of costs,
damages and interests, and without the effect of the present clause being
annulled by other true offers, passed the time frame indicated below.
In this case, an indemnity of the monthly occupation equal to the value of a
quarterly lease will be due to the lessor. The lessor will acquire the security
deposit.
TOLERANCE AND MODIFICATION
Those present express the whole agreement included between the parties relative
to the present lease. All previous agreements, written or oral must be
considered nullfied.
The same stands for all modifications by those present that can only result in a
written bilateral document. I cannot in any circumstance be deducted by
tolerance. The lessor can at any time demand to respect all clauses of the
present lease.
REGISTRATION
The parties requiring the registration of those present by right provided in
Article 739 of the general tax code.
CODE
All costs, rights and fees of those present, and the lessee to which he will
oblige will support their followers.
<PAGE>
ELECTION OF DOMICILE
To execute the following, the parties will elect a domicile:
8. the lessor at his personal domicile,
9. the lessee in his rental property
DRAWN UP IN 6 EXEMPLARIES ON JULY 16TH, 1998
THE LESSOR THE LESSEE
/s/ Jacques Cottet THE CEFCA SARL
/s/ Cyril Heitzler
EXHIBIT 10.3
MATTHEWS.MORRIS & COMPANY.INC.
LETTER OF INTENT
This LETTER OF INTENT (the "Letter") made and entered into this 29 day of
October 1998, by and between COBALTER.INC.(the "buyer"), a Florida Coporation
whocse principal place of business is 265 Sunrise Avenue, Suite 204 Palm Beach,
FL 33480 USA, represented by its President, /Ronald H. Kutz, and
CEFCA (the "Seller 1") a French company whose principal place of business
is in Orleans, France, represented by its director, Cyril Heitzler,
CARTIS INTERNATIONAL (the "seller 2"), a Mauritius comapny whose Principal
place of buisiness is in Mauritius Island, represented by Herve Gallion
WHEREAS, the Buyer confirms that it is an American company, incorporated in
the State of Florida, and listed on the stock exchange, Nasdaq(OTC BB); and
WHEREAS, the Buyer is interested in acquiring 100% of the shares in the
company CEFCA, and
WHEREAS, the Buyer is in interested in acquiring 80% of the shares in the
company Cartis International, and
WHEREAS, the "Seller 1" confirms its interest in selling these shares of
the company to the Buyer
WHEREAS, the "Seller 2" confirms its interest in selling these shares of
the company to the Buyer,
NOW THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, receipt of which to take place at closing, it is agreed
by and between the Parties as follows.
- CAPITAL STURSTURE OF THE BUYER BEFORE THE ACQUISITION
Before the acquisition of the Company's shares by the Buyer, the
capital stucture of the buyer will be 6,000,000 shares.
- CAPITAL STRUCTURE OF THE BUYER AFTER THE ACQUISTION
Immediately after the acquisition of the Company's shares by the
Buyer, the capital structure of the Buyer will be as follows:
- Privates investors (represented by Mattews, Morris & Cie): 4,000,000
unrestricted shares, representing 45% of the capital,
<PAGE>
(a) Herve Gallion : 900,000 shares of Rule 144 restricted shares (with a
Restrictive legend for eighteen months ), representing 10% of the
capital.
(b) Cator Holding LTD:2,300,00 shares of Rule 144 restricted shares (with
a Restricted legend of eighteen months), representing 25% of the
capital
(c) Aquartis LTD :1,800,000 shares of Rule 144 restricted shares (with a
Restricted legend for eighteen months), representing 20% of the
capital
Total number of shares: 9,000,000
Immediately after the acquisition of the Companies shares by the
buyer:
(a) Ronald H. Kutz will tender his resignation as President of Coblater,
Inc. Christian P. Guttierez will tender his resignation as Vice
President, Secretary and Treasurer of Cobalter, Inc
(b) The buyer will change its name from Cobalter, Inc to Cartis, Inc
(c Herve Gallion will be appointed as President of the company Cartis,
Inc.
(d) Cyril Heitzler will be appointed as Director of the company Cartis,
Inc.
(e) Phillippe Dardel will be appointed as Director of the company Cartis,
Inc.
(f) Patrick Martin will be appointed as Director of the company, Cartis,
Inc.
(g) Michael Aubry will be appointed as Secretary and Treasurer of the
Company Cartis, Inc.
3. TERMS OF THE ACQUISITION
Payment for the shares of the company Cefca and Cartis International
that the Buyer will acquire will be made by issuing 3,000,000 shares of Rule 144
restricted shares of the Buyer , and by transferring 2,000,000 shares owned by
the board of directors of the Buyer.
The share exchange shall take place at such time as is mutually
agreed upon the parties.
Buyer represents that at closing it will have zero assets and zero
liabilities.
4. GOVERNING LAW
This letter shall be governed by the applicable laws of the State of
Florida.
5. SEVERABILITY
In the event that any provision or clause of this Letter conflicts
with applicable law, such conflict shall not affect other provisions of this
Letter that can be given effect despite such conflicting provision or clause.
<PAGE>
6. CLOSING DATE
The closing date is set for November 9, 1998, in Florida, however the
Parties are already bound by this irrevocable and final Letter.
IN TESTIMONY WHEREOF, witness the signature of the parties hereto.
COBALTER, INC. CEFCA
A Florida corporation A French company
DATED: DATED: 03/11/98
BY: /s/ Ronald H. Kutz BY: /s/ Cyril Heitzler
---------------------------- ----------------------
CARTIS INTERNATIONAL
A Mauritius Company
DATED: 03/11/98
BY: /s/ H. Gallion
----------------------
EXHIBIT 10.4
CONTRAT D'ACQUISITION DU BREVET CARTIS ET DE LA MARQUE CARTIS
Le present contrat est conclu entre
D'une part,
Herve Gallion, agissant en son nom personnel, ne le 11 Janvier 1944 a Lyon, de
nationalite francaise, residant a Old Moka Road, Bell Village - Ile Maurice,
agissant en son nom.
