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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-
ACT OF 1934
For the fiscal year ended December 31, 1998
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OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 033-55254-27
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Advanced Lumitech, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Nevada 870438637
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
36 Avenue Cardinal - Mermillod, Carouge, Switzerland 1227
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 41-22-301-0360
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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_______ No X
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing. (See definition of affiliate in
Rule 405.)
Aggregate market value of voting stock held by non-affiliates of the
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registrant as of April 9, 1999 was $1,484,375.
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Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 1999
$.001 PAR VALUE COMMON STOCK 25,000,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE.
The information required by Part III of this Annual Report, to the extent
not set forth herein, is incorporated herein by reference from the
registrant's definitive proxy statement relating to the annual meeting of
stockholders to be held on May 28, 1999, which definitive proxy statement
shall be filed with the Securities Exchange Commission within 120 days after
the end of the fiscal year to which this Annual Report relates.
[Cover page 1 of 1 pages]
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ITEM 1. DESCRIPTION OF BUSINESS
General
Advanced Lumitech, Inc. ("ADLU" or the "Company") is a development stage
company, which, through its subsidiary, Lumitech SA ("Swiss Lumitech), has
developed and patented a process making it possible to create luminescent color
pictures of photographic quality, which can be applied to a multitude of objects
in numerous fields world-wide (the "Luminescence Technology").
The Company's business strategy is to generate revenues from the granting of
licenses to use the Luminescence Technology, including luminescent substances
and sheets, which will be sold under the brand name `Brightec'. Such licenses
will be for a particular field of application and for a specific geographic
region. Once a license has been granted, the Company will earn revenues
primarily from the sale of the Brightec products to the licensee. The Company
intends to enter into licensing agreements that will be subject to various
conditions, including without limitation minimum annual purchase requirements
for Brightec sheets and/or substances, the requirement that the Brightec label
be displayed on all products sold under the license, and the payment of
licensing fees in amounts which will be dependent upon the value of purchases of
Brightec products by the licensee, among other considerations.
The Company has not yet commenced commercial marketing and licensing of
Brightec, but expects these marketing activities to commence in the latter half
of 1999. The Company expects to sell both directly and through distributors. The
Company intends to initially launch its operations in the United States,
commencing primarily with the professional photo-outlet market in high tourist
density locations, such as amusement parks, cruise-liners and popular
destination cities. The marketing and selling of Brightec products is dependent
upon the Company's successful raising of financing, as described in
`Management's Discussion and Analysis - Liquidity and Capital Resources'. If the
Company is unable to successfully raise such funds or market Brightec or
manufacture Brightec products, there is substantial doubt as to the Company's
ability to continue as a going concern.
ADLU is incorporated in Nevada and its principal executive offices are located
at 36 Avenue Cardinal - Mermillod, Carouge, Switzerland, telephone (41) 22 301
0360.
Developments and Company History
The Company was incorporated on April 16, 1986 as Hyena Capital, Inc., a Nevada
corporation. For the period from incorporation to August 13, 1998, the Company
had no operations of any kind. On August 13, 1998, the Company acquired 100% of
the then outstanding common stock of Swiss Lumitech, a company founded in
Switzerland in 1992, which had developed and patented the Luminescence
Technology.
Prior to developing the Luminescence Technology, Swiss Lumitech's operations
consisted of the publication and marketing of a book written by Swiss Lumitech's
co-founders. From that point until its acquisition by the Company, Swiss
Lumitech engaged in the development of the Luminescence Technology and utilized
it to develop a range of luminescent watches, which it distributed through an
affiliated company, Lumitech BV ("the Netherlands Affiliate").
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For accounting purposes, the acquisition of Swiss Lumitech was treated as a
reverse acquisition of the Company by Swiss Lumitech. However, the Company was
the legal acquirer and accordingly, the acquisition was effected by the issuance
of 4,000,000 newly issued common shares ($0.001 par value) of the Company. As a
result of this transaction, the shareholders of Swiss Lumitech became majority
shareholders of the Company, owning 80% of the Company's then issued 5,000,000
voting common shares. On August 14, 1998, the Company's Board of Directors
authorized the change of the Company's name from Hyena Capital, Inc. to Advanced
Lumitech, Inc. and authorized a five-for-one split of the Company's then issued
share capital, increasing the Company's issued share capital to 25,000,000
shares.
Products
The Company's business strategy is to generate revenues from the granting of
licenses to use the Luminescence Technology, including luminescent substances
and sheets, which will be sold under the brand name `Brightec'. Such licenses
will be for a particular field of application and for a specific geographic
region. Once a license has been granted, the Company will earn revenues
primarily from the sale of the Brightec products to the licensee. The Company
intends to enter into licensing agreements that will be subject to various
conditions, including without limitation minimum annual purchase requirements
for Brightec sheets and/or substances, the requirement that the Brightec label
be displayed on all products sold under the license, and the payment of
licensing fees in amounts which will be dependent upon the value of purchases of
Brightec products by the licensee, among other considerations.
Brightec images have the following characteristics, which the Company believes
are unique for a product at this or any other price level:
1. excellent picture quality in daylight and at night - fine detail,
millions of colors;
2. in daylight, pictures without the yellowish tint found with standard
luminous products;
3. at night, pictures without the strong greenish color associated with
standard luminous products;
4. luminescence is guaranteed for life;
5. excellent resistance to thermal and mechanical shocks, heat, cold and
humidity; and
6. luminescence is non-toxic and non-polluting.
Brightec utilizes photoluminescence, the most wide-spread of the six forms of
luminescence. Photoluminescence is non-radioactive, non-polluting and requires
no stimulation other than light. Brightec also utilizes the latest generation of
high-intensity pigments, alkaline-earth, which are able to reproduce
luminescence at up to 10 times the levels of traditional zinc-sulfide based
pigments.
The luminescent substances, such as paints, inks and compounds, are designed for
applications using pictures, including safety and decoration, and applications
without pictures, such as markings. The luminescent sheets are manufactured in
various categories and sizes, which permit wide-spread applications in
photography, color-printing, textiles, decoration, and different printing
technologies, such as ink-jet, laser-jet, offset and sublimation. Within these
categories, specific sheets have been developed for specific applications. For
example, special luminescent sheets are required for watch dials, and
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different sheets are required for various textures, such as canvas, which give a
different look or quality to the printed image.
Using Brightec, a luminescent picture can be created in four steps:
1. Digitize the picture, with a digital camera, scanner or by creating a
picture on a computer;
2. Print the picture on a luminescent printing sheet, using, for example, a
laser or ink-jet printer;
3. Cut the luminescent picture to the desired size; and
4. Apply the luminescent picture to the end product.
The Company believes the unique, photographic-quality luminescent image produced
by Brightec products and Brightec's ease of use and use of existing and widely
available digital-printing and other technologies will be the main factors in
its appeal to licensees.
At the current time, the Company's development resources are focused on the
further development, testing and research of Brightec. As a result, the Company
has no other products and does not have the resources to develop any product
other than Brightec. Although the Company has developed Brightec to what it
believes to be a marketable form, it has yet to commercially market Brightec and
generate revenues therefrom. The Company expects to commence such marketing
during the latter half of 1999. The production of Brightec products is dependent
on the Company's successful raising of financing, as described in `Management's
Discussion and Analysis - Liquidity and Capital Resources'. If the Company is
unable to successfully raise such funds or manufacture and market Brightec
products, there is substantial doubt as to the Company's ability to continue as
a going concern.
Sources and Availability of Raw Materials
The intermediate raw materials used in Brightec products are supplied by Socol
SA ("Socol"), a Swiss based private company, which has been involved in the
development and production of luminescent substances for over 20 years. Socol,
which produces and provides more than 1,000 metric tonnes of paints to its
customers each year, has worked with the Company in developing the Luminesence
Technology and Brightec products to their current level.
The Company is presently discussing a definitive collaboration agreement with
Socol (the "Prospective Socol Agreement"), some of the terms of which are set
forth in a letter agreement dated March 31, 1999 (the "Socol Letter Agreement").
In the Socol Letter Agreement, the Company has confirmed its agreement to issue
1,000,000 shares of its common stock to Socol; and Socol has confirmed both (i)
its agreement to accept such shares in full consideration for Socol's
participation in and efforts in connection with the Luminescence Technology, and
(ii) its disclaimer of any interest or right in or to the Company's Brightec
products, the Luminescence Technology Patent described below in `Description of
Business - Patents', or the proprietary information and know how relating to
said Patent and Brightec products.
The Company expects Socol to agree, in the Prospective Socol Agreement, to
certain discounts in its pricing of Brightec products and substances procured or
manufactured by
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Socol for the Company. In return, the Company expects the Prospective Socol
Agreement to include a grant of exclusivity to Socol with regard to the
manufacturing of such substances subject, however, to the Company's right to use
alternative suppliers without penalty under certain circumstances including, for
example, upon any significant change in the management or business of Socol.
Finally, the Company expects the Prospective Socol Agreement to provide for the
continuing collaboration between Socol and the Company in the transfer of
Socol's knowledge relating to the luminescence imaging field, require Socol to
assist the Company's own in-house research and development efforts, and restrict
Socol's ability to compete against the Company or disclose information to third
parties regarding the Luminescence Technology or its manufacture.
As contemplated by the Socol Letter Agreement and in consideration for Socol's
entry into the Prospective Socol Agreement, the Company intends to issue
1,000,000 shares of its common stock to Socol. The Company intends to expense
the cost of the Prospective Socol Agreement when signed.
The Alkaline Earth component used by Socol to manufacture the intermediate raw
materials upon which the Brightec products and substances are based are provided
by two separate suppliers. As far as the Company is aware, there is only one
other company who purchases the Alkaline Earth components in the specification
used by the Company.
Markets
The Company intends to initially market the Brightec products in the following
markets:
1. Photography and color printing
Using Brightec technology, any kind of photograph or picture can be produced
on an entirely luminescent basis. This market includes articles such as
private photographs, night lights, watch dials, measuring instrument dials
and key rings.
2. Textiles
The market made up of textile products with pictures and designs includes T-
shirts, caps, shoes bags, bracelets and lamp shades. Brightec makes it
possible to apply to textiles all types of luminescent pictures in millions
of colors.
3. Decoration
This market combines a wide range of articles for interior and exterior
decoration, such as tiling, lamps, outlines, friezes and handles. Using
Brightec, such products can offer the added benefit of visibility and
security in the dark.
4. Substances
The performance and quality of Brightec substances offer outstanding
luminescent efficiency and find uses in various fields such as nautical,
telecommunications and signings.
Potential applications within the above identified markets can be segregated
into two distinct fields:
Signs and Comfort, including
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. automobile stickers, instrument panels and gear knobs
. nautical winches, measuring instruments, rigging and knives
. diving and fishing equipment, camping tools and compasses
Souvenirs and Fashion, including
. framed photos, key rings, traveling alarms
. merchandising of T-shirts, caps, bracelets, pennants and badges
. pens, paints and nail varnishes
The Company intends for its licensees to initially market Brightec in the United
States, commencing primarily with the professional photo-outlet market in high
tourist density locations, such as amusement parks, cruise-liners and popular
destination cities. In a typical transaction, a consumer would use the services
of a professional photographer at a popular tourist destination, to take a
`vacation photo'. The photographer could either use a high quality digital
camera or traditional camera to take the picture and then would process the
photograph (via a personal computer, and scanner for a traditional photograph)
using a consumer photo-quality ink-jet printer (or similar) and Brightec `ink-
jet luminescent glossy film' media. Alternatively, the consumer could take
favorite daylight images (such as photos of weddings, family reunions, holidays,
children, pets) to a professional photo-outlet that converts them to luminescent
nighttime images on the same Brightec media.
