UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
COMMISSION FILE NUMBER 0-32121
AMENDMENT NUMBER 1 TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
INOUYE TECHNOLOGIES (CANADA) INC.
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(Name of Small Business Issuer in its charter)
Canada (Federally) Not Applicable
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(State or other jurisdiction of I.R.S. Employer Identification
incorporation or organization) Number
Suite 708, 1155 West Pender Street
Vancouver, B.C. V6E 2P4 Canada
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(Address of principal executive offices including Zip Code)
Telephone: (604) 801-7409
Facsimile: (604) 274-8006
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(Issuer's telephone number)
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, no par value per share, unlimited number of common
shares authorized, 21,805,788 issued and outstanding as of
November 30, 2000.
(Title of Class)
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.
Some of the statements contained in this Form 10-SB that are
not historical facts are "forward-looking statements" which can be
identified by the use of terminology such as "estimates,"
"projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions of
strategy that involve risks and uncertainties. We urge you to be
cautious of the forward-looking statements, that such statements,
which are contained in this Form 10-SB, reflect our current beliefs
with respect to future events and involve known and unknown risks,
uncertainties and other factors affecting our operations, market
growth, services, products and licenses. No assurances can be given
regarding the achievement of future results, as actual results may
differ materially as a result of the risks we face, and actual
events may differ from the assumptions underlying the statements
that have been made regarding anticipated events. Factors that may
cause actual results, our performance or achievements, or industry
results, to differ materially from those contemplated by such
forward-looking statements include without limitation:
1. Our ability to maintain, attract and integrate internal
management, technical information and management information systems;
2. Our ability to generate customer demand for our products;
3. The intensity of competition; and
4. General economic conditions.
All written and oral forward-looking statements made in
connection with this Form 10-SB that are attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by these cautionary statements. Given the uncertainties
that surround such statements, you are cautioned not to place undue
reliance on such forward-looking statements.
PART I
Inouye Technologies (Canada) Inc. ("we", "us", "our") is filing
this Form 10-SB on a voluntary basis to:
1. Provide current, public information to the investment
community;
2. Expand the availability of secondary trading exemptions
under the Blue Sky laws and thereby expand the trading market in our
securities; and
3. Comply with prerequisites for listing of our securities on
the NASD OTC Bulletin Board.
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
We are filing this Form 10-SB on a voluntary basis in order to
make our financial information equally available to any interested
parties or investors and meet certain listing requirements for
publicly traded securities on the National Association of Securities
Dealers' (NASD), Over the Counter Electronic Bulletin Board. We
anticipate filing an information statement with a sponsoring NASD
Broker-Dealer for listing of our common stock on the OTC Electronic
Bulletin Board upon completion of the comment period for this Form
10-SB filing.
We believe that by filing such Form 10-SB and being obligated
to file reports subject to Section 13 of the Exchange Act as well as
listing our common stock on the OTC Electronic Bulletin Board, we
can attract the financing necessary to implement our plan of
business. We believe that investors risking venture capital may
require our common stock to be publicly quoted prior to their
investing, and that the existence of such a market will reduce our
cost of obtaining venture capital. There is no assurance that these
assumptions are correct.
HISTORICAL OVERVIEW OF OUR COMPANY
Inouye Technologies (Canada) Inc. was incorporated under the
laws of the Province of Alberta, Canada on April 16, 1926 and was
subsequently continued as a federal company under the Canada
Business Corporations Act on June 18, 1980. Since our incorporation,
we have undergone several prior name changes and, on December 15,
1999, our name was changed from Vescan Equities Inc. to Inouye
Technologies (Canada) Inc. We are also registered as an
extraprovincial company under the laws of the Province of British
Columbia since September 1, 1994.
Our corporate office is located at Suite 708, 1155 West Pender
Street, Vancouver, B.C. V6P 2P4, Canada and our telephone number at
this location is (604) 801-7409.
We own a wholly owned subsidiary company, Inouye Technologies
Inc. ("Inouye") which was incorporated under the laws of the
Province of British Columbia on April 9, 1998 under the name "562796
B.C. Ltd." and subsequently changed its name to Inouye Technologies
Inc. on May 18, 1999.
We are a reporting issuer company in Alberta, Canada and our
Common Shares are currently traded on the Canadian Dealing Network
(CDN SYMBOL: ITII).
In the past, we were primarily engaged in the exploration of
mineral resources properties. Our main interests consisted of
various mineral properties in Mexico and the Northwest Territories
of Canada. During such period, we incurred approximately
CDN$684,461 in acquisition and exploration costs on the Mexico
property and a further CDN$6,704,665 in acquisition and exploration
costs on the Northwest Territories properties. Due to a lack of
encouraging results the mineral properties were subsequently
abandoned and the investments were written off and we reorganised
our affairs.
As part of our reorganization, we completed a consolidation of
our capital stock, acquired all of the issued and outstanding shares
in the capital stock of Inouye (private company)in consideration for
16,700,000 of our post-consolidation Common Shares issued at an
aggregate price of CDN$882,500 and changed our name to Inouye
Technologies (Canada) Inc.
Shareholder approval for the acquisition of Inouye, the share
consolidation and name change was obtained at our 1999 annual
shareholders' meeting. The shareholders also elected Brian Inouye,
Shailen Singh and Sean Tan to the board of directors at the annual
stockholders' meeting.
In this Registration Statement, unless otherwise specified, all
dollar amounts are expressed in United States Dollars. Herein, all
references to "CDN$" refer to Canadian Dollars and all references to
Common Shares refer to the Common Shares in our capital stock.
BUSINESS OF OUR WHOLLY OWNED SUBSIDIARY
Inouye is in the business of researching, developing and
manufacturing state-of-the-art, high-end audio products such as a
series of power amplifiers, pre-amplifiers, speaker systems,
power-line conditioners and home-theatre products.
In 1984, Brian Inouye, our founder, developed a technology
that spawned a number of products starting with a general
purpose, limited production, laboratory use only power-line
conditioner. After four years of product development, the first
commercial application of this technology was realized as a
portable, dual-section, power-line conditioner known as the
Synergistic Power Line Conditioner ("SPLC"). This device was
developed to protect electronic equipment such as audio and video
products from EMI (electromagnetic interference), RFI
(radio-frequency interference), natural atmospheric disturbances
(lightning), and to ensure public safety.
In addition to its protective mode, the SPLC also enhances the
performance of the electronic equipment it was designed to protect.
The dual section power-line conditioner was designed based on the
theory that AC mains electrical power lines constantly act as a
transmission line that carries noise pollutants and electromagnetic
signals into the household's electronic equipment in addition to
electrical power. As a consequence of the presence of these
unwanted pollutants, the life-span and performance of the electronic
equipment is severely compromised.
In 1992, Mr. Inouye incorporated Brian Inouye & Associates Ltd.
("BIA") to oversee the continuing research, development, and
marketing of its power-line conditioner. As a result of such
ongoing research and development, the device has undergone numerous
changes and improvements to its original design and performance
capability. Although BIA's efforts were directed primarily to
research and development, BIA also carried out a limited amount of
manufacturing and sales of high-end audio components such as
integrated amplifiers, pre-amplifiers, power amplifiers,
loudspeakers and subwoofer products to select test markets.
Effective March 1, 1999 Mr. Inouye and BIA assigned all of
their right, title and interest in the powerline products including
SPLC and certain other products (collectively the "Products") to
Inouye for a purchase price of CDN$845,000. Such purchase price was
satisfied by way of the issuance of a total of 13,000,000 common
shares of Inouye to Mr. Inouye, BIA and certain other persons.
Inouye's first line of business is the power-line conditioner
and audio technology research, development and manufacturing
business. Inouye's power-line and audio products, which are
developed under a strict set of criteria with a view to retaining
the underlying intellectual property, are described in detail below:
INOUYE TECHNOLOGIES
Power Problems
The AC mains power distribution grid has evolved from
technology originally developed to run trolley cars and light bulbs.
It was not designed to be particularly quiet, safe or to power
sensitive electronic equipment. The power companies now distribute
power fraught with a virtual cesspool of electrical garbage. It is
not unusual for the average digital alarm clock to gain or lose time
(sometimes several minutes a day) due to these line-born anomalies.
Any line-powered electronic equipment that relies on line-frequency
synchronization will be adversely affected by line-borne anomalies.
Digital equipment, both audio and computer may die a premature death
or prove unreliable due to the same.
Inouye created technologies that have absolute control over
sometimes infinitesimally small circuit elements. This methodology
has created for Inouye world-class products. The company's
Synergistic Power Line Conditioner (SPLC) has been in production for
over ten years boasting a failure rate of zero for the whole
production. Likewise, Inouye audio products are digital capable and
justify a life-time warranty as well.
Technology Overview: Power-Line Conditioning
When we plug an audio or video component into the AC mains we
become victim to all the high-frequency noise, voltage spikes and
current surges that today's electrical appliances dump onto the
power lines. These power lines are inherently very low in impedance
and it is this characteristic that makes the power lines a virtual
cesspool of electrical garbage. Overhead power lines acting as
endless antennas eventually find their way into our environment
where they give rise to their own contribution of interference and
noise.
Atmospheric disturbances can produce both electrical and
magnetic fields that vary with not only distance but frequency and
time. Unless addressed separately, these contaminants can have a
deleterious effect on the AC mains and can be potentially harmful to
our equipment. The Inouye Power-Line Conditioning Technology offers
serious protection and ensures that these harmful artifacts will
never pass through to the equipment, but are safely diverted away.
The Inouye Power-Line Conditioning Technology also reduces
harshness, lowers background noise, and improves low-level
resolution creating a greater sense of increased micro-dynamics.
Imaging specificity as well as a deeper and more realistic
three-dimensional sound-stage are readily noticeable. One of the
most significant reasons why the Inouye Power-Line Conditioning
Technology is able to improve an audio presentation is its inherent
ability to do away with the everyday contaminants that attach
themselves to the AC mains power.
Additionally, it is not unusual to have dissimilar components
of an audio or video system share a common circuit or, worse, share
the same duplex outlet. When this happens, the smaller component
(lower current consumption) will be modulated by the larger
component (greater current consumption). The Inouye Power-Line
Conditioning Technology prevents equipment interaction as well by
ensuring near total isolation between each set of duplex outlets
regardless of the load type.
It is also not unusual to connect a variety of technologies
together in a single system. For example, HDTVs, DVD and CD
players, and DA converters both incorporate digital circuitry that
can generate a significant amount of high-frequency noise. This
high-frequency noise, unless isolated from the AC mains power lines,
imposes itself on the power line contaminating the power that
supplies the analogue portion of the equipment in the system. The
Inouye Power-Line Conditioning Technology not only attenuates this
conducted RFI (radio-frequency interference) and EMI
(electromagnetic interference), but also minimizes equipment
interaction at high-frequencies within the control environment. All
Inouye power-line conditioners incorporate bi-directional,
multi-stage conditioning circuitry. This unique ability minimizes
equipment interaction and assures optimum fail-safe operation. With
lower AC power-line noise, audio is cleaner and more resolute, video
picture quality is free of background noise and resolution is
greatly improved.
As a result, products incorporating the Inouye Power-Line
Conditioning Technology realize improved reliability, efficiency and
enhanced performance. Without adequate protection these electrical
anomalies not only endanger our equipment, but our environments and
lives as well.
Technology Overview: Audio Amplification
Audio amplifiers are still fundamentally underdeveloped as
compared to the efforts assigned to cellular communications, digital
television and personal computers. One of the reasons building a
good power amplifier is a major undertaking is the need for an
amplifier's frequency response to span over three decades of audio
reproduction (20Hz to 20kHz).
Though global satellite communications are transmitted in the
multi-gegahertz, bandwidth is no greater than one decade. The
high-fidelity audio amplifier has a technological performance
challenge that triples that required by the cellular or satellite
telephone communication system. Regrettably, little has changed or
encouraged designers to seek new circuit topologies or develop new
test and measurement processes since the 3-stage transistor power
amplifier was designed in the mid 1960s (Dr. Matti Otala, Helsinki,
Finland). By and large, industry has been a me-too (copycat)
fraternity where it comes to circuit design topologies.
To develop the Inouye Audio Amplification Technology
considerable effort was assigned to the basic amplifier circuit
topology, particularly with regard to how transistors (both bipolar
and unipolar) are employed. Early transistor amplifiers inherited
their designs directly from research that sustained the vacuum tube
audio industry for almost forty years. These early solid-state
designs demonstrated gross distortions and instability, heretofore
unknown. Inouye created a new technology, a new methodology for
test and measurement, and redefined the criteria that the transistor
amplifier should be subjected to.
The Inouye Audio Amplification Technology solution yields the
most balanced (cost versus performance), musical and reliable audio
products since the transistor's introduction in 1947 (John Bardeen,
Walter H. Brattain, et al). This technology also embraces a
philosophy that commands a systematic methodology of research and
development, production assembly, designed-in testability and
quality assurance; a philosophy that equally applies to the physics
of mechanical systems, as in our loudspeaker designs, as it does to
our electronic systems.
OVERVIEW OF SELECTED INOUYE PRODUCTS
Inouye Portable Dual-Section Power-Line Conditioner
The Synergistic Power Line Conditioner ("SPLC") is a portable,
dual-section, power-line conditioner designed to protect electronic
equipment by suppressing high-energy surges/transients, radio
frequency interference, and all types of noise including pulsed,
continuous, and intermittent. Virtually any electrical or
electronic equipment that feeds interference into, or picks up
interference from, the power lines will be adequately filtered. As
a result, the performance and life span of the electronic equipment
plugged into the SPLC is greatly enhanced.
