U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to __________________
Commission File No. 33-3358-NY
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CENTRAXX, INC.
----------------------
(Name of Small Business Issuer in its Charter)
NEVADA 88-0224219
- ------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
2700 Argentia Road, Suite #1000
Mississauga, Ontario Canada L5N 5V4
-----------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (905) 826-9988
Securities Registered under Section 12(b) of the Exchange Act: None.
Securities Registered under Section 12(g) of the Exchange Act: None.
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 90 days.
(1) Yes X No (2) Yes X No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will 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. [ ]
State Issuer's revenues for its most recent fiscal year: December 31, 1999 -
$0
For the Exhibit Index see Item 13 of this Report.
State the aggregate market value of the common voting stock held by non-
affiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within
the past 60 days.
March 29, 2000 - $128,049,022. There are approximately 11,911,537 shares
of common voting stock of the Registrant held by non-affiliates. The
Registrant has valued these shares on the low bid price per share on March 30,
2000.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
March 30, 2000
17,946,481
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
A description of "Documents Incorporated by Reference" is
contained in Item 13 of this Report.
Transitional Small Business Issuer Format Yes X No ___
PART I
Item 1. Description of Business.
-----------------------
Business Development.
- ---------------------
For information regarding corporate developments and historical
matters prior to 1999, see Centraxx, Inc.'s ("Centraxx" or the "Company")
10-KSB Annual Report for the year ended December 31, 1998, which has been
previously filed with the Securities and Exchange Commission, and is
incorporated herein by reference. See Part III, Item 13.
On May 18, 1999, the Company, Centraxx Corp., a corporation
organized under the laws of the Province of Ontario, Canada ("Centraxx
Ontario"), and the stockholders of Centraxx Ontario (the "Centraxx Ontario
Stockholders"), executed a Share Sell Agreement (the "Centraxx Ontario
Agreement"), whereby the Company acquired 100% of the outstanding
securities of Centraxx Ontario, and Centraxx Ontario became a wholly-owned
subsidiary of the Company. A 2.5 for one forward split of the outstanding
securities of the Company was effected immediately prior to the completion of
the Centraxx Ontario Agreement, and all computations herein reflect this
split. See the 8-K and the 8-KA Current Reports of the Company dated May 18,
1999, which have been previously filed with the Securities and Exchange
Commission, and are incorporated herein by reference. See Part III, Item 13.
Business.
- ---------
Centraxx is a high-speed two way wireless data communications
company specializing in location technologies. The Company is the first in
the industry to have developed a low cost, tracking, locating and monitoring
system utilizing revolutionary UNI-POINT (trademark) technology with numerous
network based and stand-alone applications. The UNI-POINT(trademark)
technology is proprietary and patents are pending.
The Centraxx System utilizes radio frequency in a unique
configuration of voice, data and radar communications to track, locate,
contain or monitor vehicles, cargo and equipment. The hardware consists of a
receiver or Base Station and an Electronic Location Tag ("Tag"). The object
to be secured is tagged and the Base Station monitors the relative position of
the Tag. A network of Base Stations will enable the Centraxx System to
monitor the location of the tagged object over the network coverage area.
This process occurs on a real-time basis utilizing UNI-POINT(trademark)
tracking. UNI-POINT(trademark) or single-point tracking represents a
breakthrough in the industry as it is more reliable and substantially more
cost effective than alternative systems such as Global Positioning Satellite
Systems or conventional Triangulation systems.
Although there are numerous potential applications, Centraxx will
initially focus its efforts on fully capitalizing on the stolen vehicle
tracking and recovery industry by introducing a more accurate, reliable and
affordable product utilizing the UNI-POINT(trademark) technology. In addition,
the Company is currently in advanced negotiations with a number of major
insurance companies to form alliances to quickly penetrate this market. This
application will be introduced initially in the Southern Ontario market, and
then expanded into Southern California and South Florida.
Market research indicates that the Centraxx System is significantly
less expensive than its nearest competitor in the industry, while offering a
more reliable and accurate system.
The Company has yet to deploy the Centraxx System, and has not
generated any revenues. The Company has no assets except the Centraxx System,
and has had no revenues since 1989. Nor, will the Company receive any
revenues until it deploys the Centraxx System; no assurance can be given that
any future business operations of the Company will operate on a profitable
basis.
Item 2. Description of Property.
- --------------------------------
The Company's research and development group is housed in a 14,000
square foot facility at Mississauga, Ontario, Canada; 4,000 square feet are
offices, 5,000 square feet are air-conditioned lab space and 5,000 square feet
are warehouse.
The lease ends in May 2000, and Centraxx currently expects that it
will move to a new 40,000 square feet facility that would accommodate
administration, sales, marketing, research and development and some
manufacturing/assembly space, as well as warehousing. The Company does not
anticipate any difficulty in finding space adequate for its purpose at
reasonable rates.
Centraxx also leases sales offices in Irvine, California.
Item 3. Legal Proceedings.
- --------------------------
The Company is not the subject of any material pending legal
proceeding except that a Centraxxs former consultant/employee has filed in
the Ontario Superior Court of Justice, Court File #00 CV 187192, a
statement of claim against the Company for breach of contract which the
Company feels can be settled without any material financial effect to the
Company. To the knowledge of management, no proceedings are presently
contemplated against the Company by any federal, state of local governmental
agency.
Further, to the knowledge of management, no director or executive
officer is party to any action in which any has an interest adverse to the
Company.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
No matter was submitted to a vote of the Company's security
holders during the fourth quarter of the period covered by this Report or
during the previous two calendar years.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
- -----------------------------------------------------------------
Market Information.
- -------------------
The Company's common stock is currently quoted on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the "NASD")
under the symbol "CNXX." No assurance can be given that the present market
for the Company's common stock will be maintained. Further, the sale of
"unregistered" and "restricted" shares of the Company's common stock pursuant
to Rule 144 of the Securities and Exchange Commission by members of management
or others may have a substantial adverse impact on the present or future
public market for the Company's common stock. For information regarding the
number of "restricted securities" potentially available for resale under Rule
144, see the heading "Recent Sales of Unregistered Securities," below, under
this caption.
The following stock quotations were provided by the National
Quotations Bureau, LLC, and do not represent actual transactions; they also do
not reflect mark-ups, mark-downs or sales commissions.
STOCK QUOTATIONS
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
[S] [C] [C]
March 31, 1999 Unpriced Unpriced
June 30, 1999 $3.625 $2.50
September 30, 1999 $3.4375 $2.625
December 31, 1999 $4.8125 $2.75
The Company filed for listing on NASDAQ Small Cap on January 27,
2000; however, no assurance can be given that the NASD will allow
the Company's securities to be quoted on this medium.