The Company initially intends to use existing professional photo-outlets as its
distribution network. These professional photo-outlets are already in place and
in search of higher margin products. In addition, these professional photo-
outlets have space for product demos and have time to sell their clients on the
advantages of luminescence. The cost to equip a photo-shop would range from
$ 850 to $ 3,000, and set-up time and training can be less than one hour,
depending on the equipment chosen.
The Company has not yet begun commercial marketing and licensing of Brightec,
but expects these initial marketing activities to commence in the latter half of
1999. Such activities, in which directly and through distributors the Company
expects to grant licenses to use Brightec products to professional photo-
outlets, will be dependent on the Company's successful raising of financing, as
described in `Management's Discussion and Analysis - Liquidity and Capital
Resources'. If the Company is unable to successfully raise such funds or market
Brightec or manufacture Brightec products, there is substantial doubt as to the
Company's ability to continue as a going concern.
Patents
The Company first received a patent for the Luminescence Product in France in
August 1997 (the "Luminescence Technology Patent") This patent covered the
processes for all types of luminescent pictures (photographic, textile and
decoration), as well the products resulting from the implementation of such
processes, as described in `Products' above. The Company has subsequently
registered applications for the Luminescence Technology Patent in 24 countries,
including the United States of America, Canada, Japan and China and 14 principal
European countries, including Switzerland. The Company expects successful
registration of the Luminescence Technology Patent to take from six months to
six years, depending on the
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country of application. The life of the Luminescence Technology Patent will vary
from country to country, but at a minimum will extend to 2015. The inability to
successfully register the Luminescence Technology Patent in any of the above
mentioned countries may have a material adverse effect on the Company's
business, financial condition and results of operations.
On March 31, 1999, the Company and the co-inventor of the processes that are the
subject of the claims covered by the Luminesence Technology Patent executed and
delivered an agreement amending a prior agreement dated January 26, 1996 between
the same parties (the "Patent Assignment Agreement"). The Patent Assignment
Agreement eliminates a requirement in the prior agreement that the Company pay
royalties to the co-inventor calculated as a percentage of sales of products
featuring Luminesence Technology, and provides for the payment to said co-
inventor $160,000, and the issuance to said co-inventor in 1999 of 800,000
shares of the Company's common stock. With respect to the cash payment
obligation, the Company paid the co-inventor $25,000 in 1998, and in the first
quarter of 1999 paid an additional $10,000. The balance is payable from time to
time as the Company's liquidity and other commitments permits. The Company
intends to expense the entire cost of the Amended Luminesence Agreement due to
uncertainty as to the recoverability of such cost.
As described above in `Description of Business - Sources and Availability of Raw
Materials', Socol has disclaimed any interest or other right in or to the
Company's Brightec products, the Luminescence Technology Patent or the
proprietary information and know how relating to said Patent and Brightec
products.
Seasonality
Although it has not begun to market or sell its Brightec products, the Company
does not anticipate any seasonality in its revenues. However, due to the nature
of the initial market sought by the Company (see `Markets' above), there may be
increased sales during the major United States holiday periods of Christmas,
Thanksgiving and "Spring-Break", as well as the significant national holidays of
Memorial Day, Labor Day and the Fourth of July.
Competition
The Company is not aware of any competing product with photographic quality
images, which offers the same combination of features as Brightec. The Company
does not intend for Brightec derived products to compete against other
potentially cheaper, non-photographic quality luminescent products, based on
zinc-sulphide technology. Such products are manufactured using processes and
technologies supported by companies which may have significantly greater
resources and have been established and known in the luminescence field for a
number of years. Although such "glow in the dark" products are well known by the
consumer and already well established at certain of the Company's intended sales
outlet channels, the Company's product is unique in that if offers photographic
quality images.
As in any technology industry, there are numerous new technologies being
developed in imaging laboratories or by individual inventors, which technologies
may render the Company's technology obsolete. The Company is not aware of any
such competing technology under development or which has been developed.
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Research and Development
The Company intends to expend funds for research and development activities in
order to improve and broaden the Company's Luminescence Technology. In this
regard, the Company anticipates hiring two full-time research analysts during
the 1999 calendar year. However, such expenditures and hirings are dependent on
the Company's successful raising of financing, as described in `Management's
Discussion and Analysis - Liquidity and Capital Resources'. If the Company is
unable to successfully raise such funds and is unable to invest further in
research and development, the Company may be unable to develop new products or
enter new markets and such inability may have an adverse effect on the Company's
results of operations. Also, the Company expects to continue to receive
assistance from, and to collaborate with, Socol in future research and
development initiatives, pursuant to the Prospective Socol Agreement as
described under `Sources and Availability of Raw Materials' and `Patents' above,
although there is no assurance that the Company and Socol will be able to
finalize the Prospective Socol Agreement on terms satisfactory to the Company.
Regulation
No government authorization is required to offer the Company's products or
services.
Year 2000
The Company is undergoing a review of its information systems, including a
preliminary assessment of all of its internal and external systems and processes
with respect to the Year 2000 issue. The Company plans to test all of its
systems and processes (and the associated Year 2000 "fixes") for Year 2000
compliance during 1999; and will initiate a review of potential Year 2000
matters with its significant suppliers (which is expected to be completed by the
end of 1999) to determine the extent to which the Company is vulnerable to the
failure of those third parties to remediate their own Year 2000 issues. Although
the actual costs cannot be determined until the review is completed, there can
be no assurance that the systems of other companies will be converted on a
timely basis and will not have a corresponding adverse effect on the Company's
results of operations.
ITEM 2. PROPERTIES
At December 31, 1998, the Company's only property was its executive office space
located at 36 Avenue Cardinal-Mermillod, Carouge, Switzerland. This office is
leased under an agreement which allows the Company to terminate the lease at the
end of each 12 month period. However, with the Company's forthcoming move to
establish a sales and administrative office in the Boston area and the expected
growth in the business, the Company anticipates securing new office space in the
Boston area during 1999.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Company is a party
or to which any of its properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the registrant's stockholders during the
fourth quarter of its fiscal year ended December 31, 1998.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
From inception to the date of the acquisition of Swiss Lumitech on August 13,
1998, there was no trading market for the Company's $.001 par value common
stock. Since August 13, 1998, the Company's common stock has been traded
Over-the-Counter Bulletin Board (US OTC-BB) under the symbol "ADLU."
The following table sets forth,on a per share basis, the range of high and low
bid information for the common stock for each quarter since August 13, 1998:
High Low
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Period from August 13, 1998 through September 30, 1998 $ 1.2500 $ 0.2500
Period from October 1, 1998 through December 31, 1998 $ 1.4218 $ 0.5625
As of March 31, 1999, there were 692 record holders of the Company's common
stock. The Company has not previously declared or paid any dividends on its
common stock and does not anticipate declaring any dividends in the foreseeable
future.
ITEM 6. SELECTED FINANCIAL DATA
The following data should be read in conjunction with the consolidated financial
statements and related notes thereto and management's discussion and analysis of
financial condition and results of operations, included elsewhere in this
report.
<TABLE>
<CAPTION>
Year Ended December 31, 1998 1997 1996 1995 1994
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Consolidated Statement of
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Operations
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<S> <C> <C> <C> <C> <C>
Revenues $ - $ 148,352 $ 54,688 $ 91,219 $ 8,406
Net loss (340,115) (219,531) (308,771) (225,351) (200,009)
Per Share Data
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Basic and diluted net
loss per share $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.01)
December 31, 1998 1997 1996 1995 1994
- ------------ ---- ----- ---- ---- ----
Consolidated Balance Sheet
- --------------------------
Data
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Total assets $ 244,325 $ 77,416 $ 60,059 $ 285,069 $ 103,142
Long-term borrowings (a) 255,809 361,476 372,493 295,474 104,542
</TABLE>
(a) (a) Consists of notes payable to directors and related parties.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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PART II
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and the related Notes included
elsewhere in this Annual Report on Form 10-K. The following discussion contains
certain trend analysis and other statements of a forward-looking nature relating
to future events or the future financial performance of the Company. Readers are
cautioned that such statements are only predictions and that actual results or
events may differ materially.
General
Advanced Lumitech, Inc. ("ADLU" or the "Company") is a developmental stage
company, which, through its subsidiary, Lumitech SA ("Swiss Lumitech), has
developed and patented an exclusive new process to create luminescent color
pictures of photographic quality, which can be applied to a variety of objects
in numerous applications (the "Luminescence Technology"). The Company will
market the Luminescence Technology and related products under the brand name
`Brightec'.
The Company was incorporated on April 16, 1986 as Hyena Capital, Inc., a Nevada
corporation. For the period from incorporation to August 13, 1998, the Company
had no operations of any kind. On August 13, 1998, the Company acquired 100% of
the then outstanding common stock of Swiss Lumitech, a company founded in
Switzerland on February 7, 1992, which had developed and patented the
Luminescence Technology.
For accounting purposes, the acquisition of Swiss Lumitech was treated as a
purchase (reverse acquisition) of the Company by Swiss Lumitech. Accordingly,
the following discussion reflects the combined operations of the Company and
Swiss Lumitech from the inception date of Swiss Lumitech to December 31, 1998.
The Company's current business strategy is to derive revenues by granting
licenses to use the Luminescence Technology, and more significantly, from the
subsequent sale of related luminescent substances and sheets. The Company
intends to grant licenses for a particular application in a specific geographic
region. In addition, the Company intends to sell the related Brightec products
to each licensee.
The Company has not commenced commercial marketing and licensing of Brightec,
but expects these marketing activities to commence in the latter half of 1999.
The Company expects to sell both directly and through distributors. The Company
intends to initially launch its operations in the United States, commencing
primarily with the professional photo-outlet market in high tourist density
locations, such as amusement parks, cruise-liners and popular destination
cities.
The marketing of Brightec products is dependent on the Company's successful
raising of capital, as described in `Liquidity and Capital Resources - Ability
to Continue as a Going Concern'. If the Company is unable to successfully raise
such funds or market Brightec or
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PART II
manufacture Brightec products, there is substantial doubt as to the Company's
ability to continue as a going concern.
Prior to its acquisition by the Company, Swiss Lumitech engaged in the
development of the Luminescence Technology and utilized it to develop a range of
luminescent watches, which it distributed through an affiliated company,
Lumitech BV ("the Netherlands Affiliate"). Prior to developing the Luminescence
Technology, Swiss Lumitech's operations consisted of unrelated activities.
At December 31, 1998, the Company had not begun commercial marketing and
licensing of Brightec and has generated accumulated losses of $ 1,537,032. Also,
the Company does not anticipate earning revenues from the sale of Brightec until
the third quarter of 1999, at the earliest. The Company's current liabilities
exceed its current assets by $ 543,002 and the Company has not secured
additional financing to fund its planned operations for 1999. As a result of
these factors, the ability of the Company to continue to operate as a going
concern cannot be predicted at this time and is primarily dependent upon the
Company's ability to obtain the necessary financing to enable it to successfully
market Brightec and then upon future profitable operations. See `Liquidity and
Capital and Capital Resources - Ability to Continue as a Going Concern'.
Results of Operations
Years Ended 1998, 1997 and 1996
Revenues
The Company had no revenues in 1998 due to the change in the Company's
operations as described above. During 1997 and 1996, the Company's revenues and
related cost of sales were generated exclusively from sales of Luminescence
Technology watches to the Netherlands Affiliate. The Company expects future
revenues, if any, to come from the licensing the Luminescence Technology, and
more significantly, from the subsequent sale of related luminescent substances
and sheets.
Gross profit
As a result of the change in the Company's operations as described above, the
Company had no revenues and therefore no gross profit in 1998. For the years
ended December 31, 1997 and 1996, the Company's sales resulted in negative gross
margins of approximately $75,439 and $110,322, respectively. In 1997, the
Company's gross profit was impacted by an inventory write-off of approximately $
72,000 resulting from the disposal of all Luminescence Technology watches. The
Company expects that future gross margins, if any, will result from the sale of
Brightec products. Historical results are not indicative of expected future
results.