The SPLC was used at the televised 1992 American Music Awards
presentation for its theatrical lighting systems and to enhance
audio and video performance. In addition, the SPLC has also been
used by numerous companies such as Pioneer to showcase their
electronic products (e.g. stereo, video, DVD, HDTV, etc.) at trade
shows and exhibitions.
Inouye is presently involved with further developing the
technology for several commercial and industrial specific versions
of the SPLC in response to market interest. One commercial version
is a permanent unit built into electronic equipment and appliances
for OEMs (Original Equipment Manufacturers).
General Product Description:
The SPLC consists of a 14 gauge aluminum chassis finished with
semi-gloss black epoxy base enamel with gold silk-screening. The
internal electronic components are securely mounted to a military
specification double-sided PTH glass epoxy circuit board with a
flash point of 23 C. The internal wiring is 14 AWG and is rated at
105 C. All the electronic components are CSA and UL approved.
The SPLC has two isolated and individually grounded hospital
grade outlets attached at the front panel. The rear panel consists
of an IEC recessed 3-prong type power-line receptacle with a
high-frequency bypassed red-lighted 16A/250VAC rocker switch to
control the electrical power. Power enters through a detachable
two-metre long 14AWG IEC line cord and passes through a standard
16A/250VAC IEC connector into a built-in 15-ampere thermal circuit
breaker.
The SPLC is divided into four primary circuits, two secondary
circuits, and two tertiary circuits. Each primary circuit comprises
a set of two bi-directional high-frequency, low-pass filters for
preconditioning and phase-compensation. Each of the secondary
circuits comprises two radio frequency interference suppression
circuits to eliminate common-mode and differential noise.
The third circuits each comprise a double-fused, voltage and
current transient-suppression circuit to suppress common-mode and
differential spikes and surges. Visual indicators are provided to
alert the user when the transient-suppression circuitry has been
compromised. The SPLC device is rated at a maximum output power of
1,800 watts.
Background:
Since 1984, there has been a proliferation of power-line
conditioners; devices ranging from simple spike-suppressors to
elaborate isolation transformers. At one time, the power-line
anomalies that presented themselves to simple electromechanical
systems or earlier vacuum tube (valve) circuits were considered
trivial and more of a nuisance than a serious problem.
Traditional methods of noise and surge protection are now
proving to be inadequate in most applications. The increase in
pollutants affects many aspects of our everyday lives including an
impact on the electrical power we consume. For example, with the
constant growth in global communication, data processing, personal
computer, etc., radiated electromagnetic energy increases. If our
electronic equipment does not directly utilize this electromagnetic
energy, then there are often significant and sometimes destructive
consequences.
Most power problems that affect our electronic equipment are
often erroneously blamed on the power utilities. It is the journey
through the grid or distribution system where the power line becomes
contaminated. The AC mains power line brings us far more than we
bargained for. Often superimposed on the voltage and current
waveforms is a copious amount of interference. This interference
may be random in nature and subsequently difficult to isolate.
Overhead power lines acting as endless antennas eventually find
their way into our environment where they give rise to their own
contribution of interference and noise. These power lines, acting
as transmission lines, not only carrying the 60Hz electrical power
that they were designed for, but also noise in the form of radio
frequency interference. Like an antenna, an electrical power line
has the ability to radiate and absorb electromagnetic interference
as well and distribute it throughout the power grid.
Atmospheric disturbances can produce both electrical and
magnetic fields that vary with not only distance, but frequency and
time. Unless addressed separately, these contaminants can have a
deleterious effect on the AC mains and can be potentially harmful to
electronic equipment. Audio/video equipment and virtually any piece
of electronic equipment that comprise both an input power
transformer and a rectified power supply contribute a significant
amount of total harmonic distortion themselves to the power lines.
In contrast to high-frequency noise, total harmonic distortion is a
continuous low-frequency problem and requires a different approach.
All noise that is generated by synchronous devices is
harmonically related to the electrical power fundamental line
frequency. These harmonics generally begin as low order
frequencies, and then progress through the spectrum to many
megahertz. Even line voltage that appears to be clean on an
oscilloscope can contain harmonics if the sine wave has been
smoothly distorted in shape. These harmful by-products of our
electronic age eventually find their way through to the very heart
of our equipment unless significant remedial measures are employed.
When you consider that all we are really listening to or viewing is
modulated AC mains power, then we can appreciate that as the power
line quality improves likewise will our enjoyment.
Electrical interference of one kind or another may originate in
our own homes by way of a faulty fluorescent light-fixture, an
electronic light dimmer, all sorts of electrical motors or an
assortment of microprocessor based appliances. For example,
personal computers, CD players and digital-to-analogue converters
all incorporate digital circuitry that can generate a significant
amount of high-frequency noise. This electrical interference,
unless isolated from the AC mains power lines, ends up contaminating
the power that supplies the rest of the equipment in our home.
It is also not unusual to connect a variety of technologies
together in a single home entertainment system. Quite often,
dissimilar components will share a common circuit or, worse, share
the same outlet. When this happens, the smaller component (lower
current consumption) will be modulated by the larger component
(greater current consumption). If the larger component is an audio
power amplifier, this could end up modulating the preamplifier or
source.
A power-line conditioner is not simply a high-frequency filter
eliminating radio frequency interference that would be better left
to the preamplifier or power amplifier power supplies to eradicate.
Conventional filters such as Chebyshev or Butterworth are designed
to give significant attenuation at frequencies close to those, which
are attenuated the least. They produce optimum performance when
their ports are terminated at the correct impedance. Any deviation
from this will cause degradation in the phase and amplitude response
of the filter. In particular, Chebyshev or Butterworth response is
not needed as the frequencies that are the least desirable are far
removed from the line frequency that we wish to pass.
Power-line conditioners should accept a variety of load
impedances without adversely affecting its low-pass characteristics.
In order to halt the propagation of high-frequency interference in
both directions a power-line conditioner requires a bi-directional,
multi-stage protection system located between the AC mains power
source and the equipment being powered.
Power-line conditioners should be capable of suppressing not
only radio frequency interference and their harmonics, but also
electromagnetic interference, voltage and current transients (spikes
and surges) and even lower the risk of natural atmospheric
disturbances. Another required feature of a power-line conditioner
is the ability to resist the interaction and modulating effects of
dissimilar loads.
Power-line conditioners comprise a whole family of noise, spike
and surge suppression devices. This family is divided primarily
into two main categories: passive and active devices. The active
devices are principally the hot-standby, uninterruptible power
supplies (UPS) used for microprocessor-based, data-processing
equipment. This category may also include a form of dynamic
power-factor correction. The passive devices include everything
else all the way down to the lowly power-bar surge suppressor. This
latter category includes devices that can be as complicated as
ferro-resonant power transformers, balanced power isolation
transformers or as simple as single-stage, high-frequency low-pass
filters.
Since 1972, the MOV (metal oxide varistor) has predominately
been the transient voltage suppressor of choice. Acting as a
voltage-dependent variable resistor, these devices short in response
to a transient over-voltage by internally dissipating the total
impulse energy. If the voltage rating of the MOV is chosen
carefully, then the circuit lives on for another day. If not, the
circuit falls or the MOV self-destructs.
Voltage transients can range anywhere from harmless, near
unmeasureable values to voltages as high as several kilovolts. It
is not unusual to have regular voltage transients in excess of 2kV.
These transients may be very short in duration and therefore
manageable by the typical MOV where the total energy content is low.
Most power-line conditioners by their very nature will likely
suppress high-frequency noise with a simple capacitor. The series
line resistance, perhaps only fractions of an ohm, coupled with a
shunt capacitor to ground, creates a simple resistor and capacitor
network known as a first-order low-pass filter. High-frequency
suppression will fall at 6dB per octave. This means that the
amplitude is halved each time the frequency is doubled. This is not
necessarily bad, but, by cascading several stages, a power-line
conditioner can provide substantially more high-frequency noise
suppression.
Power-line conditioners should have the ability to suppress
signals above its cut-off frequency making it useful in reducing the
transfer of noise from the source to the load as well as from the
load back into the power lines. This will ensure absolute isolation
between pairs of outlets. Power-line conditioners need not show any
significant suppression until the multi-kilohertz range to minimize
any reactance at line frequencies or even several harmonics away.
The only loss exhibited by power-line conditioners should be the
windage of the inductors themselves.
Whether power problems are the result of natural phenomenon,
conducted radio frequency interference, electromagnetic
interference, or total harmonic distortion, considerable effort and
a variety of technologies must be synergistically applied to ensure
successful, safe, and reliable operation of our electronic equipment.
Inouye VideoGuard Power-Line Conditioner
The VideoGuard is similar to the SPLC in that it is also a
portable power-line conditioner designed to protect electronic
equipment by suppressing voltage transients, radio frequency
interference, and pulsed, continuous, and intermittent noises.
However, the VideoGuard uses a new patentable noise suppression
technology designed in-house by Inouye. Inouye is currently
pursuing patent protection on this product design.
This new technology enables the company to design the
VideoGuard that is optimized for, not only high-end video
applications, but general-purpose television viewing. These
enhancements also protect equipment, both CATV cable and electrical
connections, from the onslaught of atmospheric disturbances such as
lighting, safeguarding both the equipment in use and the user.
General Product Description:
The VideoGuard is a portable power-line conditioner designed to
protect a television's AC power circuitry, TV/Antenna (CATV/ANT)
input circuitry and any associated ancillary equipment such as DVD,
Laserdisc or VHS machines.
Power-line conditioning is afforded by way of an electronic
multi-stage, bi-directional noise suppression system and a
three-level, high-energy, transient and surge protector.
The VideoGuard is available in two versions. Both units are
housed in a matte-black, textured, glass-filled polycarbonate
(Lexan(TM)), injection-molded plastic case ensuring a virtually
indestructible and fire-retardant structure.
All the electronic components are CSA certified and UL listed
where necessary and assembled to the strictest of instrument-grade
commercial standards. All internal electronic components are
securely mounted to a military specification double-sided,
plated-through-hole (PTH), glass-epoxy circuit board.
The VideoGuard comes as a completely assembled unit. An 18
page owner's manual prepared by our applications engineering
department answers ten of the most frequently asked questions
regarding power-line conditioning. This manual is designed to fully
acquaint the user with the VideoGuard and power related problems.
Also included in the manual are fully illustrated diagrams
detailing basic applications and the necessary precautions to take
in order to maximize its use for a flawless installation.
Inouye PM-2 Preamplifier and PA-100 Power Amplifier
Although the choices available for separate home audio systems
are many and varied, matching a system in terms of compatible music
recovery capability makes the task increasingly difficult. Many
expensive separate home audio systems fail to achieve their maximum
performance due primarily to the lack of properly matched components.
In order to eliminate problems of incompatibility, the PM-2
Dual Mono Preamplifier and the PA-100 Dual Mono Power Amplifier have
been specifically designed to mate with each other as a pair, both
sonically and aesthetically, to produce a fully optimized and
compatible musical recovery system. This means that the sonic
presentation produced by the PM-2 and PA-100 system has a higher
level of resolution and greater spatial/ambient information
recovery. As a consequence of this, the end result has a more
layered and realistic 3-dimensional sound stage.
Both the PM-2 Preamplifier and PA-100 Power Amplifier have been
produced on a limited basis and distributed for market testing. The
company will begin full-scale production of the PM-2 Preamplifier
and PA-100 Power Amplifier in the near future.
General Product Description
The PM-2 Preamplifier comprises two chassis finished with
semi-gloss, black epoxy enamel with gold silk screening. The remote
power supply is housed in a 14 gauge aluminum chassis whereas the
control chassis is contained in a black epoxy enameled, 16 gauge
welded steel enclosure with aluminum cover. All electronic
components are securely mounted to a military specification double
side, PTH, glass epoxy circuit board with a flash point of 230 C.
The front panel is made of 3/8-inch thick glass-beaded natural
anodized matte finished aluminum plate.
The PM-2 Preamplifier control chassis employs six highly
regulated power supplies feeding a network of low-pass filters that
supply a dual-channel line amplifier. All switches in the audio
path are military specification silver plated for long life and
quiet operation. The main board includes a delay circuit that
eliminates turn-on transients and harbors the line-stages and
support circuitry. Optional daughter boards are available for phono
stage circuitry or additional line-stage outputs. Frequency
response is greater than 200kHz. Noise is down 90dB for a 1V output.
The PA-100 Power Amplifier is housed in a black epoxy enameled,
16 gauge welded steel enclosure with 1/8 inch thick black anodized
aluminum lid. All visible screws are black steel alloy flat head
socket screws. The front panel is a 3/8 inch thick glass-beaded
natural anodized matte finished aluminum plate. The front panel
supports two custom designed solid aluminum handles finished as
above. All electronic components are securely mounted to three,
military specification doubled-side, PTH, glass epoxy circuit boards.
The PA-100 Power Amplifier incorporates a three stage AC to DC
high-current power supply. The dual channel (stereo) amplifiers are
related at 100 watts RMS into an 8W load; 184 watts into a 4W load.
Minimum continuous load is 2W operating as a class AB stereo power
amplifier.
Circuit Description:
The input circuitry of the power amplifier is a matched,
cascoded, bipolar transistor differential stage. Although a
differential pair has twice the perceived noise (Fletcher-Munson
effect) of a single-ended first stage, a well-balanced differential
first stage will inherently reject supply correcting. A
differential-amplifier stage has shown that perfectly matched
transistors (thermally matched in a common package) and matched in
terms of VBE and hFE would allow for the lowest possible VOS and
total harmonic distortion; this assumes balanced choices for source
and feedback resistances. This is taken advantage of in this design
by employing hand-selected, dual transistor pairs.
The input-stage is biased from a true current source whose
output is converted to a single-ended current via a unity-gain
current mirror. This current is necessary to feed the input of the
very low input impedance of the emitter-follower predriver. This
circuit topology achieves exceptional DC performance with very
predictable and very reliable low VOS, nominally less than 2.0mV
production spread, with little or no VOS (voltage offset) adjustment.