Ci- apres denomme Herve gallion
Et d'autre part,
La societe CARTIS International Ltd.ayant son siege social sis les Jamalacs
Building , Vieux Conseil Avenue Port-Louis, Ile Maurice, representee par Mr
Cyril Heitzler
Ci-apres denomme Cartis International Ltd
Il est prealablement etabli ce qui suit :
Il a ete signe en date du 15 octobre 1998, un contrat entre Herve Gallion
agissant en son nom personnel et Cartis International Inc. representee par Cyril
Heitzler ayant tous pouvoirs a cet effet. Ce contrat avait pour objet la cession
de licence exclusive de la marque Cartis. En accord avec les termes de l'article
11 avenant de ce contrat susmentionne, Herve Gallion et Cartis International Ltd
ont decide par un acte signe en date du 19 fevrier 2000 d'annuler de facon
irrevocable et definitive ce contrat du 15 0ctobre 1998. Cet acte constitue
l'annexe 1 de la presente convention.
Il a ete signe en date du 15 octobre 1998, un contrat entre Herve Gallion
agissant en son nom personnel et CEFCA representee par son gerant Cyril Heitzler
ayant tous pouvoirs a cet effet. Ce contrat avait pour objet la cession de
licence de brevet et de transfert de technologie Ce contrat concernait Les
brevets No 0934/97 cas 1 et No 2242/97 cas 2 ont ete deposes aupres de
l'Institut de la Propriete Industrielle Suisse et enregistre internationalement
par la phase PCT sous le numero 98/00610 cas 1 et cas 2 par Monsieur Herve
GALLION et portant sur le charbon actif plus argent pour le traitement
bactericide des fluides.
En accord avec les termes de l'article 11 avenant de ce contrat susmentionne,
Herve Gallion et CFCA ont decide par un acte signe en date du 19 fevrier 2000
d'annuler de facon irrevocable et definitive ce contrat du 15 0ctobre 1998. Cet
acte constitue l'annexe 2 de la presente convention.
Les deux contrats ci-dessus enoncees, ayant ete annules, ils sont remplaces
selon les termes et modalites ci-dessous enumerees.
Ceci etabli, il a ete convenu ce qui suit :
<PAGE>
1/ Herve Gallion agissant en son nom propre est detenteur de la demande des
brevets No 0934/97 cas 1 et No 2242/97 cas 2 ont ete deposes aupres de
l'Institut de la Propriete Industrielle Suisse et enregistre internationalement
par la phase PCT sous le numero 98/00610 cas 1 et cas 2 par Monsieur Herve
GALLION et portant sur le charbon actif plus argent pour le traitement
bactericide des fluides.
La demande de brevet et les extansions de ce brevet constituent l'annexe 3 de ce
present contrat.
2/ Herve Gallion est proprietaire exclusif de la marque Cartis, enregistre sous
la reference Depot de marque :
- Enregistre sous la reference A 42 Folio 82 No 163 pour la marque
"CARTIS" et A 42 Folio 82 No 162 pour la marque "CARTIS PWS" deposes
pour l'Ile Maurice aupres du Ministere du Commerce et de l'Industrie
- enregistre sous la reference No 98/12NL du 20 Mars 1998 a l'Institut
National de la Propriete Industrielle (INPI) pour la France.
Le depot de marque constitue l'annexe 4 de ce present contrat.
3/ En tant que proprietaire exclusif de la marque et du brevet tels que
ci-dessus enumeres, Herve Gallion, a decide de transferer a Cartis Inc, la
pleine propriete de ce brevet et de cette marque. Ce transfert a lieu dans le
cadre d'une rationalisation et d'une valorisation de l'ensemble des activites de
Cartis Inc. .
4/ Cartis Inc devient de ce fait proprietaire des droits directs et indirects du
brevet sus-mentionne. Par droits indirects, il est fait reference a toute
amelioration, toute modification et toute extension de ce present brevet. De
plus, tout nouveau brevet decoulant directement ou indirectement de l'activite
inventive du brevet sus-mentionne fait egalement partie de la presente
convention.
5/ Cartis Inc devient de ce fait proprietaire de la marque Cartis et de tous les
droits et extensions s'y rattachant.
6/ A compter de ce jour, Cartis inc s'engage a prendre en charge toute depense
existante ou a venir dans le cadre de la protection ou de l'extension du brevet
susmentionne. Cartis Inc. s'engage egalement a payer toute redevance ou tout
montant de quelque nature que ce soit de facon a assurer la pleine et entiere
protection du brevet et de ses extensions. De plus, Cartis Inc. s'engage a
mettre tous moyens en oeuvre pour assurer la protection et la defense du brevet
susmentionne.
7/ Cartis Inc. s'engage a communiquer a Herve Gallion, toutes les pieces
justificatives relatives aux ameliorations et extensions de ce brevet.
8/ Pour toute extension, amelioration ou depot d'un nouveau brevet entrant dans
le cadre de ce present contrat, Cartis Inc s'engage a ce que seul le nom de Mr
Gallion soit mentionne, et ce sauf avis contraire de Herve Gallion et avec
l'acceptation de Cartis Inc.
9/ Cartis Inc. s'engage a payer tous les droits necessaires a la defense de la
marque Cartis et ce a compter de ce jour.
<PAGE>
10/ En contrepartie des droits et proprietes par lui consenties, Herve Gallion
recevra les redevances suivantes sous les conditions definies dans les articles
suivants de ce present contrat.
11/ Cartis Inc. s'engage a verser sur le chiffre d'affaires Hors Taxes realise
par Cartis Inc et ce dans le cadre de l'exploitation du brevet ou de ses
extensions prevues par le present contrat, une redevance de 5 % (CINQ POURCENT).
12/ Cette redevance sera paye sous les termes ci dessous explicites.
Cartis Inc. s'engage a tenir une comptabilite speciale pour l'exploitation de
chacun des brevets concedes dont le releve sera mis a la disposition de Herve
Gallion a la fin de chaque trimestre civil, sans demande prealable, ou dans les
huit jours d'une demande ecrite.
