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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
AMENDMENT NUMBER 2
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file Number 33-22142
REDOX TECHNOLOGY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 55-0681106
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State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
340 North Sam Houston Parkway East, Suite 250, Houston, Texas, 77060
Tel: (281) 445-0020
Securities registered pursuant to Section 12(b) of the act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.00005 PER SHARE
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(Title of Class)
Indicate by check mark whether the registrant (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 90 Days. Yes [X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the average bid and asked price of the stock on December
31, 1999 was $20,992,488.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of registrant's classes of
common stock, as of the latest practicable date.
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CLASS NUMBER OF SHARES OUTSTANDING ON:
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Common Stock DECEMBER 31, 1999
par value $0.00005 -----------------
49,350,478
PART I
ITEM 1. BUSINESS OF THE COMPANY
ORGANIZATION
The Company initially was incorporated as DCUSA, Inc. under the laws of
Delaware on April 28, 1988. The Company was organized as a blind pool, meaning
that it had no business plan of its own but was organized to acquire or merge
with an active business. Initially the Company was a wholly-owned subsidiary of
Family Health Systems, Inc. which held 3,000,000 shares of the Company's Common
Stock. Pursuant to a Registration Statement which was declared effective on
August 2, 1988, the 3,000,000 shares were distributed as a dividend to
approximately 900 Family Health Systems, Inc. stockholders, effectively
spinning-off the Company as an independent entity.
In early 1993, the Company entered into a relationship with Richard Szymanski
who, on April 9, 1993 assigned his recently filed Patent Application for an
"Emergency Reserve Battery" to the Company in exchange for 15,000,000 shares of
the Company's Common Stock. As a result, Mr. Szymanski owned approximately 82%
of the Company's then issued and outstanding Common Stock. On June 1, 1993 the
name of the Company was changed to its present name, "ReDOX Technology
Corporation".
BUSINESS OPERATIONS
From 1993 until approximately 1996 the Company was engaged in developing the
"Emergency Reserve Battery". The product was, essentially, a single-use battery
which would be attached to a car battery as a reserve unit. In the event that
the regular battery was fully discharged and unable to start the car, the
driver would activate the reserve battery, releasing the electrolyte and
charging instantly the reserve battery which would then be used to start the
car. The Company built prototypes, attempted to market it to many battery
manufacturers, and attempted to secure financing to support manufacture of the
product. However, during the same period there were significant changes in
battery technology, especially the chemistry including new electro-chemical
engineering and processes (such as lithium metal batteries) which offered
higher energy densities (storage capacity)than the Company's product. As a
result, the Company became engaged in substantial research and development
efforts in a search for greater energy density and more flexibility, and the
product was never produced and sold.
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As a result of his research and development efforts, Mr. Szymanski became aware
of the work being done by Professor Licht at Clark University in Worcester,
Massachusetts. At that time, the Company's battery was based on an alloy of
aluminum, magnesium and zinc as the anode with a carbon-based cathode.
Professor Licht was working with aluminum as the anode and sulfur and
poly-sulfide as the cathode. Mr. Szymanski began working with Clark University
and in September, 1998, after about three years of investigation and
negotiations, the Company obtained a Patent License Agreement from Clark
University. (see "Property of the Company")
From 1998 to December 31, 1999 the Company has been engaged in seeking the
financing for the production of prototypes, beta testing of the prototypes,
completion of product development and establishment of manufacturing. However,
the Company has been unable to secure that financing on terms acceptable to it.
The Company continues to seek that financing.
PROPOSED PRODUCTS
The Company's initial focus is on the use of the battery technology for the
Uninterrupted Power Supply ("UPS") market. A "UPS" is intended to provide power
in the event of a failure of the primary source of power so as to retain data
and/or continue operations. The market includes computers and
computer-controlled equipment. The Company is also looking into the manufacture
and sale of batteries for portable electronic equipment, such as cellular
telephones. Another potential market is the electric car battery since the
Company's product would provide power for a longer period on a single charge.
AVAILABILITY OF RAW MATERIALS
The materials which would be used in the Company's products are common and
readily available from many sources. The Company does not foresee any
difficulties in acquiring raw materials or in facing any dramatic price
increases due to material shortages.
