<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
DICUT, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 52-2204952
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12140 Cotorro Way, San Diego, CA 92128
- -------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(619) 692-2142
- --------------
(ISSUER'S TELEPHONE NUMBER)
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASSNAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTEREDEACH CLASS IS TO BE REGISTERED
- -------------------------------- --------------------------------
- -------------------------------- --------------------------------
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:
Common Stock - .001 Par Value
-----------------------------
(TITLE OF CLASS)
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PART 1
ITEM 1
DESCRIPTION OF THE BUSINESS
BUSINESS DEVELOPMENT
ORGANIZATION
Dicut, Inc. was incorporated in Delaware on May 31, 1994 for the purpose of
developing and marketing a residential Hydronic Low Pressure Heating and Air
Conditioning system ("Hydronic LPHVAC") that would operate at lower pressure
levels than large commercial systems. During December 1997 and January 1998, the
Company received its initial funding through the sale of common stock to
investors. From inception until December 1999, the Company had no material
operating activities. In December 1999, Management completed its development and
testing of the Company's Hydronic LPHVAC design. In January 2000 Management
decided to seek necessary capital in order to advance the Company's business
plan.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There have been no bankruptcy, receivership or similar proceedings.
REORGANIZATIONS, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
BUSINESS OF THE COMPANY
PRINCIPAL SERVICES AND MARKETS
The Company intends to become a major supplier of its proprietary Hydronic Low
Pressure Heating and Air Conditioning System ("Hydronic LPHVAC") to the
residential construction industry and the residential air conditioning repair
and replacement industry, first in California, and then throughout the United
States. The Company's target market includes single family residences,
condominiums, and apartment buildings. The Company's residential Hydronic LPHVAC
product is a heating and air conditioning system consisting of a trade secret
design for a gas fired temperature transfer generator that heats or chills an
aquas solution using natural gas, and a series of metal pipes, concealed
radiators, electric fans, and thermostats that set individual room temperatures.
The Company's Hydronic LPHVAC system is based on currently available large scale
commercial building hydronic systems that utilize high pressure techniques to
heat and cool large buildings. Unlike these large scale commercial hydronic
systems, the Company's residential Hydronic LPHVAC system has been designed with
a proprietary hydronic aquas temperature control system and operates at low
pressure levels that are
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approximately 70 PSI, comparable to residential interior water pipe pressure of
approximately 80 pounds PSI.
Fred McNorton developed the Hydronic LPHVAC system from 1994 through 1999. On
August 15, 1994 Mr. McNorton accepted the position of President of the Company.
On March 15, 1997, the Company signed an exclusive license agreement with its
President for use of his Hydronic LPHVAC design in exchange for 70,500
restricted shares of the Company's common stock. The number of shares issued was
based upon an estimate of the total costs incurred by Mr. McNorton for product
development and testing.
Based upon Management's experience in the residential construction industry and
in the design and manufacture of heating and cooling systems, the Company's
Hydronic LPHVAC system will offer contractors and owners of residential
dwellings the following advantages for heating and air conditioning
requirements:
The target price of the Company's proprietary new heating and air
conditioning system is estimated by Management to be eight to twelve
percent less than traditional systems installed in residential new
construction.
The installed cost to replace an existing residential heating and air
conditioning system with the Company's new Hydronic LPHVAC system is
estimated by management to be approximately six to eight percent less
than purchasing traditional replacement heating and air conditioning
systems. The Hydronic LPHVAC system may be easily retrofitted through
an existing building's central heating and air conditioning system and
in-wall air ducts.
The Company's Hydronic LPHVAC system is designed to primarily use
natural gas as its source of heating and cooling energy. Natural gas is
less expensive than electricity or heating oil as an energy source.
National average costs per one hundred thousand btu of useable heat are
$1.79 for electricity, $1.24 for heating oil, and $.95 for natural gas
((C)2000 warmair.com). In California, the target market for the first
two years of the Company's business plan, the cost of running a gas
based heating and air conditioning system is about $.60 per hour
compared to an all electric system of about $1.40 per hour ((C)2000
sdge.com/energy).
The Company's Hydronic LPHVAC system incorporates design features that
maintain low pressure levels in all components for safety and building
code compliance for residential applications. The Hydronic LPHVAC
system consists of a proprietary design for a gas fired temperature
transfer generator that utilizes a self-contained constant temperature
fluid bath and aquas fluid mixture that maintains temperature within
plus or minus five degrees of any temperature setting between thirty
eight degrees and one hundred fifty degrees Fahrenheit. The aquas fluid
mixture is an integral part of the design which functions to maintain
the bath temperatures. The aquas fluid mixture is an important
intellectual property of the company and is protected by trade secret
laws. Traditional heating and air conditioning systems, engineered to
maintain temperature fluctuations of plus or minus ten degrees, use
more energy as they repeatedly correct for wider temperature variances.
A key feature of The Company's Hydronic LPHVAC system allows individual
rooms
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within a residential building to be adjusted for temperature variances
up to ten degrees instead of a traditional system of heating or cooling
the building to only one temperature setting. Thus the rooms on the
side of a building facing the sun may be cooled more than the rooms on
the shady side of the building.
The Company's trade secret Hydronic LPHVAC constant temperature
controller and aquas bath system was designed to utilize existing
off-the-shelf components such as heating and electrical parts used in
gas furnaces, low pressure pipes, radiators, electric fans and
thermostats, all of which are available in building code approved
formats.
The Company has a current business plan which proposes to utilize its founders'
backgrounds to develop its business from the current design stage into a unique
affordable alternative to residential contractors for their new residential HVAC
and replacement HVAC needs.
The business plan requires the Company during the first two quarters to raise
capital of $5,000,000 through the sale of common stock in a private placement.
During the third quarter, after raising capital, the Company intends to utilize
subcontract manufacturers in California to begin production of its proprietary
residential Hydronic LPHVAC system for sale in California. The Company intends
to expend $2,500,000 for subcontractor production of its proprietary residential
Hydronic LPHVAC system, $75,000 for a marketing manager, $75,000 for two
salesmen, $30,000 for two office clerical employees, $20,000 for set-up and
maintenance of the Company's web site, $500,000 for advertising, $50,000 for
purchase of computers and fixed assets, and $75,000 for rent and other operating
expenses.
DISTRIBUTION METHODS OF PRODUCTS OR SERVICES
For the first two years of its business plan, the Company will advertise its
products through direct mailings to all major plumbing, heating, and air
conditioning companies in California. In addition, the Company will advertise
weekly in medium to large city construction newspapers and in developer,
construction, and plumbing trade journals throughout California. The Company
intends to offer information on its product to prospective contractor and
homeowner customers on its web site, www.hydronicsamerica.com, which will
feature product information and local plumbing contractors who will sell and
service the Company's Hydronic LPHVAC systems.
Based upon Management's experience in the heating and air conditioning
manufacturing business and the construction business, the Company will sell its
complete residential Hydronic LPHVAC product in a range of approximately $2,100
for a 2,000 sq. ft. building to $30,000 for a 25,000 sq. ft. building. This
compares to traditional complete heating and air conditioning products priced in
a range of approximately $2,500 for a 2,000 sq. ft. building to $37,500 for a
25,000 sq. ft. building per information from the Air Conditioning &
Refrigeration Institute ((C)2000 ari.org). These selling prices are for all
components including controls and air ducts, but exclude installation labor
which is approximately $1.25 to $1.50 per sq. ft. for the Company's Hydronic
LPHVAC product, the same installation labor price for traditional heating and
air conditioning systems.
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PLANNED NEW PRODUCT OR SERVICE
The Company has no new product or service planned or announced to the public.
COMPETITION AND COMPETITIVE POSITION
The size and financial strength of the Company's primary competitors,
traditional residential heating and air conditioning manufacturers, Carrier,
Rheem, Trane, and Lennox are substantially greater than those of the Company.
The Company intends to compete against these manufacturers by offering a product
that is approximately the same cost to install, but is less costly to run than
their systems. There are major competitors for large commercial building
hydronics systems, such as Kitec and Bio-Radiant Energy, Inc. However, none of
the current hydronics systems manufacturers offer products that incorporate the
Company's trade secret low pressure constant temperature features designed to
handle residential heating and air conditioning requirements in compliance with
building codes. The Company's competitors have longer operating histories,
larger customer bases, and greater brand recognition than the Company.
Management is not aware of any significant barriers to the Company's entry into
the residential heating and air conditioning manufacturing market, however, the
Company at this time has no market share of this market.