La redevance a pour assiette le prix hors taxes de l'ensemble de la prestation
de service necessaire a la realisation du produit tel que defini Article 1.
Le taux applicable a la redevance est de 5 % de l'assiette ci-dessus, avec une
revision de prix des la fin de la seconde annee d'exploitation. Les redevances
devront etre payees dans les 30 jours, suivant la fin de chaque mois
d'exploitation du brevet, de la technologie, et du savoir faire. Le calcul et le
paiement des redevances n'interviendra pour le premier calcul qu'a la fin du
premier trimestre 2001 et ne teindra compte pour les premiers chiffres que de
toute vente survenue a partir du 01 janvier 2001.
Un etat recapitulatif sera adresse en meme temps au concedant precisant la
periode en cause, le montant unitaire (s'il y a lieu), la quantite fournie et le
chiffre d'affaire realise (ce document doit s'adapter en fonction des produits
et/ou des services en cause).
A defaut d'encaissement dans le delai fixe, les sommes porteront interet au taux
legal applicable sur le territoire a compter de leur exigibilite qui est le
dernier jour de la periode en cause. Ce taux sera augmente de 2% a compter du
troisieme mois suivant la date d'exigibilite.
13/ Cette redevance sera due jusqu'a l'expiration du present brevet ou de toute
extension ou nouveau brevet decoulant de l'exploitation de ce present contrat.
14/ Toute modification de la presente convention devra faire l'objet d'un ecrit
signe entreles deux parties.
15/ Tout litige concernant l'execution de la presente convention, sera de la
competence exclusive des tribunaux de l'etat de Floride.
16/ L'enregistrement de la presente convention aupres des organismes competents
est a la charge de Cartis Inc qui s'engage a proceder a son enregistrement dans
les 12 mois au plus tard de la signature de la presente convention.
Fait a Palm Beach, le 19 fevrier 2000 en trois exemplaires, dont un pour chacune
des parties et un pour l'enregistrement aupres de l'office Europeen des brevets.
Herve Gallion Cartis Inc.
Cyril Heitzler
/s/ Herve Gallion /s/ Cyril Heitzler
- -------------------- --------------------
EXHIBIT 10.5
Acquisition Contract for the CARTIS Patent and CARTIS Trademark
This agreement is between
Herve Gallion, representing himself, born on January 11, 1944 in Lyon (France),
of French nationality, residing at Old Moke Road, Bell Village, Island of
Mauritius
Herein after named Herve Gallion
And
The company CARTIS International, Ltd. with it's office at the Jamalacs
building, Vieux Conseil Avenue, Port-Louis, Island of Mauritius, represented by
Mr. Cyril Heitzler
Herein after named Cartis International, Ltd.
It has been established that:
On October 15, 1998 a contract between Herve Gallion, acting on his own behalf,
and Cartis International, Ltd., represented by Mr. Cyril Heitzler with power of
attorney in this matter, was signed. The objective of this contract was the
termination of the exclusive rights to the CARTIS trademark. In accordance with
the terms of article 11 of the fore mentioned contract, Herve Gallion and Cartis
International Ltd. have unanimously decided on February 9, 2000 to render the
contract of October 15, 1998 null and void. This cancellation act constitutes
the annex 1 of this agreement.
On October 15, 1998 a contract between Herve Gallion, acting on his own behalf,
and CEFCA, represented by it's General Manager Mr. Cyril Heitzler with power of
attorney in this matter, was signed. The objective of this contract was the
termination of the patent assignment and the transfer of technology. This
contract referred to the patent applications No: 0934/97 case 1 and No: 2242/97
case 2 , filed with the Swiss Institute of Industrial Property under the PCT
act, number 98/00610 case 1 and case 2 by Mr. Herve Gallion, claiming a
technology of active carbon and silver for the bactericidal treatment of fluids.
In accordance with the terms of article 11 of the above-mentioned contract,
Herve Gallion and CEFCA have decided by agreement signed on February 19, 2000 to
definitely and irrevocably cancel the contract of October 15, 1998. This
contract constitutes annex 2 of this agreement.
Having established this, it has been agreed as follows:
1. Herve Gallion, acting on his own behalf and being the owner of the patent
applications No: 0934/97 case 1 and No: 2242/97 case 2 filed with the Swiss
Institute of Industrial Property under the PCT act, number 98/00610 case 1 and
case 2 by Mr. Herve Gallion, claiming a technology of active carbon and silver
for the bactericidal treatment of fluids.
<PAGE>
The patent applications as well as its extensions constitute annex 3 of this
agreement.
2. Herve Gallion is the exclusive owner of the CARTIS trademark, registered
under the trademark application:
Reference A 42 Folio 82 No. 163 for the trademark "CARTIS" and A 42
Folio 82 No. 162 for the trademark "CARTIS PWS" filed for the Island
of Mauritius with the Ministry of Commerce and Industry
Reference No: 98/12NL dated March 20, 1998 with the National Institute
for Industrial Property (INPI) in France.
The trademark application constitutes annex 4 of this agreement.
3. Being the sole owner of the patents and the trademark as listed and described
herein, Herve Gallion has decided to transfer to Cartis, Inc. the ownership of
the patents and the trademark. This transfer has taken place in conjunction with
a reorganization and valuation of Cartis, Inc.
4. Cartis Inc. is therefore owner to the direct and indirect rights of the
above-mentioned patent. The indirect rights herein referred to include all
improvements, modifications and extensions of the patent. In addition, all new
patents deriving directly or indirectly from the invention described in the
above-mentioned patent are equally part of this agreement.
5. Cartis Inc. hereby becomes the owner of the CARTIS trademark and all rights
derived thereof.
6. From this day on, Cartis Inc. is committed to take over all existing and
future costs in connection with the protection and extension of the above
mentioned patent. Cartis Inc. also commits to pay any and all costs in order to
protect the patents and their extensions. Moreover, Cartis undertakes to use all
means to ensure protection of the aforementioned patents.
7. Cartis Inc. commits to communicate to Herve Gallion all information
pertaining to the improvements or extensions of the Patent.