Recent Sales of Unregistered Securities.
- ----------------------------------------
The following "restricted securities were issued by the Company
during the year ended December 31, 1999:
Share
Name Date Price Numbers
- ---- ----- ----- ------
Centraxx Ontario
Stockholders 5/99 * 15,234,415
Supplier 12/99 $4.36 24,390
Supplier 12/99 $4.62 12,883
Supplier 12/99 $8.50 517
Supplier 12/99 $9.42 1,610
*These shares were issued in connection with the
Centraxx Ontario Agreement. See the heading "Business
Development," Part I, Item 1.
See Note 59(a) and (b) of the Company's financial statements
accompanying this Report for additional information regarding recent sales of
unregistered securities. Also, see the caption "Sales of Unregistered
Securities During the Past Five Years," Part I, Item 1, of the 10-KSB Annual
Report for the year ended December 31, 1997, which has been previously filed
with the Securities and Exchange Commission, and is incorporated herein by
reference.
All of these securities were issued to persons who were either
"accredited investors," or "sophisticated investors," who, by reason of
education, business acumen, experience or other factors, were fully capable of
evaluating the risks and merits of an investment in the Company; and each had
prior access to all material information regarding the Company. The offer and
sale of these securities was believed to be exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Sections
4(2) and 4(6) thereof, and Regulation D of the Securities and Exchange
Commission; and from various similar state exemptions.
Sales of "restricted securities" by members of management and others
could have an adverse effect on the public market for the common stock of the
Company. With the exception of the last 39,454 shares of "restricted
securities" issued in December, 1999, as outlined above, and following May 17,
2000, with respect to the "restricted securities" issued to the Centraxx
Ontario Stockholders, all of the outstanding shares of the Company's common
stock have been held for a sufficient period of time for resale under Rule 144
of the Securities and Exchange Commission, subject to volume limitations of
subparagraph (e) of this Rule and other provisions of this Rule.
Holders.
- --------
The number of record holders of the Company's common stock as of
March 30, 2000 was 652; these numbers do not include an indeterminate number
of stockholders whose shares are held by brokers in street name.
Dividends.
- ----------
There are no present material restrictions that limit the ability
of the Company to pay dividends on common stock or that are likely to do so in
the future. The Company has not paid any dividends with respect to its common
stock, and does not intend to pay dividends in the foreseeable future because
planned principal operations have not commenced, and the Company has had no
revenues from operations.
Item 6. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
Plan of Operation.
- ------------------
Although management believes that there may be numerous potential
applications for the Centraxx technology, Centraxx intends initially to focus
its efforts on the stolen vehicle tracking and recovery industry by
introducing a more accurate, reliable and affordable product utilizing the
UNI-POINT(trademark) technology. The Company has entered into a memorandum of
a sale and market agreement with one of the major insurance companies and is
currently in advanced negotiations with other major insurance companies, auto
clubs and automobile distributors to form for this market. This memorandum is
essentially a purchase order, subject to availability of the technology for
the market. The Company has entered into some geographic joint ventures and
is negotiating with other joint venture partners to form alliances to quickly
penetrate the potential global market. There can be no assurances that any
agreements will be obtained or that if they are obtained that they will
provide material financial benefit to the Company.
In future, the Company plans to leverage its technology advantages
and network capacity to become a highly diversified wireless communications
company by introducing new products and services such as fleet management,
personal security and asset tracking, all of which take advantage of the
Centraxx System.
The first application will be initially introduced in the Southern
Ontario market and then expanded into the network coverage across North
America through entering lucrative targeted territories, including Southern
California, South Florida, Chicago, Detroit, New York City and Dallas. In
addition, the Company will continue to expand through entering into licensing
agreements and joint ventures in non-corporate targeted territories with
qualified companies.
The Company intends to outsource the manufacture of all product
components and is currently negotiating supply contracts with various
manufacturers. Relationship with secondary suppliers will also be pursued in
order to ensure a constant source of supply. Initially, the Company intends to
utilize domestic manufacturers in order to be able to exercise control over
quality and ongoing modifications with the engineering and research and
development process. Final assembly of the Base Stations will occur under
direct control of Centraxx, which will allow the Company to protect the
proprietary aspect of the technology. The Company is currently in discussions
with various software, network designers and contractors to deploy its
network. Long-term strategy of the research and development program will be
the miniaturization of the tag. The Company anticipates reducing the Tag to a
macro chip level, and this advancement will create exciting new applications
for the technology.
Centraxx has received financial and managerial support from
Frankopan & Co., a merchant bank focused on developing technology-based
companies. Frankopan has directly and indirectly financed the development of
the technology. The Company entered into a funding agreement of $2,000,000 in
August 1999. To date, the Company has received all payments anticipated under
the agreement, and the last installment is due at the end of March, 2000. The
Company has received several tentative offers of financing from non-related
parties. Centraxx is analyzing these offers and negotiating the best possible
structure for the Company. The Company has an understanding with a related
party and major shareholders to continue financing until an alternative source
is finalized. The Company has hired various levels of technical and management
staff and is actively seeking to hire a President, and a Vice President
Finance. In the interim, overall management of the Company is being provided
by Michael Ivezic, Managing Director of Frankopan & Co. Inc.
The Company's focus is on research and development of its
UNI-POINT(trademark) technology, the engineering sample of which was
successfully demonstrated on December 9, 1999. The enhancement and
miniaturization to commercialize the technology is under development. A
regional network rollout consisting of multiple Base Stations will be
completed within the next six months; at that time, complete area network are
expected to commence. The technology can be deployed to provide effective
solutions for safety, security and two-way wireless data communication and
location information. The Company has not yet generated any revenues except
some deposits from potential joint venture partners.
Results of Operations.
- ----------------------
Year Ended December 31, 1999, compared to December 31, 1998.
- ------------------------------------------------------------
The current year end net loss was $(1,976,435) compared to
$(1,432,788) for the corresponding 1998 period.
The Company's general and administrative costs increased $456,000,
primarily as a result of increased sales, marketing and administrative
personnel hired in September, 1998, together with related infrastructure
costs.
The Company's research and product development costs increased
$82,000 during the year ended December 31, 1999, as compared to the prior
year's period. The primary reasons were the increase in manpower expenditures
as the Company hired a significant number of additional personnel to assist in
the development of its technology, offset by a decrease in materials and
expenses directly related to the technology development during this period.
