<PAGE>2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB
General Form for Registration of Securities of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ACT International, Inc.
(Exact name of Small Business Issuer in its charter)
NEVADA 87-06263223
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4035 South 300 West #6, Salt Lake City, Utah 84107
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (801) 281-3073
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Forward-Looking Statements and Associated Risk. This Registration
Statement contains forward-looking statements. These
forward-looking statements are based largely on ACT's
expectations and are subject to a number of risks and uncertainties,
certain of which are beyond ACT's control. Actual results
could differ materially from these forward-looking statements as a
result of the factors, including among others, regulatory or economic
influences.
<PAGE>3
ITEM 1. DESCRIPTION OF BUSINESS
On February 1, 1999, American Coating Technologies, Inc. entered into
an agreement with S.R.& T. Partnership, Alvin A. Snaper, Taylor Family
Limited Partnership, and Rothwell Trust. Pursuant to the agreement,
SRT, Snaper, Taylor and Rothwell transferred all right title and
interest in certain diamond coating technology represented by U.S.
patent, dated October 19, 1993, #5,254,237, developed by Snaper,
including all supplemental improvements thereto and/or to the Plasma
Arc Apparatus for producing diamond semiconductor devices or machine
tool coatings, in all applications, including without limitation, the
following: Low Temperature Titanium Nitride, Cobalt Nitride,
Chromium Nitride, Ferroelectric Coatings, Picsoeectric Coatings,
Diamond Hard Coatings, Diamond Semiconductor Substrates.
Pursuant to the agreement Snaper received 2,750,000 common shares,
Taylor received 1,125,000 common shares and Rothwell received
1,125,000 common shares. Additionally, ACT shall pay Snaper, Taylor
and Rothwell, each, on an annual basis, a royalty equal to 1.667
percent of the total gross revenues derived in any way by ACT and/or
its subsidiaries, sister corporations, affiliates and assigns, from
the technology (whether from royalties, rentals, sales, service
contracts, consulting contracts and/or any other source) during the
prior calendar year. The royalty payments shall be due and payable
on Feburary 15th for 51 years after the date of the agreement.
ACT also agreed that Snaper's interest in ACT will not be diluted to
less than 51% of the outstanding stock unless and until ACT has
completed one or more public underwritings, or otherwise obtains
financing, raising not less than a cumulative $2,000,000 at
approximately $13 to $15 per share.
Industry Overview. Chemical Vapor Deposition (CVD) is a process
designed to bond a thin coating of titanium nitride to the surface of
a metal tool or instrument. The tool to be coated must be heated to
extremely high temperatures in a vacuum chamber filled with reacting
chemical vapors. The titanium nitride produced by this method
increases the useful life of a cutting tool significantly.
Alvin A. Snaper developed Physical Vapor Deposition (PVD), a process
for low-temperature, smooth, thin-film coatings. This process is
carried out in a vacuum, and involves the use of several arc
evaporators positioned on the sides and top of the vacuum chamber that
serve as plasma generators. The coatings material is formed into a
cathode that is positioned in front of the arc evaporator. Then the
electrical arc that is generated causes minute evaporation of the
cathode into a high energy, concentrated plasma which is deposited on
the tool in the vacuum chamber.
Much of the CVD industry is concentrated in microelectronics, in
particular semiconductors. PVD is less concentrated and covers a
variety of industries such as information storage, packaging and
industrial coatings.
The highest volume usage of PVD in microelectronics is in the
fabrication of semiconductors. PVD is used routinely to deposit a
variety of films such as aluminum, titanium and titanium nitride, and
conductor metals.
The advantages of PVD in semiconductor fabrication are that it
provides uniform deposition of thin films and excellent coverage.
PVD can be used to deposit metals on interconnect levels. New
techniques such as collimated sputtering and ionized magnetron
technology have been added to improve efficiency for smaller geometry
devices.
Product. The patented Plasma Arc Diamond Coating process developed
by Mr. Snaper allows a surface to be coated at room temperature with
super-hard Diamond (DC) and Diamond-Like Coatings (DLC). This process
greatly expands (a) the types of materials that can be coated and (b)
the variety of applications now feasible for coating technology.
Testing by Mr. Snaper of these new compounds indicates that while
titanium nitride coating can increase the useful life of a tool by
600% or more, the diamond-like coating can further increase the useful
life of a tool by over 1000% as compared to titanium nitride coated
tools.
<PAGE>4
Diamond and diamond-like films have a unique combination of physical
characteristics that are not found in other materials. Diamond is
the hardest available material known and can be transparent. At room
temperature it is the best known thermal conductor, and it will
conduct heat five times better than copper. Diamond is also an
electrical insulator and becomes a semiconductor when controlled
quantities of impurities are introduced. Resistant to most chemicals
and radiation, diamond can become almost frictionless when it is
polished.
Due to these properties, diamonds have potential uses in many
commercial applications including electronic packaging materials to
improve the output and reliability of components, wet coatings to
extend the lives of cutting tools and transparent optical coatings to
protect sensitive lenses.
Markets
CVD Market
Eighteen companies account for 75% of the worldwide equipment sales
and services work in the Chemical Vapor Deposition (CVD) coatings
industry. Business Opportunity Report GB-185A, Thin Layer Deposition:
Highlighting CVD, by Robert Moran, Project Analyst, Business
Communications Company, Inc. (BBC), July 1998, pp. 31-32, 64, 72.
