SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 1998
Commission file number : 2 - 85175W
ELECTRO-KINETIC SYSTEMS, INC.
(Name of small business issuer in its charter)
PENNSYLVANIA 22-1954716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
270 Rocky Run Road, Glen Gardner, New Jersey 08826
(Address of principal executive offices) (Zip code)
Issuer's telephone number 908-537-4378
Securities resistered pursuant to section 12 (b) of the Act: None
Securities resistered pursuant to section 12 (g) of the Act:
Class A Common Stock
(Title of class)
Check whether issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past Yes X No
Check if disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB.
Issuer's revenues for its most recent
fiscal year ................($25,000)
The aggregate market value of the voting stock held by
non-affiliates of the Registrant as of 12/31/98 was approximately
$400,000.
Number of shares of Class A Common Stock, no par value,
outstanding as of December 31, 1998: 30,166,069 (Common Stock issued
20,936,069 and to be issued 9,230,000)
Transitional Small Business Disclosure Format
Yes No X
<PAGE>
TABLE OF CONTENTS
Page
ITEM 1: Description of Business 1-2
ITEM 2: Description of Property 2
ITEM 3: Legal Proceedings 3
ITEM 4: Submission of Matters to a Vote of Security Holders 3
ITEM 5: Market of the Registrant's Common Stock and Related 3
Stockholders' Matters
ITEM 6: Management's Discussion and Analysis of Results of 3-4
Operations and Financial Conditions
ITEM 7: Financial Statements (Unaudited) 4,
F-1 - F-7
ITEM 8: Changes in and Disagreements with Accountants on 5
Accounting and Financial Disclosure
ITEM 9: Directors, Executive Officers, Promoters and Control 5-6
Persons; Compliance with Section 16 (a) of the Exchange
Act
ITEM 10: Executive Compensation 7
ITEM 11: Security Ownership of Certain Beneficial Owners and 7
Management
ITEM 12: Certain Relationships and Related Transactions 8
ITEM 13: Exhibits and Reports on Form 8-K 8
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
History
Electro-Kinetic Systems Inc. [EKS or the Company] was formed on April 24, 1972,
under the laws of the State of Pennsylvania. In February 1990, the Company
successfully concluded a rights offering which provided it with approximately
$700,000, net of issue expenses. The proceeds were used primarily to fund new
operations, to repay notes, to implement marketing programs, and for working
capital. Also in 1990, EKS acquired 72% of the assets of Douglas Martin &
Associates, an independent radiation testing and consulting facility (name
changed to DMA-Radtech Inc.), and in 1992, the remaining minority interest.
In December 1992, a significant change in management of EKS occurred as
a result of the investment of approximately $425,000 by private investors,
principally Charles D. Cascio, members of his family, and other associates.
The Company was achieving modest success in radon testing and analysis
when, in March 1995, the bankruptcy of its principal distributor forced the
suspension of all operations. In June 1995, the Company sold its building. After
unsuccessful joint venture/merger negotiations, the Company ceased operations in
the field of environmental hazards.
The Company acquired Israel Imaging Technologies, Inc., and its two
affiliates on September 18, 1995, and agreed to issue 4,100,000 shares of Common
Stock in exchange for their shares. The acquisition was accounted for as a
purchase. The difference between the fair market value of the stock issued over
the book value of assets acquired had been allocated to Investment in a 50%
Owned Affiliate in the amount of $84,503 and the balance to Excess of Costs over
Net Assets Acquired, in the amount of $18,656. Operations were accounted for
beginning October 1, 1995, as equity in earnings of an unconsolidated affiliate.
The 1995 acquisition of Israel Imaging Technologies, Inc., gave the
Company a 50% interest in Printone Media, Inc. [PM]. PM was a computer-imaging
and preprint company offering scanning, color separation, and other graphic arts
services in a plant in Jerusalem, Israel. During 1996, the Company acquired
companies in the field of publishing and then rescinded such transaction;
continued to negotiate for the acquisition of assets and joint ventures in the
field of publishing and attempted to exploit its Israeli facility. The Company
was unsuccessful and abandoned its efforts in the publishing field. During the
years 1995 and 1996, the Company issued approximately two million shares of
Common Stock to reduce its indebtedness and to fund its operations.