SUPPLIERS AND SOURCES OF RAW MATERIALS
Management will rely on their combined experience and knowledge in the heating
and air conditioning manufacturing and construction businesses to arrange for
the manufacturer of its hydronic parts. The Company will utilize hydronic parts
manufacturers to produce and assemble its Hydronic LPHVAC product. While the
Company has no current contracts with hydronic parts manufacturers, Management
is aware of manufacturers and suppliers such as Sparco Hydronic Heating,
Plumbing, and Energy Products, Amtrol, Inc. and Haydon Thermogenic. Management
is aware that general manufacturing costs for its Hydronic LPHVAC product
currently average approximately fifty percent of its projected wholesale selling
price. The Company will enter into agreements with manufacturers and suppliers
per its business plan after raising capital during the first six months of its
plan.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
The Company will not depend on any one or a few major customers. The Company's
target market for the first two years of its business plan will be California
heating and air conditioning units installed in new housing starts and
replacement units for housing over fifteen years old. This market is served by
heating and air conditioning contractors in California estimated by Management
at over six thousand throughout the State. According to United States Census
Bureau housing data (census.gov/const) for residences of one to four units,
California averaged the following new construction starts per year:
<TABLE>
<CAPTION>
Time Period Average Number of New Housing Starts Per Year
<S> <C>
1980 - 1989 199,355
</TABLE>
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<TABLE>
<S> <C>
1990 - 1998 74,000
1999 103,888
</TABLE>
California's existing housing units total over 8,500,000 built before 1990 per
United States Census Bureau housing data (census.gov/const). Based upon an
average life for heating and air conditioning systems of fourteen to fifteen
years (Air Conditioning & Refrigeration Institute - (C)2000 ari.org), the
Company will target this large potential replacement market with its Hydronic
LPHVAC product. After the first two years of marketing in California, the
Company intends to expand into the national heating and air conditioning market.
The national residential housing market that the Company will target with its
Hydronic LPHVAC system includes single family residences, condominiums, and
apartment buildings averaging over 1,000,000 new housing starts per year, for a
total national market of existing units over 47,000,000 built since 1959 per
United States Census Bureau housing data (census.gov/const).
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, LABOR
CONTRACTS
The Company has setup its first web page "hydronicsamerica.com", and will expand
its web site in the third quarter of 2000. The Company has no current plans for
any additional registrations such as patents, trademarks, copyrights,
franchises, concessions, royalty agreements or labor contracts at this time. The
Company will assess the need for any additional copyright, trademark or patent
applications on an ongoing basis. The Hydronic LPHVAC system consists of a
proprietary design for a gas fired temperature transfer generator that utilizes
a self- contained constant temperature fluid bath and aquas fluid mixture that
maintains temperature within plus or minus five degrees of any temperature
setting between thirty eight degrees and one hundred fifty degrees Fahrenheit.
The aquas fluid mixture an integral part of the design which functions to
maintain the bath temperatures. The aquas fluid mixture is an important
intellectual property of the company and is protected by trade secret laws.
On March 15, 1997, the Company signed an exclusive license agreement with its
President for use of his Hydronic LPHVAC design in exchange for 70,500
restricted shares of the Company's common stock. The Company issued 70,500
shares of its common stock in exchange for a ten year exclusive right to
development, manufacturing, marketing, sale, sublicensing, and any and all
usages of the Hydronic LPHVAC design in the United States and throughout the
world. After ten years the license is subject to automatic renewal each year
thereafter, subject to written notification, sixty days in advance to the
renewal, by both parties of the license agreement.
REQUIREMENTS FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
The Company is not required to apply for or have any government approval for its
products or services.
EFFECT OF GOVERNMENTAL REGULATIONS ON THE COMPANY'S BUSINESS
The Company's business is not subject to material regulation by federal
governmental agencies. The Company will be required to meet all state and local
governmental building codes and standards for the manufacturer of its
residential Hydronics HVAC product.
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Management personnel are familiar with all California state and local building
codes, plumbing and health department regulations, and contractor licensing
requirements.
RESEARCH AND DEVELOPMENT FUNDING DURING THE LAST TWO YEARS
The Company has not expended funds for research and development costs since
inception.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
Environmental regulations have had no materially adverse effect on the Company's
operations to date, but no assurance can be given that environmental regulations
will not, in the future, result in a curtailment of service or otherwise have a
materially adverse effect on the Company's business, financial condition or
results of operation. Public interest in the protection of the environment has
increased dramatically in recent years. The trend of more expansive and stricter
environmental legislation and regulations could continue. To the extent that
laws are enacted or other governmental action is taken that imposes
environmental protection requirements that result in increased costs, the
business and prospects of the Company could be adversely affected.
The Company's business plan allows for maintaining insurance coverage against
certain environmental liabilities, but there can be no assurance that such
insurance will continue to be available or carried by the Company or, if
available and carried, will be adequate to cover the Company's liability in the
event of a catastrophic occurrence.
NUMBER OF EMPLOYEES
The Company's only current employees are its two officers who will devote as
much time as the board of directors determines is necessary to manage the
affairs of the Company. The officers intend to work on a full time basis when
the Company raises capital per its business plan. The Company intends to hire
five new full time employees during the first twelve months of its business
plan.
REPORTS TO SECURITY HOLDERS
The Company's bylaws do not require the Company to deliver an annual report to
its shareholders and the Company has not in the past provided an annual report
to its shareholders. The Company is voluntarily filing this Form 10-SB in order
to make its financial information equally available to any interested parties or
investors. The Company will be subject to the disclosure rules of Regulation S-B
for a small business issuer under the Securities Exchange Act of 1934. The
Company anticipates it will become subject to disclosure filing requirements
effective sixty days after the date the Securities and Exchange Commission
accepts its original Form 10-SB filing, and, after that date, will be required
to file Form 10-KSB annually and Form 10-QSB quarterly. In addition, the Company
will be required to file Form 8 and other proxy and information statements from
time to time as required.
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<PAGE> 8
The public may read and copy any materials the Company files with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street NW, Washington D. C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC.
RISKS
While Management believes its estimates of projected occurrences and events are
within the timetable of its business plan, there can be no guarantees or
assurances that the results anticipated will occur.
The Company's long-term viability is substantially dependent upon the widespread
acceptance of its residential Hydronics HVAC product. There is no historic
evidence that this type of new product will be accepted by the Company's
end-user, the residential home market or by the construction industry. The
potential lack of acceptance by purchasers of residential HVAC products could
have a material adverse effect upon the Company's business, financial condition,
operating results and cash flows.
The Company's performance and future operating results are substantially
dependent on the continued service and performance of its current Management.
The Company intends to hire a relatively small number of additional technical
and marketing personnel in the next year. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to retain
its essential employees or that it will be able to attract or retain
highly-qualified technical and managerial personnel in the future. The loss of
the services of any of the Company's current Management or other key employees
or the inability to attract and retain the necessary technical, and marketing
personnel could have a material adverse effect upon the Company's business,
financial condition, operating results and cash flows.
The current officers, Mr. McNorton and Mr. Davis, are the sole officers and
directors of the company and have control in directing the activities of the
company. Both officers are involved in other business activities and may, in the
future, become involved in additional business opportunities. If a specific
business opportunity becomes available, the officers and directors of the
company may face a conflict of interest. The Company has not formulated a plan
to resolve any conflicts that may arise. While the Company and its sole officers
and directors have not formally adopted a plan to resolve any potential or
actual conflicts of interest that exist or that may arise, they have verbally
agreed to limit their roles in all other business activities to roles of passive
investors and devote full time services to the Company after the Company raises
capital of $5,000,000 through the sale of securities through a private placement
and is able to provide officers' salaries per its business plan.
While Management believes its estimates of projected occurrences and events are
within the timetable of its business plan, there can be no guarantees or
assurances that the results anticipated will occur. Investors in the Company
should be particularly aware of the inherent risks associated with the Company's
planned business. These risks include a lack of a proven
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<PAGE> 9
market for the Company's residential Hydronics HVAC product, lack of equity
funding, and the size of the Company compared to the size of its competitors.
Although Management intends to implement its business plan through the
foreseeable future and will do its best to mitigate the risks associated with
its business plan, there can be no assurance that such efforts will be
successful. Management has no liquidation plans should the Company be unable to
receive funding. Should the Company be unable to implement its business plan,
Management would investigate all options available to retain value for the
shareholders. Among the options that would be considered are: acquisition of
another product or technology, or a merger or acquisition of another business
entity that has revenue and/or long-term growth potential. However, there are no
pending or anticipated arrangements, understandings or agreements with outside
parties for acquisitions, mergers or any other material transactions
YEAR 2000 DISCLOSURE
For several years, users of computers in business applications were concerned
that time-sensitive software might cause their computer systems to recognize a
date using "00" as the year 1900 rather than the year 2000. This date error
problem was expected to cause computer system errors adversely affecting normal
business activities in the first weeks of 2000.
The Company's business plan directs the purchase of computer equipment and
software during the second half of 2000. The Company's Management has hands-on
familiarity with all of the software that will be utilized in its business plan
and has experienced no Year 2000 related systems problems as of the date of this
filing. Management has discussed Year 2000 computer systems issues with proposed
goods and services suppliers for the Company's business plan and they have
confirmed their computer related systems are already Year 2000 compatible.
Management's sole Year 2000 compliance plan is to purchase computer systems and
software which are already Year 2000 compatible. Other than the aforementioned
plan, Management has no current or contemplated Year 2000 contingency plans
related to Year 2000 compliance problems.
ITEM 2
PLAN OF OPERATION
The Company's current cash balance is $9200.00. Management believes the current
cash balance is sufficient to fund the current minimum level of operations
through the second quarter of 2000, however, in order to advance the Company's
business plan the Company must raise capital through the sale of equity
securities. To date, the Company has sold $9200.00 in equity securities. Sales
of the Company's equity securities have allowed the Company to maintain a
positive cash flow balance.