8. For all improvements, extensions or new patent applications, Cartis Inc.
agrees that only the name Herve Gallion be mentioned, except in case of
different instructions given directly by Mr. Gallion and accepted by Cartis,
Inc.
9. Cartis Inc. commits to pay all fees in connection with the protection of the
CARTIS trademark from this day on.
10. In exchange for the rights and ownership provided by Mr. Gallion, he will
collect compensation as outlined in the subsequent paragraphs.
<PAGE>
11. Cartis, Inc. hereby commits to pay to Herve Gallion a royalty of 5% on sales
before tax, pertaining to the exploitation of the aforementioned patents and
all, their extensions.
12. The terms and conditions of the royalty payment are defined in the
subsequent paragraphs. Cartis Inc. commits to keep precise accounting of sales
derived from the exploitations of the patents and all their extensions. Such
accounting will be given to Mr. Gallion at the end of each calendar quarter,
without special request on his part, or within 8 days of a written request.
The royalty is assessed on the pre-tax sales underlying the entirety of the
process to make the device as described in Article 1.
The royalty rate is 5% of sales as aforementioned described, with a price
revision as early as the second year of operations. The royalties will be paid
within 30 days following the end of each calendar month.
The calculation of royalties under this agreement will start at the end of the
first quarter in 2001, for the period starting January 1, 2001.
A recap will be addressed to Mr. Gallion with all details regarding quantity,
price etc.
In case of non-payment in time, the default rate will be the statutory rate.
After 2 months, the statutory rate will be increased by 2%.
13. The royalty is applicable until the patents expire, or when all extensions
or new patents derived from the original patent expire.
14. Any change to the current agreement has to be in writing.
15. Applicable law: Florida.
16. Cartis, inc. commits to register this agreement within 12 monts from the
signature of this agreement.
Palm Beach, February 19, 2000
CARTIS International, Ltd.
/s/ Herve Gallion /s/ Cyril Heitzler
EXHIBIT 10.6
CONTRAT D' ACQUISITION DU MATERIEL CARTIS ET DES DROITS DE
FABRICATION DU PROCEDE CARTIS
Le present contrat est conclu entre
D'une part,
La societe ADVANCED TECHNOLOGIES DEVELOPMENT COMPANY LIMITED, ayant son siege
social suite A, Regal House, Queensway GIBRALTAR, enregistree a Gibraltar sous
le numero 147065, representee par Monsieur Herve Gallion, ayant tous pouvoirs
[a] cet effet
Ci-apres denommee ATD
Et d'autre part,
La societe CARTIS Inc. ayant son siege a Palm Beach, 265 Sunrise Av. 33480
representee par Mr Cyril Heitzler autorise par une resolution de son Board of
Directors en date du 21 fevrier 2000 lui donnant tous puovoirs la signature de
se contrat.
Ci-apres denommee Cartis Inc.
Il est prealablement etabli ce qui suit :
Il a ete signe en date du 15 octobre 1998, un contrat entre ATD repesente par
Herve Gallion et la societe CEFCA representee par son Gerant Cyril Heitzler. Ce
contrat avait pour objet la prestation de service et de fourniture exclusive des
reacteurs destines a la fabrication du Produit appele CARTIS.
En accord avec les termes de l'article 17 de ce susmentionne, ATD at Cartis Inc
ont decide par un acte signe en date du 21 fevrier 2000 d'annuler de facon
irrevocablee et definitive ce contrat du 15 Octobre 1998.
Il a ete signe en date du 15 octobre 1998, un contrat entre ATD representee par
Herve Gallion et la societe Cartis International Ltd representee par Cyril
Heitzler et Philippe Dardel. Ce contrat avait pour objet la fourniture exclusive
des produits CARTIS.
En accord avec les termes de'article 18 du contrat susmentionne, ATD et Cartis
Internaional Ltd ont decide par un acte signe en date du 21 ferier 2000
d'annuler de facon irrevocable et definitive ce contrat du 15 Octobre 1998.
Les deux precedents contrats ci-dessus mentionnes sont donc annules de facon
definitive et remplaces selon les termes et modalites definies dans la presente
convention.
Ceci etabli, il a ete convenu ce qui suit :
1/ ADT desormais libre de toute engagement, cede a Cartis Inc. de facon
irrevocable et inconditionelle la pleine propriete en fruit et unsufruit du
materiel jusqu'a present utilise par CEFCA pour la fabrication du produit
Cartis. Le materiel est detenu dans les locaux de CEFCA et restera pour son
exploitaion future dans les locaux de CEFCA.
2/ Le material vise dans l'article 1 de la presente convention est detaille dans
l'annexe 4 du present contrat.
<PAGE>
3/ A compter de ce jour, le materiel vise a l'article 2 de la presente
convention devient propriete exclusive de Cartis Inc qui acquiert par la meme
tous les droits technologiques relatifs a ce materiel.
4/ Cartis Inc. sera en charge d'assurer la maintenance, l'entretien et le
developpement futur des machines visees dans la presente convention.
5/ ADT cede egalement a Cartis Inc. la pleine et entiere propriete de droits
technologiques y afferants des moules et pieces electroniques decrits dans
l'annexe 5 de la presente convention.
6/ Dans le cadre de l'execution de la presente convention ATD declare qu'elle
n'a aucun contrat ou engagement relatif a la fabrication du produit ou des
appareils Cartis ou relatif a la detention du materiel transfere ce jour.
7/ En contrepartie de l'acquisition par Cartis Inc. du materiel et des droits
ci-dessus enumeres, le Board of Directors de Cartis Inc a, par une resolution
signee en date du 21 fevrier 2000 et consituant l'annexe 6 de ce present
contrat, emis au profit de ADT 3'000'000 (trois millions) d'actions de Cartis
Inc sous la legende de la regle 144.
8/ Ce present contrat rend nul et non avenu toute convention, tout engagement ou
autres qu'ATD aurait pu asser au regard de tous droits relatifs au materiel vise
par la presente convention ou a la fabrication des Produits Cartis.
9/ Tout litige regardant l'execution de la presente convention sera de la
competence exclusive des tribunaux de l'etat de Floride.