On July 12, 1996, Charles D. Cascio resigned as President, Chief
Executive Officer and Chairman of the Board, and as a Director. Mr. Albert
Gardner also resigned from the Board of Directors. The resignations were not
caused by or related to any disagreements "on any matter relating to the
registrant's operating policies or practices." On July 12, 1996, Dr. Julius
Cherny, Mr. Daniel Herzka, and Mr. Richard J. L. Herson were selected for the
Board of Directors. Carryover members include Gary Dornhoefer and Ralph Lanciano
III. Dr. Cherny was elected President and Mr. Herson was elected Secretary and
Treasurer.
In the Fall of 1996, the new officers of the Company made available for
use certain systems developed by them which the Company attempted to market. No
costs or expenses have been incurred by the Company. Such efforts have been
unsuccessful. Accordingly, the designs for these decision models have been
returned to the officers.
<PAGE>
Merger of DMA-Radtech [DMAR] and Advanced Knowledge, Inc. [AK]
During 1997, the Company continued to search for other business opportunities.
In December 1997, the Company entered into negotiations for DMAR, its wholly
owned subsidiary, to be acquired by AK, a privately held Delaware Corporation.
On July 22, 1998, DMAR's Board of Directors declared a stock split of 300:1,
resulting in 300,000 shares being issued and outstanding.
On August 26, 1998, pursuant to a Plan of Merger and Reorganization, AK
merged into DMAR and DMAR issued 2,700,000 shares of its Common Stock, or 90% of
its issued and outstanding shares to AK shareholders. Concurrent with the
closing, DMAR's shareholders voted to change the name to Advanced Knowledge,
Inc.
Pursuant to the reorganization agreement: AK paid $25,000 to the
Company for certain proprietary know-how and work products; the Company assumed
all liabilities of DMAR relating to its business prior to the closing; following
all regulatory approval, the capital stock of DMAR owned by the Company will be
distributed to its shareholders of record of June 1, 1998; and the Company will
receive an additional $25,000 for reimbursement of expenses in connection with
this transaction. In the absence of regulatory approval, the transaction can be
rescinded by AK.
It should be noted that as a result of the consummation of this
transaction, the current combined carry-forward loss will be reduced from
approximately $3.3 million to $3.1 million.
Employees
Currently, the Company has two part-time officers and one part-time employee. No
salaries were paid in 1998 and 1997.
Research and Development
The Company's research and developments have been the results of the individual
efforts of its officers and directors at no expense to the Company. As stated
above, the Company has been unable to exploit such efforts.
ITEM 2. DESCRIPTION OF PROPERTY
In November 1984, the Company purchased a building located at 701 Chestnut
Square, Trainer, Pennsylvania, which housed its corporate headquarters occupying
2,500 square feet, laboratory facilities occupying 5,000 square feet, and
production facilities occupying 7,000 square feet. The Company sold this
building in June 1995 and reflected net income from this transaction, in the
amount of $315,919; net cash proceeds were all applied to reduce secured
principal debt.
The Company maintains an office at 270 Rocky Run Road, Glen Gardner,
New Jersey. Rent has been waived through December 31, 1998. There is no lease.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to nor involved in any legal proceeding as plaintiff
or defendant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. MARKET OF THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDERS' MATTERS
The price of common shares of the Company is reported on the NASDAQ OTC Bulletin
Board. The price during the year has remained in the range of 1.0(cent) bid and
1.5(cent) asked.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITIONS
The following should be read in conjunction with the financial statements
appearing elsewhere in this report.