The main markets for CVD technology are in the fields of
microelectronics, cutting tools, automotive and aerospace parts and
medical instruments. Total CVD equipment sales worldwide is
projected to grow from $4.4 billion in 1995 to over $8.1 billion by
the year 2000. Total CVD services worldwide is expected to expand
from $449 million in 1995 to $697 million in 2000. Thin Layer
Deposition: Highlighting CVD, supra, pp. 85, 86, 93-96, 100-101, 106-
107, 114-115, 117, 130-132, 138, 150-151, 157.
PVD Market
Leading companies in the Physical Vapor Deposition (PVD) market
include most of the same companies that are prominent in CVD
technology. One reason for this is that in many cases, parts lending
themselves to coating services can be coated by either CVD or PVD.
Worldwide there are twenty-five companies combined for the CVD and PVD
equipment sales and services markets, and these companies account for
75% of the total sales. Business Opportunity Report GB-186B, Thin
Layer Deposition: Highlighting PVD, by Robert Moran, Project Analyst,
Business Communications Company, Inc. (BBC), September 1996, pp. 65-
67. The main markets for PVD technology are in microelectronics,
cutting tools, automotive and aerospace parts, flexible and specialty
packaging, information storage, optics and medical instruments.
However, the biggest market for PVD is expected to be in
semiconductors. PVD equipment sales worldwide are projected to grow
from $4.1 billion to 1995 to over $7.3 billion by the year 2000.
Total PVD services worldwide is expected to expand from $567 million
in 1995 to $850 million in 2000. Thin Layer Deposition: Highlighting
PVD, supra, pp. 69,70-72, 77-79, 80-81, 83, 87-88, 91-95, 105-106,
109-117, 128-129, 134- 137-142, 148-149, 152-156, 159-163, 169-170,
174-178, 180, 186-187, 191-193, 198-199, 202-204, 209.
Market Segments.
Low-Temperature Plasma Arc Diamond Coating Technology in Traditional
Markets. The single most important advantage of ACT's Plasma Arc
Diamond Coating technology is that it is possible to deposit uniform
coatings at significantly lower temperatures, even room temperature.
Heretofore, the problem of most CVD and PVD coatings is that they must
be applied at temperatures ranging from 350 degrees to 1,300 degrees,
which distorts the temper or changes the metallurgy of the coated
substrata such as plastics, aluminum, copper, semiconductor
substrates, etc. Thus, with high temperature CVD and PVD processes,
substrata must often be retempered in order to bring the tolerances
back into compliance. Consequently, there have been many tools and
instruments that would greatly benefit from Plasma Arc Diamond
coating, but these tools and instruments are not coated because of the
high temperature problems inherent in current CVD or PVC processes.
The coating market can be greatly expanded with the Plasma Arc Diamond
Coating technology from American Coating Technologies.
Based on ACT's research, tools coated by Plasma Arc Diamond Coating
(APADC@) process are absolutely precise. Lower temperatures used by
the PADC process do not change the underlying substrate. Metals such
<PAGE>5
as copper, aluminum, plastics, etc can be coated using the PADC
process. Optics can also be coated more efficiently with the PADC
process.
Thin-Film Diamond Coatings Technology. The management is of the
opinion that its new thin-film diamond coatings technology will make
possible the use of diamond coatings for many applications in place of
the traditional coatings like titanium nitride.
There are many advantages for diamond-coated tools. A single tool can
contain and maintain several cutting edges, tools with advanced chip
breaker designs can be coated, the diamond edge does not have to be
polished. Through control of the surface morphology, tools can be
used as grown. Tools will have longer useful life and the CVD process
is expected to be lower in cost. These factors, plus the
characteristics of diamond make diamond coatings the coating of choice
for tungsten carbide, silicon nitride, and silicon carbide tools.
Thin-Film Technology for Semiconductors. To be a useful
semiconductor for transistors and other electronic applications,
diamond must be Adoped, i.e. implanted with trace amounts of
impurities. The needed impurities are of two types: p-type, which
endows diamond with the equivalent of a positive electric charge, and
n-type, for the equivalent of a negative charge. Thin-film diamond
processes to date have been able to successfully dope with the p-type
but not with the n-type. Management believes that its proprietary
and patented Radio Arc Plasma technology (U.S. Patent #5,254,237,
dated October 19, 1993), creates a way to accomplish this doping.
Marketing Strategy. Mr. Alvin A. Snaper, Chairman of American is an
internationally recognized inventor with over 600 patents and is
considered a pioneer in the coatings industry. Over twenty years ago,
Mr. Snaper invented and developed many of the original coating
processes in use today. Through acquisition and partnering
arrangements, ACT is currently acquiring Operations Centers in
Phoenix, Arizona where vacuum chambers will be fitted with the
necessary components to achieve low temperature Plasma Arc Deposition
coating process including diamond coating, diamond like coating, and
the diamond semiconductor.
ACT intends to license its technology to other companies rather than
build manufacturing facilities for semiconductors, medical, optical,
and industrial coatings. Vacuum chambers for semiconductor
manufactures and industrial coating service centers will be
retrofitted at these Operations Centers and then placed in licensed
service based on the size of the chambers. In cases of large orders,
OEM manufactures will be trained in the retrofit process.
Representatives from coating companies will be able to invite their
customers to visit the Operations Centers where they will be able to
observe demonstrations of ACT=s low temperature and thin film diamond
technology.
Dependence on One or a Few Major Customers. ACT does not
expect that any single customer will account for more than ten percent
of its business.