Fait a Palm Beach (FL) en deux examplaires, le 21 fevrier 2000
Pour ATD Pour Cartis Inc
Herve Gallion Cyril Heitzler
/s/ Herve Gallion /s/ Cyril Heitzler
- -------------------- --------------------
Ce contrat est signe et paraphe de meme que les 6 annexes
EXHIBIT 10.7
PURCHASE CONTRACT OF EQUIPMENT CARTIS
AND THE PRODUCTION RIGHTS OF CARTIS PROCESS
This agreement is entered between
On the one hand,
The Company ADVANCED TECHNOLOGIES DEVELOPMENT COMPANY LIMITED, registered
office, Regal House, Queensway GIBRALTAR, incorporated in Gibraltar under number
147065, represented by Mr. Herve Gallion, empowered will all powers for this
purpose
Hereafter called ATD
And on the other hand,
The company CARTIS Inc headquartered in Palm Beach, 265 Sunrise Avenue FL 33480
and represented by Mr. Cyril Heitzler authorized by a resolution of its Board of
Directors on 21 February 2000 giving him all capacities for the signature of
this contract.
Hereafter called Cartis Inc.
Preamble
A contract was signed on October 15, 1998 between ATD represented by Herve
Gallion and the company CEFCA represented by its Manager Cyril Heitzler. This
contract regarded the exclusive supply of services and of machinery necessary
for the manufacture of the product named CARTIS.
In agreement with the terms of article 17 of this above-mentioned contract, ATD
and Cartis Inc decided by an act signed on February 21 2000 to cancel in an
irrevocable and final way this contract of October 15 1998.
A contract was signed on October 15, 1998 between ATD represented by Herve
Gallion and the company Cartis International Ltd. represented by Cyril Heitzler
and Philippe Dardel. This contract regarded the exclusive supply of CARTIS
products.
In agreement with the terms of article 18 of the above-mentioned contract, ATD
and Cartis International Ltd. decided by agreement signed on February 21 2000 to
cancel in an irrevocable and final way this contract dated October 15 1998.
The two preceding contracts mentioned above are thus cancelled in an irrevocable
way and replaced according to terms' and conditions defined in this agreement.
It was agreed as follows:
1 / ADT free from now on of any commitment, grants to Cartis Inc., in
an irrevocable and unconditional way the ownership of the equipment until now
used by CEFCA for the manufacture of the CARTIS products. The equipment is
located at the CEFCA premises where it will remain will remain for the future
manufacture of CARTIS products.
2 / the equipment mentioned in article 1 of this agreement is listed in appendix
4 of this agreement.
3 / From today on, the equipment mentioned in article 2 of this agreement
becomes the exclusive property of Cartis Inc which acquires by same agreement
all technological rights relating to this equipment.
<PAGE>
4 / Cartis Inc will be responsible for the maintenance, and the future
development of the equipment mentioned in this agreement.
5 / ADT also grants to Cartis Inc. the full one and complete property of all
technological rights attached to the moulds and electronic parts described in
appendix 5 of this agreement.
6 / Within the framework of the implementation of this agreement, ATD declares
that it is not subject, or the beneficiary of any contract or engagement
relating to the manufacture of the CARTIS products as it relates to the
ownership of the equipment transferred today.
7 / In consideration of the acquisition by Cartis Inc. of the equipment and
rights mentioned above, the Board of Directors de Cartis Inc has, in a
resolution signed on February 21 2000 and constituting appendix 6 of this
present agreement, issued to ADT 3,000,000 (three million) shares of Cartis Inc
under regulation 144.
8 / This agreement replaces as void any other agreement, commitment or other
that ATD could have entered taking in connection to the equipment mentioned by
the present agreement to manufacture the Cartis Products.
9 / State courts of Florida.
Signed in Palm Beach (FL) in two originals, on February 21 2000
For ATD For Cartis Inc
/s/ Herve Gallion /s/ Cyril Heitzler
EXHIBIT 10.8
Ltd a CARTIS Inc. CONTRAT DE CESSION D'ACTIONS DE CARTIS INTERNATIONAL
La presente convention est conclue entre
Mr Herve Gallion, ne le 11 janvier 1944 a Lyon - France-, de nationalite
francaise
Et
Mr Cyril Heitzler, ne le 19 avril 1968 a Decines - France-, de nationalite
francaise
D'une part
ET
CARTIS INC, ayant son siege a Palm Beach, 265 Sunrise Av 33480, representee par
Steve Olivier, Membre du Board of Directors et specialement autorisee par une
resolution du Board a cet effet
D'autre part
Il est prealablement etabli ce qui suit :
La societe Cartis International Ltd est une societe offshore de droit Mauritien,
constituee sous la section 16(4) of the Mauritius Offshore Business Activities
Act 1992 . Cette societe a ete regulierement enregistree sous le nom de Cartis
International Ltd le 30 septembre 1998.
Cartis International Ltd est une societe au capital de 100'000 US Dollars
reparti en 100'000 actions de un Dollar chacune.
Mr Herve Gallion est detenteur de 10'000 actions a savoir de 10% du capital de
Cartis International Ltd.
Mr Cyril Heitzler est detenteur de 10'000 actions a savoir de 10% du capital de
Cartis International Ltd.
Messieurs Gallion et Heitzler se sont montre desireux de vendre l'ensemble des
actions qu'ils detenaient dans Cartis International Ltd.
Cartis Inc s'est montre desireuse d'acquerir l'ensemble de ces actions.
Ceci Etabli, il a ete convenu ce qui suit :
<PAGE>
1/ Mr Herve Gallion vend ses 10'000 actions representant 10% du capital de
Cartis International Ltd a Cartis Inc. qui les achete contre l'emission de
500'000 actions emises sous la legende de la regle 144. L'emission de ces
actions a ete autorisee par une resolution du Board of Directors de Cartis Inc.
en date du 17 fevrier 2000.