Results of Operations
The Company's 50% owned unconsolidated affiliate, Printone Media Inc., continued
to show losses through 1997 and 1998 and ceased operations. Accordingly, at the
end of the second quarter of 1998, the Company wrote off the carrying value of
its investment in and advances to this affiliate in the amount of $85,939. The
Company has no other operating income from itself or any of its subsidiaries.
Results for the year 1998 also reflect the following fourth quarter
adjustments:
i) write-off of the remaining balance from the September 1995
acquisition of the Excess of Cost over Net Assets Acquired of $14,781.1
ii) write-off of Equipment for Sale of $9,000.2 iii) deferral of part
of gain, previously recognized, on merger of subsidiary to the extent
of $20,000.3 iv) income from cancellation of liabilities in the amount
of $36,786, net of $5,000 payment of prior
expenses.4
- - -------------------------
1 As a result of the acquisition of Israel Investment Technologies, Inc.
and two affiliates, September 1995, the Company acquired certain
preliminary designs for developments of computer models in the fields of medical
compliance and electronic book publishing. The Company has been unsuccessful in
its efforts to exploit these developments.
2 Age and technological changes have obsolesced the value of the radon-testing
equipment for sale.
3 Since the merger of subsidiary is subject to recision, gain has been deferred.
4 Cancellation of liabilities is based on statute of limitations for
indebtedness incurred prior to March 31, 1995. Additional recroded liabilities
expiring in 1999, for which no claims have been asserted by creditors,
approximate $25,000.
<PAGE>
Waiver of compensation to officers has enabled selling, general, and
administrative expenses to remain under $10,000 per year. These consist of stock
transfer, tax, and bookkeeping costs. Interest has been accrued on an
outstanding note indebtedness and on officer's loans.
Discontinued operations, reclassified for the year 1997, reflect equity
in losses of unconsolidated subsidiary and amortization of Excess ($1,860).
Liquidity and Capital Resources
Working capital increased to ($167,072) as of December 31, 1998, from ($186,727)
as of December 31, 1997. Shareholders' equity declined from ($59,312) to
($167,072) as of the same dates.
The Company's operating losses during the past years have been funded
by the sale of its Common Stock, by loans from shareholders, and by the disposal
of a subsidiary. For the Company to become a viable entity, it must raise
sufficient capital to fund its operations. The Company is making continuing
efforts to negotiate the settlement of liabilities aggregating approximately
$100,000 for shares of its Common Stock. The Company is also seeking merger
opportunities, but there is no assurance of success in these endeavors.
ITEM 7. FINANCIAL STATEMENTS (UNAUDITED)
Pages
Consolidated Balance Sheets as of December 31, 1998 and 1997
Assets F-1
Liabilities and Stockholders' Equity F-2
Consolidated Statements of Income for the Years Ended F-3
December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended F-4
December 31, 1998 and 1997
Consolidated Statements of Changes in Stockholders' F-5
Equity for the Years Ended
December 31, 1998 and 1997
Notes to Consolidated Financial Statements F-6, F-7
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIRIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
1998 1997
Current assets:
Cash $ 4,065 1,505
Receivable from merger 25,000 9,000
Total current assets 29,065 10,505
Other assets:
Excess of cost over net assets acquired,
less accumulated amortization - 16,176
Investment and advances to 50% owned
affiliate - 110,939
Organization costs - 300
Total other assets - 127,415
Total assets $ 29,065 137,920
F-1
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
1998 1997
Current liabilities:
Accounts payable $ 44,333 63,583
Accrued expenses 19,793 21,254
Notes payable 35,828 46,614
Due to officers 76,183 65,781
Deferred income 20,000 -
Total current liabilities 196,137 197,232
Stockholders' equity:
Class "A" common shares, no par value;
authorized - 90,000,000 shares; issued