Employees. ACT currently employs three full time persons and no part
time persons. ACT shall employ individuals as required.
ACT is not subject to any collective bargaining agreement. It is
anticipated that ACT's employees will be covered by an employee stock
option plan; however, at this stage, the terms of such a plan have not
been determined.
Seasonal Nature of Business Activities. ACT's business
activities are not seasonal.
Risk Factors. ACT cautions that the factors described below could
cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements of ACT made by or on
behalf of ACT.
No Operating History and Uncertainty of Future Operating Results.
ACT has no operating history and expects to incur losses due to
minimal general and administrative expenses until revenues from the
joint venture are obtained. ACT believes that upon commencement of
operations, ACT's future operating results over both the short and
long term will be subject to annual and quarterly fluctuations due to
several factors, some of which are outside the control of ACT. These
<PAGE>6
factors include fluctuating market demand for the joint venture's
products, expansion of the market for the products, pricing,
competitive products and general economic conditions.
Competition. There is significant competition in the coating process
industry. ACT will compete with established companies and other
entities, many that possess substantially greater resources than ACT.
Almost all of the companies with which ACT will compete are
substantially larger, have more substantial histories, backgrounds,
experience and records of successful operations, greater financial,
technical, marketing and other resources, more employees and more
extensive facilities than ACT now has, or will have in the foreseeable
future. It is also likely that other competitors will emerge in the
near future. There is no assurance that ACT will compete
successfully with other established coating companies. ACT shall
compete on the basis of the need, desirability, uniqueness, and
competitive cost of its proprietary and patented Plasma Arc Diamond
Coating process. Inability to compete successfully might result in
increased costs, reduced yields and additional risks to the investors
herein.
No Public Market. There is presently no public market for the common
shares of ACT and there is no assurance that an active public market
will ever develop. Consequently, investors will not be able to
liquidate their investment in the event of an emergency or for any
other reason.
Financial Condition. Although the officers of ACT anticipate that ACT
will have adequate funds to pay all of its operating expenses assuming
ACT commences its proposed business plan, there can be no assurance
that this will in fact occur or that ACT can be operated in a
profitable manner. Profitability depends upon many factors, including
the success of the commencement of ACT's operations.
Lack of Dividends. There can be no assurance that the operations of
ACT will become profitable. At the present time, ACT intends to use
any earnings that may be generated to finance the growth of ACT's
business.
No Independent Market Research of Potential Demand for Current
Operations. Even though the Plasma Arc Diamond Coating process has
been invented and developed by Alvin A. Snaper, the inventor of most
coating processes in use today, no independent organization has
conducted market research providing management with independent
assurance from which to estimate potential demand for ACT's business
operations. In the event market demand is independently identified,
there is no assurance ACT will be successful.
Need for Cash
As ACT enters into operations, additional cash will be
required in the near term to achieve ACT's financial and operating
objectives. If ACT is unable to raise sufficient cash to fund its
growth, ACT may be unable to achieve the anticipated financial
results. There can be no assurance that adequate funds will be
available to us on terms acceptable to ACT.
Losses from Operations.
ACT has incurred substantial losses from operations since commencing
operations, and although we expect to become profitable during 2000,
there is no assurance that this will happen as quickly as forecast by
ACT.
Management of Growth
ACT's success is dependent upon its ability to (a) manage effectively
the growth resulting from new customer contracts it has entered into
and companies it acquires, (b) retain and motivate key personnel and
(c) obtain adequate working capital to support its growth. Such
growth will place, significant demands on ACT's management, operating
and financial systems, and other operating resources. To achieve its
objectives, ACT has developed scalable computer systems and a
corporate infrastructure designed to respond quickly to and
effectively to customers' needs and to absorb acquirees'
administrative functions in order to eliminate redundant resources at
the acquired companies. ACT's capacity to absorb these administrative
functions into its infrastructure quickly and efficiently, its ability
<PAGE>7
to anticipate and address changing customer demands in a timely
manner, and its ability to identify promptly new systemic, procedural
and structural requirements will determine how rapidly and profitably
ACT can grow.
Availability of Qualified Personnel
ACT believes that its future success will depend, in part, upon its
ability to attract and retain additional highly skilled professional,
managerial, sales and marketing personnel. To date, the
Company has been successful in identifying and adding such personnel
through acquisition or the normal hiring process; however, there can
be no assurance that ACT will continue to be successful in
attracting, training and retaining the personnel that it requires to
support planned growth. The failure to do so could have a material
adverse effect on ACT's business and results of operations.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Demand for ACT's products and
services will be dependent on, among other things, market acceptance
of ACT's concept, its proposed operations and general economic
conditions that are cyclical in nature. Inasmuch as a major portion
of ACT's activities will be the receipt of revenues from the sales
of its products and services, ACT's business operations may be
adversely affected by competitors.
Capital and Source of Liquidity. For the period from inception to
October 31, 1999 and the three months ended January 31, 2000, ACT did
not pursue any investing activities.
For the period from January 8, 1999 to October 31, 1999, ACT received
$382,400 from the issuance of common stock resulting in cash flows
from financing activities of $382,400.
For the three months ended January 31, 2000, ACT received $94,700 from
the issuance of common stock resulting in cash flows from financing
activities of $94,700.
Results of Operations.
For the period from inception to October 31, 1999, ACT had no
revenues. ACT had a net loss of $1,354,438 for that same period.