Management has made initial progress in implementing its business plan by
obtaining an exclusive licence for the use of the HVAC proprietary design,
registering its Internet domain name on the Internet, and opening its own web
page on the Internet. The Company will only be able to continue to advance its
business plan after it receives capital funding through the sale of equity
securities. After raising capital, Management intends to hire employees, rent
commercial
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space in San Diego, and begin production and marketing of its residential
Hydronics LPHVAC product. The Company intends to use its equity capital to fund
the Company's business plan during the next twelve months as cash flow from
sales is not estimated to begin until year two of its business plan. The Company
will face considerable risk in each of its business plan steps, such as
difficulty of hiring competent personnel within its budget, longer than
anticipated time for subcontractors to manufacture its residential Hydronics
LPHVAC product, and a shortfall of funding due to the Company's inability to
raise capital in the equity securities market. If no funding is received during
the next twelve months, the Company will be forced to rely on its existing cash
in the bank and funds loaned by the directors and officers. The Company's
officers and directors have no formal commitments or arrangements to advance or
loan funds to the Company. In such a restricted cash flow scenario, the Company
would be unable to complete its business plan steps, and would, instead, delay
all cash intensive activities. Without necessary cash flow, the Company may be
dormant during the next twelve months, or until such time as necessary funds
could be raised in the equity securities market.
There are no current plans for additional product research and development. The
Company plans to purchase approximately $50,000 in furniture, computers, and
software during the next twelve months from proceeds of its equity security
sales. The Company's business plan provides for an increase of five employees
during the next twelve months.
ITEM 3
DESCRIPTION OF PROPERTY
The Company's principal executive office address is 12140 Cotorro Way, San
Diego, CA 92128. The principal executive office and telephone number are
provided by an officer of the corporation. The costs associated with the use of
the telephone and mailing address were deemed by management to be immaterial as
the telephone and mailing address were almost exclusively used by the officer
for other business purposes. Management considers the Company's current
principal office space arrangement adequate until such time as the Company
achieves its business plan goal of raising capital of $5,000,000 and then begins
hiring new employees per its business plan.
ITEM 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information on the ownership of the Company's
voting securities by Officers, Directors and major shareholders as well as those
who own beneficially more than five percent of the Company's common stock
through the most current date - February 29, 2000:
<TABLE>
<CAPTION>
Title Of Name & Amount & Percent
Class Address Nature of owner Owned
<S> <C> <C> <C>
Common Fred McNorton 3,172,500(a) 38%
12140 Cotorro Way
San Diego, CA 92128
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Common Richard Davis 1,057,500(b) 13%
12140 Cotorro Way
San Diego, CA 92128
Total Shares Owned by Officers & Directors
As a Group 4,230,000 51%
</TABLE>
(a) Mr. McNorton received 70,500 shares of the Company's common stock on March
15, 1997 for a license agreement related to the Company's business plan.
3,102,000 shares of the Company's common stock were issued to him per a 45 for 1
stock split on January 15, 2000.
(b) Mr. Davis received 23,500 shares of the Company's common stock on March 15,
1997 for administrative services and services related to the Company's business
plan. 1,034,000 shares of the Company's common stock were issued to him per a 45
for 1 stock split on January 15, 2000.
ITEM 5
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The Directors and Officers of the Company, all of those whose one year terms
will expire 3/31/01, or at such a time as their successors shall be elected and
qualified are as follows:
<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected Term Expires
<S> <C> <C> <C> <C>
Fred McNorton 60 President, 9/15/94 3/31/01
12140 Cotorro Way Director
San Diego, CA 92128
Richard Davis 41 Secretary, 9/15/94 3/31/01
12140 Cotorro Way Treasurer,
San Diego, CA 92128 Director
</TABLE>
Each of the foregoing persons may be deemed a "promoter" of the Company, as that
term is defined in the rules and regulations promulgated under the securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, or any
regulatory agency
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permanently or temporarily enjoining, barring suspending or otherwise limiting
him from acting as an investment advisor, underwriter, broker or dealer in the
securities industry, or as an affiliated person, director or employee of an
investment company, bank, savings and loan association, or insurance company or
from engaging in or continuing any conduct or practice in connection with any
such activity or in connection with the purchase or sale of any securities.
No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.
RESUMES
Fred McNorton, President & Director
<TABLE>
<S> <C>
1999 - Current President, Real Estate Consulting Group, Inc.,
responsible for operations and marketing of company
specializing in construction inspection in Southern
California.
1997 - 1999 Director of Manufacturing, Williams Materials
Corporation, Colton, California, responsible for
manufacturing, purchasing, product distribution,
personnel - over 370 employee manufacturing firm
specializing in heating and air handling systems.
1988 - 1997 Director of Operations, Temtex Industries, Perris,
California, responsible for manufacturing, product
distribution, personnel - over 140 employee
manufacturing firm specializing in wood and gas
fireplace systems.
1959 - 1997 BS Mathematics, University of Louisville, MBA
studies, University of Louisville, Engineering
studies, Purdue University, Finance and Accounting
studies, Wartburg College.
Richard Davis, Secretary, Treasurer & Director
1995 - Current Order Coordinator, Ninteman Construction, San Diego,
California, largest commercial contractor in San
Diego, responsible for scheduling, purchasing,
logistics of construction materials and equipment for
an average of thirty five concurrent large scale
commercial construction projects.
1984 - 1995 General Contractor, San Diego, California, owned and
managed construction firm specializing in small
commercial projects and residential home
construction.
</TABLE>
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ITEM 6
EXECUTIVE COMPENSATION
The company's current officers receive no compensation.
Summary Compensation Table
<TABLE>
<CAPTION>
Other
Name & annual Restricted LTIP All other
principle Salary Bonus compen- stock Options Payouts compen-
position Year ($) ($) sation ($) awards ($) SARs ($) sation ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
F McNorton 1996 -0- -0- -0- -0- -0- -0- -0-
President 1997 -0- -0- -0- 7,050 -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
R Davis 1996 -0- -0- -0- -0- -0- -0- -0-
Secretary 1997 -0- -0- -0- 2,350 -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
There are no current employment agreements between the Company and its executive
officers.
The Board agreed to pay Mr. McNorton 70,500 shares of common stock for an
exclusive license agreement on March 15, 1997. The stock was valued at the price
unaffiliated investors paid for stock sold by the Company, $.10 per share. On
January 15, 2000, 3,102,000 shares of the Company's common stock were issued to
him per a 45 for 1 stock split.
The Board agreed to pay Mr. Davis for administrative services and services
related to the Company's business plan 23,500 shares of the Company's common
stock on March 15, 1997. The stock was valued at the price unaffiliated
investors paid for stock sold by the Company, $.10 per share. On January 15,
2000, 1,034,000 shares of the Company's common stock were issued to him per a 45
for 1 stock split.
The terms of these stock issuances were as fair to the Company, in the Board's
opinion, as could have been made with an unaffiliated third party.
The officers currently devote an immaterial amount of time to manage the affairs
of the Company. The Directors and Principal Officers have agreed to work with no
remuneration until such time as the Company receives sufficient revenues
necessary to provide proper salaries to all Officers and compensation for
Directors' participation. The Officers and the Board of Directors have the
responsibility to determine the timing of remuneration for key personnel based
upon such factors as positive cash flow to include stock sales, product sales,
estimated cash expenditures, accounts receivable, accounts payable, notes
payable, and a cash balance of not less than $25,000 at each month end. When
positive cash flow reaches $25,000 at each month end and appears sustainable the
board of directors will readdress compensation for key personnel and enact a
plan at that time which will benefit the Company as a whole. At this time,
management cannot accurately estimate when sufficient revenues will occur to
implement
-13-
<PAGE> 14
this compensation, or the exact amount of compensation.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its subsidiaries, if any.
ITEM 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principal executive office and telephone number are provided by Mr.
McNorton, an officer of the corporation. The costs associated with the use of
the telephone and mailing address were deemed by management to be immaterial as
the telephone and mailing address were almost exclusively used by the officer
for other business purposes.
ITEM 8
DESCRIPTION OF SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of 20,000,000
Shares of Common Stock, .001 par value per share. There is no preferred stock
authorized. Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of Common Stock
have cumulative voting rights. Holders of shares of Common Stock are entitled to
share ratably in dividends, if any, as may be declared, from time to time by the
Board of Directors in its discretion, from funds legally available therefor. In
the event of a liquidation, dissolution, or winding up of the Company, the
holders of shares of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of Common Stock have
no preemptive or other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such shares. All of the
outstanding Common Stock is, and the shares offered by the Company pursuant to
this offering will be, when issued and delivered, fully paid and non-assessable.
The Securities and Exchange Commission has adopted Rule 15g-9 which established
the definition of a "penny stock", for the purposes relevant to the Company, as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require:
(i) that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction.
-14-
<PAGE> 15
Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
PART II
ITEM 1
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The Company plans to file for trading on the OTC Electronic Bulletin Board which
is sponsored by the National Association of Securities Dealers (NASD). The OTC
Electronic Bulletin Board is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network which provides
information on current "bids" and "asks" as well as volume information.
As of the date of this filing, there is no public market for the Company's
securities. As of February 29, 2000, the Company had 73 shareholders of record.
The Company has paid no cash dividends. The Company has no outstanding options.
The Company has no plans to register any of its securities under the Securities
Act for sale by security holders. There is no public offering of equity and
there is no proposed public offering of equity.
ITEM 2
LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.
ITEM 3
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
CONTROL AND FINANCIAL DISCLOSURE
None.