and to be issued - 30,166,069 in 1998
and in 1997 3,441,308 3,441,308
Additional paid-in-capital 52,293 52,293
Deficit (3,660,673) (3,552,913)
Total stockholders' equity (167,072) (59,312)
Total liabilities and stockholders' equity $ 29,065 137,920
F-2
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
Selling, general and
administrative expenses $ 7,161 9,845
Net loss from continuing operations (7,161) (9,845)
Other income (expenses)
Interest expense (9,200) (9,700)
Gain on merger of subsidiary 14,640 -
Cancellation of indebtedness 30,376 2,900
Write down of assets (109,555) -
(73,739) (6,800)
Operating loss before discontinued
operations (80,900) (16,645)
Discontinued operations (26,860) (51,860)
Net loss for the year $(107,760) (68,505)
Loss per share (basic and diluted) $ 0.004 0.002
Weighted average number of
common shares outstanding 30,166,069 30,166,069
F-3
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,1998 AND 1997
1998 1997
Cash flows from operating activities:
Net income $ (107,760) (68,505)
Adjustments to reconcile net loss to net
cash used in operating activities:
Equity in earnings of unconsolidated subsidiary 25,000 50,000
Depreciation and amortization 1,860 1,860
Write down of assets 109,555 -
Change in assets and liabilities:
(Increase) in:
Receivable from merger (25,000) -
Increase (decrease) in:
Accounts payable (19,250) 3,615
Accrued expenses (1,461) 3,334
Notes payable (10,786) 1,733
Deferred income 20,000 -
Total adjustments 99,918 60,542
Net cash used in operating activities (7,842) (7,963)
Cash flows from financing activities:
Proceeds from officers' loans 3,402 1,500
Accrued interest due officers 7,000 7,968
Net cash provided by financing activities 10,402 9,468
Net increase (decrease) in cash 2,560 -
Cash - beginning of the year 1,505 1,505
Cash - end of the year $ 4,065 1,505
F-4
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional
Common Shares Common Shares Paid In Capital Deficit Total
Balance at January 1, 1997 30,166,069 $ 3,441,308 52,293 (3,484,408) 9,193
Net loss for 1997 - - - (68,505) (68,505)
Balance at December 31, 1997 30,166,06 3,441,30 3,441,308 (3,552,913) (59,312)
Net loss for 1998 - - - (107,760) (107,760)
Balance at December 31, 1998 30,166,06 $ 3,441,308 3,441,308 (3,660,673) (167,072)
</TABLE>
F-5
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND DECEMBER 31, 1997
NOTE A: THE COMPANY
Electro-Kinetic Systems, Inc. [EKS or the Company] was formed on April
24, 1972, under the laws of the State of Pennsylvania. Its corporate office is
now located in Glen Gardner, New Jersey.
The Company ceased operations in radon testing in March 1995 and failed
in its subsequent efforts: magazine publishing (1996), visual communication
technology (1997), marketing of computer decision models (1997 and 1998), and
desk-top publishing and printing (1998).
NOTE B: ACCOUNTING POLICIES
1) Principles of Consolidation
The consolidated financial statements include the accounts of
Electro-Kinetic Systems, Inc. and its wholly owned subsidiaries.
The Company acquired Israel Imaging Technology, Inc. and its two
affiliates on September 18, 1995, and agreed to issue 4,100,000 shares of its
Common Stock in exchange for their shares. The acquisition was accounted for as
a purchase. The difference between the fair market value of the stock issued
over the book value of assets acquired has been allocated to Investment in a 50%
Owned Affiliate in the amount of $84,503 and the balance to Excess of Costs over
Net Assets Acquired, in the amount of $18,656. Operations were accounted for
beginning October 1, 1995, until June 20, 1998, as equity in earnings of
unconsolidated affiliate. The write-off during 1998 of the remaining carrying
values of these assets in the amounts of $85,939 and $14,316 has been charged to
earnings.
2) Revenue Recognition
Liabilities incurred prior to March 31, 1995, subject to a four-year
statute of limitations, have been recognized as income.
Income from the merger of a subsidiary has been deferrred since the
transaction can be rescinded.
All operations are classified as discontinued.
Assets that are not anticipated to produce revenues have been written
off.