COMPETITION
The battery market is highly competitive. There are numerous manufacturers both
in the United States and overseas (especially in Japan). Many of these
manufacturers have high brand recognition and established market shares with
customer-perceived quality. The Company believes, however, that it can enter
this market and establish a reasonable market share because:
o its raw materials are readily available and less costly than those used
by competitors, giving it cost advantages;
o its raw materials permit easier and less costly manufacturing, giving
further cost advantages;
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o its finished products do not have explosion or other safety issues,
permitting easier transportation, giving further cost advantages;
o its raw materials are environmentally friendly and do not pose
disposal problems; giving it an advantage with consumers concerned
about the environment and waste disposal problems;
o the energy densities (i.e., the amount of stored power) offered by its
products are substantially higher (e.g., compared to a lithium-ion
battery offering 180 - 205 watt hours per kilogram, the Company's
replacement product would offer 680 watt hours per kilogram); and
o the Company's licensed electro-chemical process is a departure from
current technology and is expected to have a high profile.
ITEM 2. PROPERTY OF THE COMPANY
OFFICES
We maintain our principal office at 340 North Sam Houston Parkway East, Suite
250, Houston, Texas 77060, where our telephone number is (281) 445-0020 and our
facsimile number is (281) 445-0022. The offices are leased from a non-related
party under a three year lease which commenced April 1, 1998 at an annual
rental of $19,712.52 payable in monthly installments of $1,642.71. The office
area is 1,577 square feet, divided into a reception area, a conference room, a
file/storage/utility room and three executive offices. The Company owns the
office furniture and equipment in the office. This space is adequate for
current needs, but as the Company expands, additional or alternative space will
be required.
PATENTS, PATENT APPLICATIONS AND LICENSES
Prior to his relationship with the Company in 1993, Mr. Szymanski had been
developing a battery with greater storage capacity ("density") using aluminum,
magnesium and zinc. On April 8, 1993 Mr. Szymanski filed a Patent Application
for an "Emergency Reserve Battery". On April 9, 1993 Mr. Szymanski assigned
that Patent Application to the Company in exchange for 15,000,000 shares of the
Company's Common Stock. That Patent Application is still pending in the United
States Patent and Trademark Office, while the Company's primary emphasis has
been on the technology under the License obtained from Clark University,
Worcester, Massachusetts.
On September 17, 1998 the Company entered into an exclusive License Agreement
with Clark University covering U.S. Patents 5,413,881 issued May 9, 1995 and
5,571,600 issued November 5, 1996. These patents relate to batteries using
aluminum and sulfur. Upon execution of the Patent License, the Company paid
Clark University the sum of $30,000 as a License Fee. In addition, at the end
of each year of the agreement, the Company pays a minimum royalty of $35,000.
Upon the commencement of sales of products under the Patent License, the
Company will pay a royalty of 5% of Gross Sales, against which the minimum
royalty in
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that year will be applicable. The License Agreement, subject to earlier
termination by Clark University in the event of the Company's default, will
remain in effect until the expiration of the last patent to have been issued
(#5,571,600 issued November 5, 1996).
ITEM 3. LEGAL PROCEEDINGS.
We are not engaged in any pending legal proceedings. We are not aware of any
legal proceedings pending, threatened or contemplated, against any of our
officers and directors, respectively, in their capacities as such.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of shareholders in the fourth quarter of
1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal United States market in which the registrant's Common Stock has
been traded is the NASD Over the Counter (OTC) Bulletin Board under the symbol
"RDOX".
The range of our prices for the past two fiscal years is as follows:
Quarter High Ask Low Bid
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1st Qtr,'99 $ 1.53125 $ 0.4375
2nd Qtr,'99 $ 1.945 $ 0.65625
3rd Qtr,'99 $ 2.0075 $ 0.5
4th Qtr '99 $ 0.59375 $ 0.26
1st Qtr, '98 $ 1.75 $ 0.7
2nd Qtr, '98 $ 2.75 $ 0.65625
3rd Qtr, '98 $ 1.5 $ 0.8125
4th Qtr '98 $ 1.03125 $ 0.5
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ITEM 6. SELECTED FINANCIAL DATA
Selected Summary Financial Data of ReDOX Technology Corporation
Year Ended:
Dec. 31, 1999 Dec. 31, 1998
Income Statement Data:
Sales -0- -0-
Selling, General and
Admin. Expenses 326,937 137,371
(Loss) Before Income <326,937> <137,371>
Taxes
Net Loss <326,937> <137,371>
Unrealized (Loss)
On Securities -0- -0-
Balance Sheet Data:
Cash & Cash
Equivalents 3,233 186
Other Assets 121,837 120.826
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Total Assets 125,070 121,012
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Credit Payable 15,147 5,688
Other Liabilities -0- -0-
Total Stockholder Equity 109,923 115,324
Operating Data:
There was no revenue from sales and ancillary income for the calendar years
ended December 31,1998 and December 31, 1999.