The Company's commitment to UNI-POINT(trademark) technology is reflected by
its total cumulative investment in research and product development since
inception in the amount of $1,505,000, representing 43% of the Company's
operating cash activities.
Amortization incurred was not materially changed between the
respective periods.
Liquidity.
- ----------
The Company anticipates that during the next twelve months its
working capital requirements will be $7 million. The Company has engaged
Ernst and Young Corporate Finance Inc. to assist it with a private equity
placement of up to $10,000,000. The planned use from such offering will be
for the implementation of the Company's UNI-POINT(trademark)technology in the
corporate markets of Southern Ontario, Canada, Florida and Southern
California, as well as for the Company's operating capital requirements.
Thereafter, the Company expects that it will need to seek additional capital
through one or more public or private offerings of debt or equity. There can
be no assurance that the Company will be successful in obtaining any such
funds on terms acceptable to it, if at all.
Significant increases in the number of employees, primarily in
manufacturing and distribution, are anticipated during the third quarter of
2000, when the Company's products are expected to be ready for market launch,
and the Southern Ontario network is expected to be established.
Risks and Uncertainties.
- ------------------------
As of the date of this Report, the Company anticipates that its
technology will not be available for sale or distribution for at least the
next two quarters. The Company has no established source of revenues and is
dependent on its ability to raise further funding. There can be no assurance
that the Company will be successful in obtaining any funding at reasonable
terms. There can be no assurance that the Company will be able to complete
the commercial development of its technology as of that time, or at any time,
or that the Company will be able to sell or distribute its
UNI-POINT(trademark) technology to generate profitable operations at that time
or in the foreseeable future. There can be no assurance that the technology
will be successfully released to the market, or that the Company will profit
therefrom.
Item 7. Financial Statements.
- -----------------------------
For the years ended December 31, 1999 and 1998
<PAGE>
Centraxx, Inc.
(Formerly known as Composite Design Inc.)
(A Development Stage Company)
Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 1999
<PAGE>
Contents
Page
Report of Independent Accountants 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Shareholders' Deficiency 4
Consolidated Statement of Cash Flows 5
Notes to the Consolidated Financial Statements 6 - 15
<PAGE>
Report of Independent Accountants
To the Shareholders of
Centraxx, Inc.
We have audited the accompanying consolidated balance sheet of
Centraxx, Inc., a development stage company, as at December 31, 1999
and the consolidated statements of operations, changes in
shareholders' deficiency and cash flows for year then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, these consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company as at December 31, 1999 and the results of
its operations and its cash flows for the year then ended in
accordance with generally accepted accounting principles in the
United States.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed
in Note 1(b) to the consolidated financial statements, the Company has
no established source of revenue and is dependent on its ability to
raise further amounts of funding. This raises substantial doubt about
its ability to continue as a going concern. Management plans in regard to
these matters are also described in Note 1(b). The financial statements
do not include any adjustments that might result from the outcome of
this uncertainty.
The comparative figures for 1998 were audited by another firm of chartered
accountants who expressed an opinion without reservation on those
statements in their report dated May 31, 1999.
Markham, Canada Grant Thornton LLP
March 6, 2000 Chartered Accountants
<PAGE>
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
(Expressed in U.S. Dollars)
December 31 1999 1998
<CAPTION>
<S> <C> <C>
Assets
Current
Cash $ 234 $ 141
Prepaid expenses 42,231 19,306
42,465 19,447
Capital assets (Note 3) 191,413 246,259
Other assets 16,671 15,248
$ 250,549 $ 280,954
Liabilities
Current
Accounts payable and accrued liabilities
(Note 4) $ 508,724 $ 322,723
Long Term Convertible debentures (Note 6) 906,319 -
1,415,043 322,723
Shareholders' Deficiency
Capital stock (Note 5) 17,946 1,663,082
Contributed surplus 2,498,958 -
Accumulated other comprehensive loss (3,903) (3,791)
Deficit (3,677,495) (1,701,060)
(1,164,494) (41,769)
$ 250,549 $ 280,954
</TABLE>
Commitments (Note 7)
See accompanying notes to the consolidated financial statements.
<PAGE>
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(Expressed in U.S. Dollars)
<CAPTION>
August 8, 1997 to
Dec. 31, 1999
Year Ended December 31 1999 1998 Cumulative
<S> <C> <C> <C>
Sales $ - $ - $ -
Cost of sales - - -
Gross margin - - -
Expenses
Marketing and public relations 311,391 103,723 429,231
Management fees 121,156 141,529 295,185
Professional fees 151,188 65,264 271,320
Salaries and other administration 566,461 383,589 1,005,529
Research and development costs 750,492 662,007 1,505,097
Depreciation and amortization 68,509 68,477 155,696
Interest on convertible debentures 8,804 - 8,804
Foreign exchange (gain) loss (1,566) 8,199 6,633
1,976,435 1,432,788 3,677,495
Net loss $ (1,976,435) $(1,432,788)$ (3,677,495)
Net loss per share, basic and
diluted (Note 2) $ (0.11) $ (0.11)
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Consolidated Statement of Shareholders' Deficiency
(Expressed in U.S. Dollars)
Year Ended December 31, 1999
<CAPTION>
(Note 5)
Common Stock Contributed Accumulated
Shares Amount Surplus Deficit
<S> <C> <C> <C> <C>
December 31, 1997 12,265,672 $ 609,303 $ - $(268,272)
Foreign currency
translation adjustment - - - -
Issue of shares
(Note 5(b)) 2,102,008 1,053,779 - -
Net loss 1998 - - - (1,432,788)
Total comprehensive loss - - - -
December 31, 1998 14,367,680 1,663,082 - (1,701,060)
Issue of shares
(Note 5(b)) 866,735 718,712 - -
Share issue costs - (52,000) - -
15,234,415 2,329,794 - (1,701,060)
Issue of stock in
connection with
recapitalization
(Note 1) 2,672,666 (2,311,887) 2,311,887 -
Foreign currency
translation adjustment - - - -
Issue of shares
(Note 5(a)) 39,400 39 187,071 -
Net loss 1999 - - - (1,976,435)
Total comprehensive loss - - - -
December 31, 1999 17,946,481 $ 17,946 $2,498,958 $ (3,677,495)
</TABLE>
See accompanying notes to the consolidated financial statements.