The cascoded input-stage allows for the use of lower noise,
lower voltage, dual bipolar transistors that would otherwise be
prohibitive due to the higher supply rail voltages inherent in a
power amplifier. This cascoding of the input-stage has the
intrinsic ability of lowering noise at high frequencies as well. In
addition to biasing each transistor of the differential stage at 2mA
(which greatly increases slew rate), the cascode pair is biased from
a regulated, highly stable, temperature-compensated supply. Adjunct
to the slew enhancement techniques applied above, simple emitter
degeneration is implemented. By resistively and thermally matching
these emitter resistors, any contribution to VOS is minimized. The
complexity of properly applying cascoding substantially improves
linearity, in particular by overcoming the inherent distortions
caused by the "Miller" effect. This application also provides for
the best possible common-mode and power supply rejection ratios.
The above-mentioned "Miller" or "early voltage" effect is a
phenomenon by which an effective feedback path between the input and
output of a semiconductor device is provided by the capacitance
between the specified electrodes. This can affect the total input
impedance that results in the total dynamic input capacitance being
always equal to or greater than the sum of the static electrode
capacitances. The benefits of cascoding are extremely important at
this stage where regenerative feedback is virtually ineffective for
CMRR (common-mode rejection ratio) and PSRR (power supply rejection
ratio).
To further reduce the effects of common-mode signals (thereby
encouraging CMR), it was necessary to fully balance the AC impedance
of the differential input-stage bipolar transistors. This involved
more than simply equalizing resistor values; properly balancing the
differential input-stage lowers distortion due to the reduction of
output currents from the input-stage differential pair in response
to common-mode input voltage. This reduction in the conversion
process also decreases thermal drifts.
In view of the non-standard source impedances available, this
power amplifier has been specifically designed to mate with the PM-2
Preamplifier, thereby ensuring optimized impedance matching and
CMRR. The initial sonic benefits are improved low level resolution
spatial and ambient information recovery and overall better
specificity, which translates into excellent imaging and a more
realistic 3-dimensional sound stage portrayal.
The thinking today has predominately assumed that the only
solution to low-frequency group-delay distortion is the elimination
of all coupling capacitors. Unless a no-holds-barred design, a
truly direct-coupled amplifier (with absolutely no capacitors in the
signal path or feedback circuitry) is inherently unreliable and
prone to thermal drift. The consequences can be a significant, and
often unpredictable amount of VOS at the speaker terminals due to
temperature drift, semiconductor mismatch or simply component aging.
The common practice today is to compensate any VOS drift with a
comparator and a servo amplifier. This method of controlling VOS is
to examine the output for excess VOS and apply an offsetting voltage
to the amplifier input. The problem arises when we remember that we
must integrate the signal over its entirety and divide the result by
the time during which it was examined. This gives us the average DC
value of the waveform. Therefore any VOS reduction circuitry can
only respond after the fact...too late, since the waveform has
already passed through the amplifier before the error can be
distinguished from the signal.
Inouye's solution was to retain the coupling capacitors, but
include a low-frequency, group-delay compensation network. This
network directly compensates for the low-frequency attenuation
created by the first and predominant roll-off. The low-frequency
characteristics in the time domain from 1Hz to 10Hz is substantially
improved with a -3dB corner frequency better than 3Hz as well as
better low frequency transient response and overall control.
Another prerequisite of this amplifier was to ensure that the
power bandwidth was passively limited, rather than being a
manifestation of the active circuitry limitation. Therefore, the
bandwidth of the total amplifier circuitry is limited by passive
components in the low-frequencies, by way of the feedback path and
at high-frequencies, by the input filter. This passive input
filtering ensures the amplifiers overall frequency response remains
well below the frequency limitations of the active componentry.
The benefits are twofold, primarily freedom from instabilities,
and equally as important, but often misunderstood - transient
intermodulation distortion (TID). The low-frequency limiting is
accomplished by a polypropylene bypassed, low ESR, audio grade,
electrolytic capacitor. This capacitor guarantees that the output
is referenced to ground potential, due to the increasing
degenerative-feedback (negative-feedback) as frequencies approach
DC. This not only provides for a stable and reliable amplifier, but
also overcomes many of the obstacles regarding VOS mentioned earlier.
In addition to the global degenerative-feedback, local-feedback
is employed in a number of locations for a total closed-loop gain of
approximately 24. This technique raises the output impedance of the
second stage common-collector bipolar pairs by way of a pair of
common-drain MOSFETs; the inherently faster switching capabilities
of the MOSFETs ensure less phase shift than their bipolar
counterparts. This allows the output impedance of the driver stage
to be independent of the modulating effects of amplitude and
frequency on the junction capacitance's, hence one less contributor
to a form of dynamic distortion. This compound driver stage
therefore comprises a class "A" biased at 25mA. This
common-collector stage provides a very low impedance and high
current drive in addition to isolating the predriver's high output
impedance from the non-linearity of the low power MOSFET's input
capacitance.
This next low power stage is a common heat-sinked pair of
complementary MOSFETs in a common-drain configuration, biased at
approximately 30mA. These MOSFETs additionally ensure that the
final output stage MOSFETs have sufficient gate drive current to
charge and discharge the input capacitance of their gates. This
allows for extra current when needed, particularly when driving low
impedance speaker loads at high frequencies.
The output stage not only provides the necessary signal gain,
by way of current requirements, but also is susceptible to all the
back EMF and cable reflections typical of any amplifier/speaker
interface. This is compounded by the prevalence of exotic, time
compensated speaker cables. These hardships imposed on the power
amplifier are particularly true in a class "AB" design, and where
audio signals are dealt with via a (supposedly) complementary stage.
Regarding complementary output devices, typically their inherent
mismatched parameters goes unnoticed or certainly improperly
addressed. All the semiconductors used herein are individually
tested and hand-selected for proper matching characteristics.
The output power stage is also a common-drain MOSFET
configuration. Although a common-drain MOSFET output stage is less
efficient than a common-source configuration, it is inherently more
economical and more forgiving to device matching and henceforth
current sharing. This makes for a consistently more reliable
amplifier. A common-drain output stage requires the driver stage to
swing the entire output voltage range, after subtracting bias
voltage, this would require an additional dual polarity, but higher
voltage power supply for the output stage to be capable of swinging
from rail to rail. While power MOSFETs have many advantages, one
problem is the MOSFET's lower transconductance that results in
considerable crossover distortion unless biased extremely high.
Likewise, harmonic distortion increases over bipolar, typically
+10dB. Regardless of the aforementioned concerns the advantages
outweigh the disadvantages in this application.
The output devices chosen for this power amplifier are capable
of operating extremely linear when biased at a minimum of 100mA and
driven from the very stable and high current driver stage previously
mentioned. Therefore, this is the minimum bias current used here
and why MOSFET's temperature coefficient is zero; this allows for
practically no temperature drift, eliminating the need for an
elaborate bias-tracking circuit.
The output stage is coupled to the amplifier output terminals
through a quasi second-order low-pass filter. Though raising the
measured damping factor, this decoupling network reduces THD at high
frequencies and minimizes the risks of parasitic oscillations. The
output inductor has increasing impedance at high frequencies and
henceforth prevents capacitive loads from shorting the output stage.
Properly matching the output series inductor with an appropriate
damping resistor minimizes the overshoot and ringing prevalent when
driving into highly reactive loads by reducing the "Q" of the
resonant circuit.
Inouye I-250 Stereo Integrated Amplifier
As the purchasing power increases in North America due to the
healthy economic condition, more and more people are considering
buying upscale audio products that are smaller and simpler in design
but still offer an esoteric value. These high-end specialty audio
purchases are in direct contrast to the mass-market remote
controlled surround sound mega systems available today.
As a result of the change in market sentiment, the company has
developed a prototype integrated stereo amplifier to accommodate
this market segment. Although capable of being mass-produced, the
construction and detailing that comes with the I-250 Stereo
Integrated Amplifier is first class all the way. It features a
remote power supply that is unique in the industry for this type of
product and price point.
The prototype unit's performance has far exceeded all design
and performance criteria to date. Requests have also been received
from interested distributors to convert the I-250 Stereo Integrated
Amplifier with two channels to a multi-channel system that can be
used for theatre surround sound purposes. The company is currently
researching the possibility of expanding the two channels to
multi-channels system.
General Product Description:
The I-250 Integrated Amplifier comprises two chassis. The
remote power supply is housed in a 14 gauge aluminum chassis with
matching lid. Finish is semi-gloss, black epoxy enamel with gold
silk-screening. The control chassis is housed in a black epoxy
enameled, 16 gauge welded steel enclosure with 1/8 inch thick black
anodized aluminum lid.
All electronic components are securely mounted to a military
specification double-side, PTH, glass epoxy circuit board. Circuit
board silk-screening and component ident. has a flash point of
230oC. The front panel is a 3/8 inch thick glass-beaded natural
anodized matte finished aluminum plate. All electronic components
are securely mounted to three, military specification doubled-side,
PTH, glass epoxy circuit boards. Minimum continuous load is 3W.
The I-250 control chassis houses a dual-channel preamplifier
stage, a dual-channel power amplifier section and six highly
regulated power supplies. All switches in the audio path are
military specification silver plated for long life and quiet
operation. The main motherboard includes a delay circuit that
eliminates turn-on transients. Optional daughter boards are
available for phono stage circuitry or additional line-stage
outputs. Frequency response is greater than 200kHz. Noise is down
90dB for a 1V output. Power output is 50 watts RMS into 8W and 85
watts RMS into 4W.
Circuit Description:
The I-250 Integrated Amplifier incorporates a four-stage
push-pull audio power amplifier design comprising a complementary
MOSFET output stage driven by fully discrete bipolar input and
driver stages. This power amplifier was designed not as a
no-holds-barred approach or as an unusually esoteric design.
Rather, a mid-priced, though, up-scale, high-end contender. It
includes a cascoded and symmetrical differential-amplifier input
stage, a voltage-amplifier gain-stage, a high-current,
voltage-boosted buffer and dual VBE multipliers for bias
stabilization. Hallmarks of power amplifiers in this price category
often exhibit grainy high-frequencies and loose, uncontrolled,
low-frequencies, typical symptoms of poor linearity and a
high-frequency instability problem.
Emphasis has been put on increasing open-loop linearity as well
as ensuring excellent stability into a variety of speaker loads that
are as low in impedance as they are high in inductance, both
real-world conditions. The thinking today has assumed that the only
viable and perhaps the only practical solution to minimize
low-frequency group-delay distortion is to eliminate the input
coupling capacitor.
A truly direct-coupled amplifier, with absolutely no capacitors
in the signal path or feedback circuitry, can prove to be
unreliable. The consequences can be a significant and often
unpredictable amount of VOS at the speaker terminals due to thermal
drift, semiconductor mismatch or simply component aging. Another
factor to consider is the non-standard output impedance typical of
the average returned to ground via the lower output impedance of the
preamplifier's output stage. It is not unusual to have a
preamplifier with output impedance ranging from as high as 10KW to
lower than 10W.
The alternative to AC coupling is to compensate any VOS drift
with a comparator and a servo amplifier. This method of controlling
VOS is to examine the output for excess VOS and apply and offsetting
voltage to the amplifier input. The problem arises when we remember
that we must integrate the signal over its entirety and divide the
result by the time during which it was examined. This gives us the
average DC value of the waveform. Therefore, any VOS reduction
circuitry can only respond after the fact...too late, since the
waveform has already passed through the amplifier before the error
can be distinguished from the signal. An audio-grade film capacitor
is included as part of the input signal conditioning where signal is
fed into a polypropylene bypassed polycarbonate film capacitor,
which is sized to minimize low frequency phase shift.
The radio frequency interference input filter follows and is
incorporated to maximize RF suppression with an fhb of approximately
200kHz. This input signal conditioning forms a passive band-pass
filter set at over a decade above and below the minimum requisite
bandwidth of 20Hz-20kHz for minimal phase shift at the pass-band.
This RC filter network not just a capacitor to ground, is in series
with a small value resistor, providing an additional transfer
function-a zero. This zero, eliminates an additional pole, and
therefore an additional phase lag, otherwise the high frequency
phase shift would eventually approach 90 , and be prone to oscillate.
A low ESR, electrolytic capacitor in the return leg of the
global-feedback network, accomplishes further low-frequency
limiting. This capacitor guarantees that the output is referenced
to ground potential due to the increasing degenerative-feedback
(negative-feedback) as frequencies approach DC. This not only helps
to stabilize the power amplifier, but also overcomes many of the
obstacles regarding VOS mentioned earlier. The input stage
illustrated comprises a symmetrical cascoded pair of
differential-amplifiers. This input stage is essentially a
voltage-difference amplifier to current-output converter.
Although a differential amplifier has twice the perceived
noise, Fletcher-Munson Effect, as compared to a single-ended
amplifier, a well-balanced differential amplifier can virtually
eliminate 2nd-harmonic distortion and exhibit far greater power
supply noise rejection, particularly at low-frequencies. Ideally
the current-output seen at the collectors of a differential
amplifier is completely independent of their respective input
signals, only the voltage difference is amplified, hence common-mode
rejection. Analysis of this error-correcting stage has shown that
perfectly matched transistors, matched in terms of VBE and hFE,
would allow for the lowest possible VOS and total harmonic
distortion. It is of particular importance to balance the collector
currents to ensure the lowest 2nd-harmonic distortion figures.