Selling and Marketing
Selling and marketing expenses consist primarily of compensation, marketing and
promotional materials and an allocation of facility related expenses. Selling
and marketing expenses increased 171% to $70,381 in 1998 from $26,015 in 1997.
Selling and marketing expenses decreased 43% to $26,015 in 1997 from $45,644 in
1996. The increases in 1998 in selling expenses is primarily attributable to
expenses incurred in the fourth quarter of 1998 for developing marketing
materials to support the launch of the Brightec brand name. The decrease in 1997
in selling expenses is primarily attributable to efforts to reduce marketing
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PART II
expenses due to the lower than anticipated revenues. The Company expects that
selling and marketing expenses will continue to increase in dollar amount as the
Company introduces and promotes products.
General and Administrative
General and administrative expenses consist primarily of compensation of
executive personnel, legal and accounting costs and an allocation of facility
related expenses. General and administrative expenses increased 229% to $221,074
in 1998 from $67,175 in 1997. General and administrative expenses decreased 40%
to $67,175 in 1997 from $111,310 in 1996. The decrease in 1997 in general and
administrative expenses is primarily attributable to efforts to reduce expenses
due to the lower than anticipated revenues. The increase in expenses in 1998
related primarily to patent and patent application costs associated with the
Company's Luminescence Technology and the costs of being a public company. The
Company expects that general and administrative expenses will continue to
increase in dollar amount as a result of an expansion in the Company's
administrative staff to support its operations and as a result of being a public
company. Also, the Company expects to expense approximately $810,000 of patent
and patent application costs in 1999, as discussed under `Liquidity and Capital
Resources - Commitments'.
Interest Expense
Interest expense incurred on amounts due to related parties and the bank line of
credit was $48,660, $50,902 and $41,495 in the years ended December 31, 1998,
1997 and 1996, respectively.
Liquidity and Capital Resources
Cash and cash equivalents increased to $207,938 at December 31, 1998 from $494
at December 31, 1997.
Net cash used in operating activities in the year ended December 31, 1998 was
$374,008. The net cash used in operating activities during 1998 was principally
the result of the net loss of $340,115, adjusted for noncash expenses including
depreciation and the decrease in accounts payable and accrued liabilities and
accounts payable to affiliated companies.
Net cash used in investing activities in the year ended December 31, 1998 was
approximately $25,157, consisting of capital expenditures for property and
equipment.
Net cash provided by financing activities in the year ended December 31, 1998
was approximately $659,506. The net cash provided was primarily the $688,347
received in consideration for subscriptions to purchase shares of the Company's
common stock
Net cash used in operating activities in the year ended December 31, 1997 was
$60,779. The net cash used in operating activities during 1997 was principally
the result of the net loss of $219,531 adjusted for noncash expenses including
depreciation and the inventory write-off of $72,079
11
<PAGE>
PART II
and the increase of $142,612 in the accounts payable to affiliated companies
offset by the decrease of $66,672 in the accounts receivable from affiliated
company.
Ability to Continue as a Going Concern
At December 31, 1998, the Company had not begun to commercially market Brightec
and generate revenues therefrom and the Company's operations to date have
generated accumulated losses of $ 1,537,032. The Company's current liabilities
exceed its current assets by $ 543,002 at December 31, 1998. Also, at December
31, 1998 the Company exceeded the borrowings available under the line-of-credit
with a bank by $63,317, at the December 31, 1998 rate of exchange.
In order to generate future revenues from the sale of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12 month period. The Company also intends to repay a significant
amount of debt, including the bank line-of-credit. In addition, during 1999, the
Company intends to establish a U.S. based sales and administrative office, and
hire additional employees. The Company expects that it may require up to
approximately $4.0 million of cash or available credit during the next 12 month
period to finance payment of existing liabilities, including the bank line-of-
credit, purchases of raw materials and operating expenses. The Company has
engaged a Geneva, Switzerland based investment company (the "Geneva Advisor") to
assist the Company in its efforts to raise between $5.0 million and $10.0
million through a combination of debt or equity securities intended to be
offered to institutional and private investors. The Geneva Advisor will be
compensated approximately $36,000, plus five percent (5%) of the funds raised in
consideration for its services. In addition, the Geneva Advisor will assist the
Company in seeking temporary bridge financing of up to $1.0 million, the
proceeds of which will be used to fund the Company's operations until it can
complete its efforts to raise permanent financing. There can be no assurances
that the Company will be able to raise the funds it requires.
The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, to effectively market and produce Brightec products, to establish
profitable operations and to generate positive operating cash flows. If the
Company fails to raise funds, or the Company's line-of-credit is reduced or
terminated, or the Company is unable to generate operating profits and positive
cash flows, there are no assurances that the Company will be able to continue as
a going concern and it may be unable to recover the carrying value of its
assets.
In addition to the above mentioned factors, the Company is presently reliant on
one supplier, Socol SA ("Socol"), a Swiss-based company, for certain of the
materials used to manufacture Brightec products. See `Description of Business -
Sources and Availability of Raw Materials'. Furthermore, Socol is reliant on two
other suppliers for the Alkaline Earth component crucial to Socol's production
activities for the Company. Should Socol, for any reason, terminate its
relationship with the Company, this would have a material adverse short-term
impact on the Company's ability to produce Brightec products and generate sales.
The inability to obtain sufficient key components as required, or to develop
alternative sources could have a material adverse effect on the Company's
business, financial condition and results of operations.
12
<PAGE>
PART II
Management believes that with the assistance of the Geneva Advisor, it will be
successful in raising the necessary financing to fund the Company's operations
through the 1999 calendar year. Accordingly, management believes that no
adjustments or reclassifications of recorded assets and liabilities are
necessary at this time.
During the third and fourth quarters of 1998, the Company commenced seeking new
investors to raise additional financing for the Company. During 1998, the
Company received $688,347 in consideration for subscriptions to purchase
1,867,602 shares of common stock. At December 31, 1998, pending the finalization
of the Company's equity structure, the shares were not issued. It is expected
that the shares will be issued to the investors early in the second quarter of
1999, after the finalization of the Company's equity structure.
Credit Availability
The Company, through Swiss Lumitech, has borrowings under a line-of-credit with
a Swiss bank. Pursuant to the terms of the bank line-of-credit, the Company may
borrow up to $ 345,324, at the December 31, 1998 rate of exchange. At December
31, 1998 and 1997, the Company had exceeded such limit, but in each instance,
the bank granted the Company a temporary extension, with no stated expiration
date, to exceed the limit by the bank. The line-of-credit agreement contains
terms and conditions, restricting Swiss Lumitech's ability to pledge its assets
as security for separate borrowings and requiring the payment of interest each
quarter. In addition, any and all accounts receivable generated by the Company
are automatically pledged to the bank pursuant to the terms of the line-of-
credit agreement. At December 31, 1998, the borrowings under the bank line-of-
credit carries interest at 6.35%. The line-of-credit is guaranteed up to
available borrowings by a relative of certain directors.
Should the Company's line-of-credit be reduced or terminated, or if the Company
is unable to generate operating profits and positive cash flows, there are no
assurances that the Company will be able to continue as a going concern and it
may be unable to recover the carrying value of its assets. The Company does not
believe the bank line-of-credit will be reduced or terminated in the near future
and intends to repay it in full during 1999.
Commitments
At December 31, 1998, the Company and the co-inventor of the Luminescence
Technology had agreed in principle to an amendment to their agreement that
would, among other things, eliminate an obligation of the Company to pay said
co-inventor royalties calculated as a percentage of sales of products based upon
the Luminescence Technology, and instead provide for the issuance of common
stock of the Company and the making of cash payments to said co-inventor. On
March 31, 1999, the Company and the co-inventor entered into an agreement
amending the earlier royalty agreement, pursuant to which the Company (i) has
paid said co-inventor $ 25,000 and $ 10,000 in 1998 and 1999, respectively, and
committed to pay an additional $ 125,000 from time to time as the Company's
liquidity and working capital requirements permit, and (ii) agreed to issue
800,000 shares of the Company's common stock to the co-inventor.
At December 31, 1998, the Company and its principal supplier, Socol SA ("Socol")
had agreed informally on terms for the continuation of their on-going
relationship; and on March 31, 1999, the Company and Socol entered into a
13
<PAGE>
PART II
letter agreement in which the Company confirmed its agreement to issue 1,000,000
shares of its common stock to Socol; and Socol confirmed both (i) its agreement
to accept such shares in full consideration for Socol's participation in and
efforts in connection with the Luminescence Technology, and (ii) its disclaimer
of any interest or right in or to the Company's Brightec products, the
Luminescence Technology Patent or the proprietary information and know how
relating to said Patent and Brightec products. The Company anticipates
finalizing a definitive Socol agreement during the second quarter of 1999.
At December 31, 1998, a company controlled by one of the Company's directors
(the "Netherlands Affiliate") had agreed to terminate and cancel a license
arrangement dated June 30, 1997, pursuant to which the Netherlands Affiliate had
obtained an exclusive license to use and exploit the Luminescence Technology in
the European countries, for consideration paid in 1997 of $100,000. Pursuant to
the December 1998 informal agreement, the Company had agreed to the payment of $
170,000 to the Netherlands Affiliate of which $ 70,000 was to reimburse the
Netherlands Affiliate for costs and expenses it paid or incurred in the
development of processes, products and markets and the remainder was to repay
the Netherland Affiliate the $100,000 it paid the Company in 1997. By agreement
dated March 31, 1999, the Netherlands Affiliate formally agreed to the
termination of its exclusive license in consideration for which the Company
confirmed its agreement to pay $70,000 in reimbursement of the costs and
expenses of the Netherlands Affiliate, and further agreed to repay the
Netherlands Affiliate the $100,000 paid to the Company in 1997. Said agreement
contemplates the payment of such amounts, without interest, at any time on or
before March 31, 2004. At December 31, 1998, the Company had paid approximately
$60,000 of the aggregate $170,000 due the Netherlands Affiliate; and the entire
$ 170,000 has been charged to expense at December 31, 1998.
Year 2000
The Company is undergoing a review of its information systems, including a
preliminary assessment of all of its internal and external systems and processes
with respect to the Year 2000 issue. The Company plans to test all of its
systems and processes (and the associated Year 2000 "fixes") for Year 2000
compliance during 1999; and will initiate a review of potential Year 2000
matters with its significant suppliers (which is expected to be completed by the
end of 1999) to determine the extent to which the Company is vulnerable to the
failure of those third parties to remediate their own Year 2000 issues. Although
the actual costs cannot be determined until the review is completed, there can
be no assurance that the systems of other companies will be converted on a
timely basis and will not have a corresponding adverse effect on the Company's
results of operations.
Certain Factors That May Affect Future Results
This Annual Report on Form 10-K contains forward-looking Statements that involve
a number of risks and uncertainties. There are a number of important factors
that could cause the Company's actual results to differ materially from those
indicted by such forward-looking statements.
These factors include without limitation, that the Company is in the early
stages of development and has not generated revenues from the sale of Brightec
products. Prior to the development of its Brightec products the Company
incurred recurring operational losses from unrelated activities.
14
<PAGE>
PART II
The commercial success of the Company is dependent upon the acceptance in the
marketplace of Brightec. The Company believes it must establish collaborative
relationships with partners in connection with the development of Brightec and
there can be no assurance that these relationships will be successful and that
the termination of such relationships will not be detrimental to the Company.
The Company needs to secure additional funding to finance development, marketing
and operational costs associated with launching the Brightec range of products.