ITEM 4
RECENT SALES OF UNREGISTERED SECURITIES
On March 15, 1997, the shareholders authorized the issuance of 70,500 shares of
common stock to Mr. McNorton for a license agreement related to the Company's
business plan and 23,500 shares to Mr. Davis for administrative services and
services related to the Company's business plan for a total of 94,000 Rule 144
shares. The Company relied upon Section 4(2) of
-15-
<PAGE> 16
Securities Act of 1993, as amended (the "Act"). The Company issued the shares in
satisfaction of management services rendered to officers and directors, which
does not constitute a public offering.
From the period of approximately December 1, 1997 until January 31, 1998, the
Company offered and sold 92,000 shares at $0.10 per share to non-affiliated
private investors. The Company relied upon Section 4(2) of the Securities Act of
1993, as amended (the "Act"). Each prospective investor was given a private
placement memorandum designed to disclose all material aspects of an investment
in the Company, including the business, management, offering details, risk
factors and financial statements. Each investor also completed a subscription
confirmation letter and private placement subscription agreement whereby the
investors certified that they were purchasing the shares for their own accounts,
with investment intent and that each investor was either "accredited", or were
"sophisticated" purchasers, having prior investment experience or education, and
having adequate and reasonable opportunity and access to any corporate
information necessary to make an informed investment decision. This offering was
not accompanied by general advertisement or general solicitation and the shares
were issued with a Rule 144 restrictive legend.
Under the Securities Act of 1933 , all sales of an issuers' securities or by a
shareholder, must either be made (i) pursuant to an effective registration
statement filed with the SEC, or (ii) pursuant to an exemption from the
registration requirements under the 1933 Act.
Rule 144 under the 1933 Act sets forth conditions which if satisfied, permit
persons holding control securities (affiliated shareholders, i.e., officers,
directors or holders of at least ten percent of the outstanding shares) or
restricted securities (non-affiliated shareholders) to sell such securities
publicly without registration. Rule 144 sets forth a holding period for
restricted securities to establish that the holder did not purchase such
securities with a view to distribute. Under Rule 144, several provisions must be
met with respect to the sales of control securities at any time and sales of
restricted securities held between one and two years. The following is a summary
of the provisions of Rule 144: (a) Rule 144 is available only if the issuer is
current in its filings under the Securities an Exchange Act of 1934. Such
filings include, but are not limited to, the issuer's quarterly reports and
annual reports; (b) Rule 144 allows resale of restricted and control securities
after a one year hold period, subjected to certain volume limitations, and
resales by non-affiliates holders without limitations after two years; ( c ) The
sales of securities made under Rule 144 during any three-month period are
limited to the greater of: (i) 1% of the outstanding common stock of the issuer;
or (ii) the average weekly reported trading volume in the outstanding common
stock reported on all securities exchanges during the four calendar weeks
preceding the filing of the required notice of the sale under Rule 144 with the
SEC.
On January 15, 2000, the Board of Directors authorized a forward stock split of
45 for 1 resulting in a total of 8,370,000 shares of common stock issued and
outstanding.
ITEM 5
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws allow for the indemnification of Company Officers and
Directors in regard to their carrying out the duties of their offices. The
By-Laws also allow for reimbursement of certain legal defenses. As to
indemnification for liabilities arising under the
-16-
<PAGE> 17
Securities Act of 1933 for directors, officers or persons controlling the
Company, the Company has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and
unenforceable.
PART F/S
The audited financial statements of the Company for the years ended March 31,
1998 and 1999, and the period ended February 29, 2000 and related notes which
are included in this offering have been examined by Barry Friedman, CPA, and
have been so included in reliance upon the opinion of such accountants given
upon their authority as an expert in auditing and accounting.
-17-
<PAGE> 18
DICUT, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FEBRUARY 29, 2000
MARCH 31, 1999
MARCH 31, 1998
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE #
------
<S> <C>
INDEPENDENT AUDITORS REPORT F-1
ASSETS F-2
LIABILITIES AND STOCKHOLDERS' EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-11
</TABLE>
<PAGE> 20
[BARRY L. FRIEDMAN, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors March 1 , 2000
Dicut, Inc.
Poway, California
I have audited the accompanying Balance Sheets of Dicut, Inc. (A
Development Stage Company), as of February 29, 2000, March 31, 1999, and March
31, 1998, and the related statements of operations, stockholders' equity and
cash flows for the period April 1, 1999 to February 29, 2000, and the two years
ended March 31, 1999, and March 31, 1998. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Dicut, Inc. (A
Development Stage Company), as of February 29, 2000, March 31, 1999, and March
31, 1998, and the related statements of operations, stockholders' equity and
cash flows for the period April 1, 1999 to February 29, 2000, and the two years
ended March 31, 1999, and March 31, 1998, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ BARRY L. FRIEDMAN
- ---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
F-1
<PAGE> 21
DICUT, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
FEBRUARY 29, MARCH 31, MARCH 31,
2000 1999 1998
------------ --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS $9,200 $9,200 $9,200
------ ------ ------
TOTAL CURRENT ASSETS $9,200 $9,200 $9,200
------ ------ ------
OTHER ASSETS $ 0 $ 0 $ 0
------ ------ ------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------ ------ ------
TOTAL ASSETS $9,200 $9,200 $9,200
------ ------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-2
<PAGE> 22
DICUT, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FEBRUARY 29, MARCH 31, MARCH 31,
2000 1999 1998
------------ --------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES $ 0 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
-------- -------- --------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.00001
Authorized 20,000,000 shares
Issued and outstanding at
March 31, 1998 -
186,000 shares $ 2
March 31, 1999 -
186,000 shares $ 2
Common stock
Par value $0.001
Authorized 20,000,000 shares
Issued and outstanding at
February 29, 2000 -
8,370,000 shares $ 8,370
Additional Paid-In Capital +10,230 +18,598 +18,598
Deficit accumulated during
Development stage -9,400 -9,400 -9,400
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY $ 9,200 $ 9,200 $ 9,200
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,200 $ 9,200 $ 9,200
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE> 23
DICUT, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Year Year May 31, 1994
Ended Ended Ended (Inception)
Feb. 29, Mar. 31, Mar. 31, to Feb. 29,
2000 1999 1998 2000
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
EXPENSES
General, Selling and
Administrative $ 0 $ 0 $ 0 $ 9,400
---------- ---------- ---------- ----------
TOTAL EXPENSES $ 0 $ 0 $ 0 $ 9,400
---------- ---------- ---------- ----------
NET PROFIT/LOSS (-) $ 0 $ 0 $ 0 $ -9,400
---------- ---------- ---------- ----------
Net Profit/Loss (-)
per weighted share
(Note #1) $ NIL $ NIL $ NIL $ NIL
---------- ---------- ---------- ----------
Weighted average
Number of common
shares outstanding 8,370,000 8,370,000 8,370,000 8,370,000
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE> 24
DICUT, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Balance,
March 31, 1997 94,000 $ 1 $ 9,399 $ -9,400
January 31, 1998
Issued For Cash 92,000 1 9,199
Net loss year ended
March 31, 1998 0
--------- --------- --------- ---------
Balance,
March 31, 1998 186,000 $ 2 $ 18,598 $ -9,400
Net loss year ended
March 31, 1999 0
--------- --------- --------- ---------
Balance,
March 31, 1999 186,000 $ 2 $ 18,598 $ -9,400
October 25, 1999
Changed Par Value
From $0.00001
To $0.001 +184 -184
January 15, 2000
Forward Stock Split
45 for 1 8,184,000 +8,184 -8,184
Net Loss
April 1, 1999 to
February 29, 2000 0
--------- --------- --------- ---------
Balance,
February 29, 2000 8,370,000 $ 8,370 $ 10,230 $ -9,400
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE> 25
DICUT, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year May 31,1994
Ended Ended Ended (Inception)
Feb. 29, Mar. 31, Mar. 31, to Feb. 29,
2000 1999 1998 2000
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss $ 0 $ 0 $ 0 $ -9,400
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Issue Common Stock
For Services 0 0 0 +9,400
Changes in assets and
Liabilities 0 0 0 0
--------- --------- --------- ---------
NET CASH USED IN
OPERATING ACTIVITIES $ 0 $ 0 $ 0 $ 0
CASH FLOWS FROM
INVESTING ACTIVITIES 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of Common
Stock for Cash 0 0 +9,200 +9,200
--------- --------- --------- ---------
Net Increase (decrease) $ 0 $ 0 $ 0 $ 0
Cash,
Beginning of period 9,200 9,200 0 0
--------- --------- --------- ---------
Cash, End of Period $ 9,200 $ 9,200 $ 9,200 $ 9,200
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE> 26
DICUT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000, MARCH 31, 1999, and MARCH 31, 1998
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized MAY 31, 1994, under the laws of the State of
Delaware as DICUT, INC. The Company currently has no operations and in
accordance with SFAS #7, is considered a development company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits. For
the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are
considered to be cash equivalents. There are no cash equivalents
as of February 29, 2000.
F-7
<PAGE> 27
DICUT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 29, 2000, MARCH 31, 1999, and MARCH 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Reporting on Costs of Start-Up Activities
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities" which provides guidance on the financial
reporting of start-up costs and organization costs. It requires
most costs of start-up activities and organization costs to be
expensed as incurred. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. With the adoption of SOP 98-5,
there has been little or no effect on the company's financial
statements.