The common practice today is to actively load each differential
amplifier with a current mirror in order to ensure proper current
balancing. Passively balancing the collector currents also has the
advantage of not unnecessarily increasing differential amplifier
gain that would otherwise occur due to the very high effective load
impedance created by current mirror. This has only a marginal
degradation on 2nd-harmonic distortion performance. This is in part
owing to the very low load imposed by the following
voltage-amplifier stage. Total harmonic distortion should therefore
only be measurable at very high-frequencies. To further reduce the
effects of common-mode signals, thereby encouraging the common-mode
rejection, it is imperative to fully balance the AC impedance of the
differential amplifiers as well. This involves more than simply
equalizing resistor values.
A truly balanced differential amplifier input stage lowers
distortion by reducing its current-output in response to common-mode
voltage-input. This reduction in the conversion process also
decreases thermal drifts that could significantly degrade VOS. The
benefits of cascoding are extremely important at this stage where
regenerative-feedback is virtually ineffective for common-mode
rejection and power supply noise rejection. Cascoding also
increases the input stage's linearity and open-loop frequency
response due to the minimization of the junction capacitance,
Miller-effect, of the input transistors. Otherwise, this effect
would adversely affect the total input impedance resulting in the
total dynamic input capacitance being always equal to or greater
than the sum of the transistor's static capacitances.
To maintain the high bandwidth and gain capability of the input
stage, its output impedance which is governed predominantly ROUT,
must be terminated by a similar load impedance and a reasonably low
capacitive load, CLOAD of the next amplifying stage. This is
imperative to ensure a sufficient current swing at its output. The
power amplifier's second stage is built around a
complementary-cascode voltage-amplifier. The use of a cascode stage
here serves the dual role of splitting the power dissipation between
four devices as well as increasing open-loop frequency response.
This stage provides the current-to-voltage conversion and provides
the phase inversion necessary to drive the output stage drivers.
The lower frequency response typical of a common-emitter
amplifier is enhanced with the cascode connected common-base
transistors. These common-base transistors inherently have the best
high-frequency response as well as very high voltage gain, although
current gain is slightly less than unity. As a large gain-stage,
the voltage-amplifier can contribute a consequential amount of
distortion if not linearized properly. First of all, it is assumed
that if the global-feedback network addresses linearization of gain
at low-frequencies, then high-frequency linearization must be
addressed locally. Secondly, and perhaps more, is the fact that,
although the voltage-amplifier stage is essentially a high gain
stage in its own right, gain is difficult to maintain due to this
stage's inherent sensitivity to loading. High gain must be
maintained in order for local-feedback to be effective.
The benefits mentioned earlier from passively limiting the
high-frequency response of the input stage is equally realized here
by the action of Cdom passively limiting the high-frequency response
of the voltage-amplifier stage. Another reason to include these
capacitors is the ease at which linearization is accomplished.
Linearization can be so successful that any harmonic distortion
contribution will be predominately lost in the noise floor and can
be virtually ignored.
As indicated previously, the load subjected to the differential
amplifier stage should be as ideal as possible. High-frequency
stability can easily be threatened by the cumulative phase errors
that occur by cascading amplifier-stages. Therefore, the emphasis
during development of the input differential amplifier stage and
voltage amplifier stage was to eliminate the possibility of any
high-frequency oscillations.
The output stage is a highly biased class "AB" complementary
push-pull source-follower (common-drain) MOSFET output stage.
MOSFETs were chosen in view of the significantly less odd-order
harmonic distortion that is contributed to the output signal than
their bipolar junction transistor counterparts. This stage supplies
all the current necessary for the speaker load. Connected to the
output is another RC Zobel network that dampen any high-frequency
resonances. This RC network terminates the output stage with a
resistive load at high frequencies minimizing the possibility of
oscillations. The inductor serves to isolate the power amplifier at
high-frequencies from capacitive speaker/cable loads.
Modus I Home Theatre Subwoofer System
Due to technology's continuous advancement in home theatre, the
need for a fully compatible and upgradeable high-end subwoofer
system becomes abundantly clear.
The design objective in the development of the Modus I
Subwoofer System was to realize an unobtrusive integration of
realistic and articulate low-frequencies (bass) with any satellite
or theatre-surround sound system, THX, Dolby Digital, DTS and Pro
Logic included.
The Modus I Subwoofer System includes an exceptionally flexible
crossover system where both sound-pressure level (SPL) and crossover
frequencies would be continuously adjustable.
Additionally, ergonomics temper the design allowing for a
remote crossover system that would allow locating the subwoofer's
main enclosure where the low-frequency response was best and
locating the crossover system's controls where they were most
convenient.
General Product Description:
The Modus I Subwoofer System is a high-end, high-powered,
professional home-theatre subwoofer. Included in the system package
is a furniture-grade, ported, loudspeaker enclosure and all
necessary electronics.
The furniture grade wooden enclosure comes in a variety of
finishes. The standard finish is piano-gloss black enamel.
Construction is typically from 25mm (1 inch) stock with reinforced
corners and generous bracing. This ensures the lowest cabinet
resonances and the tautest low-frequency bass extension.
The loudspeaker enclosure houses a matched pair of 10 inch,
long-throw, (approx. 25.4 cm) low-frequency drivers. The two
drivers (woofers) are configured in a push-pull arrangement to
minimize low-frequency total harmonic distortion (THD).
The Modus I Subwoofer System also includes an exceptionally
flexible, active crossover unit, all necessary controls and
adjustments, and a high-current auto turn on/off 300-watt power
amplifier.
The system's electronics are housed within two separate
chassis. The power amplifier is housed within a 14 gauge welded
steel construction, semi-flush mounted chassis directly behind the
subwoofer's grill frame. The housing that encloses the electronic
crossover is constructed from 16 gauge, anodized aluminum. Finish
is semi-gloss, black epoxy enamel with gold silk-screening.
All electronic components are securely mounted to a military
specification double-side, PTH, glass epoxy circuit board. Circuit
board silk-screening and component ident. has a flash point of 230 C.
Circuit Description:
The Modus I Subwoofer System's electronics includes a dedicated
high-current 300-watt power amplifier within the subwoofer's main
enclosure. The short length required for connecting the subwoofer's
two large woofers to the power amplifier would further the
amplifier's ability to increase dynamic response which is greater
than +4dB.
The power amplifier is configured as a true motional feedback
system. This system incorporates the driving voice coils directly
in the feedback loop as opposed to monitoring cone-motion.
Conventional cone-motion monitoring, either by way of a second voice
coil per speaker or through a cone-mounted accelerometer, detects
the cone motion (position) only after the damage has been done.
The signal is routed to the Modus I Subwoofer System from the
electronic crossover. At this stage, low-frequency adjustment is
made via two continuously adjustable frequency controls and two
continuously adjustable level controls.
Direct input to the Modus I Subwoofer System is available from
virtually any source. This exceptional flexibility allows this
subwoofer to seamlessly integrate into any satellite or
theatre-surround sound system regardless of format.
Typically, electromagnetic interference is not a significant
problem for power amplifiers as their power supplies are inherently
ground (earth) referenced. In the Modus I Subwoofer System, this
would create unwanted ground loops due to the distance, perhaps
several metres, from the music source.
To seamlessly integrate the Modus I Subwoofer System's
electronic system into a theatre-surround sound system, Inouye
developed a floating power supply that feeds a true balanced audio
connection between the power amplifier and the electronic crossover.
The Modus I Subwoofer System also features a power supply
soft-start that minimizes reactive loading to the power-line. This
coupled with the automatic delay on/off timer means that you adjust
the Modus I Subwoofer System once and forget about it.
The active crossover system is designed to be the most flexible
in the industry. This system, normally mounted in a cavity behind
the front grille frame can be dismounted and located remote to the
main subwoofer enclosure for any installation requirement.
Electronic Hobby Kits
During the manufacturing of electronic products, surplus parts
and discontinued raw materials often stock up. This, coupled with
any assembly-line interruption, will allow Inouye to manufacture a
full line of educational/institutional teaching/learning aids to be
sold as Electronic Hobby Kits. These kits, some of which have
already been designed and tested, will be sold directly to
electronic supply houses for distribution; similar versions of the
same to educational/institutional school boards.
An early understanding of electronic principles and systems
eliminates the mystique of technology and better prepares the young
adult to cope with the electronics permeating all aspects of our
daily activities.
Electronic Hobby Kits are electronic kits that come in an ideal
assortment of project subjects as well as skill levels. A
comprehensive instructional manual comes with all kits as well as an
800 number for the first time kit builder. The skill level required
for assembly is ideal for the adult beginner or high-school student.
TRADEMARKS AND COPYRIGHTS
Inouye relies upon patent copyright, trademark and trade secret
laws to protect its proprietary rights in its products. Inouye has
applied for registration in Canada and the United States of the
trademark "INOUYE". While our competitive position may be affected
by our ability to protect our proprietary information, we believe
that because of the rapid pace of technical advancement in the
industry, factors such as technical expertise, knowledge, and
innovative skill of our management and technical personnel and our
ability to rapidly develop, produce, enhance and market our products
may be more significant than formal intellectual property protection
measures in maintaining our competitive position.
We will further protect our proprietary rights by requiring
each employee, prior to commencing employment with us, to enter into
an agreement with us which provides, among other things, that during
his/her employment and for a specified period of not less than two
years subsequent to the termination of the employment, the employee
is prohibited from competing with us. This agreement also provides
that the employee shall assign to us all intellectual property
rights in any work undertaken by the employee.
We are pursuing patent registration for all our products in
Canada, United States, Great Britain and the Europe Community.
DEVELOPED PRODUCTS AND PRODUCTS AT MARKET TESTING STAGE
All Inouye products are currently UL Listed and CSA Certified
or NRTL/C Certified (Nationally Recognized Testing Laboratory for
both USA and Canada) where applicable, and, comply with the new CSA
International's combined Canadian and American certification program
that came into effect July 1, 1999.
Our Products Currently in Production and For Sale
Power-Line Products:
* Synergistic Power-Line Conditioner
* VideoGuard
* VideoGuardplus
Audio Products:
* PA-100 Power Amplifier
* PM-2 Preamplifier
* I-250 Stereo Integrated Amplifier
Loudspeaker Products:
* Modus I Satellite Speaker System
* Modus VIII Speaker System
Our Products at Market Testing Stage
Power-Line Products:
* PowerBarplus
* PowerGuardplus System
Audio Products:
* MPA - 200 Mono Block Power Amplifier (pair)
* DMP - 20/50 Dual Mono Preamplifier
* SPA - 100 Stereo Power Amplifier
Home Theatre Audio Products:
* THX 6 Theatre Power Amplifier
* Dolby Digital 5.1 Theatre Power Amplifier
* Modus I Subwoofer/Amplifier System
Accessory Audio Products:
* HDS 10 Professional Headphone Amplifier
* Moving-Coil Preamplifier
* Loudspeaker Products
* Modus II Speaker System
* Modus III Speaker System
* Modus V Speaker System
Educational/Institutional Teaching/Learning Aids:
* Electronic Hobby Kits
MARKET OVERVIEW
The Consumer Electronics Manufacturers Association (CEMA)
reported that US sales of high-end audio products amounted to US$4.7
billion in 1999, an increase of 7% over the previous year. The
industry has enjoyed steady growth for each of the past five years.
Overall, the American consumer electronics industry has grown
nine-fold in 20 years. Factory sales amounted to US$8.14 billion in
1977 and grew to US$72.11billion in 1998.
With the anticipated introduction of high definition television
(HDTV) this year, the total market for the home audio-video consumer
market is expected to increase by at least another 10%. Added to
this, is the much talked about emergence of the convergence of the
audio/video/personal computer/Internet/video game technologies in
residential homes which is anticipated to dramatically push the
total sales of home entertainment electronic products even further.
One of the reasons often cited for the increased spending in
electronic equipment is the overall desire to keep up-to-date with
the latest technology. With the North American market currently
enjoying one of its healthiest economic cycles since the Second
World War, large sums of disposable income have been directed into
spending for leisure products especially those related to up-scale
audio-video equipment such as Laser Disc, DVD, and HDTV.
The second rationale for the ever-increasing home electronics
market is attributed primarily to the demographics factor. Those
individuals born after W.W.II are fast approaching their early
retirement age. These individuals, better known as baby boomers,
usually have significant savings accumulated. As such, they are
typically driven by product performance demanding the best in
audio/video or other similar electronics available.
Furthermore, as the population ages, the concept of "cocooning"
becomes increasingly popular as a lifestyle choice. Instead of
spending nights out at the movies, most of these individuals prefer
to rent movies and view at home. This has created the so called
"Home Theatre" phenomenon which played a significant role in the
increase of electronic sales in North America particularly for
products like large screen televisions, VCRs, Laser Disc, DVD and CD
players, speakers, etc.
Market for Amplifiers, Pre-Amplifiers and Loudspeaker
The market for separate audio components such as amplifiers,
pre-amplifiers and loudspeakers has fluctuated over the last several
decades. Beginning in the 1950s, tube amplifiers were very popular
due to the innovations carried out by American audio pioneers like
Marantz, Fisher, and Scott. The popularity of these separate audio
components coincided with the era of rock and roll music and
continued into the 1960s with heavier rock music from bands like the
Rolling Stones, Beatles, etc.
In the 1970s, the market demand for separate audio components
began to decline tremendously due to the wide availability of cheap
rack-mount systems and portable audio products like mini-systems and
boom boxes. The onslaught of cheap systems continued through the
1970s and 1980s with the introduction of portable radio and cassette
players like the Sony "Walkman". In the early 1990s, the demand for
separate audio components began to increase again.
The rise in popularity of the separate audio components is
attributed directly to the popularity of the home theatre concept.
With the emergence of Home Theatre, special pre-amplifiers are
required to decode the wide variety of soundtrack formats such as
Dolby Digital, DTS and Pro-Logic. Similarly, amplifiers with three
channels, five channels and six channels became critical components
of sophisticated home theatre systems.