There can be no assurance that the Company will secure these funds, and failure
to do so will have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company may face competition from other companies, which may have greater
resources than the Company, seeking to duplicate the Company's technologies and
to enter the Company's targeted markets. There can be no assurance that the
Company will be able to successfully compete with such potential competitors.
The Company lacks an experienced marketing and sales force to sell its Brightec
products. The Company's failure to hire experienced marketing personnel or to
develop such marketing and sales forces to sell its Brightec products will have
a material adverse effect on the Company's business, financial condition and
results of operations. The Company also will need to develop an appropriate
organizational structure and hire the appropriate personnel to fulfill the
management roles envisaged within that structure.
The future growth and success of the Company will depend on the hiring of
innovative research and development personnel to further develop Brightec and
other products and processes.
The Company is dependent upon two sources for the supply of the Alkaline Earth
component necessary for creation of its Luminescence Product. There can be no
assurance that the Company can obtain the Alkaline Earth component if the
Company's relationships with the sources is terminated. Termination of these
relationships may have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company is undergoing a review of the readiness of its suppliers for the
Year 2000 issue. It is unclear at this time what affect the Year 2000 issue
will have on the Company's suppliers or the Company.
The participating member countries of the European Union have adopted the Euro
as its common legal currency on January 1, 1999. At this early stage of its
assessment the Company cannot predict the impact of the conversion to the Euro.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company faces exposure to financial market risks, including adverse
movements in foreign currency exchange rates and changes in interest rates.
These exposures may change over time as business practices evolve and could have
a material adverse impact on the Company's financial results. The Company's
primary exposure has been related to local
15
<PAGE>
PART II
currency revenue and operating expenses in Europe. Historically, the Company has
not hedged specific currency exposures as gains and losses on foreign currency
transactions have not been material to date.
ITEM 8. FIANANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and the related auditors'
reports thereon are included in the following pages F-1 through F-15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Following the change in control of the Company, effective August 13, 1998, the
Company's new board of directors determined that it would be in the best
interests of the Company to engage a national accounting firm to audit its
financial statements as of December 31, 1998 and 1997, and for each of three
years in the period ended December 31, 1998. On January 27, 1999, pursuant to a
decision of the Company's board of directors, the Company advised its
independent accountants, Smith & Company, of their dismissal.
In the two fiscal years and subsequent interim period prior to the dismissal of
Smith & Company, there were no reports on the financial statements of the
Registrant containing any adverse opinion or disclaimer of opinion, no such
reports were qualified or modified as to uncertainty, audit scope or accounting
principles, and there were no disagreements with Smith & Company concerning any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
In January, 1999, Ernst & Young, LLP, advised the Company that it had accepted
an engagement to act as the Registrant's independent auditor.
Prior to being engaged, Ernst & Young LLP was not consulted with by the Company
as to the application of accounting principles to any specified transaction or
the type of audit opinion that might be rendered on the financial statements.
16
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Part III, Item 10, is included in the Company's Proxy
Statement relating to the Company's annual meeting of stockholders to be held on
May 28, 1999, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Part III, Item 11, is included in the Company's Proxy
Statement relating to the Company's annual meeting of stockholders to be held on
May 28, 1999, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Part III, Item 12, is included in the Company's Proxy
Statement relating to the Company's annual meeting of stockholders to be held on
May 28, 1999, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Part III, Item 13, is included in the Company's Proxy
Statement relating to the Company's annual meeting of stockholders to be held on
May 28, 1999, and is incorporated herein by reference.
17
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1 Financial Statements
--------------------
See Index to Financial Statements on page F-1
2 Financial Statement Schedules
-----------------------------
See Index to Financial Statements on page F-1
3 The following exhibits are filed as part of this Annual Report or,
where indicated, were previously filed and are hereby incorporated
by reference:
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3.1 Articles of Incorporation of Advanced Lumitech, Inc., and all amendments
and modifications thereto, filed with the Secretary of State of the State
of Nevada as of March 29, 1999.
3.2 By-laws of Advanced Lumitech, Inc.
4 Specimen Certificate representing the Company's Common Stock.
10.1 Merger Agreement dated as of August 12, 1998, by and among the Company,
Lumitech, S.A. and Patrick Planche, pursuant to which the Company to
acquired 100% of the issued and outstanding shares of the common stock of
Lumitech, S.A.
10.2 Patent Assignment Agreement respecting the Company's luminescence
technology dated as of January 16, 1996, as amended on March 31, 1999,
between Jacques-Charles Collett and Lumitech S.A. (formerly known as OTWD
On Time Diffusion S.A.).
10.3 Agreement dated as of March 31, 1999, between Lumitech S.A. and
Luminescent Europe Technologies b.v. (the "Netherlands Affiliate"),
providing for the termination of all rights and interests of the
Netherlands Affiliate with respect to the Company's luminescence
technology.
10.4 Socol Letter Agreement dated as of March 31, 1999, between the Company and
Socol S.A., pursuant to which Socol disclaims any interest in the
Company's Luminescence Technology.
10.5 Credit Agreement dated as of August 6, 1997, as amended on September 9,
1998 between Lumitech S.A. and Credit Suisse.
18
<PAGE>
PART IV
10.6 Agreement dated as of December 28, 1998, between Lumitech S.A. and
LumiCorp, providing for the termination of all rights and interests of
LumiCorp with respect to the Company's luminescence technology.
16 Letter from Smith & Co., the Registrant's former independent accountant
(filed as Exhibit 16 to the Company's Current Report on Form 8-K, dated
February 4, 1999 and incorporated by reference herein)
21 Subsidiaries of Advanced Lumitech, Inc.
27 Financial Data Schedule (for SEC use only).
(b) Reports filed on Form 8-K during the fourth quarter of 1998:
None.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVANCED LUMITECH, INC.
By: /s/ Patrick Planche
-------------------------------------
Patrick Planche
Chairman of the Board
Chief Executive Officer
April 15, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
Date: April 15, 1999 By: /s/ Patrick Planche
--------------------------------
Principal Financial Officer
Date: April 15, 1999 By: /s/ Francois Planche
--------------------------------
Francois Planche, Director
Date: April 15, 1999 By:
--------------------------------
Jose Canales, Director
20
<PAGE>
INDEX TO FINANCIAL STATEMENTS
(a) The following documents are filed as part of this Report:
<TABLE>
<CAPTION>
<S> <C>
(1) Index to Consolidated Financial Statements.
Report of Independent Auditors.......................................... F-2
Consolidated Balance Sheets at December 31, 1998 and 1997............... F-3
Consolidated Statements of Operations
for the years ended December 31, 1998,1997 and 1996 and for the period
from inception (April 16, 1986) to December 31, 1998.................... F-4
Consolidated Statements of Stockholders' Deficit
for the years ended December 31, 1998, 1997 and 1996 and for the
period from inception (April 16, 1986) to December 31, 1998............. F-5
Consolidated Statements of Cash Flows
for the years ended December 31, 1998,1997 and 1996 and for the period
from inception (April 16, 1986) to December 31, 1998................... F-7
Notes to Consolidated Financial Statements.............................. F-8
(2) Index to Financial Statement Schedules:
None
</TABLE>
No schedules for Advanced Lumitech, Inc. and subsidiaries have been presented
since the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the information
required is included in the respective financial statements or notes thereto.
F-1
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Advanced Lumitech, Inc.
We have audited the accompanying consolidated balance sheets of Advanced
Lumitech, Inc. (a development stage company) as of December 31, 1998 and 1997
and the related consolidated statements of operations, stockholders' deficit,
and cash flows for each of the three years in the period ended December 31, 1998
and for the period from inception (February 7, 1992) to December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Advanced Lumitech, Inc. (a development stage company) at
December 31, 1998 and 1997 and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 1998
and for the period from inception (February 7, 1992) to December 31, 1998, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully described in
Note 2, the Company has incurred recurring operating losses of $ 1,537,032 since
its inception and has a working capital deficiency of $ 543,002 at December 31,
1998. In addition, the Company has limited cash resources and borrowings exceed
the line-of-credit established with its bank. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.
Boston, Massachusetts Ernst & Young LLP
March 31, 1999
F-2
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 207,938 $ 494
Accounts receivable from affiliated company - 66,672
Prepaid expenses and other assets 9,878 2,270
------------------------------------------------
Total current assets 217,816 69,436
Property and equipment:
Office and photographic equipment 60,108 34,951
Less accumulated depreciation (33,599) (26,971)
------------------------------------------------
26,509 7,980
------------------------------------------------
Total assets $ 244,325 $ 77,416
================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Borrowings under bank line-of-credit $ 408,641 $ 375,881
Accounts payable and accrued liabilities 151,699 227,771
Accounts payable to affiliated companies 156,412 179,925
Note payable to related party 44,066 -
------------------------------------------------
Total current liabilities 760,818 783,577
Note payable to related party - 39,479
Notes payable to directors 255,809 321,997
------------------------------------------------
Total liabilities 1,016,627 1,145,053
Stockholders' deficit:
Common stock, $0.001 par value;
Authorized; 100,000,000 shares
Issued and outstanding; 25,000,000 shares
(1997-20,000,000 shares) 25,000 20,000
Additional paid-in capital 45,426 50,426
Stock subscribed 688,347 -
Stock subscriptions receivable (34,965) (34,965)
Deficit accumulated during the development stage (1,537,032) (1,196,917)
Cumulative translation adjustment 40,922 93,819
------------------------------------------------
Total stockholders' deficit (772,302) (1,067,637)
------------------------------------------------
Total liabilities and stockholders' deficit $ 244,325 $ 77,416
================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(FEBRUARY 7, 1992)
YEAR ENDED THROUGH DECEMBER
DECEMBER 31, 31,
1998 1997 1996 1998
--------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
Sales to third parties $ - $ - $ - $ 814,540
Sales to affiliated company - 148,352 54,688 203,040
--------------------------------------------------------------------- ------------------
- 148,352 54,688 1,017,580
-
Cost of sales 223,791 165,010 1,005,756
--------------------------------------------------------------------- ------------------
Gross profit/(loss) - (75,439) (110,322) 11,824
Operating Expenses:
Selling and marketing 70,381 26,015 45,644 170,327
General and administrative 221,074 67,175 111,310 1,143,078
--------------------------------------------------------------------- ------------------
291,455 93,190 156,954 1,313,405
--------------------------------------------------------------------- ------------------
Operating loss (291,455) (168,629) (267,276) (1,301,581)
Interest expense, net 48,660 50,902 41,495 235,451
--------------------------------------------------------------------- ------------------
Net loss $ (340,115) $ (219,531) $ (308,771) $ (1,537,032)
===================================================================== ==================
Basic and diluted loss per share $ (0.02) $ (0.01) $ (0.02)
Shares used to compute basic 21,875,000 20,000,000 20,000,000
and diluted loss per share
</TABLE>
See accompanying notes.