Operating expense were $326,937 for the year ending December 31,1998 and
$137,371 for the year ending December 31, 1999. Operating expenses primarily
include General and Administrative costs.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not have any market risk sensitive instruments, commodity risk
or any foreign currency exchange rate risk.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information with respect to the Officers
and Directors of the company.
Name Age Position
---- --- --------
Richard Szymanski 58 President/Director
Clifton D. Douglas 71 Secretary/Treasurer/Director
James R. Schuler 60 Director
Clifford A. Jones 87 Director
The members of the Board of Directors of the Company are elected by the
shareholders at each annual meeting for a one year term. Officers are elected
by the Directors at each annual meeting for a one year term, or until otherwise
replaced by the Board of Directors.
Richard A. Szymanski is President, Chairman of the Board of Directors and CEO
of our Company, serving in these capacities since our incorporation in April
1993. Mr. Szymanski is involved in research, development and improvement of
high density power batteries. Mr Szymanski previously served as Vice President
and Technical Director of World Book Encyclopedia Science Service for several
years where he maintained a staff of professional science writers and
photographers for the purpose of writing and illustrating major scientific
events, including: exclusive coverage of the seven original astronauts,
organizing all photo coverage including space launchers at Cape Kennedy, and
the initial heart transplants performed in Houston, Texas.
Clifton D. Douglas has served as Secretary/Treasurer and Director since July
1996, overseeing and managing all of the accounting and financial affairs of
the Company. From 1990 though 1995, Mr. Douglas was Vice President of Tiger Oil
and Gas, Inc., Latin America Trading Company and Petrorental Internacionales,
S.A., where he was responsible for operations in Mexico and Latin America.
Previously, Mr. Douglas was a financial consultant in the areas of oil, gas and
real estate construction.
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In 1953, Mr. Douglas received a Bachelor of Science in Accounting from Arizona
State University.
James R. Schuler has served as a Director of our Company since August 4, 1998.
Presently, Mr. Schuler is the President and CEO of Trans United Partners, Inc.
of Pacifica, California, having been with that company since 1998. Also since
1998 through the present, Mr. Schuler is CEO to S-Cube Investments, LLC, where
he has been forming a technology cooperative among new technology companies.
Previously, Mr. Schuler co-founded a research and development company in 1994
called Add-Vision, Inc., which produced a new illumination technology made up
of a revolutionary thin, flat, programmable display product with multiple uses
(called Intelligent Illumination). He remained with Add-Vision until 1998.
Prior to that, Mr. Shculer served as President and CEO to a transportation
relocation company called Relocation Controls Corporation, and to a petroleum
refining administrative company which he founded called Transatlantic
Petroleum.
Mr. Schuler received a Bachelor of Science Degree in Finance and Business
Administration from the University of North Carolina.
Clifford A. Jones has served as Director since our inception in April of 1993,
and was Secretary of the Corporation from April of 1993 through July of 1996.
Mr. Jones is the founder and Senior Partner of the firm of Jones, Close and
Brown, Chartered Attorney-at-Law, in Las Vegas, Nevada, where he has been
practicing law for the past 38 years. Mr. Jones served as Lieutenant Governor
of the State of Nevada for two consecutive terms. He is listed in "Who's Who in
American Law" and "Who's Who in the World." He also serves as a Director of 18
Greenway Environmental Services, Inc., a public company.
Mr. Jones received his LL.B. and JD from the University of Missouri, Columbia,
Missouri.
ITEM 11. EXECUTIVE COMPENSATION.
Currently, our Officers are not compensated for their services. They do not
receive any salary, wages or other cash remuneration. They receive no
performance-based stock or options, no non-performance-based stock or options
and they receive no SAR grants or deferred compensation of any kind.
Annual Compensation including wages, cash remuneration of any kind,
performance- based stock and options and non-performance based stock and
options, SAR grants and deferred compensation of any kind for the past three
years is as follows:
Name Title 1999 1998 1997
---- ----- ---- ---- ----
Richard Szymanski President -0- -0- -0-
Clifton D. Douglas Secretary/Treasurer -0- -0- -0-
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 31, 1999, information regarding
the beneficial ownership of shares of our Common Stock by each person known by
us to own five percent or more of the outstanding shares of Common Stock, by
each of our Officers, by each of our Directors, and by our Officers and
Directors as a group. On December 31, 1999 there were 49,350,478 shares issued
and outstanding of record.