ACT had general and administrative expenses of $1,354,438 for the
period from inception to October 31, 1999 which consisted the value of
common stock issued for services relating to commencing operations and
stock option compensation expense.
For the three months ended January 31, 2000, ACT had no revenues.
ACT had a net loss of $112,169 for that same period. ACT had general
and administrative expenses of $112,169 for the period from inception
to October 31, 1999 relating to the commencement of operations.
Plan of Operation. . ACT requires additional capital in order to
commence its current and strategic business plans. Initial working
capital has been obtained by private sale of common stock. As of
January 31, 2000, ACT had cash remaining of $8,903. We have financed
a major part of our operating expenses by issuing common shares for
services. Due to lack of current operating expenses, available cash
can satisfy current expenses for only one to months while we continue
to pursue sufficient financing. We will seek additional debt and
equity financing to commence limited operations until the warrants are
exercised, if ever. Revenues, if any, will be utilized to continue
limited operations. ACT hopes to generate sufficient capital to begin
operations by August 2000 and expects to generate sufficient revenue to
finance limited operations by January 2001
If we fail to raise the additional financing necessary, we shall
discontinue our business plan and consider alternative strategies. We
do not currently have any specific alternative strategies and if none
are developed, we may not be able to continue operations and you may
lose the entire investment .
<PAGE>8
ITEM 3. DESCRIPTION OF PROPERTY.
ACT's executive offices are located at 4066 South 1400 East, Salt Lake
City, Utah 84124. These offices consist of 250 square feet of office
space and 750 square feet of warehouse space. These offices are
leased on a one year term expiring December 31, 2000 for the monthly
lease fee of $505 per month. ACT intends to lease facilities in Las
Vegas, Nevada by the fourth quarter of 2000. This research and
manufacturing facility will house the Plasma Arc Diamond Coating
chambers, research and development laboratory, and corporate offices.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There are currently 5,373,470 common shares outstanding, 3,974,000 of
which are controlled by certain beneficial owners and management.
The following tabulates holdings of shares and other securities of ACT
by each person who, subject to the above, at the date of this
prospectus, holds of record or is known by management to own
beneficially more than 5.0% of the common shares and, in addition, by
all directors and officers of ACT individually and as a group. Each
named beneficial owner has sole voting and investment power with
respect to the shares set forth opposite his name.
Shareholdings
<TABLE>
<CAPTION>
Number & Class(1) Percentage of
Name and Address of Shares common shares(3)
<S> <C> <C>
Richard M. Sjostrom 0 0%
1399 South 700 East
Salt Lake City, Utah 84105
David Mark Eames 1,119,000 20.82%
4066 South 1400 East
Salt Lake City, Utah 84124
David L. Taylor 105,000 1.95%
4974 Gaskill Way
West Jordan, Utah 84088
Alvin A. Snaper 2,750,000 51.16%
2800 Cameo Drive
Las Vegas, NV 89107
Access First International 1,124,000 20.93%
5085 Sunset Lane
Ogden, Utah 84403
Directors and Officers
as a group
(4 persons) 3,974,000(2) 31.23%(3)
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, beneficial ownership of a security consists of sole or
shared voting power (including the power to vote or direct the voting)
and/or sole or shared investment power (including the power to dispose
or direct the disposition) with respect to a security whether through
a contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Board of Directors. The following persons listed below have been
retained to provide services as director until the qualification and
election of his successor. All holders of common stock will have the
right to vote for Directors of ACT. The board of directors has
primary responsibility for adopting and reviewing implementation of
the business plan of ACT, supervising the development business plan,
review of the officers' performance of specific business functions.
The Board is responsible for monitoring management, and from time to
time, to revise the strategic and operational plans of ACT.
<PAGE>9
Directors receive no cash compensation or fees for their services
rendered in such capacity. The directors will serve until the next
annual meeting scheduled for the third quarter of 2000.
The Executive Officers and Directors are:
</TABLE>
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Richard M. Sjostrom, age 50 President/Director December 1999
to present
David Mark Eames, age 31 Vice President/Director December 1999
to present
David L. Taylor, age 29 Secretary/Treasurer Inception
Director to present
Alvin A. Snaper, age 67 Chairman of the Board Inception
To present
Richard M. Sjostrom. Mr. Sjostrom has been president and a director
of ACT since December 1999. From 1987 to present, Mr. Sjostrom has
been a member/manager of N-Tek, LLC. During this time, Mr. Sjostrom
management, analyzed and executed improvements in technology platform
to facilitate the conversion of waste materials to ethanol and other
commercially viable products. From 1987 to present, Mr. Sjostrom has
also been vice president of Intrade, Ltd. Intrade, Ltd. sells various
products in countries throughout the world but with primary focus on
the USA, Japan and China.
Mr. Sjostrom earned a Bachelor of Science degree from Utah State
University in 1972 and a Juris Doctor degree from the University of
Utah, College of Law in 1995.
David Mark Eames. Mr. Eames has been vice president and a director
of ACT since December 1999. From 1996 to the present, Mr. Eames has
been a manager in training at Enterprise located in Salt Lake City.
Mr. Eames attended Dixie College from 1987-1988 and became a certified
word processing specialist at Wasatch Career Institute.
Alvin A. Snaper. Mr. Snaper has been chairman of the board and
director of research of ACT since inception. For the last forty
years, Mr. Snaper has been an inventor/engineer engaged in scientific
research and development of products and services. Mr. Snaper holds
over 600 patents and was awarded the Design News Magazine Best Patent
in four different years. Among his more famous inventions are the
Look Up Display for jet fighter aircraft, Tang and the IBM typewriter
ball.