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Consolidated Statement of Shareholders' Deficiency
(Expressed in U.S. Dollars)
Year Ended December 31, 1999
<CAPTION>
Accumulated
Other
Comprehensive Total Comprehensive
Loss Deficiency Loss
<S> <C> <C> <C>
December 31, 1997 $ 7,917 $348,948 -
Foreign currency
translation
adjustment (11,708) (11,708) (11,708)
Issue of shares
(Note 5(b)) - 1,053,779 -
Net loss 1998 - (1,432,788) (1,432,788)
Total comprehensive loss - - (1,444,496)
December 31, 1998 (3,791) (41,769)
Issue of shares
(Note 5(b)) - 718,712
Share issue costs - (52,000)
(3,791) 624,943
Issue of stock in
connection with
recapitalization
(Note 1) - -
Foreign currency
translation
adjustment (112) (112) (112)
Issue of shares
(Note 5(a)) - 187,110 -
Net loss 1999 - (1,976,435) (1,976,435)
Total Comprehensive loss - - (1,976,547)
December 31, 1999 $(3,903) $(1,164,494)
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
<TABLE>
Centraxx, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Expressed in U.S. Dollars)
Year Ended December 31 1999 1998
<CAPTION>
<S> <C> <C>
Cash flows from (applied to)
Operating
Net loss $(1,976,435) $ (1,432,788)
Depreciation and amortization 68,509 68,477
Services for stock 283,045 140,949
Loss on write-down of investment - 54,159
(1,624,881) (1,169,203)
Changes in
Prepaid expenses (22,925) (19,306)
Accounts payable and accrued liabilities 186,001 278,271
(1,461,805) (910,238)
Financing
Issue of shares 622,738 912,830
Share issue costs (52,000) -
Issue of convertible debenture 906,319 -
Advances from related parties - (17,419)
1,477,057 895,411
Investing
Purchase of other assets (673) (3,798)
(Purchase) sale of capital assets (2,202) 6,764
(2,875) 2,966
Foreign currency effect on cash (12,284) 10,676
Net increase in cash during the year 93 (1,185)
Cash, beginning of year 141 1,326
Cash, end of year $ 234 $ 141
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
Nature of business
Centraxx Inc. (the "Company"), organized under the laws of the State
of Nevada, is a wireless data communications company specializing in
providing location technology solutions. The Company has developed a
proprietary radio location two-way land-based system utilizing
single-point tracking ("UNI-POINT" technology) which can be deployed
to provide effective solutions for numerous safety, security and
location information needs in multiple network and stand-alone
applications. The Company conducts all of its operations through a
wholly owned subsidiary, Centraxx Corp., organized on August 8,
1997, located in Mississauga, Ontario, Canada.
The Company is considered to be in the development stage and the
accompanying financial statements represent those of a development
stage enterprise, and therefore, is subject to the usual business
risks of development stage companies.
1. Basis of presentation and ongoing operations
The consolidated financial statements include the accounts of
Centraxx, Inc. and its wholly owned subsidiary, Centraxx Corp.
(a) Recapitalization
On May 18, 1999, Centraxx, Inc., a non-operating public company with
2,672,666 Common shares outstanding and immaterial net assets,
acquired 100% of the outstanding common stock of Centraxx Corp. from
various shareholders (the Acquisition). The Acquisition resulted in
the owners and management of Centraxx Corp. having effective control
of the combined entity.
Under generally accepted accounting principles, the Acquisition is
considered to be a capital transaction in substance, rather than a
business combination. That is, the Acquisition is equivalent to the
issuance of stock by Centraxx Corp. for the net monetary assets of
Centraxx, Inc., accompanied by a recapitalization, and is accounted
for as a change in capital structure. Accordingly, the accounting
for the Acquisition is identical to that resulting from a reverse
acquisition, except that no goodwill is recorded. Under reverse
takeover accounting, the post reverse-acquisition comparative
historical financial statements of the "legal acquirer" (Centraxx,
Inc.), are those of the "legal acquiree" (Centraxx Corp.) (i.e. the
accounting acquirer).
Accordingly, the consolidated financial statements of Centraxx, Inc.
as at December 31, 1999 and December 31, 1998, and for the fiscal
years then ended, are the historical financial statements of
Centraxx Corp. for the same periods adjusted for the following
transactions contained in the Share Exchange Agreement executed at
the consummation of the Acquisition. The basic structure and terms
of the Acquisition, together with the applicable accounting effects,
is as follows:
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
Basis of presentation and ongoing operations (continued)
Centraxx, Inc. acquired all of the outstanding shares of Common
stock of Centraxx Corp. from various shareholders in exchange for
15,234,415 shares of newly issued Common stock of Centraxx, Inc.
The Common stock exchange, in addition to the existing Centraxx,
Inc. shares outstanding, collectively resulted in the
recapitalization of the Company. Loss per share calculations
include the Company's change in capital structure for all periods
presented.
The Company incurred $52,000 of costs related to the acquisition.
These costs were recorded as reductions in shareholders' equity in
connection with the reclassification of equity resulting from the
recapitalization.
(b) Ongoing operations
As of December 31, 1999, the Company has experienced a cumulative
loss of $3,677,495. The Company has commenced its planned principal
operations through its newly acquired subsidiary, however, it has
not yet earned any revenue therefrom and the technologies that it
intends to develop may require cash in excess of its current
resources. The ability of the Company to translate these
technologies into marketable products is dependent on management's
ability to obtain adequate financing, develop commercially saleable
products and to achieve profitable operations.
Management is devoting significant efforts to obtain financing to
fund the continued development of its Uni-Point technology. To
date, management has received several tentative offers from non-related
parties for financing. The Company has an understanding with a related
party and major shareholders to continue financing until alternative
sources are arranged.
The Company's current operational focus is to ensure that Uni-Point
is able to be commercially exploited. To that end, management is
devoting substantially all of the Company's resources to the
development of the technology.
These financial statements do not reflect adjustments that would be
necessary if the going concern assumption were not appropriate
because management believes that the action already taken, or
planned, will support the validity of the going concern assumptions
used in preparing these financial statements.
2. Summary of significant accounting policies
Accounting principles
The Company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the U.S.A.
The financial statements are prepared using U.S. dollars.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
2. Summary of significant accounting policies (continued)
Use of estimates
In preparing the Company's financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements, and
the reported revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Depreciation
Rates of depreciation are applied to write off the cost of capital
assets less estimated salvage value over their estimated useful
lives. All capital assets are being depreciated on a straight line
basis over 5 years.
Income taxes
The Company accounts for its income taxes under the liability method
specified by Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. Deferred tax assets and
liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities as
measured by the enacted tax rates which will be in effect when these
differences reverse. Deferred tax expense is the result of changes
in deferred tax assets and liabilities.