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of February 29, 2000, the Company had no dilative
common stock equivalents such as stock options.
F-8
<PAGE> 28
DICUT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 29, 2000, MARCH 31, 1999, and MARCH 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year End
The Company has selected March 31st as its fiscal year-end.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended February 29,
2000, due to the net loss and no state income tax in Delaware, the state
of the Company's domicile and operations. The Company's total deferred
tax asset as of March 31, 1999 is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $100
Valuation allowance $100
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward will expire in 2015.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
F-9
<PAGE> 29
DICUT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 29, 2000, MARCH 31, 1999, and MARCH 31, 1998
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of 20,000,000
shares with a par value $0.001 per share.
Preferred Stock
Dicut, Inc. has no preferred stock.
On August 15, 1994, the Company issued 94,000 shares of its $0.00001 par
value common stock in consideration of $0.10 per-share ($9,400.00) to
its directors.
On January 31, 1998, the Company issued 92,000 shares of its $0.00001
par value common stock for cash of $9,200.
On October 25, 1999, the State of Delaware approved the Company's
restated Articles of Incorporation, which changed the par value from
$0.00001 to $0.001.
On January 15, 2000, the Company approved a forward stock split on the
basis of 45 for 1, thus increasing the common stock from 186,000 shares
8,370,000 shares.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. The stockholders/officers and/or directors
have informally committed to advancing the operating costs of the
Company interest free.
F-10
<PAGE> 30
DICUT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 29, 2000, MARCH 31, 1999, and MARCH 31, 1998
NOTE 6 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
share of common stock.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have
not been reflected therein. The officers and directors of the Company
are involved in other business activities and may in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
F-11
<PAGE> 31
PART III
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization or liquidation None
Exhibit 3(i) Articles of Incorporation Included
Exhibit 3(ii) Bylaws Included
Exhibit 4 Instruments defining the rights of holders None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Licensing Agreement Included
Exhibit 11 Statement re: computation of per share earnings See Financial Stmts.
Exhibit 16 Letter on change of certifying accountant None
Exhibit 21 Subsidiaries of the registrant None
Exhibit 23 Consent of experts and counsel Included
Exhibit 24 Power of Attorney None
Exhibit 27 Financial Data Schedule Included
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dicut, Inc.
Date March 28, 2000 By /s/ Fred McNorton
---------------------- --------------------------------------
Fred McNorton, President & Director
Date March 28, 2000 By /s/ Richard Davis
---------------------- --------------------------------------
Richard Davis, Sec., Treas. & Director
<PAGE> 1
EXHIBIT 3(i)
Page 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
- --------------------------------------------------------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "DICUT, INC.", FILED IN THIS OFFICE ON
THE THIRTY-FIRST DAY OF MAY, A.D. 1994, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] /s/ WILLIAM T. QUILLEN
--------------------------------------
William T. Quillen, Secretary of State
2406811 8100 Authentication: 7135069
944096932 Date: 05-31-94
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
DICUT, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting business and promoting the purposes hereinafter
stated, under the provision and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is called Dicut, Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, City of Dover, County of Kent; and the name of the register
agent of the corporation in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is Twenty Million (20,000,000), all of which are of a
par value of $.00001 dollars each. All such shares are of one class and are
shares of Common stock.
FIFTH: The name and mailing address of the incorporator are as follows:
NAME ADDRESS
J. Klein 18200 Von Karman
Suite 100C
Irvine, CA 92715
SIXTH: The corporation is to have perpetual existence.
<PAGE> 3
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholder of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs
of the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the
Bylaws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the
total number of directors which the corporation would have if
there were to be no vacancies. No election of directors need be
made by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in
accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware, and, after the
corporation has received any payment for any of its stock, the
power to adopt, amend, or repeal,
<PAGE> 4
the Bylaws of the corporation may be exercised by the Board of
Directors of the corporation, provided, however, that any
provision for the classification of directors of the corporation
for staggered terms pursuant to the provisions of subsection (d)
of Section 141 of the General Corporation Law of the State of
Delaware shall be set forth in an initial Bylaw or in a Bylaw
adopted by the stockholders entitled to vote of the corporation
unless provision for such classification shall be set forth in
this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to
issue more than one class of stock, no outstanding share of any
class of stock which is denied voting power under the provisions
of the certificate of incorporation shall entitle the holder
thereof to the right to vote at any meeting of stockholders
except as the provisions of paragraph (2) of subsection (b) of
Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any
such class which is otherwise denied voting power shall entitle
the holder thereof to vote upon the increase or decrease in the
number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all expenses, liabilities, or other matters referred to in or
covered by said section, and the indemnification provided for herein shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or
<PAGE> 5
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as 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.
ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the State of Delaware at the time in force may be added or
inserted in the manner and at the time prescribed by said laws, and all rights
at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
DATED: May 27, 1994
/s/ J KLEIN
------------------------------------
J. Klein, Incorporator
<PAGE> 6
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
- --------------------------------------------------------------------------------
I, EDWARD J. FREEL, SECRETARY OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF AMENDMENT OF "DICUT, INC.", FILED IN THIS OFFICE ON THE
TWENTY-FIFTH DAY OF OCTOBER, A.D. 1999, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEWCASTLE
COUNTY RECORDER OF DEEDS.
[SEAL] /s/ EDWARD J. FREEL
------------------------------------
Edward J. Freel, Secretary of State
2406811 8100 Authentication: 0045127
9441451908 Date: 10-26-99
<PAGE> 7
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/25/1999
991451908 - 2406811
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DICUT, INC.
- --------------------------------------------------------------------------------
DICUT, INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST; That the Board of Directors of said corporation at a meeting duly
convened and held, adopted the following resolution:
RESOLVED; That the Board of Directors hereby declares it is advisable
and in the best interests of the Company that Article Fourth of the Certificate
of Incorporation be amended to read as follows:
FOURTH: The total number of shares of stock which the corporation
is authorized to issue is Twenty Million shares (20,000,000) of
common stock with a par value of $.001 amounting to Twenty
Thousand dollars ($20,000.00).
SECOND; That said amendment has been consented to and authorized by the
holders of a majority of the issued and outstanding stock entitled to vote by
written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD; That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Fred H. McNorton, this 22nd day of October, 1999.
/s/ FRED H. MCNORTON
-----------------------------------
Fred H. McNorton, President
<PAGE> 1
EXHIBIT 3(ii)
BY-LAWS
OF
DICUT, INC.
------------------------
ARTICLE I
OFFICES
-------
1.1 Registered Office: The registered office shall be established
and maintained at and shall be the registered agent of the Corporation in
charge hereof.
1.2 Other Offices: The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board
of Directors may from time to time appoint or the business of the corporation
may require, provided, however, that the corporation's books and records shall
be maintained at such place within the continental United States as the Board
of Directors shall from time to time designate.
ARTICLE II
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the
stockholders of the corporation shall be held at such place or places, within
or outside the State of Delaware as may be fixed by the Board of Directors from
time to time or as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual
meeting of stockholders shall be held each year within five months after the
close of the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called
by the President or by the Chairman of the Board of Directors, or at the
request in writing by stockholders or record owning at least fifty (50%)
percent of the issued and outstanding voting shares of common stock of the
corporation.
By - Laws - 1
<PAGE> 2
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less than ten days not more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote at such meeting, written notice, served
personally by mail or by telegram, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Such notice, if mailed shall be deemed to be given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of voting stockholders, present in person or by proxy, may
adjourn the meeting from time to time without notice other than announcement at
the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board of
Directors.
(d) If an adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Chairman and Secretary of Meeting. The President, shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a
person to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
By-Laws - 2
<PAGE> 3
2.9 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote by
ballot at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer
presiding at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting
of stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During ordinary business hours, for a period of at least ten
days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting
is to be held.
(c) The list shall also be produced and kept at the time and
place of the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by
this Section 2.11 or the books of the corporation, or to vote in person or by
proxy at any meeting of stockholders.
2.12 Procedure as Stockholders' Meetings: Except as otherwise
provided by these by-laws or any resolutions adopted by the stockholders or
Board of Directors, the order of business and all other matters of procedure at
every meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any
annual or special meeting of stockholders, or any action which may be taken at
any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action to
be 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. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
By-Laws - 3
<PAGE> 4
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The
number of directors which shall constitute the Board of Directors shall be one
(1) unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not
be stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director may
resign his office at any time by delivering his resignation in writing to the
Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any
time by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors
may hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined by resolution of
the Board of Directors. No notice of such regular meetings shall be required.
If the date designated for any regular meeting be a legal holiday, then the
meeting shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting,
no notice thereof shall be required.
By-Laws - 4
<PAGE> 5
(d) Special Meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or
at the written request of any one director.
(e) The Secretary shall give notice to each director of any special
meeting of the Board of Directors by mailing the same at least three days
before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a statement of
the business to be transacted at, or the purpose of, any such meeting. Any and
all business may be transacted at any meeting of the Board of Directors. No
notice of any adjourned meeting need be given. No notice to or waiver by any
director shall be required with respect to any meeting at which the director is
present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Directors
shall constitute a quorum for the transaction of business; but if there shall
be less than a quorum at any meeting of the Board, a majority of those present
may adjourn the meeting from time to time. The vote of a majority of the
Directors present at any meeting at which a quorum is present shall be
necessary to constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or, in
his absence a member of the Board of Directors selected by the members present,
shall preside at meetings of the Board. The Secretary shall act as secretary of
the meeting, but in his absence the presiding officer may appoint a secretary of
the meeting.