2/ Mr Cyril Heitzler vend ses 10'000 actions representant 10% du capital de
Cartis International Ltd a Cartis Inc. qui les achete contre l'emission de
500'000 actions emises sous la legende de la regle 144. L'emission de ces
actions a ete autorisee par une resolution du Board of Directors de Cartis Inc.
en date du 17 fevrier 2000.
3/ De par cet acte, et compte tenu des actions de Cartis International
prealablement detenu, Cartis Inc. devient proprietaire de 100% des actions de
Cartis International Ltd.
4/ Chacune des parties sera seule responsable des enregistrements ou publication
necessaire pour son compte.
Fait, le 18 fevrier 2000, a Palm Beach
Herve Gallion Cartis Inc.
Steve Olivier
/s/ Herve Gallion /s/ Steve Olivier
- -------------------- --------------------
Cyril Heitzler
/s/ Cyril Heitzler
- -------------------
Annexes (2)
- Board of Resolution du 17 fevrier 2000 autorisant Steve Olivier a
executer cette transaction
- Board of Resolution du 17 fevrier 2000 autorisant la creation de
1'000'000 actions sous la regle 144
EXHIBIT 10.9
AGREEMENT OF SALE OF CARTIS INTERNATIONAL, Ltd.
SHARES TO CARTIS, INC.
This agreement is entered between
Mr. Herve Gallion, born on January 11, 1944 in Lyon, France, of French
nationality and
Mr. Cyril Heitzler, born on April 19, 1968 at Decines, France, of French
natoionality
On the one hand, and
Cartis, Inc. headquartered in Palm Beach, 265 Sunrise Avenue, FL 33480 and
represented by Steve Olivier, member of the Board of Directors and duly
authorized by said Board to do so.
Preamble:
Cartis International, Ltd. is an "offshore" company registered in Mauritius, and
incorporated under section 16(4) of the Mauritius Offshore Business Activities
Act of 1992. This company was validly registered under the name Cartis
International Ltd. on September 30 1998.
Cartis International, Ltd. has a capital of $100,000 composed of 100,000 shares,
with a par value of $1.
Mr. Herve Gallion owns 10,000 shares, or 10% of Cartis International, Ltd.
Mr. Cyril Heitzler owns 10,000 shares, or 10% of Cartis International, Ltd.
Mr. Gallion and Heitzler are willing to sell the entirety of the shares that
they own in Cartis International, Ltd.
Cartis, Inc. is willing to purchase all of the shares.
It is therefore agreed that :
1/ Mr. Herve Gallion sells 10,000 shares that represent 10% of the capital of
Cartis International, Ltd to Cartis, Inc. In consideration for the sale, Cartis,
Inc. issues 500,000 shares to Mr. Gallion, under section 144. The
<PAGE>
share issuance has been duly authorized by a resolution of the Board of
Directors of Cartis, Inc. dated February 17, 2000.
2/ 1/ Mr. Cyril Heitzler sells 10,000 shares that represent 10% of the capital
of Cartis International, Ltd to Cartis, Inc. In consideration for the sale,
Cartis, Inc. issues 500,000 shares to Mr. Heitzler, under section 144. The share
issuance has been duly authorized by a resolution of the Board of Directors of
Cartis, Inc. dated February 17, 2000.
3/ As a result of the two sale contracts, Cartis International, Inc. becomes the
wholly owned (100%) subsidiary of Cartis, Inc.
4/ Each of the signatories, singly, are responsible for the registration of
their rights under the agreements.
Palm Beach, February 18, 2000
Signed by:
/s/ Herve Gallion /s/ Cyril Heitzler
Cartis, Inc
/s/ Steve Olivier
Attachments (2)
- Board resolution dated February 17, 2000 authorizing Steve Olivier to
execute this transaction
- Board resolution dated February 2000 authorizing the issuance of
1,000,000 shares, under section 144.
EXHIBIT 10.10
CONTRAT DE TRAVAIL
Entre les soussignes,
- - CARTIS INTERNATIONAL Limited Adresse : CARTIS Center - Old Moka Road - BELL
VILLAGE - REPLUBLIQUE DE MAURICE Representee par Monsieur Herve GALLION,
President Directeur General, ayant tous pouvoirs a l'effet des presentes
D'une part,
- - Et
Monsieur Steve OLIVIER
Demeurant:
Nationalite: Mauricienne
D'autre part,
Il a ete convenu ce qui suit:
Engagement
La Societe CARTIS International Ltd engage Monsieur Steve OLIVIER a compter du
01/01/1999, aux conditions indiquees ci-apres, sous reserve des resultats de la
visite medicale d'embauche.
Perioda d'essal
I.e. present contrat, conclu pour une duree indeterminee, ne deviendra definitif
qu'a l'issue d'une periode d'essai de trois mois.
Fonctions
Monsieur Steve OLIVIER exercera les fonctions de Directeur Administratif &
comptable, sous l'autorite et dans le cadre des instructions donnees par le
President.
Remuneration
<PAGE>
En remuneration de ses services. Monsieur Steve OLIVIER percevra un salaire
mensuel de Rs 8.000,00 (huit mille roupies mauriciennes) pour un travail d'une
duree moyenne de 12 heures par semaines.
Lieu de travall
Monsieur Steve OLIVIER exercera ses fonctions au siege de CARTIS International a
l'lle Maurice.
Conges payee
Monsieur Steve OLIVIER beneficiera des conges payes legaux. La periode de ces
conges est determinee par accord entre la Direction et Monsieur Steve OLIVIER,
compte-tenu de necessites du service.
Clause de confidentiallte
Monsieur Steve OLIVIER s'engage a ne communiquer a qui que ce soit, tant, a
l'interieur qu'a l'exteriur de la Societe, pendant la duree du present contrat
et a l'issue de celui-ci, aucune des informations se rapportant a l'activite de
la Societe, don't il aurait eu connaissance en raison, ou a l'occasion de ses
fonctions.
Cette interdiction vise de facon generale tous les documents auquel Monsieur
Steve OLIVIER aura eu acces, dans le cadre de son activite professionnelle au
sein de la Societe.