Foreign currency translation
The functional currency of the Company is the Canadian dollar. The
financial statements are presented in U.S. dollars using the
principles set out in Statement of Financial Accounting Standards
No. 52 "Foreign Currency Translation" (SFAS No. 52). Assets and
liabilities are translated at the rate of exchange in effect at the
close of the period. Revenues and expenses are translated at the
weighted average of exchange rates in effect during the period. The
effects of exchange rate fluctuations on translating foreign
currency assets and liabilities into U.S. dollars are included as
part of the accumulated other comprehensive loss component of
shareholders' equity.
Loss per share
The Company reports earnings per share in accordance with the
provisions of SFAS No. 128, Earnings Per Share. SFAS No. 128
requires presentation of basic and diluted earnings per share in
conjunction with the disclosure of the methodology used in computing
such earnings per share. Basic earnings per share excludes dilution
and is computed by dividing income available to common shares by the
weighted average common shares outstanding during the period.
Diluted earnings per share takes into account the potential dilution
that could occur if securities or other contracts to issue common
stock were exercised and converted into common stock.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
2. Summary of significant accounting policies (continued)
There were stock options outstanding at December 31, 1999, to
purchase 1,945,000 shares of common stock which were not included in
the computation of diluted loss per share because to do so would be
antidilutive.
Basic weighted average shares outstanding for the year were
16,835,887 (1998 12,658,800).
3. Capital assets 1999 1998
Cost
Engineering equipment $ 209,522 $ 197,657
Office furniture and equipment 124,171 118,394
Leasehold improvements 13,352 12,731
347,045 328,782
Accumulated depreciation
Engineering equipment 90,583 46,722
Office furniture and equipment 58,522 32,122
Leasehold improvements 6,527 3,679
155,632 82,523
Net book value
Engineering equipment 118,939 150,935
Office furniture and equipment 65,649 86,272
Leasehold improvements 6,825 9,052
$ 191,413 $ 246,259
4. Accounts payable and accrued liabilities 1999 1998
Accounts payable
Trade $ 293,952 $ 265,110
Related parties 68,326 -
362,278 265,110
Accrued liabilities
Trade 67,904 46,765
Professional fees 69,738 10,848
Related party interest 8,804 -
$ 508,724 $ 322,723
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
5. Capital stock 1999 1998
Authorized:
200,000,000 Common shares with a par value of
$0.001
Issued:
17,946,481 Common shares (1998-1,069,020) $17,946 $1,663,082
(a) Centraxx, Inc.
i) In December 1999, 1,610 Common shares were issued, for $9.42 per
share, to a supplier of the Company in exchange for services.
These services had a market value of $15,166 and are included in
the statement of operations as marketing expense.
ii) In December 1999, 12,883 Common shares were issued, for $4.62 per
share, to a supplier of the Company in exchange for services.
These services had a market value of $59,519 and are included in
the statement of operations as marketing expense.
iii) In December 1999, 517 Common shares were issued, for $8.50 per
share, to a supplier of the Company in exchange for services.
These services had a market value of $4,395 and are included in
the statement of operations as research and development costs.
iv) In December 1999, 24,390 Common shares were issued, for $4.36 per
share, to a supplier of the Company in exchange for services.
These services had a market value of $106,379 and are included
in the statement of operations as professional fees.
(b) Centraxx Corp.
The following capital stock transactions occurred in the subsidiary
(Centraxx Corp.) during the 1998 fiscal year:
i) On September 30, 1998, 749,493 Common shares were issued to a
related party at an issue price of $0.51 per share as per the
original Subscription Agreement dated September 2, 1997. The
shares were recorded at a total consideration of $382,241.
ii) On September 30, 1998, 30,000 Common shares were issued in
exchange for services to non-related parties at an issue price of
$0.67 per share. The shares were recorded at a total consideration
of $20,100. The corresponding expenses were recorded in the
statement of operations.
iii) On September 30, 1998, 8,500 Common shares were issued in
exchange for services to non-related parties at an issue price of
$2.05 per share. The shares were recorded at a total consideration
of $17,425. The corresponding expenses were recorded in the
statement of operations as professional fees.
iv) On December 31, 1998, 30,000 Common shares were issued in
exchange for services to non-related parties at an issue price of
$1.35 per share. The shares were recorded at a total consideration
of $40,500. The corresponding expenses were recorded in the
statement of operations as marketing expense.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
5. Capital stock (continued)
v) On December 31, 1998, 123,800 Common shares were issued in
exchange for services to non-related parties at an issue price of
$0.51 per share. The shares were recorded at a total consideration
of $62,924. The corresponding expenses were recorded in the
statement of operations as research and development expense.
The following capital stock transactions occurred in the subsidiary
(Centraxx Corp.) during the period January 1, 1999 to May 18, 1999:
i) In January 1999, 61,895 Common shares were issued to employees at an
issue price of $0.50 per share. The shares were recorded at a
total consideration of $30,948. These shares were issued as
settlement of wages owed to these employees for the 1998 fiscal
year.
ii) During the period January 1, 1999 to May 18, 1999, 270,761 Common
shares were issued to a related party at an issue price of $0.66
per share as per the original Subscription Agreement dated
September 2, 1997. The shares were recorded at a total
consideration of $178,702.
iii)During the period January 1, 1999 to May 18, 1999, 50,155 Common
shares were issued in exchange for services to non-related
parties at an issue price of $1.33 per share. The shares were
recorded at a total consideration of $66,638. The corresponding
expense has been included in the statement of operations.
6. Long term Convertible debentures
The Company entered into a $2,000,000 funding arrangement with a
related party on August 10, 1999, to be advanced in minimum monthly
amounts as follows:
August 31, 1999 $ 100,000
September 15, 1999 150,000
October 15, 1999 200,000
November 15, 1999 200,000
December 15, 1999 200,000
January 15, 2000 200,000
February 15, 2000 350,000
March 31, 2000 600,000
Advances are in the form of an 8% mandatory convertible debenture on
the assets of the Company together with a guarantee by the Company's
subsidiary (Centraxx Corp.) The debenture provides for a deferment
of interest for two (2) years, thereafter to be paid quarterly, and
a conversion to stock privilege at any time at the rate of $2 per
share.
As at December 31, 1999, interest of $8,804 has been accrued on
advances totaling $906,319.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
7. Commitments
The Company has entered into agreements to lease its office,
research and development, and warehouse premises and certain
equipment for various periods until 2002 under operating leases.
Future minimum lease payments under the operating leases are as
follows:
Equipment Premises
2000 $ 85,938 $ 17,895
2001 $ 81,553 -
2002 $ 7,863 -
8. Related party transactions
During the year, the Company entered into the following transactions
with related parties:
Management fees in the amount of $203,624 (1998 - $141,528) were
paid to a company subject to significant influence by one of the
Directors.