3.7 Action by Consent Without Meeting: Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors,
or any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9 Committee: The Board of Directors shall, by resolution or resolutions
passed by a majority of Directors designate one or more committees, each of
such committees to consist of one or more Directors of the Corporation, for
such purposes as the Board shall determine. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee.
By-Laws - 5
<PAGE> 6
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time, and
from time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at the
pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such resignation
shall be made in writing and shall take effect at the time specified therein
or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at
any time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then
in office.
4.3 Duties: (a) President: The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect (unless any such
order or resolution shall provide otherwise), and in general shall perform all
duties incident to the office
By-Laws - 6
<PAGE> 7
of president and such other duties as may be prescribed by the Board of
Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody of
and be responsible for all funds and securities of the Corporation; (2) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever; (3) deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositories as shall be selected by
resolution of the Board of Directors; and (4) in general perform all duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. He shall,
if required by the Board of Directors, 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.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in
accordance with the provisions of these by-laws and as required by law; (3) 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 documents, the execution of
which on behalf of the corporation under its seal, is duly authorized; (4) keep
a register of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (5) have general charge of
stock transfer books of the Corporation; and (6) 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 by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation
shall be entitled to have a certificate signed by, or in the name of, the
corporation by the President and by the Treasurer or the Secretary, certifying
the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of issue.
By-Laws - 7
<PAGE> 8
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership: A record of the name and address of the
holder of such certificate, the number of shares represented thereby and the
date of issue thereof shall be made on the corporation's books. The corporation
shall be entitled to treat the holder of any share of stock as the holder in
fact thereof, and accordingly shall not be bound to recognized any equitable or
other claim to or interest in any share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made
on the books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates
representing shares of the stock of the corporation shall be issued in place of
any certificate alleged to have been lost, stolen or destroyed in such manner
and on such terms and conditions as the Board of Directors from time to time
may authorize.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock
of the corporation shall be transferable. The corporation may also maintain one
or more registry offices where such stock shall be registered. The Board of
Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of
Record: The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of the stockholders or any adjournment thereof, or the
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock, or to express consent to
corporate action in writing without a meeting, or in order to make a
determination of the stockholders for the purpose of any other lawful action.
Such record date in any case shall be not more than sixty days nor less than
ten days before the date of a meeting of the stockholders, nor more than sixty
days prior to any other action requiring such determination of the
stockholders. A determination of stockholders of record entitled to notice or
to vote at a meeting of stockholders shall apply to any adjournment
By-Laws - 8
<PAGE> 9
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation
(a) Any of the following officers, to wit, the President and the
Treasurer shall be, and they hereby are, authorized and empowered to transfer,
convert, endorse, sell, assign, set over and deliver any and all shares of
stock, bonds, debentures, notes, subscription warrants, stock purchase warrants,
evidence of indebtedness, or other securities now or hereafter standing in the
name of or owned by the corporation, and to make, execute and deliver, under the
seal of the corporation, any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of assignment
and transfer executed pursuant to and in accordance with the foregoing
paragraph (a), a certificate of the Secretary of the corporation in office at
the date of such certificate setting forth the provisions of this Section 6.2
and stating that they are in full force and effect and setting forth the names
of persons who are then officers of the corporation, then all persons to whom
such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date
of such certificate, to assume and to act in reliance upon the assumption that
the shares of stock or other securities named in such instrument were
theretofore duly and properly transferred, endorsed, sold, assigned, set over
and delivered by the corporation, and that with respect to such securities the
authority of these provisions of the by-laws and of such officers is still in
full force and effect.
By-Laws - 9
<PAGE> 10
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form and shall
have such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place
or purpose of any meeting of the stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers
and employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth
in subsections (a) and (b) of Section 145 of the Delaware General Corporation
Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by the
Board of Directors, the fiscal year of the corporation shall end on March 31st.
By-Laws - 10
<PAGE> 1
EXHIBIT 10
MANUFACTURING AND MARKETING
EXCLUSIVE LICENSE AGREEMENT
This Agreement made the 15th day of March, 1997.
BETWEEN:
FRED MCNORTON
an individual
(The "Licensor")
AND:
DICUT, INC.
a Corporation incorporated in the
State of Delaware
(The "Licensee")
WHEREAS:
A. The Licensor is the sole owner of proprietary technologies and "Know-how"
related to the Products hereinafter referred to as the "Properties;" and
B. The Licensor warranties that the Trade Secrets related to the Properties,
have been maintained as Trade Secrets and are afforded the protections under
trade secret laws; and
C. The Licensor further warranties that the Properties and the related Products
are free of any lien, encumbrance, joint-ownership, or prior commitment to a
third party;
D. The Licensor wishes to grant and the Licensee desires the exclusive rights to
the Products, including but not limited to the development, manufacturing,
marketing, sale, sublicensing, and any and all usages of the Products, in the
United States and throughout the world;
E. The Licensor wishes to grant and the Licensee desires the exclusive rights to
use the Properties, as well as Licensor's "Know-how", related to the
development, manufacturing, marketing, sale, sublicensing, and usage of the
Products, and any future products derived from the Properties, in the United
States and throughout the world;
<PAGE> 2
NOW THEREFORE, in consideration of the premises and mutual promises, terms and
conditions and other good and valuable considerations, the parties do hereby
agree as follows:
1. DEFINITIONS
For the purposes of the Agreement:
1.1 "Products" shall mean all licensed proprietary property, specified
in Exhibit A1;
1.2 "Properties" shall mean all proprietary intellectual properties,
encompassed in the Trade Secret, set forth in Exhibit A1;
1.3 "Know-how" shall mean secret processes, formulae, trade secrets,
engineering, design, process and operating information, inventions,
developments, technical data and other scientific and technical information
relating to any process or method now owned or controlled by the licensor or its
Affiliate relating in any way to the Products;
1.4 "Confidential Information": shall mean that part of the Technical
Information, whether written or oral which is:
1.41 not publicly known, and
1.42 annotated as "confidential" or "proprietary." Any
information which is not annotated as "confidential" or "proprietary" shall be
deemed to be in the public domain. In addition, "Confidential Information" shall
include information disclosed by either party to the other party in accordance
with (Modifications and/or Improvements of Products);
1.5 "Affiliate" whether of the Licensee or the Licensor, shall mean any
corporation, firm, association or other business owned or controlled
beneficially or directly or indirectly by the Licensee or the Licensor, by its
principal officers, directors, supervisory employees or members of their
families. Ownership of 50% or more of such business by any one of such persons
shall constitute beneficial ownership or control;
1.6 "Manufacturing Cost" shall mean the cost of the "Products" F.O.B.
the Licensee's manufacturing plant at point of shipment;
1.7 "Effective Date" shall mean the later of:
1.71 the date on which Licensor executes this Agreement,
1.72 the date on which Licensee executes this Agreement.
2. GRANT OF RIGHTS
<PAGE> 3
The Licensor grants the following rights to Licensee:
2.1 LICENSED TERRITORY
Exclusive Worldwide Rights: The Licensor grants the Licensee the
exclusive rights to the Products and the Properties in the United States and
throughout the world;
2.2 GRANTS RELATED TO LICENSOR'S PRODUCTS, PROPERTIES AND "KNOW-HOW"
2.21 Grants Related to Products. The Licensor grants the Licensee
the exclusive right to the Products, specified in Exhibit A1, including but not
limited, to the Licensee's rights to the development, manufacturing, marketing,
sale, sublicensing, and any and all usages of the Products, in the United States
and throughout the World.
2.22 Grants Related to Properties. The Licensor grants the
Licensee the exclusive right to use the Licensor's Properties, specified in
Exhibit A1, including but not limited, to the Licensee's rights to develop,
manufacture, market, sell and sublicense any and all products, having derived
and to be derived from the Properties, in the United States and throughout the
world;
2.23 Grants Related to "Know-how". The Licensor grants the
Licensee the exclusive right to the Licensor's "know-how" trade secrets, and
other technical information, related to the Products and the Properties, to be
conveyed to Licensee in confidence, upon the consummation of this Agreement.
3. CONSIDERATIONS TO LICENSOR
As considerations for the Grants, the Licensee agrees to provide the
Licensor with the following payments:
3.1 Equity Consideration
(i) 70,500 fully paid and non assessable shares of the Licensees'
Common stock with restrictions on sale.
4. TERMS AND CONDITIONS
4.1 TERMS AND CONDITIONS RELATED TO THE GRANTS TO LICENSEE
4.11 Development of Technology. The Licensor agrees to assist the
Licensee to conclude the negotiations on technologies under consideration as set
out in Exhibit A1, "Properties."
F-13
<PAGE> 4
4.12 Marketing and Manufacturing Perimeters. The Licensee, at its
own costs, shall manufacture and market the Products to potential client firms.