According to the Consumers Electronics Manufacturers
Association, the average sales of separate audio components from
1993 to 1997 in the United States was US$1,729 million per year.
This compares to an average of US$461 million for rack systems.
With recent developments in more sophisticated digital applications
like audio DVDs, digital broadcast, super DVDs, etc., the demand for
separate audio components is likely to dramatically increase in the
immediate future.
Current Market Trends
Present technological advancements and research in the
industry, specifically those involving surround sound and digital
reproduction techniques, are at the forefront of the general public
interest.
In contrast to mainstream products, high-end products are
typically not as price-sensitive, but are selected by performance
driven criteria. The potential customer for Inouye products is not
the first time purchaser, but rather the second or third time,
up-scale purchaser. External influences, such as economic
conditions, have less impact on this target market that,
statistically, has greater disposable income available.
Pacific Rim Countries
Beyond North America, Asian countries have also emerged as
leading consumers of home entertainment electronics. Countries like
South Korea, Japan, Hong Kong, Taiwan, Singapore, and Malaysia have
always been in the forefront in the past in terms of promoting the
latest wave of electronic home entertainment products. More
recently, people in China and Vietnam are also seeking to enjoy the
latest electronic products available.
With over a billion in population, China is one of the largest
markets in the world. The opening of the Chinese market and their
rising standard of living has created a market sensitive to
value-engineered products that were heretofore unavailable.
Products manufactured in Canada and the USA are highly sought after.
COMPETITION
There are currently two principal competitive threats we face:
first from the alternative standards and technologies, and second
from direct competition to our products and services.
There are only a handful of companies currently involved in the
power-line conditioning or surge protection industry. Large
segments of the present players are mainly involved in manufacturing
basic surge protection devices for the computer industry. Most of
these surge protectors do not provide any power-conditioning element
in their product specifications. Of those manufacturers (e.g.
Chang, Tice, Transparent, MIT, and Power Wedge) that have power-line
conditioning in their devices, most are still not on par with our
Synergistic Power Line Conditioner in terms of performance.
Technology
At Inouye we have the ability to continuously manage and fully
explore and exploit the privileges accorded under the international
copyright and patent laws.
Third Party Suppliers
Our in-house technologies are well developed so as not to rely
on single source suppliers. Invariably, parts availability may be
interrupted whereupon alternate suppliers become necessary.
Therefore, Inouye uses the JIT (just-in-time) production method.
Accordingly, advanced long-term scheduling helps to ensure the
constant uninterrupted flow of raw materials while offsetting
unexpected price increases at the same time.
Domestic Regulations
In Canada and the USA, electrical certification by CSA and UL
respectively are required for any consumer electronic products that
rely on standard house current. All products have been designed to
comply with CSA's and UL's most stringent testing including the new
North American NRTL/C Certification (Nationally Recognized Testing
Laboratory for both USA and Canada).
International Regulations
These regulations, specifically electrical codes, vary from
country to country; however, by complying with Canada's own CSA
requirements, most other countries' regulatory requirements are far
exceeded. Other regulations may include clearance-to-market,
minimum warranty, etc. Our intent is to utilize distribution
channels/agents that are well respected and fully versed in these
regulatory requirements for their domestic markets.
Technological Obsolescence
The consumer electronics industry is characterized by rapid and
often very consequential technological changes. Inouye
technologies, developed in-house, are significantly advanced such
that it has the ability to respond quickly to future changes and new
market demands.
OUR COMPETITIVE ADVANTAGE
We have been able to carve a market niche for ourself in the
last decade by concentrating our efforts on producing a high quality
and reasonably priced product with zero failure rate coupled with
excellent customer service backing. This has been possible due to
several factors because, the whole design of the power line
conditioner has been done entirely in-house by Brian Inouye &
Associates Ltd. at the research facility with full CAD/CAM equipment
support. This has resulted in tremendous cost savings since lag
time caused by changes in design work has been eliminated. In
addition, we are able to keep our cost within reasonable terms
since we don't need to incur additional expenses by contracting out
any of our design work.
OUR MARKETING STRATEGIES
Our objective is to establish ourselves as the leading supplier
of high-end audio products. To achieve this, Inouye has adopted the
following future strategy:
Expansion of the Distributor Team
Inouye is expanding and building a strong sales and marketing
team.
Expansion Of Corporate Communication Program
By creating a strong industry presence for itself, Inouye is
differentiating itself from competitors. Inouye plans to open a US
office, attend more trade shows, increase its advertising in trade
publications, conduct educational seminars and continue to develop
and refine its web site.
Leverage Third Party Relationships
Inouye is negotiating with established major home electronics
companies to assist in overcoming competition from firms with
substantially greater technical, financial and marketing resources.
This will also enhance Inouye's ability to complement its product
line and receive more stable revenue.
The availability of different products at different price
ranges has also enabled us to penetrate various types of
distribution channels. The more costly product line is distributed
primarily through high-end electronic retail stores that cater to
sophisticated clienteles. The lower priced product line will be
distributed mainly through large retail chain stores like Best Buy.
The mass-market distribution arrangement will help to move our line
of products expeditiously and also assist in promoting our
reputation to a wider circle of consumers.
Expansion Strategy
At present, Inouye has a twofold strategy that involves
manufacturing under its "INOUYE" brand name and alliances with major
consumer electronics companies to manufacture products on OEM basis.
Inouye has negotiated the acquisition of the business of its
PCB (printed circuit board) maker. This will provide Inouye with
additional technologies and broaden its market.
Ability To Capture Larger Market Segment
Despite an existing competitive position in the market, one of
our focus is to ensure that we have products that cater to every
class of consumer. For example, the SPLC, being a more
comprehensive power-line-conditioning device, has targeted primarily
the more affluent and sophisticated consumers. These are primarily
second-time, up-scale purchasers, with sophisticated home
entertainment systems that require state-of-the-art circuit
protection.
In contrast, the VideoGuard power line conditioner is designed
with the mass-market consumer in mind. A commercial version is
being planned for the OEM commercial market.
E-Commerce Opportunities
Typically, advertising is a one-way communication with
potential customers. With Internet commerce, advertising becomes
interactive. Through on-line advertising, in the comfort and
privacy of individual homes, home-offices and businesses, Inouye
connects to a segment of the business community that would be
otherwise inaccessible. By way of the Internet, the World Wide Web
is becoming an increasingly versatile vehicle to launch new
products, provide greater support for pricing information, product
availability, and customer service.
Inouye is currently advancing the state-of-the-art in web site
design by developing a comprehensive interactive web site for all
commerce available to distributors, dealers and end-users alike.
This new initiative will capitalize on the efficiency of today's
electronic data-management systems to speed order entry, processing
and delivery, while simultaneously improving customer relations.
GOVERNMENT REGULATIONS
Our products are currently UL Listed and CSA Certified or
NRTL/C Certified (Nationally Recognized Testing Laboratory for both
USA and Canada). Due to the rapid changes in the regulations, we
may not be able to obtain the necessary product certifications in a
timely manner to comply with the new CSA International's combined
Canadian and American certification program.
EMPLOYEES
We presently have 3 full-time and 2 part-time employees.
Our employees are not represented by a collective bargaining
agreement, and we believe that our relations with our employees are
good.
REPORTS TO SECURITY HOLDERS.
Prior to the filing of this Form 10-SB, we have not filed any
other reports with the United States Securities and Exchange
Commission. Once we become a reporting company under the Securities
Exchange Act of 1934, our management anticipates that all required
reports and information will be timely filed with the United States
Securities and Exchange Commission. Likewise, to the extent that we
are required to deliver annual and quarterly reports to security
holders through our status as a reporting issuer, or as may be
required by the rules or regulations of any exchange upon which our
shares are traded or quoted, we will deliver annual and quarterly
reports to all shareholders. If we issue additional shares, we may
file additional registration statements for those shares.
This report and any other information that we have filed with
the United States Securities and Exchange Commission may be read or
copied at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. The public may obtain information on the
operation of the Public Reference Room by calling 1-800-SEC-0330.
The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet
address of the Commission's site is http://www.sec.gov.
We also maintain an Internet website at http://www.inouye.bc.ca/.
RISK FACTORS
Our business is subject to numerous risk factors, including the
following:
HIGHLY COMPETITIVE INDUSTRY. We are engaged in the consumer
electronics industry which is subject to competition from both
domestic and international businesses, many of whom have greater
financial, technical and marketing resources than us. Such
competition, as well as any future competition, may adversely affect
our success in the marketplace.
ABILITY TO MEET CUSTOMER ACCEPTANCE OF PRODUCT LINE. Our
ability to grow and remain competitive will be dependent upon, inter
alia, our ability to achieve market acceptance for our products in
Canada, the United States and abroad. There are no assurances that
our existing products or any new products will achieve acceptance in
such markets or elsewhere nor be commercially viable. In addition,
there are no assurances that we will be successful in establishing a
world-wide network of dealers and distributors to carry our product
line or that we will be able to secure an agreement with one or more
OEMs to bundle our products with those of the OEM on a private label
basis on commercially acceptable terms, or at all, in which event
our business strategy may not be capable of being implemented
successfully.
IMPROVING OUR PRODUCT LINE AND ADAPTING TO CHANGES IN
TECHNOLOGY. In order to remain competitive, we must continually
upgrade and improve our products, or develop new products. The
audio/video electronics industry is characterized by rapid
technological change, new product introductions and evolving
industry standards, which quickly render existing products obsolete.
DEPENDENCE ON KEY AND ADDITIONAL PERSONNEL. Our operations are
highly dependent upon the participation of our directors and senior
officers, particularly our founder, Brian Inouye. The loss of Mr.
Inouye or any other senior management personnel may materially affect
our ability to implement our business plan. Our success,
particularly as we undertake commercial rollout of our products, is
and will also be dependent upon our ability to retain and hire
qualified executive marketing, technical, and financial personnel.
There can be no assurance that we will be able to hire or retain such
necessary personnel.
WE REQUIRE CAPITAL TO EXECUTE OUR BUSINESS STRATEGY. No
assurance can be given that any additional financing required will
be available, or that additional financing will be available on
terms that may be advantageous to our shareholders. Such financing,
to the extent that they are available, may result in substantial
dilution. To the extent that such financing is not available, our
ability to implement our business plan and continue to carry on
business will be severely jeopardized.
PATENTS, PROPRIETARY INFORMATION AND TRADEMARKS. We consider
our products and trademarks to be of value and important to our
business. Although we have applied for patent protection in Canada
and the United States in respect of those products which are
currently in production we rely principally upon a combination of
copyright, trademark and trade secret laws, non-disclosure
agreements and other contractual provisions to establish and
maintain our rights. As part of our confidentiality procedures, we
generally enters into a non-disclosure and confidentiality agreement
with each of our employees, consultants, distributors and
specifically with any third party which would have access to our
proprietary information. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or
obtain and use information that we regard as proprietary. There can
be no assurance that the steps taken by us to protect our
proprietary information will prevent misappropriation of such
information. The cost of litigation necessary to enforce our
proprietary rights may be prohibitive. Such steps may not preclude
competitors from developing confusingly similar brand names or
promotional materials or developing products and services similar to
ours.
UNCERTAINTY OF COST PROJECTIONS. Since some of our products
are in the design stage, there can be no assurance that we can
produce the products economically.
PRODUCT DEVELOPMENT. There is no assurance that our product
development will be completed. Technical and/or cost issues may
arise during the final development stages that may materially
affect the capital requirements and financial performance.
MARKET ACCEPTANCE. There is no assurance that our products
will achieve a satisfactory level of market acceptance.
UNCERTAINTY OF SELLING PRICE. Apart from selling SPLC
Powerline products we have made no attempt to market our other
products and thus there can be no assurance that such products can
be sold.
CAPITAL REQUIREMENTS TO CONTINUE AS A GOING CONCERN. If are
not able to obtain the investment capital necessary to meet our
development and production needs, our potential as a "going
concern" could be seriously affected.
LIMITED PUBLIC MARKET FOR STOCK; PRICE VOLATILITY; LACK OF
LIQUIDITY OF INVESTMENT. We are a public company currently trading
on the Canadian Dealing Network (CDN Symbol: ITII). The stock is not
heavily traded. Any significant sales or purchases of stock may
have a material effect upon the trading price for the stock and
cause significant volatility in the trading price of the stock. At
any particular time, shareholders may find it difficult or may be
unable to liquidate an investment in our stock. We intend to
qualify for the trading of our stock through the NASD OTC Bulletin
Board system. However, there can be no assurance that such a market
will develop for the stock, or that if developed, such a market can
be maintained. Purchasers of the our stock should be aware that they
will be required to bear the financial risks of their investment for
an indefinite period of time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
The following discussion and analysis should be read in
conjunction with our financial statements and the notes associated
with them contained elsewhere in this registration statement. This
discussion should not be construed to imply that the results
discussed in this registration statement will necessarily continue
into the future or that any conclusion reached in this registration
statement will necessarily be indicative of actual operating results
in the future. The discussion represents only the best present
assessment of management.
PLAN OF OPERATIONS
Over the next 12 month our management plan to consolidate the
two separate profit centers along two distinct lines of business:
Inouye brand products distributed through a worldwide distribution
network, and Original Equipment Manufacturer (OEM) sales. Both of
the lines of business would interact with the others in a synergistic
relationship where our ongoing technology development will
continuously provide products for direct sales through our
distribution and dealer network or by way of our OEM business. This
comprehensive marketing approach assist with the distribution of
Inouye brand products throughout the world.
1. ORIGINAL EQUIPMENT MANUFACTURER (OEM) SALES. The first line
of Inouye business will be the provision of OEM products.
Negotiations are currently underway for bundling of the audio products
under the labels of various audio market leaders. To date, Inouye has
had discussions and has shared technology for the purposes of
obtaining orders for the manufacturing of Inouye products for OEMs.