Rent in the amount of $Nil (1998 -$40,400) was paid to a company
subject to significant influence by one of the Directors.
Scientific research and development consulting expenses totaling
$138,465 (1998 - $143,550) were paid to two companies each
controlled by two Directors of the Company.
These transactions occurred under terms and conditions reflecting
prevailing market conditions.
Refer to Notes 4 and 6 for details of amounts owing to related
parties.
9. Income taxes
The reconciliation of the statutory federal rate to the Company's
effective income tax rate is as follows:
1999 1998
Statutory tax benefit $(896,881) $ (644,763)
Non-deductible expense 51,144 30,800
Amortization of share issue costs (4,887) -
Other (34,378) (5,728)
Increase in valuation allowance 885,002 619,691
$ - $ -
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
9. Income taxes (continued)
Under SFAS No. 109, Accounting for Income Taxes, deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates.
The tax effect of temporary differences that give rise to deferred
income taxes is as follows:
1999 1998
Deferred tax assets
Net operating loss carryforwards $ 1,761,055 $ 926,270
Capital assets 26,384 (4,448)
Share issue costs 19,385 -
Valuation allowance (1,806,824) (921,822)
$ - $ -
At December 31, 1999, the Company had approximately $3,913,000 of
net operating loss carryforwards which expire as follows:
2004 $ 601,500
2005 1,454,100
2006 1,857,400
10. Industry segment
Management has determined that the Company operates in one industry
segment.
11. Stock options
The Company initiated a stock option plan on January 18, 1999 for
employees and on October 1, 1999 for Directors. The plan allows the
Company to grant options to directors and employees up to an
aggregate of 20% of the outstanding common shares of the Company
(3,500,000 options as at December 31, 1999). The options have a term
expiring five (5) years after the grant date. The exercise price
for each option will be at fair market value per share at the date
the options are granted.
During the year, the Company granted 2,050,000 options. The exercise
price is generally equal to the market price at the grant dates.
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
11. Stock options (continued)
During the year, the Company granted 2,000,000 options that are
accounted for under APB Opinion 25 and related interpretations.
Entities that continue to account for stock options using APB
Opinion No. 25 are required to make pro forma disclosures of net
income and earnings per share, as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. Had
compensation cost for the above stock option plan been determined
based on the fair value of the options at the grant dates consistent
with the method of SFAS No. 123, the Company's net income and
diluted loss per share would have been reduced to the pro forma
amounts indicated below:
Net loss As reported $ (1,976,434)
Pro forma $ (2,410,588)
Net loss per share,
Basic and Diluted As reported $ (0.11)
Pro forma $ (0.13)
During the year, the Company granted 50,000 options that are
accounted for under SFAS no. 123 "Accounting for Stock-Based
Compensation". The standard contains a fair value based method for
valuing stock-based compensation that entities may use, and measures
compensation cost at the grant date based on the fair value of the
award. Compensation is then recognized over the service period,
which is usually the vesting period.
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes options pricing model with the
following weighted average assumptions used for grants. Expected
volatility of 83%; risk free interest rate of 5.13%; and expected
lives of 5 years.
A summary of the status of the Company's option plans as of December
31, 1999 and changes during the period ending on that date is
represented below:
Shares Weighted Avg.
Outstanding, beginning of period Nil $ 0.00
Granted 2,050,000 $ 1.32
Exercised - -
Forfeited (105,000) $ 0.70
Outstanding, end of period 1,945,000 $ 1.35
Options exercisable at period-end 761,274
<PAGE>
Centraxx, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1999
11. Stock options (continued)
Weighted average fair value of options
granted during the period $ 0.99
The following table summarizes information about options outstanding
and exercisable at December 31, 1999:
Options Outstanding Options Exercisable
Range of Weighted Avg.
Exercise Number Remaining Weighted Avg. Number Weighted Average
Prices Outstanding Contractual Life Exercise Price OutstandingExercise Price
$0.70 1,260,000 2.84 years $ 0.70 710,397 $0.70
$2.00-3.00 640,000 4.74 years $ 2.46 49,863 2.55
$3.80 45,000 4.90 years $ 3.80 1,014 3.80
1,945,000 761,274
12. Financial instruments
Foreign currency risk
The Company operates primarily in Canadian dollars.
Fair values
The estimated fair value of cash and cash equivalents, accounts
payable and accrued liabilities approximates carrying value due to
the relatively short term nature of the instruments and/or floating
interest rates on the instruments. The estimated fair value of
convertible debenture also approximates carrying value due to the
relatively short term to maturity and/or effective interest rates
that are not significantly different from market rates.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
The Company changed independent auditors from Jones, Jenson & Co.,
of Salt Lake City, Utah, to Grant Thornton, LLP, Chartered Accountants, of
Ontario, Canada. The change was not the result of any disagreement on
accounting principals or practices, or accounting or auditing procedure, but
was made to have an auditing firm that was in close proximity to the principal
executive offices of the Company in Ontario, Canada. See the 8-K Current
Report dated November 17, 1999, which is or will be filed with the Securities
and Exchange Commission at or about the same time as this Report, and is
incorporated herein by reference.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are elected
or appointed and qualified, or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Michael Ivezic President 5/18/99 *
Director 5/18/99 *
Stewart Somers Chief Financial
Officer 5/18/99 10/15/99
Treasurer 5/18/99 10/15/99
Executive Vice
President 5/18/99 10/15/99
David Pamenter Secretary 5/18/99 *
Brian J.
DeChamplain Executive Vice
President 5/18/99 *
Chief Technology
Officer 5/18/99 *
Director 5/18/99 *
Frank Gerlach Vice President 5/18/99 *
Chief Engineer 5/18/99 *
Director 5/18/99 *
Michael St. Vice President 5/18/99 *
Eve
Tony Monga Director 5/18/99 *
Frank Executive Vice 10/1/99 *
Neuperger President *
Bob Hill Vice President 10/1/99 *
Diane Wigley Director 10/1/99 *
Corie Merrell Director 2/1/96 5/18/99
Secretary/ 2/1/96 5/18/99
Treasurer
David C. Merrell President 2/1/96 5/18/99
Director
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Michael Ivezic, Acting President, Director. From 1997 to present,
Mr. Ivezic has been the Managing Director of Frankopan & Co, Inc. Between
1994 and 1997, he was President and CEO of Luminart Inc. Mr. Ivezic is
providing overall direction to Centraxx during its startup and development
phase. Mr. Ivezic has 15 years experience in managing the startup and growth
phases of several companies. He has extensive expertise in identifying high
potential business opportunities and raising the necessary working capital for
these ventures.