David L. Taylor. Mr. Taylor has been secretary, treasurer and
director of ACT since inception. From 1991 to present, he worked at
Taylor & Associates, Salt Lake City, Utah, a company that sells and
manufactures recreational tents. Mr. Taylor holds a Business
Management diploma from Mountainwest College of Business & Technology.
Executive Compensation
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
--------------------------- ---------------------- ----------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Position Year Salary($) Bonus($) Compensatio($) Awards($) Options/SARs(#) Payouts($) Compensation($)
<S> <C> <C> <C> <C> <C>
Richard M. Sjostrom(1) 1999 - - - - - - -
President
David Mark Eames(2) 1999 - - - (1) - - -
Vice President
David L. Taylor 1999 $6,000 - - (1) - - -
Secretary/Treasurer
</TABLE>
<PAGE>10
(1) On December 20, 1999, the board of directors awarded David L.
Taylor and David Mark Eames an option beginning March 1, 2000 for a
period of 60 months to purchase 200,000 shares each of ACT. The
option price shall be $7.50 per common share.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a payable due to an officer/shareholder in the amount
of $12,480. The payable is unsecured, non-interest bearing, and has
no specific repayment terms.
The Company has entered into consulting agreements with certain
officers/shareholders. The agreements require aggregate mandatory
monthly consulting fees of approximately $18,000. As of October 31,
1999 the Company had paid approximately $81,000 under the terms of
these agreements. No amounts are due under these agreements at
October 31, 1999.
The Company has entered into agreements with certain shareholders
which requires the Company to pay royalties of approximately 7% of
gross revenues generated from use of the Company technology. No
amounts were due or paid during the period from January 8, 1999 (date
of inception) to October 31, 1999.
ITEM 8. DESCRIPTION OF SECURITIES
The following statements constitute brief summaries of the material
provisions of ACT's certificate of incorporation and bylaws, as
amended.
ACT's articles of incorporation authorize it to issue up to
100,000,000 common shares, $.001 par value per Common Share and
5,000,000 Preferred Shares, $.001 par value per Preferred Share. The
common shares purchased in this offering will be fully paid and non-
assessable.
Common Stock. Holders of common Shares of ACT are entitled to cast
one vote for each share held at all shareholders meetings for all
purposes. Upon liquidation or dissolution, each outstanding common
share will be entitled to share equally in the assets of ACT legally
available for distribution to shareholders after the payment of all
debts and other liabilities. Common shares are not redeemable, have
no conversion rights and carry no preemptive or other rights to
subscribe to or purchase additional common shares in the event of a
subsequent offering. All outstanding common shares are, and the
common shares offered hereby will be when legally issued, fully paid
and non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends from any funds legally available
therefore. ACT has not paid dividends to date and it is not
anticipated that any dividends will be paid in the foreseeable future.
The Board of Directors may follow a policy of retaining earnings, if
any, to finance the future growth of ACT. Accordingly, future
dividends, if any, will depend upon, among other considerations, ACT's
need for working capital and its financial condition at that time.
Preferred Shares. Five Million (5,000,000) shares have been
designated "preferred stock", and shall have a par value of $.001 per
share, and shall be issued for such consideration, expressed in
dollars, as the board of directors may, from time to time, determine.
(b) Consideration for Shares. All shares of preferred stock
shall be issued by ACT for cash, property or services actually
performed, for no less than the par value of $.001 for preferred
stock. All shares shall be fully paid and non-assessable.
(c) Issuance of Preferred Stock. The preferred stock
authorized by this certificate of incorporation may be issued from
time to time in series. The board of directors of ACT is authorized
to establish such series, to fix and determine the variations and the
relative rights and preferences as between series, and to thereafter
issue such stock from time to time. The board of directors is also
authorized to allow for conversion of the preferred stock to common
stock under terms and conditions as determined by the board of
directors.
<PAGE>11
(d) Dividends. Dividends in cash, property or share of ACT
may be paid upon the preferred stock, as and when declared by the
board of directors, out of funds of ACT to the extent, and in the
manner permitted by law.
(e) Voting Rights. The voting rights of preferred stock, if
any, shall be established by the board of directors at the time such
stock is issued in series.
Transfer Agent. OTC Transfer Company located at 240 E. 2100 S, Salt
Lake City acts as our transfer agent
<PAGE>12
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
There is no market for ACT's common stock. ACT intends to
apply to have its common stock traded on the OTC Bulletin Board. If
ACTis not accepted on the OTC Bulletin Board, ACT will list its
common shares on the pink sheets.
ACT has never paid any cash dividends nor does it intend, at
this time, to make any cash distributions to its shareholders as
dividends in the near future.
As of April 30, 2000, the number of holders of ACT's common
shares was approximately 34.
ITEM 2. LEGAL PROCEEDINGS
ACT is not a party to any legal proceedings of a material nature nor
is ACT aware of any disputes that may result in legal proceedings that
would have a material adverse effect on ACT's operating results.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Since inception, there have been no changes in or disagreements with
ACT's principal independent accountant or a significant
subsidiary's independent accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In January 1999, ACT issued 5,100,000 common shares to the following
individuals and entities for technology valued at $505,000 or
approximately $.0990 per common share:
Name Date Number of Shares
Ned Dyne Research, Inc. 1/8/99 2,750,000
The Rothwell Trust 1/8/99 1,125,000
Access First International 1/8/99 1,125,000
David L. Taylor 1/8/99 100,000
In 1999, ACT issued 86,950 common shares to the following individuals
for services rendered valued in the aggregate at $159,805.