2. INOUYE BRAND PRODUCTS. The second line of business is the
manufacture and sale of Inouye brand of power-line conditioner
products and research and development of new power-line conditioning
products with an ability to retain the underlying intellectual
property. The following products comprise some of the proprietary
technologies developed by Inouye.
<TABLE>
<CAPTION>
Inouye Products at Pre-Production and On Sale
Power-Line Products Audio Products Loudspeaker Products
___________________ ______________ ____________________
<S> <C> <C>
Synergistic Power PA-100 Power Modus I Satellite
Line Conditioner Amplifier Speaker System
VideoGuard PM-2 Preamplifier Modus VIII Speaker
System
VideoGuardplus I-250 Stereo
Integrated
Amplifier
</TABLE>
Inouye Products at Prototype or Market Testing Stage
<TABLE>
<CAPTION>
Power-Line Products Audio Products Home Theatre Audio Loudspeaker Products
Products
___________________ ______________ __________________ ____________________
<S> <C> <C> <C>
PowerBarplus MPA D 200 Mono THX 6 Theatre Power Modus II Speaker
Block Power Amplifier System
Amplifier (pair)
PowerGuardplus System DMP D 20/50 Dual Dolby Digital 5.1 Modus III Speaker
Mono Preamplifier Theatre Power System
Amplifier
Home Guard SPA D 100 Stereo Modus I Subwoofer Modus V Speaker
Power Amplifier /Amplifier System System
</TABLE>
2(a) WORLDWIDE DISTRIBUTION NETWORK. The second line of
business is based on distribution of Inouye brand products through a
worldwide network of independent agents/distributors. Inouye is in
the process of assembling a comprehensive distribution network of
agents, noted below, from over a dozen different countries who are
already involved with similar products and possess the appropriate
background and clientele base.
Canada
______
Speaker City Vancouver, BC
Commercial Electronics Ltd. Vancouver, BC
HI FI Centre Ltd. Vancouver, BC
A&B Sound Ltd. BC & Alberta
Artech Electronics Ltd. Central and Eastern Canada
Future Shop Canada
United States of America
________________________
Artech Electronics Ltd. New York State
Best Buy Western USA
Plurison Central USA
Music Hall Eastern USA
Asia
____
Miko Tronic (HK) Ltd. Mainland China
Audio Suite Ltd. Singapore
Audio Services Australia
Excel Hi-Fi China
Axiss Corporation Japan
Europe
______
Presentec Czech Republic
Audio Quartet France
Audio Components Germany
Location Sound Greece
Grand Audio Hungry
Audio Natali Italy
Fequence Audio Martinique
Durob Audio The Netherlands
Audio Klan Imacustica Portugal
Sarte Audio Elite Spain
Audio Nord Sweden
Montanta Audio Systems Switzerland
PRODUCT RESEARCH AND DEVELOPMENT
To date, all the research, design, and manufacturing of our
products are carried out from a small-leased premises located in
the Greater Vancouver area. Certain portions of the manufacturing
process are currently being contracted out to other companies. We
will be phasing out all contract work in the future as our own
manufacturing capacity improves. This will assist us in
streamlining the production schedule to be more cost efficient and
effective.
Currently, we have sub-contracted our production to Brian
Inouye & Associates, a company owned by our founder and director
Brian Inouye, for the production of two thousand units (2,000), in
batches of 50 units, SPLC power-line conditioners to meet the
current demand. The contractor will supply the SPLC products that
are CSA approved and fully packaged for delivery to the purchasers.
We have also established working relationships with the
Department of Physics and Robotics at the University of British
Columbia as well as the National Research Council office at the
British Columbia Institute of Technology for research purposes.
We do expect to increase the number of our employees during
the next twelve months by adding approximately 5 employees,
which would include administrative and executive personnel.
LIQUIDITY AND CAPITAL RESOURCES
We anticipate the revenue from the sale of our products, will
be sufficient to meet our ongoing working capital requirements. We
are manufacturing and selling our SPLC power-line conditioner
products through various distributors in Canada, USA and on the
Internet.
As at November 30, 2000, we are indebted to the business
associates of our directors and senior officers in the aggregate
amount of CDN$145,600 for the money received pursuant to an
Offering Memorandum dated May 8, 2000. We have not issued shares
for the money collected from the private placement. Save as
aforesaid, we do not have any long term or short term debt
obligations. Our miscellaneous accounts payable as at November 30,
2000 aggregated approximately CDN$3,000.
The purposes of the private placement, under the Offering
Memorandum, was to fund purchase of the circuit board manufacturer
Omni Graphics Ltd. Since then, we have terminated the agreement on
October 20, 2000 with Omni Graphics Ltd. The private placement was
for units at CDN$0.35 each and each unit consisted of one
non-transferable share purchase warrant and each warrant entitling
the holder to purchase one additional common share of our company
for a period of two (2) years from the closing at a price of
CDN$0.35 per share in the first year and at a price of CDN$0.41
per share thereafter. Any funds received by us from the
exercise of the Warrants will be added to the general working
capital.
We had incurred losses in the past but with the adoption of
the afore-mentioned business strategy we believe we will be able
to generate adequate revenue to expand the manufacturing capacity
and to fund our product distribution and marketing program.
However, we will require additional capital to execute our business
strategy and if we are unable to obtain investment capital
necessary to meet our development needs, our potential as a going
concern could be seriously affected.
ITEM 3. DESCRIPTION OF PROPERTY.
We do not own any real property. Our executive offices is
located at Suite 708 - 1155 West Pender Street, Vancouver, B.C. V6E
2P4, Canada. The space consists of approximately 750 square feet
and is leased by us on a month to month basis currently at the rate
of CDN$500 per month.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following tables sets forth the number of shares of our
Common Stock, no par value, held by each person who is believed to
be the beneficial owner of 5% or more of the 21,805,788 shares of
our Common Stock outstanding at November 30, 2000, based on our
transfer agent's list, and the names and number of shares held by
each of our officers and directors and by all officers and
directors as a group.
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
--------- ------------------- --------------------- --------
<S> <C> <C> <C>
Common Doug Livsey 1,400,000 Indirect(1) 6.4%
102 145 15TH St. W
North Vancouver, B.C.
V7N 2E6
--------------------------------
Officers, Directors and Nominees
Common Shailen Singh, 500,000 Direct 2.29%
President and Chairman 1,979,300 Indirect(2) 9.07%
of the Board of Directors
10460 Leonard Road
Richmond, B.C.
V7A 2N5
Common Sean Tan,
Chief Executive Officer, 1,979,300 Indirect(2) 9.07%
Secretary and Director
1395 Gabriola Dr.
Coquitlam, B.C.
V3E 2H3
Common Brian Inouye, 640,000 Direct 2.93%
Director 2,639,066 Indirect(2) 12.10%
4915 D 44th Ave.
Delta, B.C.
V4K 1B9
Common Lonnie Hayward 350,000 Direct 1.60%
Director
2075 Rufus Dr.
North Vancouver, BC
V7J 3N2
Common Michael Michaud Nil
Director
6D21960 River Rd.
Maple Ridge, B.C.
V2X 2C3
All Officers, Directors, and
Nominees as a Group (5 Persons) 1,490,000 Direct 6.83%
6,597,666 Indirect 30.25%
========= ======
</TABLE>
______________
(1) Shares held of record by Jasmine Pacific Holdings Ltd., a
company controlled by Doug Livsey.
(2) Shares held of record by 556375 B.C. Ltd., a company controlled
by Messrs. Inouye, Singh and Tan.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The following table includes the names, ages and positions of
our Executive Officers and Directors. Directors are elected at our
annual meeting of shareholders and serve for one year or until their
successors are elected. The board elects the Officers and Officer's
terms of office are, unless governed by employment contract, at the
discretion of the Board.
Name Age Positions and Offices Held
---- --- --------------------------
Shailen Singh 35 President, Chief Financial
Officer and Chairman of
the Board of Directors
Sean Tan 34 Chief Executive Officer,
Secretary and Director
Brian Inouye 45 Director
Lonnie Hayward 32 Director
Michael Michaud 36 Director
Shailen Singh has been President, Chief Financial Oficer and
Chairman of the Board of Directors since December 15, 1998. Mr.
Singh, an accountant by profession, provides a solid financial and
strategic management background along with 14 years of
international public accounting experience with various public
accounting firms, such as Price Waterhouse Cooper, Chartered
Accountants in Fiji and Evancic Perrault Robertson, Certified
General Accountants of Surrey, B.C. Mr. Singh holds a Bachelor of
Commerce degree in Accountancy and Management and a Fellow of The
Taxation Institute of Australia (FTIA) since January 1988, Certified
Practising Accountant (CPA) memeber of the Australian Society of CPA,
since February 1993, and an Associate Member of the Australian
Society of CPA, since September 1990. Mr. Singh also serves as a
director of Buddha Resources Inc., a publicly listed company on the
Canadian Venture Exchange (CDNX: BUA).
Sean Tan has been Secretary and Director since December 15,
1998. On October 23, 2000, Mr. Tan was appointed as our interim
Chief Executive Officer (CEO). Mr. Tan has substantial financial
and banking experience. Before joining our company, Mr. Tan worked
as a banker for Banca Commerciale Italiana of Canada, Business
Development Bank of Canada, Royal Bank of Canada, the Southern Bank
of Malaysia and as a financial and corporate recovery consultant
for KPMG Peat Marwick Consulting in Malaysia. He holds a
Bachelor's of Arts in Economics and Political Science from
Northern Illinois University and a Master's degree in Public
Administration from Pennsylvania State University. In addition, he
is a member of various professional business and management
organizations. Mr. Tan is also a director of Buddha Resources Inc.,
a publicly listed company on the Canadian Venture Exchange (CDNX:
BUA).
Brian Inouye is our founder. Mr. Inouye has been involved in
scientific research for over twenty years. He has been principal
lead in the engineering of lifesafety and communication systems for
both the private sector and the military. He was previously the
Western Regional Manager for Mirtone Industries Ltd. (lifesafety
systems), Santel West Communications Inc. (telecommunication systems)
and Electro-Vox Inc. (intercom and fire-fighter evacuation systems)
and a Systems Specialist for ADT-Pacificom. (high-level government
and military security systems and lifesafety systems). As the
regional manager of Mirtone, Mr. Inouye was responsible for the
design and supervision of lifesafety protection systems for the
re-built MGM Grand Hotel (now Bally's) in Las Vegas. As a Systems
Specialist, Mr. Inouye supervised the design and installation of
lifesafety systems for 46 pavilions at the Expo '86 in Vancouver,
British Columbia, Canada. Mr. Inouye currently consults to other
companies on matters relating to acoustic and sound engineering in
addition to managing Brian Inouye & Associates Ltd. Some of his
more recent consulting assignments include Silent Witness
Enterprises Ltd. (R & D of concealed microphone surveillance systems),
Xinex Networks Inc. (R & D of handsfree desktop telephone system),
Alphasonik (automotive power amplifier), Exciter Sound Products
(sub-woofer system), Pacific Semiconductor (R & D of MOSFET testing
system), Speaker City (consumer electronics speaker), Artech
Electronics Ltd. (motor control power supply), and HiFonics Corp.
(automotive power amplifier). Mr. Inouye is also a regular
contributing editor to The Inner Ear Report trade journal and a
frequent lecturer.
Lonnie Hayward has served as a director since January, 1999.
Since 1986, Mr. Hayward owned and operated several private businesses.
In 1986, he owned and operated Vyntex, an upholstery company with
CDN$300,000 in annual sales. In 1988, he owned and operated Animated
Signs and was solely responsible for increasing its value to
CDN$450,000. In 1992, he co-owned and managed Network International
Collections Ltd. and was responsible in increasing its sales from
CDN$30,000 to over CDN$150,000 per month. In 1995, Mr. Hayward worked
as an Independent Sales Manager for Fraser Collection Services Ltd.
and helped increase its sales to CDN$250,000 per month. In 1998, he
co-owned and operated AAA International Debt Collection Agency before
joining us in 1999 as Director in charge of Investor Relations. Mr.
Hayward is a graduate of Rutland Senior Secondary Course in 1987 of
Canada. He also received a degree in Business Management in 1987 from
Okanagan College, Canada.
Michael Michaud has served as a director since March 14, 2000.
Mr. Michaud is a consultant with an international engineering firm and
has held several management positions over the past ten years. He
holds a Master of Science degree and is a Professional Geoscientist
and a member of the Association of Professional Engineers and
Geoscientist of British Columbia.
ITEM 6. EXECUTIVE COMPENSATION.
We have not had a bonus, profit sharing, or deferred compensation
plan for the benefit of our employees, officers or directors. Except
as noted below, we have not paid any salaries or other compensation to
our officers, directors or employees for the years ended August 31,
2000, 1999 and 1998, nor at any time during 2000, 1999 and 1998.
Further, we have not entered into an employment agreement with any of
our officers, directors or any other persons and no such agreements
are anticipated in the immediate future. It is intended that our
directors may be compensated for services provided to us. As of the
date hereof, no person has accrued any compensation from us.
The following tables set forth certain summary information
concerning the compensation paid or accrued for each of our last three
completed fiscal years or our principal subsidiaries chief executive
officer and each of our other executive officers that received
compensation in excess of $100,000 during such period (as determined
at August 31, 2000, the end of our last completed fiscal year):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
------------------- ---- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shailen Singh 2000 $ -0- -0- -0- -0- -0- -0- -0-
President & Chief 1999 $ -0- -0- -0- -0- -0- -0- -0-
Financial Oficer 1998 $ -0- -0- -0- -0- -0- -0- -0-
Sean Tan 2000 $ -0- -0- -0- -0- -0- -0- -0-
Chief Executive 1999 $ -0- -0- -0- -0- -0- -0- -0-
Officer & Secretary 1998 $ -0- -0- -0- -0- -0- -0- -0-
</TABLE>
Options/SAR Grants in Last Fiscal Year
None.