F-4
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficit
<TABLE>
<CAPTION>
Common Stock Additional Stock
------------------------- Paid-in Stock Subscriptions
Shares Par Value Capital Subscribed Receivable
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of Stock in February 1992 20,000,000 $20,000 $15,461 $ - $ -
Net loss for the period February 7, 1992 to
December 31, 1992 - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balance at December 31, 1992 20,000,000 20,000 15,461 - -
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balance at December 31, 1993 20,000,000 20,000 15,461 - -
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balance at December 31, 1994 20,000,000 20,000 15,461 - -
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balances at December 31, 1995 20,000,000 $20,000 $15,461 $ - $ -
</TABLE>
<TABLE>
<CAPTION>
Deficit
Accumulated Accumulated Total
During the Other Stockholders'
Development Comprehensive Equity/
Stage Income/(Loss) (Deficit)
-----------------------------------------------
<S> <C> <C> <C>
Issuance of Stock in February 1992 $ - $ - $35,461
Net loss for the period February 7, 1992 to
December 31, 1992 (30,528) (30,528)
Foreign currency translation adjustment - (378) (378)
-------
Comprehensive loss - - (30,906)
---------------------------------------------
Balance at December 31, 1992 (30,528) (378) 4,555
Net loss for year (212,727) - (212,727)
Foreign currency translation adjustment - (31) (31)
-------
Comprehensive loss - - (212,758)
---------------------------------------------
Balance at December 31, 1993 (243,255) (409) (208,203)
Net loss for year (200,009) - (200,009)
Foreign currency translation adjustment - (34,590) (34,590)
-------
Comprehensive loss - - (234,599)
---------------------------------------------
Balance at December 31, 1994 (443,264) (34,999) (442,802)
Net loss for year (225,351) - (225,351)
Foreign currency translation adjustment - (67,486) (67,486)
-------
Comprehensive loss - - (292,837)
---------------------------------------------
Balances at December 31, 1995 $(668,615) $(102,485) $(735,639)
</TABLE>
F-5
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficit
(Continued)
<TABLE>
<CAPTION>
Common Stock Additional Stock
------------------------- Paid-in Stock Subscriptions
Shares Par Value Capital Subscribed Receivable
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 20,000,000 $20,000 $15,461 $ - $ -
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balance at December 31, 1996 20,000,000 20,000 15,461 - -
Unpaid subscriptions for stock 34,965 - (34,965
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
-------------------------------------------------------------------------
Balance at December 31, 1997 20,000,000 20,000 50,426 - (34,965
Receipt of subscriptions for 1,867,602
common shares of stock - - - 688,347 -
Issuance of shares in connection with
acquisition of the Company 5,000,000 5,000 (5,000) - -
Net loss for year - - - - -
Foreign currency translation adjustment - - - - -
Comprehensive loss - - - - -
Balance at December 31, 1998 25,000,000 $25,000 $45,426 $ 688,347 $ (34,965
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
Deficit
Accumulated Accumulated Total
During the Other Stockholders'
Development Comprehensive Equity/
Stage Income/(Loss) (Deficit)
------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1995 $ (668,615) $ (102,485) $ (735,639)
Net loss for year (308,771) - (308,771)
Foreign currency translation adjustment - 125,045 125,045
-------
Comprehensive loss - - (183,726)
-----------------------------------------------
Balance at December 31, 1996 (977,386) 22,560 (919,365)
Unpaid subscriptions for stock - - -
Net loss for year (219,531) - (219,531)
Foreign currency translation adjustment - 71,259 71,259
-------
Comprehensive loss - - (148,272)
-----------------------------------------------
Balance at December 31, 1997 (1,196,917) 93,819 (1,067,637)
Receipt of subscriptions for 1,867,602
common shares of stock - - 688,347
Issuance of shares in connection with
acquisition of the Company - - -
Net loss for year (340,115) - (340,115)
Foreign currency translation adjustment - (52,897) (52,897)
-------
Comprehensive loss - - (393,012)
-----------
Balance at December 31, 1998 $(1,537,032) $ 40,922 $ (772,302)
===============================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(FEBRUARY 7, 1992) THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------
1998 1997 1996 1998
------------------------------------ ---------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(340,115) $(219,531) $(308,771) $(1,537,032)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 6,628 4,729 3,553 35,866
Inventory written-off - 72,079 - 72,079
Accounts receivable written-off - - 26,830 (78,121)
Changes in operating assets and liabilities:
Accounts receivable - - - 78,121
Accounts receivable from affiliated
company 66,672 (66,672) - -
Prepaid expenses and other current assets (7,608) 186 5,381 (9,878)
Inventory - (25,811) 177,210 (72,079)
Accounts payable and accrued liabilities (76,072) 31,629 (75,245) 151,699
Accounts payable to affiliated companies (23,513) 142,612 (6,165) 156,412
------------------------------------ -----------
Net cash used in operating activities (374,008) (60,779) (177,207) (1,202,933)
INVESTING ACTIVITIES
Proceeds from disposal of property and equipment - - 10,216 10,216
Purchase of property and equipment (25,157) (7,495) - (72,591)
------------------------------------ -----------
Net cash provided by (used in) investing activities (25,157) (7,495) 10,216 (62,375)
FINANCING ACTIVITIES
Net change in bank line of credit 32,760 2,408 (36,894) 408,641
Change in notes payable to directors (66,188) (10,571) 37,094 255,809
Change in note payable to related party 4,587 (446) 39,925 44,066
Cash received for subscriptions for common stock 688,347 - - 723,808
------------------------------------ -----------
Net cash provided by (used in) financing activities 659,506 (8,609) 40,125 1,432,324
Effect of changes in foreign exchange rates (52,897) 71,259 125,045 40,922
------------------------------------ -----------
Increase (decrease) in cash and cash equivalents 207,444 (5,624) (1,821) 207,938
Cash and cash equivalents at beginning of period 494 6,118 7,939 -
------------------------------------ -----------
Cash and cash equivalents at end of period $ 207,938 $ 494 $ 6,118 $ 207,938
==================================== ===========
Supplemental disclosure of cash flow information
Interest paid $ 29,854 $ 27,230 $ 41,557 $ 193,638
</TABLE>
See accompanying notes.
F-7
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Advanced Lumitech, Inc. ("ADLU" or the "Company") and its wholly-owned
subsidiary, Lumitech SA ("Swiss Lumitech").
Effective August 13, 1998, the Company acquired 100% of the then outstanding
common stock of Swiss Lumitech for consideration of 4,000,000 newly issued
common shares ($ 0.001 par value) of the Company. As a result of this
transaction, the shareholders of Swiss Lumitech became majority shareholders of
the Company, owning 80% of the Company's then issued 5,000,000 voting common
shares.
For accounting purposes, the acquisition of Swiss Lumitech was treated as a
purchase (reverse acquisition) of the Company by Swiss Lumitech. In a reverse
acquisition, the historical shareholders' equity of the acquiror prior to the
merger is retroactively restated (a recapitalization) for the equivalent number
of shares received in the merger after giving effect to any difference in par
value of the issuers and acquirer's stock by an offset to paid in capital. All
share and per-share information has been presented in the accompanying
consolidated financial statements as if recapitalization had occurred as of the
first day presented in the financial statements. Accordingly, the accompanying
consolidated financial statements and related notes reflect the operations of
the Company combined with the operations of Swiss Lumitech from February 7,
1992, the inception date of Swiss Lumitech, to December 31, 1998.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
DESCRIPTION OF BUSINESS
ADLU is a developmental stage company, which, through Swiss Lumitech, has
developed and patented a process to create luminescent color pictures of
photographic quality, which can be applied to a variety of objects in numerous
applications (the "Luminescence
F-8
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
Technology"). The Company plans to market the Luminescence Technology and
related products under the brand name `Brightec'. Although Swiss Lumitech
believes it has developed the Brightec products to a marketable form, it has yet
to commercially market the Brightec products and generate revenues therefrom.
The Company's success will depend in part on its ability to obtain and maintain
patent protection in the United States and other countries where the
Luminescence Technology is patented or a patent application is in process. The
commercial success of the Company also depends in part on neither infringing
patents or proprietary rights of third parties nor breaching any licenses that
may relate to the Company's Luminescence Technology and Brightec products.
From the period January 1, 1996 to December 31, 1997, the Company's business
strategy was to sell watches on to which the Luminescence Technology had been
applied, to an affiliated company. Effective December 31, 1997, the Company
ceased such activities and focused its efforts on further developing the
Luminescence Technology and Brightec products and raising funds to finance its
new business strategy. Accordingly, the Company is classified as a development
stage company in accordance with Statement of Financial Accounting Standards No.
7, "Accounting and Reporting by Development Stage Enterprises".
CASH AND CASH EQUIVALENTS
Cash and cash equivalents, which consist of cash and money market funds with
insignificant interest rate risk and original maturities of three months or less
at date of purchase, are stated at cost, which approximates fair value.
REVENUE RECOGNITION
The Company recognizes revenue upon product shipment or when title passes.
CONCENTRATIONS OF CREDIT RISK
Credit risk results from the possibility that a loss may occur from the failure
of another party to perform according to the terms of a contract. Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and cash equivalents. The Company places its
available cash with high quality financial institutions to mitigate the risk of
material loss in this regard. Accordingly, management believes the likelihood
of incurring material losses due to concentration of credit risk is remote.
OFFICE AND PHOTOGRAPHIC EQUIPMENT
Office and photographic equipment are stated at cost, less accumulated
depreciation, which is computed using the straight-line method over the
estimated useful life of the related assets, which the Company has determined to
be five years. Amounts charged to expense were $6,628 in 1998, $ 4,729 in 1997
and $ 3,553 in 1996 and $ 35,866 for the period from February 7, 1992 to
December 31, 1998.
F-9
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
FOREIGN CURRENCY
From inception to date, the Company's revenues and expenses have been generated
and incurred by Swiss Lumitech, which operates within Switzerland. Accordingly,
the functional currency of the Company is the Swiss Franc. Foreign currency
denominated assets and liabilities are translated into U.S. dollar equivalents
based on exchange rates prevailing at the end of each period. Revenues and
expenses are translated at average exchange rates during the period. Aggregate
foreign exchange gains and losses arising from the translation of foreign
currency denominated assets and liabilities are included as a component of
comprehensive income, and realized gains and losses are reflected in income.
Such realized gains and losses have not been material to date.
OPERATING LEASES
Rental expense for the Company's administrative office was $ 12,511, $ 18,378
and $ 12,640 for the years ended December 31, 1998, 1997 and 1996, respectively.
Rental expense for the period from February 7, 1992 to December 31, 1998
amounted to $ 115,964. The lease for the administrative office may be canceled,
at the Company's option and without penalty, after each 12 month leasing period.
INCOME TAXES
Deferred tax assets and liabilities are recognized based on temporary
differences between the financial statements and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
temporary differences are expected to reverse. A valuation allowance is
applied against net deferred tax assets if, based on the available evidence, it
is more likely than not that some or all of the deferred assets will not be
realized.
PATENTS AND PATENT APPLICATIONS
The Company capitalizes patent and patent application costs as incurred, if
recoverability is reasonably assured. Such costs were $47,004 for the year ended
December 31, 1998, and for the period from February 7, 1992 to December 31,
1998. These costs have been expensed due to the uncertainty as to
recoverability.
STOCK SPLIT
On August 14, 1998, the Company's Board of Directors approved a 5-for-1 stock
split of the Company's issued and outstanding common shares (the "Stock Split").
Accordingly, the Company's then issued and outstanding share capital of
5,000,000 shares was increased to 25,000,000. All share and per share
information have been retroactively restated to reflect the stock split.
EARNINGS PER SHARE
Earnings per share are presented in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), which
requires the presentation of
F-10
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
"basic" earnings per share and "diluted" earnings per share. Basic earnings per
share is computed by dividing income available to common shareholders by the
weighted-average shares of common stock outstanding during the period. For
purposes of computing diluted earnings per share the denominator includes both
the weighted-average shares of common stock outstanding during the period and
the weighted average number of potential shares of common stock, if any. There
is no difference between basic and diluted net loss per share for the Company,
since it has incurred losses since inception. There were no common stock
equivalents during any of the above periods presented in the accompanying
consolidated financial statements.
SEGMENT INFORMATION
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131, establishes standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. During the periods presented in the
consolidated financial statements, the Company has operated in only one
operating segment - Luminescence Technology development. Long-lived assets are
principally located in Switzerland.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 will become effective in January
2000. SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. To date the Company has not
utilized derivative instruments or hedging activities and, therefore, the
adoption of SFAS 133 is not expected to have a material impact on the Company's
financial position or results of operations.