David Pamenter, Secretary. Mr. Pamenter, a lawyer, has been a
partner with Gowling, Strathy & Henderson from 1997 to present. Prior to
this, he was a partner in the law firm of Lang, Michener.
Brian J. DeChamplain, Executive Vice President, Chief Technology
Officer, Director. Mr. De Champlain, a co-founder of Centraxx Corp., the
Company's predecessor, brings 16 years of management and RF electronic design
experience in the communications, cable TV, broadcast and consumer product
industries. His technical accomplishments include the design and patent of
new video and RF based scrambling systems for the cable TV, broadcast
industries and consumer RF markets. He has several patents to his credit and
is well respected as a RF product designer.
Frank Gerlach, Vice President, Chief Engineer and Director. Mr.
Gerlach is a co-founder of Centraxx Corp. Between 1986 and 1996, Mr. Gerlach
was employed by Spar Aerospace as a Senior Project Engineer responsible for
projects including the redesign of the Canada Arm and integration of a fiber
optic based naval communications systems. From 1996 to 1997, Mr. Gerlach was
Vice President of Paltrac International Corporation.
Michael St. Eve, Vice President. Mr. St. Eve brings 26 years of
experience in the radio communications industry. From 1995 to 1997, Mr. St.
Eve was President of Midland International Corp. and thereafter was an
independent consultant until he joined Centraxx Corp. in August 1998. Between
1990 and 1996, he was Executive Vice President of Simmonds Capital Limited.
His substantial expertise in the management of the sales and distribution
process for various wireless products will ensure effective penetration of the
Centraxx product in the market place.
Tony Monga, Director. From 1994 to present Mr. Monga, as Managing
Director, has been directing the operations of MVS Mode Inc., a company
engaged in international trade liaison and consulting. Mr. Monga brings 20
years of experience as a management and financial consultant for several large
international companies dealing and negotiating with international joint
ventures, government corporation or state authorities in different cultural
environments. His expertise will be vital as Centraxx crosses political
borders and establishes itself as global power.
Frank Neuperger, Executive Vice President. Mr. Neuperger has a
proven track record in managing emerging technology companies and holds
several patents. His expertise includes experience with terrestrial and
satellite wireless communications, GPS and precision positioning systems, most
notably with Satloc Inc.and Ameritech.
Bob Hill, Vice President Sales, Strategic and Specialty Markets.
Mr. Hill brings over 20 years of sales and marketing experience with leading
international consumer products corporations. His expertise in new product
launches and distribution channel programming will ensure the rapid awareness
and acceptance of the Centraxx technology and products in the international
marketplace. The familiarity gained with distribution channels applicable to
Centraxx will be vital to accelerating customer support of the product
offering.
Diane Wigley, Director. Ms. Wigley has been a principal and
Secretary Treasurer of Consolidated Insurance Brokers Limited since 1970. She
was President of the Insurance Brokers of Metropolitan Toronto in 1992 and was
the first female President, in 1996, of the Insurance Brokers Association of
Ontario.
Significant Employees.
- ----------------------
None; not applicable.
Family Relationships.
- ---------------------
None; not applicable.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
To the knowledge of management, during the past five years, no
present or former director, person nominated to become a director, executive
officer, promoter or control person of the Company:
(1) Was a general partner or executive officer of any business
by or against which any bankruptcy petition was filed,
whether at the time of such filing or two years prior
thereto;
(2) Was convicted in a criminal proceeding or named the subject
of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
him from or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant,
associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or
employee of any investment company, bank, savings and
loan association or insurance company, or engaging in
or continuing any conduct or practice in connection
with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the
purchase or sale of any security or commodity or
in connection with any violation of federal or
state securities laws or federal commodities
laws;
(4) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal
or state authority barring, suspending or otherwise limiting
for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be
associated with persons engaged in any such activity;
(5) Was found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission to have
violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities
and Exchange Commission has not been subsequently reversed,
suspended, or vacated; or
(6) Was found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to
have violated any federal commodities law, and the judgment
in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed,
suspended or vacated.
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
No securities of the Company are registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, and the Company files reports
under Section 15(d) of the Securities Exchange Act of 1934; accordingly,
directors, executive officers and 10 percent stockholders are not required to
make filings under Section 16 of the Securities Exchange Act of 1934.
Item 10. Executive Compensation.
- -------------------------------
Cash Compensation.
- ------------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years or other all
principal periods Annual restricted option/ LTIP other
position Ended $ $ Compen- Stock SAR's Payouts Compen-
Salary Bonus sation awards$ # $ sation$
- ------------------------------------------------------------------------------
Michael 12/31/99 0 0 0 0 0 0 0
Ivezic, Pres
Director
Stewart Somers12/31/99 $83900 0 0 0 0 0 0
CFO, Tres, VP
David Pamenter12/31/99 0 0 0 0 0 0 0
Sec
Brian J.
DeChamplain 12/31/99 $76444 0 0 0 0 0 0
Exec VP, CTO,
Director
Frank Gerlach 12/31/99 $72619 0 0 0 0 0 0
VP, Chief Eng
Director
Michael St.
Eve 12/31/99 $63000 0 0 0 0 0 0
V.P
Tony Monga 12/31/99 0 0 0 0 0 0 0
Director
Frank
Neuperger 12/31/99 $33150 0 0 0 0 0 0
Exec. VP
Bob Hill 12/31/99 $42200 0 0 0 0 0 0
V.P.
Diane Wigley 12/31/99 0 0 0 0 0 0 0
Director
Corie Merrell 12/31/98 0 0 0 0 0 0 0
Sec/Tres 12/31/97 0 0 0 0 0 0 0
Director
David C. 12/31/98 0 0 0 0 0 0 0
Merrell 12/31/97 0 0 0 0 0 0 0
President
Director
No cash compensation, deferred compensation or long-term incentive
plan awards were issued or granted to the Company's management during the
calendar years ending December 31, 1998 and 1999, or the period ending
on the date of this Report. Further, no member of the Company's management
has been granted any option or stock appreciation right, except those in the
following table:
Name Option Vested Option Price
Awarded Option (USD)
- ----------------------------------------------------------------------------
Michael Ivezic 75,000 6,233 $2.50
Tony Monga 75,000 6,233 $2.50
Diane Wigley 75,000 6,233 $2.50
Frank Gerlach 150,000 116,438 $0.70
Frank Gerlach 75,000 6,233 $2.50
Brian De Champlain 150,000 116,438 $0.70
Brian De Champlain 75,000 6,233 $2.50
Michael St. Eve 150,000 65,753 $0.70
Bob Hill 105,000 78,151 $0.70
Frank Neuperger 175,000 18,699 $2.62
Stewart Somers 175,000 75,000 $0.70
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
There are no arrangements pursuant to which any of the Company's
directors was compensated during the Company's last completed calendar year or
the previous two calendar years for any service provided as director. See the
Summary Compensation Table of this Item.