Bonuses and Deferred Compensation
None.
Compensation Pursuant to Plans
None.
Pension Table
Not Applicable.
Other Compensation
None.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On March 1, 1999, Brian Inouye and Brian Inouye & Associates
Ltd. ("BIA") assigned all of their rights, title and interest in
the power-line products including SPLC and certain other products
to Inouye for a purchase price of CDN$845,000. Such purchase price
was satisfied by way of the issuance of a total of 13,000,000
common shares of Inouye to Brian Inouye, BIA and certain other
persons.
Subsequently, on December 29, 1999, pursuant to a share
exchange agreement dated July 20, 1999, we issued 16,700,000
post-consolidated shares to acquire a 100% interest in Inouye. The
transaction resulted in the former shareholders of Inouye owning
the majority of our issued and outstanding shares.
A lease agreement dated March 31, 2000 between our company
and BIA provided for the rental of a strata unit located at
13-7550 River Road, Delta, B.C. V4G 1C8. The lease calls for a
monthly rental payment of CDN$1,855.00. The term of the lease is
for one year commencing from April 1, 2000. Subsequently, on
August 31, 2000, the lease was terminated by mutual consent.
Brian Inouye, our founder and director, is the sole director,
controlling shareholder and President of BIA.
We entered into a Letter of Intent on March 10, 2000 with the
shareholders of Omni Graphics Ltd. to acquire 100% of the common
shares of Omni Graphics Ltd. The Letter of Intent was terminated
by mutual consent on October 20, 2000.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
Our capital consists of shares of Common Stock ("Shares")
without par value. At November 30, 2000, 21,805,788 Shares were
outstanding; we are authorized to issue an unlimited number of
Common Shares.
Each Share is fully paid and non-assessable, carries one vote
at all meetings of shareholders, participates ratably in any
dividend declared by the directors and carries the right to receive
a proportionate share of our assets available to shareholders in
the event of the liquidation, dissolution, or winding up of our
company. There are no pre-emptive rights or cumulative voting
rights in our charter. There are no provision for redemption,
purchase for cancellation, surrender or sinking funds attached to
any of the Common Shares. Provisions as to the modification,
amendment or variation of such rights or provisions are contained
in our Articles of Continuance and the Canadian Business
Corporations Act.
DIVIDENDS
Dividends, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and financial conditions.
The payment of dividends, if any, will be within the discretion of
our Board of Directors. We presently intend to retain all earnings,
if any, for use in our business operations and accordingly, our
Board of Directors does not anticipate declaring any dividends in
the foreseeable future.
TRADING OF SECURITIES IN SECONDARY MARKET
The National Securities Market Improvement Act of 1996 limited
the authority of states to impose restrictions upon sales of
securities made pursuant to Sections 4(1) and 4(3) of the Securities
Act of companies which file reports under Sections 13 or 15(d) of
the Exchange Act. Upon effectiveness of this registration statement,
we will be required to, and will, file reports under Section 13 of
the Exchange Act. As a result, sales of our common stock in the
secondary market by the holders thereof may then be made pursuant to
Section 4(1) of the Securities Act (sales other than by an issuer,
underwriter or broker) without qualification under state securities
acts.
TRANSFER AGENT AND REGISTRAR
The Registrar and Transfer Agent for our Shares is the Montreal
Trust Company of Canada, 600 530 - 8th Avenue South West, Calgary,
Alberta, T2P 3S8 Canada. Telephone (403) 267-6800, Facsimile: (403)
267-6529.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
Our Common Shares are traded on the Canadian Dealing Network,
Inc. ("CDN") under the symbol "ITII."
The high and low bid prices for 1998, 1999, and the first,
second and third quarters of 2000, as reported by the CDN, in
Canadian dollars were:
<TABLE>
<CAPTION>
1998 1999 2000
----------------- ---------------- ----------------
LOW HIGH LOW HIGH LOW HIGH
<S> <C> <C> <C> <C> <C> <C>
1st Qtr. $N/A $N/A $N/A $N/A $0.55 $1.10
2nd Qtr. N/A N/A N/A N/A 0.45 0.80
3rd Qtr. N/A N/A 0.55(1) 1.10(1) 0.22 0.39
4th Qtr. N/A N/A 0.55(1) 1.10(1) 0.07 0.21
</TABLE>
________
(1) Adjusted to post consolidated prices.
CDN quotations represent inter-dealer prices, without mark-ups,
commissions, etc., and they may not necessarily be indicative of
actual sales prices.
As of November 30, 2000 there were approximately 2,919 holders of
our Common Shares. No dividends have ever been paid on our Common
Shares, and we intend to retain our earnings for use in the business
and we do not expect to pay dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
We are not currently involved in any legal proceedings nor do
we have any knowledge of any threatened litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
We have had no disagreements with our independent accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Within the past three years and prior to the date of this
registration statement, we conducted several private placement
offerings in Canada .Such sales of securities, as noted below,
were made in accordance with the applicable laws and regulations
in Canada and in provinces of Alberta and British Columbia.
No securities were sold to any residents of the United States of
America.
Inouye Acquisition. As described in greater detail under
"Certain Relationships and Related Transactions" above, we acquired
Inouye Technologies Inc. ("Inouye"). In consideration for all of
the equity in Inouye, we issued 16,700,000 shares of our common
stock to the shareholders of Inouye. The transaction involved no
known U.S. residents. The share purchase agreement was entered
into as of July 20, 1999. The transaction closed on December 29,
1999.
Concurrently, with the completion of the share purchase and
sale agreement on December 29, 1999, we issued 2,733,334 Common
Shares in lieu of Bonds for CDN$410,000 received by us for 410
Series "A" bonds.
In May 8, 2000, we conducted a private placement of
4,285,714 units at a price of CDN$0.35 per unit (involving no
known U.S. residents). Each unit comprising of one common share
and one non-transferable common share purchase warrant entitling
the holder to acquire one further common share of our company at
a price of CDN$0.35 per share for the first year and at CDN$0.41
per share thereafter. We closed the private placement at
CDN$102,100 in accordance with the Offering Memorandum dated
May 8 ,2000. As at the date this application no units were issued
to the subscribers of the private placements.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our by-laws provide that directors and officers will be
indemnified from and against all liabilities, costs and expenses in
respect to any action brought against them relating to their duties
as an officer or director.
PART F/S
FINANCIAL STATEMENTS.
Set forth below are the audited financial statements for the
Company for the years ended August 31, 2000 and 1999 and unaudited
interim financial statements for the three month period ended
November 30, 2000. The following financial statements are attached
to this report and filed as a part thereof.
The financial statements are stated in Canadian Dollars and
are prepared in accordance with United States Generally Accepted
Accounting Principles.
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2000 AND 1999
DUNCAN BUDGE LTD.
Ste. 200-120 Lonsdale Ave.
North Vancouver, B.C. V7M 2E8
DUNCAN BUDGE, C.A.
Chartered Accountant
Telephone: (604) 990-6680
Facsimile: (604) 990-7701
______________________________________________________________________
AUDITOR'S REPORT
The Shareholders
INOUYE TECHNOLOGIES (CANADA) INC.
I have audited the consolidated balance sheets of INOUYE TECHNOLOGIES
(CANADA) INC. as at August 31, 2000 and 1999 and the consolidated
statements of operations and deficit and cash flows for the years then
ended. 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 audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform an audit to
obtain reasonable assurance 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.
In my opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at August
31, 2000 and 1999 and the results of its operations and its cash flows
for the years then ended in accordance with generally accepted
accounting principles.
Vancouver, B.C. "DUNCAN BUDGE, C.A."
November 22, 2000 CHARTERED ACCOUNTANT
Comments By Auditor For U.S. Readers On Canada - U.S. Reporting
Differences
In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph)
when the financial statements are affected by conditions and events
that cast substantial doubt on the Company's ability to continue as a
going concern, such as those described in Note 2 to the financial
statements. My report to the shareholders dated November 22, 2000 is
expressed in accordance with Canadian reporting standards which do not
permit a reference to such events and conditions in the auditor's
report when these are adequately disclosed in the financial statements.
Vancouver, B.C. "DUNCAN BUDGE, C.A."
November 22, 2000 CHARTERED ACCOUNTANT
DUNCAN BUDGE LTD.
Ste. 200-120 Lonsdale Ave.
North Vancouver, B.C. V7M 2E8
DUNCAN BUDGE, C.A.
Chartered Accountant
Telephone: (604) 990-6680
Facsimile: (604) 990-7701
______________________________________________________________________
AUDITOR'S REPORT
The Shareholders
INOUYE TECHNOLOGIES (CANADA) INC.
I have audited the consolidated balance sheets of INOUYE TECHNOLOGIES
(CANADA) INC. as at August 31, 2000 and 1999 and the consolidated
statements of operations and deficit and cash flows for the years then
ended. 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 audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform an audit to
obtain reasonable assurance 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.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at August 31, 2000 and
1999 and the results of its operations and its cash flows for the years
then ended in accordance with generally accepted accounting principles.
Vancouver, B.C. "DUNCAN BUDGE, C.A."
November 22, 2000 CHARTERED ACCOUNTANT
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 2000 AND 1999
2000 1999
_________ _________
(Note 3 a))
ASSETS
CURRENT
Cash $ 25,288 $ 101
Accounts receivable 5,180 -
_________ _________
30,468 101
DEFERRED DEVELOPMENT COSTS (Note 4) 845,000 845,000
_________ _________
$ 875,468 $ 845,101
========= =========
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 3,009 -
Deposits from investors (Note 6) 71,375 -
_________ _________
74,384 -
_________ _________
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5) 1,292,000 845,101
DEFICIT ( 490,916) -
_________ _________
801,084 845,101
_________ _________
$ 875,468 $ 845,101
========= =========
"SUBSEQUENT EVENTS" (Note 7)
APPROVED BY THE DIRECTORS:
"SEAN TAN" Director "SHAILEN SINGH" Director
__________________ __________________
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
YEARS ENDED AUGUST 31, 2000 AND 1999
2000 1999
___________ ___________
(Note 3 a))
REVENUE - Product sales $ 16,612 $ -
COST OF SALES 18,998 -
___________ ___________
( 2,386) -
ADMINISTRATIVE EXPENSES
Amortization 257 -
Camp cleanup 11,813 -
Consulting 105,936 -
Legal and accounting 57,392 -
Office, rent and miscellaneous 45,538 -
Product promotion 11,180 -
Research and development 97,521 -
Transfer agent and regulatory fees 13,251 -
Travel and promotion 56,478 -
Website development 8,307 -
___________ ___________
407,673 -
___________ ___________
LOSS FOR THE YEARS ( 410,059) -
DEFICIT, BEGINNING - -
WRITE-OFF OF EXCESS COST ON ACQUISITION
OF INOUYE TECHNOLOGIES INC. ( 80,857) -
DEFICIT, ENDING $( 490,916) $ -
=========== ===========
LOSS PER SHARE $(0.03) -
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 15,568,288 -
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31, 2000 AND 1999
2000 1999
___________ ___________
(Note 3 a))
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the years $( 410,059) $ -
Items not involving cash
Amortization 257 -
Gain on disposal of fixed assets ( 257) -
Consulting fees paid by issuance of shares 37,000 -
___________ ___________
( 373,059) -
Changes in non-cash working capital items
Accounts receivable ( 5,180) -
Accounts payable and accrued liabilities 3,009 -
Deposits from investors 71,375 -
___________ ___________
( 303,855) -
___________ ___________
FINANCING ACTIVITIES
Shares issued for cash 410,000 -
INVESTING ACTIVITIES
Acquisition of Inouye Technologies Inc. ( 80,857) -
___________ ___________
NET INCEASE IN CASH 25,288 -
CASH, BEGINNING - 101
___________ ___________
CASH, ENDING $ 25,288 $ 101
=========== ===========
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2000 AND 1999
1. GENERAL
The Company was incorporated under the laws of Alberta, Canada and was
subsequently continued as a federal company under the Canada Business
Corporations Act on June 18, 1980. Since incorporation, the Company has
undergone a number of name changes and on December 15, 1999 changed its
name from Vescan Equities Inc. to Inouye Technologies (Canada) Inc.
2. FUTURE OPERATIONS
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern
which assumes that the Company will be able to realize assets and
discharge liabilities in the normal course of business for the
foreseeable future. Accordingly, they do not give effect to adjustments,
if any, that would be necessary should the Company be unable to continue
as a going concern.
As at August 31, 2000, the Company has an accumulated deficit of
$490,916 and incurred a loss of $410,059 during the year ended August 31,
2000. The Company's continuance as a going concern is dependent upon its
ability to obtain adequate equity financing and to achieve profitable
levels of operations.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation - Business Combination
On December 29, 1999, pursuant to the terms of a share purchase
agreement dated July 20, 1999, the Company acquired 100% of the issued
and outstanding shares of Inouye Technologies Inc. in exchange for
16,700,000 post-consolidation shares of the Company. As a result of
this transaction, the former shareholders of Inouye Technologies Inc.
received shares representing an aggregate of 82.56% of the Company's
outstanding shares, resulting in a change in control of the Company.
The acquisition has been accounted for as a reverse takeover under
which the legal subsidiary (Inouye Technologies Inc.) is considered to
be the acquiring entity and the consolidated entity is considered to
be a continuation of Inouye Technologies Inc.