2. ABILITY TO CONTINUE AS A GOING CONCERN
The consolidated financial statements have been prepared on the basis that the
Company will continue to operate as a going concern, including the realization
of its assets and settlement of its liabilities at their carrying values in the
ordinary course of business for the foreseeable future. At December 31, 1998,
the Company has yet to commercially market Brightec and
F-11
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
generate revenues therefrom and the Company's operations to date have generated
accumulated losses of $ 1,537,032. At December 31, 1998, the Company's current
liabilities exceed its current assets by $ 543,002 and the Company had
outstanding advances of approximately $ 63,000 above the limit available to it
under its line-of-credit arrangements with a Swiss bank.
In order to generate awareness and future sales of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12 month period. The Company also intends to repay a significant
amount of the Company's debt, including the bank line-of-credit. In addition,
during 1999, the Company intends to establish a U.S. based sales and
administrative office, and hire additional employees. The Company expects that
it may require up to approximately $4.0 million of cash or available credit
during the next 12 month period to finance payment of existing liabilities,
including the bank line-of-credit, purchases of raw materials and operating
expenses. The Company has engaged a Geneva, Switzerland based investment
company (the "Geneva Advisor") to assist the Company in its efforts to raise
between $5.0 million to $10.0 million through a combination of debt or equity
securities intended to be offered to institutional and private investors. The
Geneva Advisor will be compensated approximately $36,000, plus five percent (5%)
of the funds raised in consideration for its services. In addition, the Geneva
Advisor will assist the Company in seeking temporary bridge financing of up to
$1.0 million, the proceeds of which will be used to fund the Company's
operations until it can complete its efforts to raise permanent financing.
There can be no assurances that the Company will be able to raise the funds it
requires.
The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, whether through the Geneva Advisor or other sources, to effectively
market and produce Brightec products over the next 12 month period and then upon
future profitable operations and the generation of positive operating cash flows
or finding additional financing. However, should the Company fail to raise such
funds or the Company's line-of-credit is reduced or terminated or the Company is
unable to generate operating profits and positive cash flows, there are no
assurances that the Company will be able to continue as a going concern and it
may be unable to recover the carrying value of its assets.
Management believes that the Company will be successful in its efforts to raise
the financing required to support the Company's operations. Accordingly,
management believes that no adjustments or reclassifications of recorded assets
and liabilities is required.
3. Related Party Transactions
At December 31, 1997, the balance sheet classification, "Accounts receivable
from affiliated company" represents amounts due from the sales of watches to a
company controlled by one of the Company's directors (the "Netherlands
Affiliate"). In 1998, no sales were made to the Netherlands Affiliate.
F-12
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
The balance sheet classification "Accounts payable to affiliated companies"
includes amounts owed to the Netherlands Affiliate for the repurchase of
certain licenses granted by the Company to the Netherlands Affiliate for the use
and exploitation of the Company's Luminescence Technology (the "Netherlands
Affiliate Product Rights") and in addition, at December 31, 1997, to a separate
entity ("Lumicorp") controlled by the Company's directors, for the repurchase of
certain other rights relating to the Luminescence Technology (the "Lumicorp
Product Rights"), which the Company had previously sold or licensed to these
entities. At December 31, 1998, the Company had informally agreed to repurchase
the Netherlands Affiliate Product Rights at the equivalent amount the
Netherlands Affiliate paid to acquire them, plus an additional $ 70,000 for
costs and expenses the Netherlands Affiliate paid or incurred in the development
of processes, products and markets. The Company repurchased the Lumicorp Product
Rights during 1998 for the equivalent amount Lumicorp previously paid to acquire
them. The decision to repurchase the Product Rights was a direct result of the
change in the Company's strategy, as discussed in Note 1. See Note 7.
The balance sheet classification "Note payable to related party" represents
amounts owed to a director of one of the Company's former significant suppliers.
The note has no stated maturity and has an interest rate of 7%. The borrowings
under this note payable are not secured.
The balance sheet classification "Notes payable to directors" represents amounts
owed to the Company's directors, pursuant to three separate agreements (the
"Directors Note Agreements"). The Directors Note Agreements have no stated
maturity and have an interest rate of 7%. The borrowings under the Director's
Note Agreements are not secured, and the note holders have agreed not to require
payment in cash before January 1, 2000.
4. Income Taxes
At December 31, 1998, the Company had foreign net operating loss carryforwards
of approximately $ 1,537,032. These net operating loss carryforwards will expire
at various dates between 2000 and 2005.
Utilization of the net operating losses may be limited due to changes in
ownership of the Company.
At December 31, 1998 and 1997, the Company had net deferred tax assets of
$376,573 and $ 293,245, respectively. The net deferred tax assets have been
fully offset by a valuation allowance. The net deferred tax assets relate to the
Company's net operating loss carryforwards.
F-13
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
5. Line of Credit
The Company, through Swiss Lumitech, has a line-of-credit with a Swiss bank.
Pursuant to the terms of the bank line-of-credit, the Company may borrow up to
$345,324, at the December 31, 1998 rate of exchange. At December 31, 1998, the
Company had exceeded such borrowing limit by approximately $63,000. However, the
bank granted the Company a temporary extension, with no stated expiration date,
to exceed the limit by the bank. The line-of-credit agreement contains terms and
conditions, restricting Swiss Lumitech's ability to pledge its assets as
security for other borrowings and requiring the payment of interest each
quarter. In addition, all accounts receivable generated by the Company are
automatically pledged to the bank pursuant to the terms of the line-of-credit
agreement. At December 31, 1998, the borrowings under the bank line-of-credit
carries interest at 6.35%. The line-of-credit is guaranteed up to the amount
available under the line of credit by a relative of certain directors.
6. Supplemental Balance Sheet Information
At December 31, 1998 and 1997, accounts payable and accrued liabilities were as
follows:
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------------------
Accounts Payable and Accrued Liabilities:
- -----------------------------------------
<S> <C> <C>
Trade accounts payable $101,699 $227,771
Accrued selling and marketing fees $ 50,000 -
------------------------------
$151,699 $227,771
==============================
</TABLE>
7. Commitments
At December 31, 1998, the Company and the co-inventor of the Luminescence
Technology had agreed in principle to an amendment to their agreement that
would, among other things, eliminate an obligation of the Company to pay the co-
inventor royalties calculated as a percentage of sales of products based upon
the Luminescence Technology, and instead provide for the issuance of common
stock of the Company and the making of cash payments to said co-inventor. On
March 31, 1999, the Company and the co-inventor entered into an agreement
amending the earlier royalty agreement pursuant to which the Company (i) has
paid the co-inventor $25,000 and $10,000 in 1998 and 1999, respectively, and
committed to pay an additional $125,000 from time to time as the Company's
liquidity and working capital requirements permit, and (ii) agreed to issue
800,000 shares of the Company's common stock to the co-inventor.
F-14
<PAGE>
Advanced Lumitech, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
At December 31, 1998, the Company and its principal supplier, Socol SA ("Socol")
had agreed informally on terms for the continuation of their on-going
relationship; and on March 31, 1999, the Company and Socol entered into a letter
agreement in which the Company confirmed its agreement to issue 1,000,000 shares
of its common stock to Socol; and Socol confirmed both (i) its agreement to
accept such shares in full consideration for Socol's participation in and
efforts in connection with the Luminescence Technology, and (ii) its disclaimer
of any interest or right in or to the Company's Brightec products, the
Luminescence Technology Patent or the proprietary information and know how
relating to said Patent and Brightec products. The Company anticipates
finalizing a definitive Socol agreement during the second quarter of 1999.
At December 31, 1998, the Netherlands Affiliate had agreed to terminate and
cancel a license arrangement dated June 30, 1997, pursuant to which it had
obtained an exclusive license to use and exploit the Luminescence Technology in
the European countries, for consideration paid in 1997 of $100,000. Pursuant to
the December 1998 informal agreement, the Company had agreed to the payment of
$170,000 to the Netherlands Affiliate of which $70,000 was to reimburse the
Netherlands Affiliate for costs and expenses it paid or incurred in the
development of processes, products and markets and the remainder was to repay
the Netherlands Affiliate the $100,000 it paid the Company in 1997. By agreement
dated March 31, 1999, the Netherlands Affiliate formally agreed to the
termination of its exclusive license in consideration for which the Company
confirmed its agreement to pay the $70,000 in reimbursement of the costs and
expenses of the Netherlands Affiliate, and further agreed to repay the
Netherlands Affiliate the $100,000 paid to the Company in 1997. Said agreement
contemplates the payment of such amounts, without interest, at any time on or
before March 31, 2004. At December 31, 1998, the Company had paid approximately
$60,000 of the aggregate $170,000 due the Netherlands Affiliate; and the entire
$170,000 has been charged to expense at December 31, 1998.
F-15
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3.1 Articles of Incorporation of Advanced Lumitech, Inc., and all
amendments and modifications thereto, filed with the Secretary of
State of the State of Nevada as of March 29, 1999.
3.2 By-laws of Advanced Lumitech, Inc.
4 Specimen Certificate representing the Company's Common Stock.
10.1 Merger Agreement dated as of August 12, 1998, by and among the
Company, Lumitech, S.A. and Patrick Planche, pursuant to which the
Company to acquired 100% of the issued and outstanding shares of the
common stock of Lumitech, S.A.
10.2 Patent Assignment Agreement respecting the Company's luminescence
technology dated as of January 16, 1996, as amended on March 31, 1999,
between Jacques-Charles Collett and Lumitech S.A. (formerly known as
OTWD On Time Diffusion S.A.).
10.3 Agreement dated as of March 31, 1999, between Lumitech S.A. and
Luminescent Europe Technologies b.v. (the "Netherlands Affiliate"),
providing for the termination of all rights and interests of the
Netherlands Affiliate with respect to the Company's luminescence
technology.
10.4 Socol Letter Agreement dated as of March 31, 1999, between the Company
and Socol S.A., pursuant to which Socol disclaims any interest in the
Company's Luminescence Technology.
10.5 Credit Agreement dated as of August 6, 1997, as amended on
September 9, 1998, between Lumitech S.A. and Credit Suisse.
10.6 Agreement dated as of December 28, 1998 between LumiCorp and Lumitech
S.A., providing for the termination of all rights and interests of
LumiCorp with respect to the Company's luminescence technology.
16 Letter from Smith & Co., the Registrant's former independent
accountant (filed as Exhibit 16 to the Company's Current Report on
Form 8-K, dated February 4, 1999 and incorporated by reference herein)
21 Subsidiaries of Advanced Lumitech, Inc.
27 Financial Data Schedule (for SEC use only).
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
HYENA CAPITAL, INC.
Know all men by these presents;
That I, the undersigned, acting as incorporator for the purpose of forming
a corporation under and pursuant to the provisions of Nevada Revised Statutes
78.010 to Nevada Revised Statutes 78.090 inclusive, as amended and certify that;
ARTICLE I
The name of this corporation is HYENA CAPITAL, INC.
The name and post office address of the incorporator signing the Articles
of Incorporation is: Krista Castleton, 3760 So. Highland Drive, Suite 300, Salt
Lake City, Utah, 84106. The name and address of the first member of the First
Board of Directors is: Krista Castleton, 3760 So. Highland Drive, Suite 300,
Salt Lake City, Utah, 84106.
ARTICLE II
The Resident Agent of this corporation in Nevada shall be Nevada Corporate
Services located at 1800 E. Sahara, Suite 107, Las Vegas, Clark County, Nevada,
89104. Offices for the transaction of any business of the Corporation, and where
meetings of the Board of Directors and of Stockholders may be held, may be
established and maintained in any other part of the State of Nevada, or in any
other state, territory or possession of the United States of America, or in any
foreign country as the Board of Directors may, from time to time determine.