Termination of Employment and Change of Control Arrangement.
- ------------------------------------------------------------
There are no compensatory plans or arrangements, including
payments to be received from the Company, with respect to any person named in
the Summary Compensation Table set out above which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- -----------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of December
31, 1999, and to the date hereof:
Number and Percentage
Name and Address of Shares Beneficially Owned
- ---------------- ----------------------------
Heartland Trust 3,000,000 16.71%
Champion Business Services, Inc. 2,200,000 12.25%
Worldwide Consulting Services, Inc. 2,200,000 12.25%
High Tech Systems, Inc. 950,000 5.29%
Apollo Systems Ltd. 950,000 5.29%
TOTALS 9,300,000 51.82%
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of December 31, 1999, and to the
date hereof:
Number and Percentage
Name and Address of Shares Beneficially Owned
- ---------------- ----------------------------
Michael Ivezic 20,000 .11
David Pamenter --0 -0-
Brian J. DeChamplain 93,000 .52
Frank Gerlach 87,300 .48
Michael St. Eve 11,650 .06
Tony Monga 3,000 .01
Frank Neuperger --0 -0-
Bob Hill 5,000 .02
Diane Wigley --0 -0-
Frankopan & Co., Inc. 15,000(1) .08
Paltrac International Corporation 100,000(2) .55
TOTALS 334,950 1.83
(1) Is controlled by Michael Ivezic.
(2) 100,000 shares are held in the name of Paltrac International
Corporation. Brian De Champlain and Frank Gerlach each own 50% of
Paltrac International Corporation.
Changes in Control.
- -------------------
None, except see the 8-K Current Report dated May 18, 1999. See Part
III, Item 13.
Item 12. Certain Relationships and Related Transactions.
- -------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
Except as indicated below, or under the headings "Sales of
Unregistered Securities During the Past Five Years," of Part I, Item 1, of the
10-KSB Annual Report for the year ended December 31, 1997, or the caption
"Executive Compensation," Part III, Item 10, there were no material
transactions, or series of similar transactions, during the Company's last
three calendar years, or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or
is to be a party, in which the amount involved exceeded $60,000 and in which
any director, executive officer or any security holder who is known to the
Company to own of record or beneficially more than five percent of any class
of the Company's common stock, or any member of the immediate family of any of
the foregoing persons, had an interest.
The Company paid management fees in the amount of $203,623 to a
company subject to significant influence by one of the Company's directors.
The Company also paid scientific research and development consulting
expenses in the amount of $143,550 to two companies that were each controlled
by two directors of the Company.
Certain Business Relationships.
- -------------------------------
Except as indicated under the heading "Transactions with
Management and Others" above, there were no material transactions, or series
of similar transactions, during the Company's last three calendar years, or
any currently proposed transactions, or series of similar transactions, to
which it or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director, executive officer
or any security holder who is known to the Company to own of record or
beneficially more than five percent of any class of its common stock, or any
member of the immediate family of any of the foregoing persons, had an
interest.
Indebtedness of Management.
- ---------------------------
Except as indicated under the heading "Transactions with
Management and Others" above, there were no material transactions, or series
of similar transactions, during the Company's last three calendar years, or
any currently proposed transactions, or series of similar transactions, to
which it or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director, executive officer
or any security holder who is known to the Company to own of record or
beneficially more than five percent of any class of its common stock, or any
member of the immediate family of any of the foregoing persons, had an
interest.
Transactions with Promoters.
- ----------------------------
Except as indicated under the heading "Transactions with
Management and Others" above, there were no material transactions, or series
of similar transactions, during the Company's last three calendar years, or
any currently proposed transactions, or series of similar transactions, to
which it or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any promoter or founder or any
member of the immediate family of any of the foregoing persons, had an
interest.
Item 13. Exhibits and Reports on Form 8-K.
- -----------------------------------------
Reports on Form 8-K.
- --------------------
8-K Current Report dated May 18, 1999, as amended, and respectively filed with
the Securities and Exchange Commission on June 18, 1999 and August 13, 1999.
Exhibit
Exhibits* Number
Number. -------
- -------
(i)
Subsidiaries 21
Financial Data Schedule 27
(ii) Where Incorporated
In This Report
Number. ------------------
- -------
10-KSB Annual Report for the year ended Part I, Item 1
December 31, 1998 Part II, Item 5
Part III, Item 10
Articles of Incorporation of SRS Part III, Item 12
Technical, Inc. dated January 15, 1986
Certificate of Amendment to Articles of
Incorporation of SRS Technical, Inc. dated
June 5, 1987
Certificate of Amendment to the Articles of
Incorporation of Composite Design, Inc., as
corrected, dated December 13, 1996
10-KSB Annual Report for the year ended Part II, Item 5
December 31, 1997
8-K Current Report dated May 18, 1999. Part I, Item 1
8-KA Current Report dated May 18, 1999. Part I, Item 1
* A summary of any Exhibit is modified in its entirety by reference
to the actual Exhibit.
** These documents and related exhibits have previously been filed
with the Securities and Exchange Commission and are incorporated
herein by this reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CENTRAXX, INC.
Date: 3/30/2000 By/s/Michael Ivezic
Michael Ivezic, Acting President and
Director
Date: 3/30/2000 By/s/Brian J. DeChamplain
Brian J. DeChamplain, Exec. V.P., Director
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated:
CENTRAXX, INC.
Date: 3/30/2000 By/s/Michael Ivezic
Michael Ivezic, Acting President and
Director
Date: 3/30/2000 By/s/Brian J. DeChamplain
Brian J. DeChamplain, Exec. V.P., Director
Date: 3/30/2000 By/s/Tony Monga
Tony Monga, Director
Date: 3/30/2000 By/s/Frank Gerlach
Frank Gerlach, Director
SUBSIDIARIES OF THE COMPANY
Centraxx Corp.
<TABLE> <S> <C>
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<LEGEND>
This document contains summary financial information extracted from the
Registrants Audited Consolidated Balance sheet as at December 31, 1998 and
1999 and Audited Consolidated Statement of Operations for the years then ended
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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