3) Income Taxes
The Parent Company and its subsidiaries have combined tax carryforward
losses of approximately $3,100,000. No potential benefit has been recognized.
Under Section 382 of the Internal Revenue Code of 1986, as amended, the
utilization of prior net operating loss-carryforwards may be limited as a result
of changes in stock ownership.
4) Earnings Per Common Share
The Company has adopted Statement of Financial Standards (SFAS) No.
218, "Earnings Per Share" (EPS), which requires dual presentation of basic and
diluted EPS on a retroactive basis.
Outstanding stock options were anti-dilutive.
5) Use of Estimates
The preparation of the Consolidated 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 reported amounts of revenues and expenses. Actual results could
differ from these estimates.
F-6
<PAGE>
NOTE C: STOCK OPTION PLAN
The Company adopted a Stock Option Plan [the Option Plan] on May 3,
1993. Under the Option Plan, shares of the Company's Common Stock (subject to
certain adjustments) are reserved for issuance upon the exercise of options.
Options granted under the Option Plan are intended to constitute incentive stock
options under Section 422A of the Internal Revenue Code of 1986, as amended, or
any corresponding provisions of succeeding law (the "Code"). Stock appreciation
rights may be granted under the Option Plan to employees (including officers and
directors who are employees of the Company or subsidiaries) on the date of
grant.
By its terms, the Option Plan is to be administered by a committee [the
Committee] appointed by the Board of Directors which shall consist of either the
entire Board of Directors, all of whom must be disinterested persons, or by a
committee of two or more directors. Subject to the provisions of the Option
Plan, the Committee has the authority to determine the persons to whom options
will be granted, the exercise price, the term during which options may be
exercised and such other terms and conditions as it deems appropriate. As of the
date hereof, options to purchase 1,000,000 shares of Common Stock have been
granted under the Option Plan at $0.015 per share that expire in the year 2001.
The aggregate fair market value of shares issuable pursuant to
incentive stock options granted in any calendar year to an employee or officer
may not exceed $100,000 subject to certain carryovers from previous years.
Incentive stock options granted under the Option Plan may not have an exercise
price less than the fair market value of the Common Stock on the date of the
grant (or 110% of the fair market value in the case of employees holding ten
percent or more of the voting stock of the Company). Options granted under the
Option Plan will expire not more than ten years from the date of the grant
subject to earlier termination under the Option Plan. The term of an incentive
stock option granted to a 10% holder shall be no more than 5 years from the date
of the grant.
Under the Option Plan, participants may be granted stock appreciation
rights in connection with, or separately from, options. Each stock appreciation
right consists of a right to receive, upon exercise, either cash or shares of
Common Stock, as determined in the discretion of the Committee, equal to the
amount by which the shares of Common Stock on the date the stock appreciation
right are exercised. Only the number of shares actually delivered upon the
exercise of such stock appreciation rights will be charged against the maximum
number of shares which may be issued under the Option Plan.
NOTE D: GOING CONCERN
The Company's financial position continues to reflect a significant
shortage of working capital and a negative book value. The Company believes that
current funds may be insufficient to continue to meet its obligations. While the
Company continues to pursue alternate courses of action, there can be no
assurance that it will be successful. The Company has a history of continuing
losses and a significant working capital deficit. There is doubt about the
Company's ability to continue as a going concern.
NOTE E: COMMITMENTS AND CONTINGENCIES
During the past years, the Company has entered into various agreements
in connection with actual and proposed transactions. The Company believes it has
no direct or contingent obligations relative to these matters that are not
recorded in the accompanying financial statements. The Company has no
outstanding leases or employment contracts, nor is it a party to or involved in
any legal proceeding as plaintiff or defendant.