Name Common Shares
Garth Low 46,050
?
In the third and fourth quarters of 1999, ACT issued 40,000 common
shares at $2.00 per common share to Brian Steffensen.
All of the listed sales were made in reliance upon the exemption from
registration offered by Section 4(2) of the Securities Act of 1933, as
amended and applicable state private offering exemptions.
Based upon the pre-existing relationship between the shareholders
and ACT, ACT believes it had reasonable grounds to believe immediately
prior to making an offer to the private investors, and did in fact
believe, when such subscriptions were accepted, that such purchasers
(1) were purchasing for investment and not with a view to
distribution, and (2) had such knowledge and experience in financial
and business matters that they were capable of evaluating the merits
and risks of their investment and were able to bear those risks. The
purchasers had access to pertinent information enabling them to ask
informed questions. The shares were issued without the benefit of
registration. An appropriate restrictive legend is imprinted upon each
of the certificates representing such shares, and stop-transfer
instructions have been entered in ACT's transfer records. All
such sales were effected without the aid of underwriters, and no sales
commissions were paid.
In 1999 and January 2000, ACT conducted an offering pursuant to Rule
504 of the Securities Act of 1933 at an offering price of $5.00 per
common share. ACT sold 124,420 common shares for an aggregate of
$622,100 to the following individuals or entities.
<PAGE>13
Name Amount Date
Brian Stefensen 10,000 2/12/99
Douglas Hampton 2,000 2/12/99
1,000 2/22/99
7,000 11/23/99
1,000 1/13/00
William J. Hoffman 2,000 2/14/99
1,700 3/11/99
1,720 3/16/99
900 4/21/99
Debra Foster 800 2/18/99
Kevin Sherman 1,000 2/20/99
Carl F. Krieser 1,000 2/20/99
Rodney Page 1,000 2/22/99
Mr. and Mrs. Lynn Page 2,000 2/23/99
Lynn D. Beckman 7,500 2/25/99
5,000 12/1/99
Kathy Robinson &
Samuel P. Robinson 2,000 3/9/99
2,000 3/13/99
1,000 4/20/99
2,000 12/20/99
Michael Robison 2,000 3/10/99
B.M.T. Enterprises 4,000 3/12/99
Christine Andrews 800 3/26/99
Curtis Rich 1,600 3/26/99
Mr. & Mrs. Kent Crookston 800 3/26/99
800 4/1/99
800 4/9/99
800 4/19/99
5,600 4/22/99
Scott E. Rich 800 3/27/99
James Camberlango 1,000 4/2/99
1,000 4/7/99
Elka & Brett Higginson 800 6/12/99
Martha May Craig 2,000 7/1/99
3,000 11/6/99
Howard G. Whitney 800 12/1/99
John & Arlene Whitney 1,000 12/2/99
Donald & Beverly Timpson 800 12/22/99
Charles & Kimberly Hoffman 800 12/24/99
Timothy Shurtliff 800 1/31/00
Timothy & Nany Shurthliff 800 1/31/00
These sales were made pursuant to an exemption from registration
pursuant to Section 504 of Regulation D. The offering was approved
and/or exempted by the required states and the appropriate Form D was
filed with the Securities and Exchange Commission.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. ACT shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the
State of Nevada, any person made, or threatened to be made, a party to
an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or
officer of ACT, or served any other enterprise as director,
officer or employee at the request of ACT. The Board of
Directors, in its discretion, shall have the power on behalf of the
Company to indemnify any person, other than a director or officer,
made a party to any action, suit or proceeding by reason of the fact
that he/she is or was an employee of ACT.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of ACT,
ACT has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by ACT of expenses incurred or paid by a director,
officer or controlling person of ACT in the successful defense
of any action, suit or proceedings) is asserted by such director,
officer, or controlling person in connection with any securities being
registered, ACT will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issues.
<PAGE>14
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING ACT FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
PART F/S
The following financial statements required by Item 310 of Regulation
S-B are furnished below:
Independent Auditor's Report dated January 5, 2000
Balance Sheets - October 31, 1999 and January 31, 2000 (unaudited)
Statement of Operations for the period from January 8, 1999 (Date of
Inception) to October 31, 999 and three months ended January 31, 2000
(unaudited)
Statement of Changes In Stockholders' Equity for the period from
January 8, 1999 (Date of Inception) to October 31, 999 and three
months ended January 31, 2000 (unaudited)
Statement of Cash Flows for the period from January 8, 1999 (Date of
Inception) to October 31, 999 and three months ended January 31, 2000
(unaudited)
Notes to Financial Statements
<PAGE>15
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
And Stockholders of
American Coating Technologies, Inc.
We have audited the accompanying balance sheet of American Coating
Technologies, Inc. (a development stage company), as of October 31,
1999 and the related statements of operations, stockholders' equity
and cash flows for the period January 8, 1999 (date of inception) to
October 31, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the 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. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American
Coating Technologies, Inc., as of October 31, 1999 and the results of
its options and its cash flows for the period January 8, 1999 (date of
inception) to October 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2
to the financial statements, the Company has a deficit in working
capital, incurred a loss and has not generated any revenues. These
conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Tanner + Co.