The August 31, 1999 comparative figures are those of Inouye
Technologies Inc. (the legal subsidiary).
b) Use of Estimates
The presentation 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 revenues
and expenses during the reporting period. Actual results may differ
from those estimates.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2000 AND 1999
3. SIGNIFICANT ACCOUNTING POLICIES - Continued
c) Financial Instruments
The fair value of the Company's cash, accounts receivable, accounts
payable and accrued liabilities and deposits from investors approximate
their carrying amounts because of the immediate or short-term to
maturity of these financial instruments.
d) Loss Per Share
Loss per share is calculated based on the weighted average number of
shares outstanding during the year.
e) Research And Development Costs
Research costs are expenses as incurred. Development costs are deferred
if they meet certain criteria.
f) Deferred Development Costs
These costs will be amortized commencing in the period during which
commercial production and sales of a product commences.
4. DEFERRED DEVELOPMENT COSTS
By a purchase and sale agreement dated March 1, 1999, Inouye Technologies
Inc. acquired certain technologies for $845,000 (13,000,000 shares at a
price of $0.065 per share).
The technologies include the rights and interest to design and drawings,
engineering information computer programs and files, research and
development records and other data and information relating to products
and technologies described as Power Products, Audio Products and Speaker
Products.
During the year, the Company produced 56 units of its Power Line
Conditioner. All units have been sold and distributed for product
promotion and testing purposes.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2000 AND 1999
5. SHARE CAPITAL
a) Authorized - unlimited number of common shares without par value.
b) Issued
Shares Consideration
___________ _____________
Balance, August 31, 1999 260,975,181 $ 14,765,802
Share subscriptions receivable - ( 1,033,819)
___________ _____________
260,975,181 13,731,983
Share consolidation - 110:1 (258,602,727) -
___________ _____________
2,372,454 13,731,983
Elimination of share capital as at
date of acquisition - ( 13,731,983)
Shares issued to acquire Inouye
Technologies Inc. 16,700,000 882,000
Private placement of shares for cash 2,733,334 410,000
___________ _____________
Balance, August 31, 2000 21,805,788 $ 1,292,000
=========== =============
6. Deposits From Investors
$71,375 has been received from investors pursuant to an Offering
Memorandum dated May 8, 2000 for the private placement of units at
$0.35 per unit. Subsequent to year end, additional fund were received.
(Note 7)
7. SUBSEQUENT EVENTS
a) Deposits From Investors - Private Placement
Subsequent to year end, an additional $30,725 in funds were received
from investors pursuant to an Offering Memorandum for the private
placement of units at $0.35 per unit.
The Company has received a total of $102,100 and has closed the
offering. 291,713 units will be issued. Each unit will consist of one
common share and one non-transferable share purchase warrant. Each
warrant is exercisable to acquire one additional share at $0.35 during
the first year following closing of the offering and at $0.41 during
the second year. A finder's fee of 10% ($10,210) will be paid.
b) Deposits From Investors - Other
The Company has received $43,500 from investors for general working
capital use.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2000 AND 1999
8. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Except as described below, there are no material differences in these
financial statements between Canadian generally accepted accounting
principles ("Canadian GAAP") and those applicable in the United States
("U.S. GAAP") or from practices prescribed by the Securities and Exchange
Commission.
Deferred Development Costs:
U.S. GAAP requires that development costs be charged as an expense of the
period in which they are incurred. Canadian GAAP permits development
costs to be deferred to future periods if certain criteria are met. The
Company has deferred $845,000 in development costs in the accounts.
Accordingly, the application of U.S. GAAP would result in a material
difference from Canadian GAAP.
The effect of the difference between Canadian GAAP and U.S. GAAP on the
consolidated balance sheets and statements of operations and deficit is
summarized as follows:
<TABLE>
<CAPTION>
2000 1999
____________ ____________
<S> <C> <C>
Deferred development costs (deferred) under
Canadian GAAP $ 845,000 $ 845,000
Adjustment for U.S. GAAP ( 845,000) ( 845,000)
____________ ____________
Deferred development costs (deferred) under
U.S. GAAP $ - -
============ ============
Loss for the years under Canadian GAAP $ ( 410,059) $ ( -)
Development costs expensed as incurred - ( 845,000)
____________ ____________
Loss for the years under U.S. GAAP $ ( 410,059) $ ( 845,000)
============ ============
Deficit under Canadian GAAP $ ( 490,916) $ ( -)
Adjustment for expensing of development costs ( 845,000) ( 845,000)
____________ ____________
Deficit under U.S. GAAP $ (1,335,916) $ ( 845,000)
============ ============
</TABLE>
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
DUNCAN BUDGE LTD.
Ste. 200-120 Lonsdale Ave.
North Vancouver, B.C. V7M 2E8
DUNCAN BUDGE, C.A.
Chartered Accountant
Telephone: (604) 990-6680
Facsimile: (604) 990-7701
______________________________________________________________________
REVIEW ENGAGEMENT REPORT
I have reviewed the consolidated balance sheet of INOUYE TECHNOLOGIES
(CANADA) INC. as at November 30, 2000 and the consolidated statements
of operations and deficit and cash flows for the three month period
then ended. My review was made in accordance with generally accepted
standards for review engagements and accordingly consisted primarily
of enquiry, analytical procedures and discussion related to
information supplied to me by the Company.
A review does not constitute an audit and consequently I do not
express an audit opinion on these consolidated financial statements.
Based on my review, nothing has come to my attention that causes me
to believe that these consolidated financial statements are not, in
all material respects, in accordance with generally accepted
accounting principles.
Vancouver, B.C. "DUNCAN BUDGE, C.A."
January 9, 2000 CHARTERED ACCOUNTANT
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
2000 1999
_________ _________
(Note 3 a))
ASSETS
CURRENT
Cash $ 12,584 $ 101
Accounts receivable 4,586 -
Deposits and prepaid expenses 53,924 -
_________ _________
71,094 101
DEFERRED DEVELOPMENT COSTS (Note 4) 845,000 845,000
_________ _________
$ 916,094 $ 845,101
========= =========
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 3,000 -
Deposits from investors (Note 6) 145,600 -
_________ _________
148,600 -
_________ _________
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5) 1,292,000 845,101
DEFICIT ( 524,506) -
_________ _________
767,494 845,101
_________ _________
$ 916,094 $ 845,101
========= =========
APPROVED BY THE DIRECTORS:
"SEAN TAN" Director "SHAILEN SINGH" Director
__________________ __________________
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
2000 1999
___________ ___________
(Note 3 a))
REVENUE - Product sales $ 1,379 $ -
COST OF SALES - -
___________ ___________
1,379 -
___________ ___________
ADMINISTRATIVE EXPENSES
Camp cleanup 1,000 -
Legal and accounting 1,000 -
Office, rent and miscellaneous 11,071 -
Transfer agent and regulatory fees 828 -
Travel and promotion 20,868 -
Website development 202 -
___________ ___________
34,969 -
___________ ___________
LOSS FOR THE PERIOD ( 33,590) -
DEFICIT, BEGINNING ( 490,916) -
___________ ___________
DEFICIT, ENDING $( 524,506) $ -
=========== ===========
LOSS PER SHARE - -
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 21,805,788 -
=========== ===========
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
2000 1999
___________ ___________
(Note 3 a))
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the period $( 33,590) $ -
Changes in non-cash working capital items
Accounts receivable 594 -
Deposits and prepaid expenses ( 53,924) -
Accounts payable and accrued liabilities ( 9) -
Deposits from investors 74,225 -
___________ ___________
NET DECREASE IN CASH ( 12,704) -
CASH, BEGINNING 25,288 101
___________ ___________
CASH, ENDING $ 12,584 $ 101
=========== ===========
See accompanying notes.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
1. GENERAL
The Company was incorporated under the laws of Alberta, Canada and was
subsequently continued as a federal company under the Canada Business
Corporations Act on June 18, 1980. Since incorporation, the Company has
undergone a number of name changes and on December 15, 1999 changed its
name from Vescan Equities Inc. to Inouye Technologies (Canada) Inc.
2. FUTURE OPERATIONS
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern
which assumes that the Company will be able to realize assets and
discharge liabilities in the normal course of business for the
foreseeable future. Accordingly, they do not give effect to adjustments,
if any, that would be necessary should the Company be unable to continue
as a going concern.
As at November 30, 2000, the Company has an accumulated deficit of
$524,506 and incurred a loss of $33,590 during the three month period
ended November 30, 2000. The Company's continuance as a going concern is
dependent upon its ability to obtain adequate equity financing and to
achieve profitable levels of operations.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation - Business Combination
On December 29, 1999, pursuant to the terms of a share purchase
agreement dated July 20, 1999, the Company acquired 100% of the
issued and outstanding shares of Inouye Technologies Inc. in
exchange for 16,700,000 post-consolidation shares of the Company.
As a result of this transaction, the former shareholders of Inouye
Technologies Inc. received shares representing an aggregate of
82.56% of the Company's outstanding shares, resulting in a change
in control of the Company.
The acquisition has been accounted for as a reverse takeover under
which the legal subsidiary (Inouye Technologies Inc.) is considered
to be the acquiring entity and the consolidated entity is considered
to be a continuation of Inouye Technologies Inc.
The November 30, 1999 comparative figures are those of Inouye
Technologies Inc. (the legal subsidiary).
b) Use of Estimates
The presentation 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 revenues
and expenses during the period. Actual results may differ from those
estimates.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
3. SIGNIFICANT ACCOUNTING POLICIES - Continued
c) Financial Instruments
The fair value of the Company's cash, accounts receivable, prepaid
expenses and deposits, accounts payable and accrued liabilities and
deposits from investors approximate their carrying amounts because of
the immediate or short-term to maturity of these financial instruments.
d) Loss Per Share
Loss per share is calculated based on the weighted average number of
shares outstanding during the period.
e) Research And Development Costs
Research costs are expensed as incurred. Development costs are deferred
if they meet certain criteria.
f) Deferred Development Costs
These costs will be amortized commencing in the period during which
commercial production and sales of a product commences.
4. DEFERRED DEVELOPMENT COSTS
By a purchase and sale agreement dated March 1, 1999, Inouye Technologies
Inc. acquired certain technologies for $845,000 (13,000,000 shares at a
price of $0.065 per share).
The technologies include the rights and interest to design and drawings,
engineering information computer programs and files, research and
development records and other data and information relating to products
and technologies described as Power Products, Audio Products and Speaker
Products.
5. SHARE CAPITAL
a) Authorized - unlimited number of common shares without par value.
b) Issued
<TABLE>
<CAPTION>
Shares Consideration
__________ _____________
<S> <C> <C>
Balance, August 31, 2000 and November 30, 2000 21,805,788 $ 1,292,000
</TABLE>
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
6. DEPOSITS FROM INVESTORS
a) Private Placement
$102,100 has been received from investors pursuant to an Offering
Memorandum dated May 8, 2000 for the private placement of units at
$0.35 per unit.
The Company has closed the offering. 291,713 units will be issued. Each
unit will consist of one common share and one non-transferable share
purchase warrant. Each warrant is exercisable to acquire one additional
share at $0.35 during the first year following closing of the offering
and at $0.41 during the second year. A finder's fee of 10% ($10,210)
will be paid.
b) Deposits From Investors - Other
The Company has received $43,500 from investors for general working
capital use.
7. RELATED PARTY TRANSACTIONS
Deposits and prepaid expenses includes $26,050 paid to a company owned by
a Director of Inouye Technologies (Canada) Inc. The deposits are for the
production of the Company's Synergistic Power Line Conditioner for future
delivery and for additional development of the Company's VideoGuard
power line conditioner.
8. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Except as described below, there are no material differences in these
financial statements between Canadian generally accepted accounting
principles ("Canadian GAAP") and those applicable in the United States
("U.S. GAAP") or from practices prescribed by the Securities and Exchange
Commission.
Deferred Development Costs:
U.S. GAAP requires that development costs be charged as an expense of the
period in which they are incurred. Canadian GAAP permits development costs
to be deferred to future periods if certain criteria are met. The Company
has deferred $845,000 in development costs in the accounts. Accordingly,
the application of U.S. GAAP would result in a material difference from
Canadian GAAP.
INOUYE TECHNOLOGIES (CANADA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED NOVEMBER 30, 2000
(Unaudited - See Review Engagement Report)
8. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
- Continued
The effect of the difference between Canadian GAAP and U.S. GAAP on the
consolidated balance sheets and statements of operations and deficit is
summarized as follows:
<TABLE>
<CAPTION>
2000 1999
____________ ____________
<S> <C> <C>
Deferred development costs (deferred) under
Canadian GAAP $ 845,000 $ 845,000
Adjustment for U.S. GAAP ( 845,000) ( 845,000)
____________ ____________
Deferred development costs (deferred) under
U.S. GAAP $ - -
============ ============
Deficit under Canadian GAAP $ ( 524,506) $ ( -)
Adjustment for expensing of development costs ( 845,000) ( 845,000)
____________ ____________
Deficit under U.S. GAAP $ (1,369,506) $ ( 845,000)
============ ============
</TABLE>
PART III
ITEM 1. INDEX TO EXHIBITS.
Copies of the following documents are included as exhibits to
this Form 10-SB pursuant to Item 601 of Regulation SB.
SEC
Exhibit Reference
Number Number Description
--------- --------- -----------------------------------------------
1 2.1 Share Purchase and Sale Agreement
2 3.1 Certificate of Registration
3 3.2 Articles of Incorporation as Amended
4 3.3 Bylaws
5 4.1 Specimen Stock Certificate
6 10.1 Agreement with FS Capital Markets Group Inc.
7 21.1 Subsidiaries of Inouye Technologies (Canada)
Inc.
8 23.1 Consent of Accountants
9 99.1 Form F-X
10 27 Financial Data Schedule (For SEC purposes only)
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Inouye Technologies (Canada) Inc.
[Registrant]
/s/ Shailen Singh
-----------------
By: Shailen Singh
Title: Chairman and President
Date: January 16, 2001