F-7
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There are no audited reports for the years 1994, 1995, 1996, 1997, and 1998. In
their report from 1993, the Company's independent public accountants included an
explanatory paragraph stating there is substantial doubt about EKS's ability to
continue as a going concern. The accountants formally resigned in 1995 because
of unpaid fees (reference is made to Forms 8-K filed). The fee was settled in
1998. The Company is in the process of retaining independent public accountants
to report upon the financial statements for the years 1998 and 1997. The Company
will file Form 8-K relative to the retention of the auditors and will file an
amended Form 10-K to include the opinion of the outside auditors.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16 (a) OF
THE EXCHANGE ACT
Set forth below is certain information regarding the executive officers and
directors of the Company:
<TABLE>
<S> <C> <C> <C>
Name Age Position Since
Julius Cherny 62 Director, President, and Chief Executive
Officer 1996
Richard J. L. Herson 80 Director, Treasurer, Secretary, Chief
Accounting Officer, Chief Operating Officer 1996
Daniel Herzka 48 Director 1996
Ralph Lanciano III 34 Director 1993
Gary Dornhoefer 53 Director 1993
</TABLE>
Julius Cherny, Ph.D., has been president and a director since July 12,
1996. Dr. Cherny is a founder and partner of Mottola, Cherny and Associates, a
consulting firm specializing in providing financial, organizational, and systems
consulting services. Dr. Cherny holds a Ph.D. in accounting and is currently on
the faculty at the NYU Graduate School of Business and was previously at the
Hagen School of Business at Iona College. Dr. Cherny has held positions as
director, senior vice president, and chief financial officer with firms in the
securities industry. Dr. Cherny has published numerous papers and authored
several books dealing with finance, accounting, and advanced mathematical
theory. In October 1997, Dr. Cherny became president of Bureau of Translation
Services, Inc., a wholly owned subsidiary of The Translation Group, Ltd. [TTGL],
a Delaware public company. Dr. Cherny was a director of TTGL from DATE 1997
until DATE 1998.
Richard J. L. Herson has been a director and secretary and treasurer of
the Company since July 12, 1996. He was secretary/treasurer and a director of
TTGL from its inception in July 1995 until February 1, 1996, when he resigned as
secretary and treasurer and was appointed chief accounting officer; he resigned
this position in October 1997 and remains a director. Mr. Herson was previously
a general partner in the firm of Hertz, Herson and Company, CPAs with offices in
New York, Boston, and Charlotte. He is currently secretary of the Bruner
Foundation, where he is responsible for its investment portfolio. He holds a
Bachelor's degree from the City College of New York and an M.S. in accounting
from Columbia University. He has also authored numerous articles and a book on
accounting.
<PAGE>
Daniel Herzka became a director in July 1996. He was the vice president
for marketing and product management of Linotype-Hell Company from DATE through
DATE. In this position he was responsible for the introduction of new products
and solutions to the graphic-arts market. Daniel Herzka has more than 20 years'
experience applying innovative computerized imaging solutions in a broad range
of industries including printing and publishing, textile, CAD/CAM, PCB, mapping,
medical imaging and scientific visualization. Mr. Herzka came to Linotype-Hell
from Ultimate Technologies Inc., the inventors of Impostrip, the professional
electronic imposition software, where he served as senior vice president for
sales and marketing. Previously he held a senior worldwide business management
position with Dupont De Nemours. Prior to Dupont, he was an employee of Scitex
for thirteen years in a variety of management positions in sales and marketing
involving business activities in the United States, Europe, Japan, and South
America. Daniel studied for an MBA at Hebrew University in Jerusalem and for a
BSC in Electrical and Industrial Engineering from the Technion in Haifa.
Gary Dornhoefer became a director in October 1993. A National Hockey
League "Hall of Famer," he played professional hockey for the Philadelphia
Flyers for eleven years, during which time the team won two Stanley Cups. Mr.
Dornhoefer is currently with Prism Cable Network as a color analyst/commentator
for the Philadelphia Flyers, and has various other business interests. He is
co-administrator of the EKS 1993 Stock Option Plan.
Ralph C. Lanciano III became a director in October 1993. A licensed
optician, Mr. Lanciano has owned and operated CEE Optical Center since 1989, and
has participated in various real estate development and other business ventures.