Salt Lake City, Utah
January 5, 2000
<PAGE>16
American Coating Technologies, Inc.
(A Development Stage Company)
Balance Sheet
-------------------------------------------------
January 31,
October 31, 2000
1999 (Unaudited)
---------- ----------
Assets
Current assets - cash $ 1,122 $ 8,903
Technology, net of accumulated
Amortization of $37,875
At October 31, 1999 467,125 441,875
---------- ----------
Total assets $ 468,247 $ 450,778
========== ==========
------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities - related
party payable $ 12,480 $ 12,480
---------- ----------
Commitments - -
Stockholders' equity
Preferred stock, $001 par value;
5,000,000 shares authorized, no
shares issued or outstanding
Common stock, $.001 par value;
100,000,000 shares authorized,
5,287,370 shares issued and
at outstanding at October 31, 1999 5,287 5,309
Additional paid-in capital 1,804,918 1,899,596
Accumulated deficit (1,354,438) (1,466,607)
----------- -----------
Total stockholders' equity 455,767 438,298
----------- -----------
Total liabilities and
stockholders' equity $ 468,247 $ 450,778
=========== ==========
See accompanying notes to financial statements
<PAGE>17
American Coating Technologies, Inc.
(A Development Stage Company)
Statement of Operations
January 8, 1999 (Date of Inception) to October 1999
And Three Months Ended January 31, 2000
2000
1999 (Unaudited)
--------- ----------
Revenue $ - $ -
General and administrative expenses 1,354,438 (112,169)
---------- ---------
Loss before income taxes (1,354,438) (112,169)
Income tax benefit $ - $ -
----------- ---------
Net loss $(1,354,438) $(112,169)
=========== =========
Loss per share - basic and diluted $ (.26) $ (.02)
=========== =========
Weighted average common shares
- basic and diluted 5,160,000 5,331,000
=========== =========
See accompanying notes to financial statements
<PAGE>18
American Coating Technologies, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
January 8, 1999 (Date of Inception) to October 1999
And Three Months Ended January 31, 2000
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ----- -------- ----------- ------
<S> <C> <C> <C> <C>
Balance, January 8, 1999 - $ - $ - $ - $ -
(date of inception
Issuance of common stock for:
Cash 100,420 100 382,300 - 382,400
Technology 5,100,000 5,100 499,900 - 505,000
Services 86,950 87 159,718 - 159,805
Issuance of common stock
Options - - 763,000 - 763,000
Net loss - - - (1,354,438) (1,354,438)
--------- ------ --------- ---------- ----------
Balance, October 31, 1999 5,287,370 5,287 1,804,918 (1,354,438) 455,767
Issuance of common stock in
Private offering, net of
$10,300 offering costs
(unaudited) 86,100 8,610 94,678 - 94,700
Net Loss (unaudited) - - - (112,169) (112,169)
---------- ----- -------- --------- -----------
Balance, January 31, 2000
(unaudited) 5,373,470 $ 5,309 $1,899,596 $(1,466,607) $438,298
========== ======= ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>19
American Coating Technologies, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
January 8, 1999 (Date of Inception) to October 1999
And Three Months Ended January 31, 2000
2000
1999 (Unaudited)
------- -----------
Cash flows from operating activities
Net loss $ (1,354,438) (112,169)
Adjustments to reconcile net
Loss to net cash
Used in operating activities
Amortization expense 37,875 25,250
Issuance of common stock for services 159,805 -
Stock option compensation expense 763,000 -
Increase in accounts payable 12,480 -
------------ --------
Net cash used in
Operating activities (381,278) (86,919)
----------- --------
Cash flows from investing activities - -
----------- --------
Cash flows from investing activities
Issuance of common stock 382,400 94,700
----------- --------
Net increase in cash 1,222 7,781
Cash, beginning of period - 1,122
-------- -------
Cash, end of period $ 1,122 $ 8,903
======== =======
See accompanying notes to financial statements
<PAGE>20
American Coating Technologies, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
October 31, 1999
1. Organization and Summary of Significant Accounting Policies
Organization
American Coating Technologies, Inc. (the Company) was incorporated in
the State of Nevada on January 8, 1999 for the purposes of developing
business opportunities by licensing its patented low-temperature
Plasma ArcDeposition technology in semiconductor, medical optical, and
industrial tool applications and to pursue further research and patent
processes.
In accordance with SFAS No. 7, the Company is considered to be in the
developmental stage. The Company is devoting substantially all of
its efforts to establishing a new business. No principal operations
have commenced and no significant revenue have been derived from
operations.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes all cash
and investments with original maturities to the Company of three
months or less.
Technology
The technology consists of costs to acquire all legal rights to the
patents of the technology in use by the Company. Technology is
amortized over a five month period.
Income Taxes
Deferred income taxes are provided in amounts sufficient to give
effect to temporary differences between financial and tax reporting.
Loss per Share
The computation of basic earnings per common share is based on the
weighted average number of shares outstanding during the period.
The computation of diluted earnings per common share is based on the
weighted average number of shares outstanding during the period plus
the common stock equivalents which would arise from the exercise of
stock options and warrants outstanding using the treasury stock method
and the average market price per share during the period. Common
stock equivalents are not included in the diluted earnings per share
calculation when their effect is antidilutive.
Use of Estimates in Financial Statements
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. Actual results could differ from
those estimates.