4.13 Best Effort by Licensee. The Licensee agrees to use its best
efforts and all due diligence to promote the sale of the product and other
products derived from the Properties, in all licensed territories;
4.14 Training and Technical Assistance. To assist Licensee in
exercising its rights hereunder, Licensor agrees to provide appropriate training
and technical assistance to Licensee, its employees and its permitted
sublicensees, in order for the Licensee to utilize the licensed technology
appropriately to their full potential. Such training and assistance shall be
provided by Licensor from time to time, for training purposes at Licensee's
facilities. Travel costs, lodging and all related expenses incurred by one
party, in connection with sending its employees or permitted sublicensees to the
other party's location, shall be paid in full by the party requesting the
training or technical assistance. However, the Licensee acknowledges hereunder
that said training obligation of the Licensor may be limited by the availability
of its training and technical personnel;
4.15 When to Disclose "Know-how" by Licensor. Commencing ten (10)
days after the execution of this Agreement, the Licensor agrees to make full
disclosure of its "know-how" to the Licensee's technical personnel, designated
by the Licensee. In addition, the Licensor agrees to promptly inform the
Licensee of any newly developed technical and trade "know-how", which the
Licensee is entitled to record confidentially with any available medium;
4.16 Terms for "Know-how" Disclosure. All disclosures and
instructions shall be made or given at the Licensor's locations, without cost to
the Licensee, provided, however, that at the Licensee's request, the Licensor
may from time to time send one of its qualified personnel for the purpose of
"know-how" disclosure, to the Licensee's location, at the request of the
Licensee, for not more than 15 days, the related costs of which shall be assumed
by the Licensee;
4.17 Confidentiality Maintained by Licensee. All disclosures of
the Licensor's "know-how" shall be confidential and shall be held confidentially
by the Licensee, without disclosure to a third party, and shall remain
confidential for a period of five years. This obligation of non-disclosure shall
not apply to any information, which is already known to the Licensee, at the
time of disclosure, or which is rightfully obtained from a third party without
obligation of confidence, or which is freely available in the public domain.
Licensee agrees that the Licensor has a proprietary interest in its Confidential
Information, provided to the Licensee. During the term of the Agreement and for
five years thereafter, all proprietary disclosures to the Licensee, its agents,
and employees shall be held in strict confidence by Licensee. Licensee shall
disclose the Confidential Information only to its agents and employees, to whom
the dissemination of confidential information is deemed necessary, in order to
properly carry out their duties, designated by the Licensee, in its execution of
the License. During the term of this Agreement and for five years thereafter,
Licensee shall not use the Confidential Information, except for the purposes of
exercising its rights and carrying out its duties hereunder. This provision of
the Agreement shall also apply to any consultants or subcontractors of the
Licensee,
<PAGE> 5
that Licensee may engage in connection with its execution of the License.
4.18 Product Quality Maintained by Licensee. In order to comply
with the Licensor's quality control standards, Licensee agrees to maintain the
quality of the Product, adhering to specific quality control standards, in all
aspects of manufacturing, that the Licensor may from time to time communicate to
the Licensee, with respect to certain product;
4.2 TERMS AND CONDITIONS RELATED TO THE CONSIDERATIONS TO LICENSOR
Interim Funding to Licensor. Licensee shall advance funds to the
Licensor, subject to written approval by the Licensee for services required of
the Licensor by the Licensee.
4.3 OTHER TERMS AND CONDITIONS
4.31 Ownership of New Product Development. The undersigned
mutually agree to the following ownership rights to new product development:
(a) Joint Ownership. Any invention, protectable by patent,
copyright or other legal proprietary protection, made or conceived during the
term of this Agreement, by one or more employees or consultants of the Licensor
jointly with one or more employees or consultants of the Licensee, shall be
jointly owned, of which the parties agree to grant the license of the related
invention(s) to each other without any payment, royalty or consideration. Title
to all related patents issued shall be jointly owned. All expenses incurred in
obtaining and maintaining such patents, shall be jointly shared. In the event
one of the parties declines to apply for a patent, or alternatively fails to pay
their portion of the patent costs, then the ownership of the patent shall be
held by that party, who wishes to file the patent and assumes the related
expenditures;
(b) Sole Ownership. Any invention, protectable by patent,
copyright or other legal proprietary protection made or conceived solely by the
employees or consultants of either party of the undersigned, shall become the
sole property of such party.
4.32 Right to Assign License Agreement. The Licensor and the
Licensee mutually agree not to assign the explicit rights of the Licensor or the
Licensee, as defined by this Agreement, in whole or part, to a third party,
whether by operation of law or otherwise, without the prior written consent of
the other party, except that either party may assign its rights hereunder to a
successor, subsidiary or affiliated corporation, without releasing the assignor
and the assignee, from the contractual responsibilities, stipulated hereunder.
Any assignment contrary to the terms hereof shall be null and void and of no
force or effect.
4.33 Non-Competition. The Licensor, during the term of this
Agreement agrees not to compete with the Licensee on the Licensed Products;
<PAGE> 6
5. WARRANTIES
5.1 LICENSOR'S WARRANTIES
5.11 Patents Maintained. The Licensor warranties that the Patents
and Patent Applications, related to the Properties, are current, updated, and
properly maintained with respective patent agencies, with jurisdiction over the
Patent and Patent Applications; and
5.12 Properties Without Other Commitment. The Licensor further
warranties that the Properties and the related Products are free of any lien,
encumbrance, joint-ownership, or prior commitment to a third party.
5.13 No Knowledge of Third Party Claims. Licensor represents and
warrants to Licensee that Licensor knows of no claim by any third party of
infringement by Licensor on such party's patent, trade mark, copyright, trade
secret or any other intellectual property rights in the Territory of the
Licensee.
5.2 LICENSEE'S WARRANTIES
5.21 Lawful Corporation. The licensee is a lawful U.S.
Corporation incorporated in the State of Nevada.
6. DEFENSE OF LICENSED INTELLECTUAL PROPERTIES
Pertaining to the infringement of patented licensed technology by a
third party, the Licensor of the technology and the Licensee shall together
determine whether to take any and all actions, legal or otherwise, which are
necessary to:
6.1 terminate infringements of any part of the Licensed Products;
or
6.2 terminate any attempt of imitation of any of the Licensed
Products, including without limitation, obtaining damages, injunction and all
other appropriate relief.
The legal costs of said intellectual property defense shall be
the responsibility of the Licensee and said Licensor. In addition, if the
defense is successful and damages are awarded by the court related to the
infringement, such damage award shall be shared equally between the Licensor and
the Licensee. However, if for any reason or for no reason, a party of the
undersigned elects not to incur the expenditure of the legal defense, and the
other party elects to carry solely said expenditure, then accordingly, the
damage award, if any, shall be received by the party which has incurred the
expenditure of the defense.
<PAGE> 7
7. INDEMNITY
7.1 Indemnity by Licensor
7.11 Except as provided in subsection 7.12 below, Licensor of the
technology shall defend and indemnify Licensee from and against any damages,
liabilities, costs and expenses, including reasonable attorney's fees and court
costs, arising out of any claim, involving Licensee's usages of the Licensed
Products, or manufacturing of the products, which infringe a valid intellectual
property right, or which represent a misappropriation of a trade secret of a
third party; provided, however, that:
7.11a Licensee shall have promptly submitted to said
Licensor the related written notice of infringement, along with reasonable
cooperation, information and assistance from the Licensee, in connection with
the case; and
7.11b The said Licensor shall have sole control and
authority with respect to the defense settlement, or compromise thereof;
7.12 The said Licensor shall have no liability or obligation to
Licensee under this Article with respect to any claim based upon:
7.12a Use of the Products by Licensee, its sublicensees or
its customers in an application or environment for which such Products were not
designed or contemplated; or
7.12b Modifications and/or improvements of the Products
introduced by Licensee, its permitted sublicensees or its customers.
7.13 In the event a claim is based partially on an indemnified
claim, described in subsection 7.11, and partially on an non-indemnified claim
described in subsection 7.12, any payments and reasonable legal fees incurred in
connection with such claim are to be apportioned between the parties in
accordance with the degree of cause attributable to each party.
7.2 INDEMNITY BY LICENSEE
7.21 Indemnity for Products. Licensee shall defend and indemnify
Licensor of the technology from and against any damages, liabilities, costs and
expenses, including any reasonable legal fee and court cost, arising out of
injuries or damages caused by the Products, which are not attributable to faulty
materials or workmanship in the manufacture, or the assembly of the Products by
the said Licensor and by the Licensee;
7.22 Offering Related Indemnity. The Licensee hereunder agrees to
indemnify and hold harmless the said Licensor, against any and all losses,
claims, damages, liabilities and expenses, including any litigation arising from
the Licensee's Offering, or involving the subject matter hereof, including but
not limited to litigation by the shareholders of
<PAGE> 8
the Licensee, upon the fulfillment of the Licensor's contractual duties, except
for willful default or negligence perpetrated by the Licensor, involving this
Agreement. The Licensee agrees to assume the sole responsibility toward its
investors, in all matters relating to the Offering.
8. DURATION AND TERMINATION
8.1 TERMS OF AGREEMENT
The Licensor shall offer the Grants to the Licensee, for a period
of ten (10) years, with automatic renewal each year thereafter, subject to
written notification, sixty (60) days in advance to the renewal, by both parties
of the undersigned.