ARTICLE III
The nature of the business and the objects and purpose proposed to be
transacted, promoted or carried on by the Corporation is to conduct any lawful
activity in accordance with the Laws of the State of Nevada and the United
States of America, including but not limited to inventing, developing,
marketing, and otherwise
<PAGE>
exploiting high technology electronic communication systems, both hardware and
software components, particularly systems utilizing security coding and
protective transmitting and receiving.
To do each and everything necessary, suitable or proper for the
accomplishment of any of the foregoing purposes or the attainment of any one or
more of the subjects hereinabove enumerated, or which may at any time appear
conducive to or expedient for the protection or benefit of this Corporation, and
to do such acts as fully and to the same extent as natural persons might, or
could do, in any part of the world as principals, agents, partners, trustees, or
otherwise, either alone or in conjunction with any other person, association or
corporation. The period of duration of this Corporation is perpetual.
The foregoing clauses shall be construed as powers as well as objects and
purposes and the matters expressed in each clause shall, unless herein otherwise
expressly provided, be in no wise limited by reference to or inference from the
terms of any other clause shall be regarded as independent objects, purposes and
powers and the enumeration of specific objects, purposes and powers shall not be
construed to limit or restrict in any manner the meaning of the general terms or
the general powers of the Corporation nor shall the expression of one thing be
deemed to exclude another not expressed although it be of like nature.
ARTICLE IV
The aggregate number of shares which the Corporation shall have authority,
to issue is 100,000,000 shares, having a par value of $0.001 (one mill) per
share. The stock shall be designated as Class "A" voting common stock and shall
have the same rights and preferences. The stock of the Corporation shall be
nonassessable. Fully paid stock of this Corporation shall not be liable for any
further call or assessment. The total capitalization of the Corporation shall be
$ 100,000. The shares of Class "A" common stock shall not be divided into
classes and may not be issued in series.
ARTICLE V
No stockholder of the Corporation shall, because of his ownership of stock,
have a pre-emptive or other right to purchase, subscribe for or take part of any
of the notes, debentures,
<PAGE>
bonds or other securities convertible into or carrying options for warrants to
purchase stock of the Corporation issued, optioned or sold by it after its
incorporation, except as may be otherwise stated in these Article of
Incorporation. Any part of the capital stock and any part of the notes,
debentures, bonds, or other securities convertible into or carrying options or
warranties to purchase stock of the Corporation authorized by these Articles of
Incorporation or by an amended certificate duly filed may at any time be issued,
optioned for sale and sold or disposed of by the Corporation pursuant to the
resolution of its Board of Directors to such persons and upon such terms as may
to such Board of Directors seem proper, without first offering such stock or
securities or any part thereof to existing stockholders, except as required in
Article IV of these Articles of Incorporation.
ARTICLE VI
Each outstanding share of the class "A" common stock of the Corporation
shall be entitled to one vote on each matter submitted to a vote at a meeting of
the stockholders. Each shareholder shall be entitled to vote his or its shares
in person or by proxy, executed in writing by such shareholder or by its duly
authorized attorney in fact. At each election for directors, every shareholder
entitled to vote at such election shall have the right to vote in person or by
proxy, the number of shares owned by him or it for as many persons as there are
directors to be elected and for whose election he or it has the right to vote,
but the shareholder shall have no right, whatsoever, to accumulate his or its
votes with regard to such election.
ARTICLE VII
The members of the governing board of this corporation shall be called
directors. The Board of Directors shall consist of at least one (1) person. The
number of directors of this corporation may, from time to time, be increased or
decreased by an amendment to the By-Laws in that regard and without the
necessity of amending the Articles of Incorporation. A majority of the Directors
in office, present at any meeting of the Board of Directors, duly called,
whether regular or special, shall always constitute a quorum for the transaction
of business, unless the By-Laws otherwise provide. Directors need not be
residents of the State of Nevada or stockholders of the Corporation.
<PAGE>
ARTICLE VIII
This Corporation shall have a president, a secretary, a treasurer, and a
resident agent, to be chosen by the Board of Directors, any person may hold two
or more offices.
ARTICLE IX
The capital stock of the Corporation, after the fixed consideration thereof
has been paid or performed, shall not be subject to assessment, and the
individual stockholders of this Corporation shall not be individually liable for
the debts and liabilities of the Corporation, and the Articles of Incorporation
shall never be amended as to the aforesaid provisions.
ARTICLE X
The Board of Directors is expressly authorized: (subject to the By-laws, if any,
adopted by the Stockholders)
1) To make, alter or amend the By-Laws of the Corporation.
2) To fix the amount in cash or otherwise, to be reserved as working
capital.
3) To authorize and cause to be executed mortgages and liens upon the
property and franchises of the Corporation.
4) To by resolution or resolutions passed by a majority of the whole board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation, which, to the extent provided in the
resolution or resolutions or in the By-Laws of the Corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and may have power to authorize the
seal of the Corporation to be affixed to all papers on which the Corporation
desires to place a seal. Such committee or committees shall have such name or
names as may be stated in the ByLaws of the Corporation or as may be determined
from time to time by resolution adopted by the Board of Directors.
5) To sell, lease or exchange all of its property and assets, including its
goodwill and its corporate franchises, upon such terms and conditions as the
board deems expedient and for the best interests of the Corporation, when and as
authorized by the affirmative vote of the stockholders holding stock in the
<PAGE>
Corporation entitling them to exercise at least a majority of the voting power
given at a stockholders meeting called for that purpose.
ARTICLE XI
In the absence of fraud, no contract or other transaction of the
Corporation shall be affected by the fact that any of the Directors are in any
way interested in, or connected with, any other party to such contract or
transaction, or are themselves, parties to such contract or transaction,
provided that this interest in any such contract or transaction of any such
director shall at any time be fully disclosed or otherwise known to the Beard of
Directors, and each and every person who may become a director of the
Corporation is hereby relieved of any liability that might otherwise exist from
contracting with the Corporation for the benefit of himself or any firm,
association or corporation in which he may be in any way interested.
ARTICLE XII
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director or
officer provided, however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
<PAGE>
I, the undersigned, being the incorporator hereinbefore named for the
purpose of forming a corporation pursuant to the general corporation law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand.
/s/ Krista Castleton
--------------------
State of Utah )
)ss
County of Salt Lake )
On December 29, 1993 personally appeared before me, the undersigned, a
Notary Public, Krista Castleton, known to me the person whose name is subscribed
to the foregoing document and acknowledged to me that she executed the same.
/s/ David R. Yeames
--------------------------
Notary Public
[Notary Stamp]
<PAGE>
ARTICLES OF MERGER
OF
HYENA CAPITAL, INC.
As provided for under Nevada Revised Statute Section 78.458, Hyena Capital,
Inc., a Nevada Corporation, as the surviving corporation of the planned merger
herein submits to the Secretary of State the following ARTICLES OF MERGER as
acknowledged by the President and the Secretary of the corporation.
1. Hyena Capital, Inc., a Utah corporation, is located at 3760 So. Highland
Drive, Suite 300, Salt Lake City. Utah 84106 and is being merged into and
survived by Hyena Capital, Inc., a Nevada corporation, as the acquiring
corporation with its registered place of business at 1800 E. Sahara, Suite 107,
Las Vegas, Nevada 89104.
2. The plan of merger has been adopted by the board of directors of each
corporation.
3. Approval by the stockholders of the Nevada corporation was not required as
set forth in Section 78.454 inasmuch as the shares and rights of the
stockholders of the Nevada corporation will not change.
4. Approval by the stockholders of the Utah corporation was required, and
after approval by the board of directors, the plan was submitted to the
stockholders at a special meeting on December 30. 1993, with the voting as
follows: At the time of the meeting there were 1,000,000 shares outstanding and
entitled to vote, 845,800 shares were present in person or by proxy and that
845,800 shares voted in favor of the plan and no shares voted against the plan.
5. There are no amendments to the Articles of Incorporation of the surviving
corporation.
6. A copy of the Plan of Merger is attached.
<PAGE>
We, the undersigned, being the President and the Secretary, do make and
file these Articles of Merger, hereby declaring and certifying that the facts
herein stated are true, and accordingly have hereunto set our hand.
/s/ Krista Castleton
----------------------------
Krista Castleton, President
/s/ David R. Yeaman
- -----------------------------
David R. Yeaman, Secretary
STATE OF UTAH )
)ss
County of Salt Lake )
On this 30th day of December, 1993, before me, a notary public, personally
appeared Krista Castleton and David R. Yeaman known to me to be the persons
whose names are subscribed to the within document, and acknowledge that they
executed the same.
/s/ Peter W. Guyon
- -------------------------
Notary Public
[Notary Stamp]
<PAGE>
PLAN OF MERGER
OF
HYENA CAPITAL, INC.
SUBJECT TO THE NEVADA REVISED STATUTES SECTION 78.451 THE NEVADA
CORPORATION HEREIN SUBMITS ITS PLAN OF MERGER AS APPROVED BY THE BOARD OF
DIRECTORS AND A MAJORITY OF THE STOCKHOLDERS.
1. NAME:
It is the intent of Hyena Capital, Inc., incorporated in the State of Utah,
to merge into and to be survived by the Nevada corporation, a corporation
organized under the laws of the State of Nevada, and to hence forth be known and
on record as Hyena Capital, Inc.
2. TERMS AND CONDITIONS:
The terms and conditions of the merger, as negotiated by the board of
directors and approved by the majority of the stockholders is as follows:
(a) That Hyena Capital, Inc., a Utah corporation, merge into and be
survived by Hyena Capital. Inc., the Nevada corporation and that the
stockholders of the Utah corporation will now hold the same number of shares in
the Nevada corporation with identical designations, preferences, limitations,
and relative rights after the merger.
(b) That the stockholders in Hyena Capital, Inc., a Utah corporation, will
receive one share of Hyena Capital, Inc., the Nevada corporation, in exchange
for one share of the Utah corporation.
(c) Merger of the Utah corporation into the Nevada corporation is
permissible under Utah law Section 16-10A-1107 (1)(a).
<PAGE>
(d) Subject to NRS Section 78.454, approval by the stockholders of the
Nevada corporation, is not required for the merger, inasmuch as the articles of
incorporation of the Nevada corporation will not differ from its articles before
the merger.
(e) Each stockholder in the Nevada corporation, whose shares were
outstanding immediately before the effective date of the merger, will hold the
same number of shares with identical designations, preferences, limitations, and
relative rights immediately after the merger.
(f) The number of voting shares outstanding immediately after the merger,
plus the number of voting shares issuable as a result of the merger do not
exceed more than twenty percent (20%) of the total number of voting shares
outstanding immediately before the merger.
(g) The number of participating shares outstanding immediately after the
merger, plus the number of participating shares issuable as a result of the
merger do not exceed more than twenty percent (20%) of the total number of
participating shares outstanding immediately before the merger.
HYENA CAPITAL, INC. (Utah)
/s/ Krista Castleton
-------------------------------
President
HYENA CAPITAL, INC. (Nevada)
/s/ Krista Castleton
-------------------------------
President
<PAGE>
AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
HYENA CAPITAL, INC.
(NAME CHANGED HEREIN TO ADVANCED LUMITECH, INC.)
WHEREAS, there was issued by the Secretary of State a Charter constituting
and creating HYENA CAPITAL, INC., a corporation organized under the laws of this
state with its principal place of business in Las Vegas, Nevada, and a capital
stock of One Hundred Thousand Dollars ($100,000.00), divided into One Hundred
Million (100,000,000) shares of a par value of one mill (1/10 cent) each,
empowering it to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America.