He is co-administrator of the EKS 1993 Stock Option Plan.
Charles D. Cascio was a director and CEO of the Company from 1993 until
July 1996; he owns approximately 9% of its common shares and is currently CEO
and a director of TTGL.
Board of Directors
Each director holds office until the next annual meeting of stockholders, and
until his successor is elected and qualified. At present, the Company's bylaws
require no fewer than one director. Currently, there are five directors of the
Company. The bylaws permit the Board of Directors to fill any vacancy and the
new director may serve until the next annual meeting of stockholders and until
his successor is elected and qualified. Officers are elected by the Board of
Directors and their terms of office are at the discretion of the Board. There
are no family relations among any officers or directors of the Company. The
officers of the Company devote part-time to the business of the Company. The
Company has established separate Audit and Compensation Committees. The Audit
Committee consists of Mr. Herson and Dr. Cherny. The Audit Committee will make
recommendations to the Board of Directors regarding the selection of independent
auditors, review the results and scope of the audit and of the services provided
by the Company's independent auditors, and review and evaluate the Company's
internal control functions. The Compensation Committee consists of Dr. Lanciano
and Mr. Herzka. The Compensation Committee will make recommendations to the
Board of Directors concerning compensation for executive officers and
consultants of the Company. The Option Committee will continue to consist of Dr.
Lanciano and Mr. Dornhoefer.
Filing Compliance by Officers and Directors
Timely reports have not been filed by Dr. Julius Cherny (Form 3) and Richard J.
L. Herson (Form 3 and Form 4). These reports are in the process of preparation
and will be filed shortly.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The Company has part-time executive officers. There was no compensation paid to
officers in 1998 and 1997.
The directors of the Company are not compensated for their services in that
capacity.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the shares of Common Stock owned by (i) each
person who is known by the Company to own beneficially more than 5% of the
shares of any class of Common Stock, (ii) each Director of the Company who owns
shares, and (iii) the executive officers and Directors of the Company as a
group. Unless otherwise indicated, all shares of Common Stock are owned by the
individual named as sole record and beneficial owner with exclusive power to
vote and dispose of such shares.
Name Position Common Shares Owned Percentage
and To Be Issued
Julius Cherny President 2,515,000 8.3
Richard J. L. Herson5 Sec./Treas. 2,181,850 7.2
Gary Dornhoefer Director 240,000 0.8
Ralph Lanciano Director 800,000 2.7
Daniel Herzka Director 630,000 2.1
All executive officers
and directors as a Group --------- 6,366,850 21.1
Charles D. Cascio --------- 2,735,000 9.0
The capitalization of EKS, as of December 31, 1998, was as follows:
Title of Class Amount Authorized Currently Outstanding
Common Stock $.001
Par Value Per Share 90,000,000 shares 30,166,069 shares6
Preferred Stock $.001
Par Value Per Share 10,000,000 shares None
Stock Option Plan
Reference is made to Note C, Stock Option Plan, for a description of the terms
of the Plan and options granted and outstanding.
- - ------------------------------------
5 Disclaims control of 2,041,955 common shares owned by corporation in which
adult son is shareholder and 140,000 shares owned by adult daughter.
6 Shares issued 20,936,069; to be issued 9,230,000.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
10.1) Agreement and Plan of Merger and Reorganization between DMA-Radtech, Inc.
and Advanced Knowledge, Inc.
10.2) Advanced Knowledge, Inc. Form 10-SB, filed January 6, 1999.
Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized:
ELECTRO-KINETIC SYSTEMS, INC.
Dated: ______________ By: _________________________________
Julius Cherny, Ph.D., President
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following person(s) on behalf of
the Registrant and in the capacities indicated and on the dates indicated.
SIGNATURE CAPACITY DATED
President, Director
Julius Cherny
Secretary, Treasurer,
Richard J. L. Herson Director
Director
Daniel Herzka
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<PERIOD-START> JAN-01-1998
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