8.2 TERMINATION FOR CAUSE
This Agreement may be terminated by a party of the undersigned,
by serving written notice of termination to the other party, which shall become
immediately effective upon the documented receipt of such notice of termination,
after the occurrence of any of the following events, unless a mutual remedy is
reached, by both parties of the undersigned in writing, to obviate the
termination, within ninety (90) days from the date of receipt of the notice by a
served party:
8.21 a material breach or default as to any obligation, specified
hereunder, by the Licensee or the Licensor, and the failure of the notified
party to promptly pursue a reasonable remedy to cure such material breach or
default; or
8.22 the filing of a petition in bankruptcy, insolvency or
reorganization by the Licensee or the Licensor, or the Licensee or Licensor
becoming the subject to a composition for creditors, whether by law or
agreement, or the Licensee or the Licensor going into receivership or otherwise
becoming insolvent; or
8.23 in the event of liquidation, caused by insolvency, the
Licensor and the Licensee hereunder agree to give the first right of refusal to
acquire the liquidation properties of the other, subject to the rulings of the
court on this matter.
8.3 AFTER TERMINATION OR EXPIRY
The parties hereto agree to the following conditions, once this
Agreement is terminated or expires:
8.31 Terminate Usage of Products and Properties by Licensee.
Licensee shall cease any use or practice of the Licensed Products and other
products involving the Properties; and upon termination or expiration of this
Agreement, all sublicenses granted by Licensee during the term of this Agreement
shall terminate. Licensee shall, at its own expense, return to Licensor all
Confidential Information as soon as practicable after the date of such
termination, including original documents, drawings, computer diskettes, models,
samples, notes, reports, notebooks, letters, manuals, prints, memoranda and any
copies which have been received
<PAGE> 9
by Licensee. All such Confidential Information shall remain the exclusive
property of Licensor during the term of this Agreement and for five (5) years
thereafter.
8.32 Payment Obligations for Unpaid Consideration to Licensor.
Upon termination of this Agreement, nothing shall be construed to release
Licensee from its obligations to pay Licensor any and all royalties or other
accrued but unpaid considerations due Licensor, incurred prior to the date of
such termination or expiration.
9. DISPUTE RESOLUTION
The Licensor and the Licensee agree mutually hereunder to submit any and
all unresolved disputes, related to this Agreement, firstly, to the American
Arbitration Board (or to a licensed arbitrator mutually agreed on by both
parties) and abide by the binding resolution of said arbitration. The venue, if
any, of said arbitration board shall reside in the State of Nevada. Since the
offices of the Licensor and the Licensee are situated at a considerable distance
from each other, to conserve time and costs, the Licensor and the Licensee agree
herein to conduct said arbitration by video conferencing, if permitted by the
arbitrator. The non-prevailing party in said arbitration shall be responsible
for the costs directly incurred by the arbitration, including but not limited to
the arbitrator's fees and telecommunication fees. In addition, the Licensor and
the Licensee agree mutually herein that any dispute arising from the Agreement
is limited to the compensatory (not punitive) considerations of this Agreement,
unless the disputes arise from some unanticipated factors based on criminal
negligence or criminal act committed by a party, or malicious and egregious
refusal to participate in the dispute arbitration by a party, in which case the
ruling of a competent court with jurisdiction over the matter shall be binding.
In the unlikely eventuality of the requirement of a court ruling, the venue of
said court action shall reside in the State of Nevada or alternatively, in the
city where the Licensee has its primary business. In said case, the ruling of a
competent court, in said venue, with jurisdiction over the matter shall be
binding;
10. SEVERABILITY
If any provision of this Agreement is held in whole or in part to be
unenforceable for any reason, the Licensor and the Licensee agree hereunder to
notify the other party immediately of said unenforceable provision(s) in the
Agreement, and to modify this Agreement accordingly to the benefit and consent
of both parties. Furthermore, if any provision of this Agreement is declared
invalid or unenforceable by a court having competent jurisdiction, it is
mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court. The parties shall consult and
use their best efforts to agree upon a valid and enforceable provision which
shall be a reasonable substitute for such invalid or unenforceable provision in
light of the intent of this Agreement.
11. FORCE MAJEURE
11.1 Either the Licensee or the Licensor shall be released from its
obligations, hereunder to the extent that performance thereof is delayed,
hindered or prevented by Force
<PAGE> 10
Majeure as defined below, provided that the party claiming hereunder shall
notify the other with all possible speed specifying the cause and probable
duration of the delay or non-performance and shall minimize the effects of such
delay or non-performance
11.2 Force Majeure means any circumstances beyond the reasonable control
of the affected party;
11.3 Without prejudice to the generality of Section 10.12a and without
being thereby limited, force majeure includes any one or more of the following:
acts or restraints of governments or public authorities; wars, revolution, riot
or civil commotion, strikes, lockouts or other industrial action; failure of
supplies of power or fuel; damage to the premises or storage facilities by
explosion, fire, corrosion, ionizing radiation, radio-active contamination,
flood, natural disaster, malicious or negligent act of accident; and breakdown
or failure of equipment whether of the affected party or others.
12. ENTIRE AGREEMENT, NO OTHER RELATION, COUNTERPARTS AND CORRESPONDENCE
ADDRESSES.
This Agreement contains the entire Agreement between the Licensor and
the Licensee. No other agreement, or promise made or before the effective date
of the Agreement will be binding on the parties. No modification or addendum to
this Agreement is valid, unless mutually endorsed and dated by both parties.
Nothing contained herein shall be deemed to create a joint venture, agency or
partnership relationship between the parties hereto. Neither party shall have
any power to enter into any contracts or commitments in the name of or on behalf
of the other party, or to bind the other party in any respect whatsoever, in
business outside of this Agreement. This Agreement may be executed in any number
of counterparts and by a different party hereto on separate counterparts, each
of which, when so executed, shall be deemed to be original and all of which,
when taken together, shall constitute one and the same Agreement.
The official correspondence addresses of the parties are:
THE LICENSOR: Fred McNorton
12140 Cotorro Way
San Diego, CA 92128
THE LICENSEE: Dicut, Inc.
1139 Terminal Way Ste 809
Reno, NV 89502
<PAGE> 11
IN WITNESS WHEREOF, the Licensor and the Licensee have executed this Agreement
on the day and the year first above-written.
BY: /s/ FRED MCNORTON Dated March 15, 1997
--------------------------------------- -------------------
Fred McNorton
BY: /s/ Richard Davis Dated 3/15/97
--------------------------------------- -------------------
Dicut, Inc.
Richard Davis Secretary
LISTS OF EXHIBITS
EXHIBIT A1 Description
<PAGE> 12
Hydronic HVAC for Residential & Small Commercial Buildings
Residential Hydronic Heating and Air Condition (HVAC) system to maintain single
temperature selection.
Concept: Use natural / propane gas as the fuel source to generate the HVAC
required for residential living using low cost energy to provide
air condition for individual rooms air requirements.
I System A Generator for temperature transfer
1A Fluid temperature conversion system
2A Safety valve and pilot; natural or propane gas
3A Burner; natural or propane gas
4A Constant temperature fluid bath; temperature range 38F - 150F
5A Temperature transfer coil from generator
6A Hydronic fluid temperature transfer coil to room air handler
units
7A Outer cabinet dimensions: 30"H x 20"W x 36"D
8A Circulating pump; low pressure
9A Safety thermal sensor
II System B Air Handler
1B Air in
2B Air out
3B Thermostat/fan speed control for each individual room
4B Heat exchange coil; 3 row x 6 rows
5B Squirrel cage fan; variable speed
6B Drain pan; with condensation line
7B Filter
8B Outer cabinet dimensions: 18"H x 16"W x 14"D
9B Circulating pumps
10B In and out for other units
III Piping All piping is copper or steel for low pressure fluid
lines. Drain or condensation lines are PVC or ABS plastic.
[DIAGRAM]
<PAGE> 1
EXHIBIT 23
[BARRY L. FRIEDMAN LETTERHEAD]
To Whom It May Concern: March 1, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of March 1, 2000, on the Financial
Statements of DICUT, INC., as of February 29, 2000, in any filings that are
necessary now or in the near future with the U.S. Securities and Exchange
Commission.
Very truly yours,
/s/ BARRY L. FRIEDMAN
- ---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR PERIOD ENDING FEBRUARY 29, 2000, FOR YEAR ENDING MARCH
31, 1999, AND FOR YEAR ENDING MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DICUT, INC. 10-SB.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> OTHER YEAR YEAR
<FISCAL-YEAR-END> MAR-31-2000 MAR-31-1999 MAR-31-1998
<PERIOD-START> APR-01-1999 APR-01-1998 APR-01-1997
<PERIOD-END> FEB-29-2000 MAR-31-1999 MAR-31-1998
<CASH> 9,200 9,200 9,200
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 9,200 9,200 9,200
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 9,200 9,200 9,200
<CURRENT-LIABILITIES> 0 0 0
<BONDS> 0 0 0
0 0 18,598
0 0 0
<COMMON> 8,370 2 2
<OTHER-SE> 10,230 18,598 0
<TOTAL-LIABILITY-AND-EQUITY> 9,200 9,200 9,200
<SALES> 0 0 0
<TOTAL-REVENUES> 0 0 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 0 0 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 0 0 0
<EPS-BASIC> .00 .00 .00
<EPS-DILUTED> .00 .00 .00
</TABLE>