Unaudited Financial Statements
In the opinion of the Company's management, the accompanying unaudited
financial statements contain all normal recurring adjustments
necessary to present fairly the Company's financial position for the
interim period. Results of operations for the three months ended
January 31, 2000 are not necessarily indicative of results to be
expected for the full fiscal year ending October 31, 2000.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for annual
financial statements. Although the Company believes that the
disclosures in these unaudited financial statements are adequate to
make the information presented for the interim periods not misleading,
certain information and footnote information normally included in
annual financial statements prepared in accordance with generally
<PAGE>21
accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange
Commission, and these financial statements should be read in
conjunction with the Company's audited annual financial statements.
2. Going Concern
The accompanying financial statements have been prepared on a going-
concern basis, which contemplates profitable operations and the
stisfaction of liabilities in the normal course of business. As
shown in the statement of operations, the Company has had no revenues
from operations and reported a net loss for the period ended October
31, 1999. These uncertainties raise substantial doubt about the
ability of the Company to continue as a going concern.
The Company's continuation as a going concern is dependent upon its
ability to satisfactorily meet its debt obligations through securing
adequate new financing or generating sufficient cash flows from
operations. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Management has entered into a plan where it is pursing other financing
and searching for additional business opportunities. It is not known
if the Company will be successful.
3. Income Taxes
The benefit for income taxes is different from amounts which would be
provided by applying the statutory federal income tax rate to loss
before benefit for income taxes for the following reasons:
Federal income tax benefit at statutory rate $460,000
Change in valuation allowance (460,000)
----------
$ -
Deferred tax assets (liabilities) consist of the following:
Net operating loss carryforward $460,000
Valuation allowance (460,000)
---------
$ -
=========
At October 31, 1999, the Company has a net operating loss carryforward
available to offset future taxable income of approximately $1,350,000,
which will begin to expire in 2019. The utilization of the net
operating loss carryforward is dependent upon the tax laws in effect
at the time the net operating loss carryforward can be utilized. The
Tax Reform Act of 1986 significantly limits the annual amount that can
be utilized for this carryforward as a result of a change in
ownership.
4. Related Party Transactions
The Company has a payable due to an officer/shareholder in the amount
of $12,480. The payable is unsecured, non-interest bearing, and has
no specific repayment terms.
The Company has entered into consulting agreements with certain
officers/shareholders. The agreements require aggregate mandatory
monthly consulting fees of approximately $18,000. As of October 31,
1999 the Company had paid approximately $81,000 under the terms of
these agreements. No amounts are due under these agreements at
October 31, 1999.
The Company has entered into agreements with certain shareholders
which requires the Company to pay royalties of approximately 7% of
gross revenues generated from use of the Company technology. No
amounts were due or paid during the period from January 8, 1999 (date
of inception) to October 31, 1999.
5. Supplemental Cash Flow Disclosure
During the period ended October 31, 1999:
- The Company did not pay any amounts related to interest and
income taxes.
<PAGE>22
- The Company issued 5,100,000 shares of common stock in exchange
for technology valued at $505,000.
6. Preferred Stock
The preferred stock consists of 5,000,000 shares with $.001 par value.
Upon any dissolution or liquidation, the holders of preferred stock
shall be entitled to receive out of the assets of the Company, the sum
initially paid per share and any dividend declared or unpaid before
any payment shall be made or any assets distributed to the common
stock shareholders. All other rights and privileges are to be
determined upon an issuance of the preferred stock.
7. Stock options
The Company has granted stock options to certain officers, employees
and consultants of the Company to purchase shares of the Company's
common stock. A schedule of the options at October 31, 999 is as
follows:
Exercise
Number of Price Per
Options Share
Outstanding at January 8, 1999
(date of Inception)
Granted 445,000 $.001-2.00
Exercised (90,000) .001-2.00
Expired (210,000) 2.00
Canceled (145,000) .001
--------------------------------
Outstanding at October 31, 1999 - $ 0
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123) gives entities the choice between
adopting a fair value method or continuing to use the intrinsic value
method under Accounting Principles Board (APB) Opinion No. 25 with
footnote disclosures of the pro forma effects if the fair value method
had been adopted. The Company has opted for the latter approach.
During the period ended October 31, 1999, the options granted had no
value as computed under the requirements of SFAS 123 and, therefore,
there would be no pro forma effect on the operations.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
assumptions:
Expected dividend yield $ -
Expected stock price volatility -
Risk-free interest rate 5%
Expected life of options 6 months
8. Fair Value of Financial Instruments
The Company's financial instruments consist of cash and payables.
The carrying amount of cash and payables approximates fair value
because of the short-term nature of these items.
9. Subsequent Event
The Company has entered into an employment agreement with an employee
which expires December 2003. The agreement provides the employee
with a monthly base salary, business expense reimbursement, and
eligibility for: 1) a performance bonus; 2) stock options and 3) other
benefit programs offered by the Company
<PAGE>23
PART III
ITEM 1. INDEX TO EXHIBITS
(3) Charter and By-Laws
(4) Instruments defining the rights of security holders
(10) Material Contracts
(27) Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS
(3.1) Articles of Incorporation
(3.2) Amendment to Articles dated April 2000
(3.3) Bylaws
(4) Common Stock Certificate
(10) Agreement dated February 1, 1999
(27) Financial Data Schedule
<PAGE>24
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
ACT International, Inc.
Date: June 4, 2000 /s/ Richard M. Sjostrom
-------------------------
By: Richard M. Sjostrom, President