A la cessation de ses activites, Monsieur Steve OLIVIER devra remettre, avant
son depart, tous les documents qui lui auront ete confies ou qu'il aura etabli
dans l'exercice de ses fonctions. D'une maniere generale, les techniques se
rapportant a l'activite pour laquelle il a ete employe, propres a CARTIS
International ou aux organismes avec lesquels elle est associee, dont il aura
pris connaissance, ne pourront etre utilises par lui dans une autre entreprise,
existant ou a creer, ni profiter a celle-ci.
Conditions d'execution du contrat
Monsieur Steve OLIVIER s'engage a observer les instructions et consignes
particulieres de travail qui pourront lui etre donnees. Il devra egalement les
transmentre a ses eventuels subordonnes et sera responsable de leur bonne
application.
Monsieur Steve OLIVIER devra informer la Societe de tout changement sur la
situation qu'il a signalee lors de son engagement (adresse, situation de
famille, etc...).
Fait en double exemplairs a Bell Village , le ..............
/s/ Steve Olivier /s/ Herve Gallion
- ----------------------- -----------------------
Steve OLIVIER Herve GALLION
Signature precedee de la mention manuscrite President
( lu et approuve)
EXHIBIT 10.11
CONTRACT OF EMPLOYMENT
Between the undersigned,
- - Cartis International Limited Address: Cartis Center - Old Road Moka Road -
Bell Village Republic Of Mauritius represented by Mr Herve GALLION,
Chairman and CEO, having all capacities to negotiate the present contract
On the one hand,
and
- - Mr Steve Olivier, of mauricien nationality
on the other hand,
He was agreed what follows:
Offer of Employment
CARTIS International Ltd offers to hire Mr Steve Olivier, effective as of the
1/1/1999, under the terms and conditions indicated hereafter, and under the
conditions of satisfactory results of the medical examination.
Mr Steve Olivier who accepts this offer of employment.
Trial period
This contract, without defined duration, will become fully effective at the end
of a three months trial period.
Responsibilities
Mr Steve Olivier will exercice the functions of Chief Financial and
Administrative Officer, under the authority and within the framework of the
instructions given by the Chairman & CEO.
Remuneration
<PAGE>
In remuneration of his services, Mr Steve Olivier will receive monthly wages of
Rs 8,000.00 for a part time employment avraging 12 hours per week.
Place of work
Mr Steve Olivier's place of work will be at the headquarters of CARTIS
International in Mauritius
Paid vacations
Mr Steve Olivier will benefit from the allowance of paid vacations as specified
by law. The timing of these vacations is determined by mutual agreement between
Management and Mr. Steve Olivier, taking into account the requirements of the
job.
Clause of confidentiality
Mr Steve Olivier covenants not to communicate to anyone, inside as well as
outside of the Company, for the duration of this contract and beyond, any of the
information regarding the activities of the Company, of which he would have been
appraised in the exercise of his duties.
This confidentiality agreement covers in particular all the technical documents,
drawings, studies, projects and achievements, and in a general way, all the
industrial know-how to which Mr Steve Olivier will have access, within the
framework of its professional activity at the Company.
Upon termination of employment in the Company, Mr Steve Olivier will have to
return all the documents that would have been entrusted to him or that he would
have generated in the performance of his duties. In general, all technology and
know-how relating to the activity for which he was employed, which are specific
to CARTIS International or related companies, to the extent that he would have
knowledge of them, could not be used by him in another company, nor benefit any
other company, existing or future.
Conditions for execution of the contract
Mr Steve Olivier commits to observe the work instructions that could be given to
him. He will also be responsible to communicate these instructions to his
subordinates and ensure their implementation.
Mr Steve Olivier will have to inform the Company of any change in the personal
information given at the time of his hiring (addresses, family circumstances,
etc.).
Drafted in double originals, in Bell Village, on 8/1/99
/s/ Steve Olivier /s/ Herve Gallion
President
Signature preceded by the handwritten mention
" read and approved "
EXHIBIT 10.12
CONTRAT DE TRAVAIL
Entre les soussignes,
- - CARTIS INTERNATIONAL Limited Adresse:
CARTIS Center - Old Moka Road - BELL VILLAGE - REPLUBLIQUE DE MAURICE
Representee par Monsieur Herve GALLION, President Directeur General,
ayant tous pouvoirs a l'effet des presentes
D'une part,
- - Et
Monsieur Cyril HEITZLER
Demeurant: 97, route cotiere - ROCHES NOIRES. REPUBLIQUE DE MAURICE
Nationalite: Francaise
D'autre part,
Il a ete convenu ce qui suit:
Engagement
La Societe CARTIS International Ltd engage Monsieur Cyril HEITZLER a compter du
01/08/1999, aux conditions indiquees ci-apres, sous reserve des resultats de la
visite medicale d'embauche.
Monsieur Cyril HEITZLER, qui accepte cet engagement, declare formellement d'etre
lie a aucune Entreprise.
Perioda d'essal
I.e. present contrat, conclu pour une duree indeterminee, ne deviendra definitif
qu'a l'issue d'une periode d'essai de trois mois.
Fonctions
Monsieur Cyril HEITZLER exercera les fonctions de Directeur de societe, sous
l'autorite et dans le cadre des instructions donnees par le President.
<PAGE>
Remuneration
En remuneration de ses services. Monsieur Cyril HEITZLER percevra un salaire
mensuel de 15.000,00 FF.
Monsieur Cyril HEITZLER disposera, en outre, d'une voiture de fonction et d'une
indemnite de logement de 4300 FF, suivant les modalites qui lui ont ete exposees
lors du dernier entretion.
Lieu de travall
Monsieur Cyril HEITZLER exercera ses fonctions au siege de CARTIS International
a l'lle Maurice. Des deplacements temporaires sont prevus dans chaque pays et
sites ou CARTIS International sera implante ou souhaitera s'implanter.
Conges payee
Monsieur Cyril HEITZLER beneficiera des conges payes legaux. La periode de ces
conges est determinee par accord entre la Direction et Monsieur Cyril HEITZLER,
compte-tenu de necessites du service.