Name and Address of Number of Percent
Beneficial Owner Shares As of 12/31/991
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Richard Alan Szymanski 15,144,9002 30.69%
Trust #1
15 White Oak Manor
Conroe, Texas 77304
Clifton D. Douglas 500,000 1.01%
14674 F. Perthshire
Houston, Texas 77079
Clifford A. Jones 1,000,000 2.03%
28 Queens Courtyard Drive
Los Vegas, Nevada 89109
James R. Schuler -0- -0-
1141 Harbor Bay Parkway
Alameda, CA 94502
All officers and
directors as a group(4) 16,644,900 33.73%
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1 Based on 49,350,478 shares of Common Stock issued and outstanding as of
12/31/99.
2 These shares were placed in a trust, The Richard Alan Szymanski Trust #1, for
the benefit of Patricia Szymanski, Wendy Szymanski, Jonathan Szymanski and
Holly Szymanski.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since his association with the Company in 1993, Mr. Szymanski has provided
substantially all of the funding which the Company has received. From 1993 to
June 30, 2000, Mr. Szymanski has advanced a total of $1,080,712 to the Company.
In addition, Mr. Szymanski has served as Chairman of the Board, Vice President
or President, and as the primary employee during that same period without
compensation. In 1996, in an effort to recognize Mr. Szymanski's contributions,
the Board of Directors authorized the issuance of 6,000,000 shares of a series
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of Convertible Preferred Stock which was designated for that purpose. This
issuance was based upon a then recent Amendment to the Certificate of
Incorporation which had authorized 10,000,000 shares of undesignated Preferred
Stock having a par value of $.001 per share. In reliance upon that issuance,
the advances made by Mr. Szymanski prior to that date were booked as
"Additional Paid In Capital". Furthermore, Mr. Szymanski continued to make all
necessary cash advances and in reliance upon the issuance of the Convertible
Preferred Stock those were also booked as "Additional Paid In Capital". In
essence, Mr. Szymanski's advances were treated as capital contributions. During
the second quarter of 2000, questions were raised about the validity of the
1996 Amendment to the Certificate of Incorporation since the proxies used for
the required vote of the stockholders had been solicited without the use of a
definitive Proxy Statement filed in accordance with the Proxy Rules of the
Securities and Exchange Commission. To resolve the problem, the Board and Mr.
Szymanski rescinded the issuance with respect to the 5,000,000 shares of
Convertible Preferred Stock still held by his trust, issued him a Promissory
Note for the $1,080,712 in advances, and agreed to develop an alternative plan
to recognize his advances and convert the Promissory Note back to equity. The
Board has ordered the holding of a Special Meeting of Stockholders to authorize
an Amendment to the Certificate of Incorporation which would clear up the
questions surrounding the 1996 Amendment. If the stockholders approve the
Amendment and authorize an increase in the authorized shares of Common Stock,
the Board intends to issue Mr. Szymanski 11,937,311 shares of Common Stock in
conversion of the Promissory Note. The number of shares was arrived at by
taking the advances made to 1996 and dividing that total by one-half of the
then market price per share and by taking the further advances to June 30, 2000
and dividing that total by $.20 per share, as follows:
Advances Shares
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$379,379 to 6/30/96 8,430,644
$701,333 to 6/30/00 3,506,667
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Exhibits
3.1* Certificate of Incorporation, filed April 25, 1988
3.2* By-laws
3.3 Certificate of Amendment, filed June 7, 1993
3.4 By-laws of June 1993
3.5 Certificate of Amendment, filed July 5, 1994
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3.6 Certificate of Amendment, filed September 12, 1996
4.1 Designation of Convertible Preferred Stock
10.1 License Agreement with Clark University
10.2 Indemnification Agreement with Richard A. Szymanski
10.3 Indemnification Agreement with Clifford D. Douglas
10.4 Indemnification with James R. Schuler
23.1 Consent of Auditors
B. Financial Statements*
C. Reports on Form 8-K
None
* Previously filed
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Security Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
REDOX TECHNOLOGY CORPORATION
By: /s/ RICHARD A. SZYMANSKI
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Richard A. Szymanski, President
Date: August 18,2000
By: /s/ CLIFTON D. DOUGLAS
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Clifton D. Douglas, CFO
Date: August 18,2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant in the capacities and on the dates indicated.
/s/ CLIFTON D. DOUGLAS
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Clifton D. Douglas, Director
Date: August 18,2000
/s/ JAMES R. SCHULER
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James R. Schuler, Director
Date: August 18,2000
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