Clause de confidentiallte
Monsieur Cyril HEITZLER s'engage a ne communiquer a qui que ce soit, tant, a
l'interieur qu'a l'exteriur de la Societe, pendant la duree du present contrat
et a l'issue de celui-ci, aucune des informations se rapportant a l'activite de
la Societe, dont il aurait eu connaissance en raison, ou a l'occasion de ses
fonctions.
Cette interdiction vise notamment tous les documents techniques, plans, etudes,
projets et realisations, et de facon generale, tout le savoir-faire industriel
auquel Monsieur Cyril HEITZLER aura eu acces, dans le cadre de son activite
professionnelle au sein de la Societe.
A la cessation de ses activites, Monsieur Cyril HEITZLER devra remettre, avant
son depart, tous les documents qui lui auront ete confies ou qu'il aura etabli
dans l'exercice de ses fonctions. D'une maniere generale, les techniques se
rapportant a l'activite pour laquelle il a ete employe, propres a CARTIS
International ou aux organismes avec lesquels elle est associee, dont il aura
pris connaissance, ne pourront etre utilises par lui dans une autre entreprise,
existant ou a creer, ni profiter a celle-ci.
Conditions d'execution du contrat
Monsieur Cyril HEITZLER s'engage a observer les instructions et consignes
particulieres de travail qui pourront lui etre donnees. Il devra egalement les
transmentre a ses eventuels subordonnes et sera responsable de leur bonne
application.
Monsieur Cyril HEITZLER devra informer la Societe de tout changement sur la
situation qu'il a signalee lors de son engagement (adresse, situation de
famille, etc...).
<PAGE>
Fait en double exemplairs a Bell Village , le 02/08/99
/s/ Cyril Heitzler /s/ Herve Gallion
- ------------------------ ----------------------
Cyril HEITZLER Herve GALLION
Signature precedee de la mention manuscrite President
( lu et approuve)
EXHIBIT 10.13
CONTRACT OF EMPLOYMENT
Between the undersigned,
- - Cartis International Limited
Address: Cartis Center - Old Road Moka Road - Bell Village Republic Of Mauritius
represented by Mr Herve GALLION, Chairman and CEO, having all capacities to
negotiate the present contract
On the one hand,
and
- - Mr Cyril Heitzler
domicilied: 97, coastal road - BLACK ROCKS. REPUBLIC OF MAURITIUS, of french
nationality
on the other hand,
He was agreed what follows:
Offer of Employment
CARTIS International Ltd offers to hire Mr Cyril HEITZLER, effective as of the
8/1/1999, under the terms and conditions indicated hereafter, and under the
conditions of satisfactory results of the medical examination.
Mr Cyril HEITZLER, who accepts this offer of employment, formally declares that
he is not tied by any other employment contract.
Trial period
This contract, without defined duration, will become fully effective at the end
of a three months trial period.
Responsibilities
<PAGE>
Mr Cyril HEITZLER will exercice the functions of Executive Vive President, under
the authority and within the framework of the instructions given by the Chairman
& CEO.
Remuneration
In remuneration of his services, Mr Cyril HEITZLER will receive monthly wages of
15,000.00 FF.
Also, as discussed duting the latest meeting, Mr Cyril HEITZLER will receive a
company car and a housing allowance of 4,300 FF.
Place of work
Mr Cyril HEITZLER' s main place of work will be at the headquarters of CARTIS
International in Mauritius. Temporary assignments may be necessary in each
country and sites where CARTIS International is established or wishes to be
established.
Paid vacations
Mr Cyril HEITZLER will benefit from the allowance of paid vacations as specified
by law. The timing of these vacations is determined by mutual agreement between
Management and Mr. Cyril HEITZLER, taking into account the requirements of the
job.
Clause of confidentiality
Mr Cyril HEITZLER covenants not to communicate to anyone, inside as well as
outside of the Company, for the duration of this contract and beyond, any of the
information regarding the activities of the Company, of which he would have been
appraised in the exercise of his duties.
This confidentiality agreement covers in particular all the technical documents,
drawings, studies, projects and achievements, and in a general way, all the
industrial know-how to which Mr Cyril HEITZLER will have access, within the
framework of its professional activity at the Company.
Upon termination of employment in the Company, Mr Cyril HEITZLER will have to
return all the documents that would have been entrusted to him or that he would
have generated in the performance of his duties. In general, all technology and
know-how relating to the activity for which he was employed, which are specific
to CARTIS International or related companies, to the extent that he would have
knowledge of them, could not be used by him in another company, nor benefit any
other company, existing or future.
<PAGE>
Conditions for execution of the contract
Mr Cyril HEITZLER commits to observe the work instructions that could be given
to him. He will also be responsible to communicate these instructions to his
subordinates and ensure their implementation.
Mr Cyril HEITZLER will have to inform the Company of any change in the personal
information given at the time of his hiring (addresses, family circumstances,
etc.).
Drafted in double originals, in Bell Village, on 8/1/99
/s/ Cyril Heitzler /s/ Herve Gallion
President
Signature preceded by the handwritten mention
" read and approved "
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001096595
<NAME> Cartis, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Jun-30-1999
<PERIOD-START> Jul-01-1999
<PERIOD-END> Dec-31-1999
<EXCHANGE-RATE> 1
<CASH> 22,031
<SECURITIES> 0
<RECEIVABLES> 1,756
<ALLOWANCES> 0
<INVENTORY> 442,667
<CURRENT-ASSETS> 471,840
<PP&E> 141,349
<DEPRECIATION> (22,674)
<TOTAL-ASSETS> 594,320
<CURRENT-LIABILITIES> 366,672
<BONDS> 0
0
0
<COMMON> 944
<OTHER-SE> 196,193
<TOTAL-LIABILITY-AND-EQUITY> 594,620
<SALES> 82,585
<TOTAL-REVENUES> 73,612
<CGS> (8,973)
<TOTAL-COSTS> (8,973)
<OTHER-EXPENSES> 206,605
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,525)
<INCOME-PRETAX> (163,438)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,438)
<EPS-BASIC> (0.02)
<EPS-DILUTED> 0
</TABLE>