The undersigned, President and Secretary of HYENA CAPITAL, INC. hereby
certify that by resolutions duly adopted unanimously by the Board of Directors
of the Company pursuant to written action effective as of August 14, 1998; and
by resolutions duly adopted by a majority of the shareholders of all classes of
stock outstanding and entitled to vote thereon of the Company pursuant to
written action affective as of August 14, 1998, amending the Articles of
Incorporation as follows:
That Article I, be amended and changed to read as follows:
Name: The name of the Corporation is ADVANCED LUMITECH, INC.
<PAGE>
WHEREFORE, they pray that the Articles of Incorporation of HYENA CAPITAL,
INC. be so amended.
DATED this 14/th/ day of August, 1998.
/s/ Patrick Planche
-------------------------------
Patrick Planche, President
/s/ Francois Planche
- ------------------------------
Francois Planche, Secretary
State of )
)ss GENEVA - SWITZERLAND
County of )
On this 14/th/ day of August, 1998, before me, a notary public, personally
appeared Patrick Planche and Francois Planche, known to me to be the persons
whose names are subscribed to the within document, and acknowledges that they
executed the same.
j/v /s/ Me Liesel GLASER KELLER
-------------------------------
Notary Public
[Notary Stamp]
<PAGE>
EXHIBIT 3.2
BYLAWS OF
ADVANCED LUMITECH, INC.
(FORMERLY, HYENA CAPITAL, INC.)
ARTICLE I - STOCKHOLDER'S MEETINGS
A) ANNUAL MEETINGS shall be held on the 30th day of December of each year
beginning 1993, or at such other time as may be determined by the Board of
Directors of the President, for the purposes of electing directors, and
transacting such other business as may properly come before the meeting.
B) SPECIAL MEETINGS may be called at any time by the Board of Directors or by
the President, and shall be called by the President or the Secretary at the
written request of the holders of a majority of the shares then outstanding and
entitled to vote.
C) WRITTEN NOTICE stating the time and place of the meeting, signed by the
President or the Secretary, shall be served either personally or by mail, not
less than ten (10) nor more than sixty (60) days before the meeting upon each
Stockholder entitled to vote. Said notice shall state the purpose for which the
meeting is called, no other business may be transacted at said meeting, unless
by unanimous consent of all stockholders present, either in person or by proxy.
D) PLACE of all meetings shall be at the principal office of the Corporation,
or at such other place as the Board of Directors of the President may designate.
E) A QUORUM necessary for the transaction of business at a stockholder's
meeting shall be a majority of the stock issued and outstanding, either in
person or by proxy. If a quorum is not
<PAGE>
present, the stockholders present may adjourn to a future time, and notice of
the future time must be served as provided in Article I, C), if a quorum is
present they may adjourn from day to day without notice.
F) VOTING: Each stockholder shall have one vote for each share of stock
registered in his name on the books of the Corporation, a majority vote shall
authorize any Corporate action, except the election of the Directors, who shall
be elected by a plurality of the votes cast.
G) PROXY: At any meeting of the stockholders any stockholder may be represented
and vote by a proxy , appointed in writing and signed. No proxy shall be valid
after the expiration of six (6) months from the date of its execution, unless
the person executing it specifies the length of time it is to continue in force,
which in no case shall exceed seven (7) years from its execution.
H) CONSENT: Any action, except election of Directors, which may be taken by a
vote of stockholders at a meeting, may be taken without a meeting if authorized
by a written consent of stockholders holding at least a majority of the voting
power.
ARTICLE II - BOARD OF DIRECTORS
A) OFFICE: At least one person chosen annually by the stockholders shall
constitute the Board of Directors. Additional Directors may be appointed by the
Board of Directors. The Directors' term shall be for one year, and Directors
may be re-elected for successive annual terms.
B) DUTIES: The Board of Directors shall be responsible for the control and
management of the affairs, property and interests of the Corporation and may
exercise all powers of the Corporation, except as are in the Articles of
Incorporation or by statute expressly conferred upon or reserved to the
stockholders.
<PAGE>
C) MEETINGS: Regular meetings of the Board of Directors shall be held
immediately following the annual meeting of the stockholders, at the place of
the annual meeting of the stockholders, or at such other time and place as the
Board of Directors shall be resolution establish. Notice of any regular meeting
shall not be required, unless the Board of Directors shall change the time and
place of the regular meeting at which change was made. Special meetings may be
called by the President or by one of the Directors at such time and place
specified in the notice or waiver of notice thereof. The notice of the special
meeting shall be mailed to each Director at least five (5) days before the
meeting day, or if the notice is delivered the day before the meeting. Special
meetings may be called without notice, provided a written waiver of notice is
executed by a majority of the Board of Directors.
D) CHAIRMAN: At all meetings of the Board of Directors, the Chairman shall
preside. If there is no Chairman one shall be chosen by the Directors.
E) QUORUM: A majority of the Board of Directors shall constitute a quorum.
F) VACANCIES: Any vacancy in the Board of Directors, unless the vacancy was
caused by a stockholder removal of a Director, shall be filled for the unexpired
term by a majority vote of the remaining Directors, though less than a quorum,
at any regular or special meeting of the Board of Directors called for that
purpose.
G) A RESOLUTION in writing signed by a majority of the Board of Directors,
shall constitute action by the Board, with the same force and effect as though
such resolution had been passed at a duly convened meeting. The Secretary shall
record each resolution in the minute book.
<PAGE>
H) COMMITTEES may be appointed by a majority of the Board of Directors from its
number, by resolution, with such powers and authority to manage the business as
granted by the resolution.
I) SALARIES of the Corporate officers shall be determined by the Board of
Directors.
ARTICLE III - OFFICERS
A) TITLE: This Corporation shall have a president, secretary, treasurer, and
such other officers as may be necessary. Any two or more offices may be held by
the same person. The officers shall be appointed by the Board of Directors at
the regular meeting of the Board.
B) DUTIES: THE PRESIDENT SHALL:
1) Be the chief executive officer of the Corporation.
2) Preside at all meetings of the Directors and Stockholders
3) Sign or countersign all certificates, contracts and other instruments of
the Corporation as authorized by the Board of Directors and shall perform
all such other incidental duties.
THE SECRETARY SHALL:
1) Have charge of the corporate books, and be responsible to make the
necessary reports to the stockholders and the Board of Directors.
2) Prepare and disseminate notices, waivers, consents, proxies and other
material necessary for all meetings.
3) File the sixty (60) day list of officers, directors, name of the
resident agent and the filing fee to the Secretary of State.
4) File the designation of resident agent in office of the County Clerk in
which the principal office of the Corporation in Nevada is located.
<PAGE>
5) File the annual list of officers, directors and designation of resident
agent along with the filing fee.
6) Be the custodian of the certified articles of incorporation, bylaws and
amendments thereto.
7) Supply to the Resident Agent or Principal Corporate Nevada Office the
name of the custodian of the stock ledger or duplicate stock ledger, along
with the complete Post Office address of the custodian, where such stock
ledger or duplicate stock ledger is kept.
THE TREASURER SHALL:
1) Have the custody of all monies and securities of the Corporation and
shall keep regular books of account.
2) Perform all duties incidental to his office as directed of him by the
Board of Directors and the President.
ARTICLE IV - STOCK
A) CERTIFICATES representing shares of the Corporation's stock shall be in such
form as shall be adopted by the Board of Directors, numbered and registered
in the order issued. The certificates shall bear the following; the holders
name, the number of shares of stock, the signature either of the Chairman of
the Board of Directors or the President, and either the Secretary or
Treasurer.
B) NO CERTIFICATE shall be issued until the full amount of consideration has
been paid, except as otherwise provided by law.
C) EACH SHARE of stock shall entitle the holder to one vote.
ARTICLE V - DIVIDENDS
<PAGE>
DIVIDENDS may be declared and paid out of any funds available therefor, as
often, in such amounts as the Board of Directors may determine, except as
limited by law.
ARTICLE VI - FISCAL YEAR
THE FISCAL YEAR of the Corporation shall be determined by the Board of
Directors.
ARTICLE VII - INDEMNIFICATION
PURSUANT TO N.R.S. 78.751 any person who is a Director, Officer, Employee, or
Agent of this Corporation, who becomes a party to an action is entitled to
indemnification against expenses including attorney fees, judgements, fines and
amounts paid in settlement, if he acted in good faith and he reasoned his
conduct or action to be in the best interest of the Corporation.
ARTICLE VIII - AMENDMENTS
A) STOCKHOLDERS shall have the authority to amend or repeal all the bylaws of
the Corporation and enact new bylaws, by affirmative vote of the majority of the
outstanding shares of stock entitled to vote.
B) THE BOARD OF DIRECTORS shall have the authority to amend, repeal, or adopt
new bylaws of the Corporation, but shall not alter or repeal any bylaws adopted
by the stockholders of the Corporation.
<PAGE>
EXHIBIT 4
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO. 00758W 10 3
NUMBER SHARES
-X- Advanced Lumitech, Inc. -XX-
AUTHORIZED COMMON STOCK: 100,000,000 SHARES . PAR VALUE: $.001
THIS CERTIFIES THAT
SPECIMEN
IS THE RECORD HOLDER OF
-- Shares of ADVANCED LUMITECH, INC. Common Stock --
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned by the Transfer Agent
and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:_____________________________
/s/ Francois Planche /s/ Patrick Planche
- ----------------------------------- [Corporate Seal] -----------------------
Secretary President
<PAGE>
EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT is made this 12th day of August, 1998 by and among Hyena
Capital, Inc., a Nevada corporation, hereinafter called "HYENA", a Lumitech,
S.A., a company organized under the laws of Switzerland, hereinafter called
"LUMITECH", and Patrick Planche, hereinafter called "PLANCHE".
RECITALS:
WHEREAS, HYENA desires to acquire 100% of the issued and outstanding shares
of the common stock of LUMITECH, in exchange for 4,000,000 authorized but
unissued shares of the .001 par value common stock of HYENA, pursuant to a plan
of reorganization within the meaning of IRC (1986), Section 368(a)(1)(B), as
amended; and
WHEREAS, PLANCHE desires to exchange 100% of the issued and outstanding
shares of the common stock of LUMITECH, currently owned by PLANCHE, in exchange
for said 4,000,000 shares of HYENA.
NOW THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, and to comsummate the foregoing plan of
reorganization, the parties hereby adopt said plan of organization and agree as
follows:
ARTICLE I
EXCHANGE OF SECURITIES
1.01 ISSUANCE OF HYENA SHARES. Subject to all of the terms and conditions
of this Agreement, HYENA agrees to issue to PLANCHE 4,000,000 fully paid and
nonassessable unregistered shares of HYENA common stock in exchange for 100% of
the outstanding LUMITECH common stock, 500 shares, all of which are currently
owned by PLANCHE.
1.02 TRANSFER OF LUMITECH SHARES. In exchange for HYENA's stock being
issued to PLANCHE as above described, PLANCHE shall on the closing date and
concurrent with such issuance of HYENA's common stock, deliver to HYENA 100% of
the outstanding common stock of LUMITECH.
ARTICLE II
INDEMNIFICATION OF FINDER/NO AFFILIATE
2.01 INDEMNIFICATION OF FINDER/BROKER. Negotiations relative to this
Agreement and related transactions have been conducted with the assistance of
Capital General Corporation who is acting as a broker, finder and consultant on
behalf of both LUMITECH and HYENA. LUMITECH, HYENA and PLANCHE agree to hold
harmless and indemnify Capital General Corporation and its officers and
directors from any and all claim, demand, cause of action or suit raised or
filed in connection with the within Agreement or any related transaction or the
operation or promotion of LUMITECH and/or HYENA or the trading of their shares.
<PAGE>
2.02 NO AFFILIATE. All parties agree that after the exchange of shares as
provided above, that neither Capital General Corporation nor any of its officers
and directors have any ongoing or other business relationship with any of the
parties to this Agreement, or their officers, directors and promoters, nor any
family or other relationships with such, and therefore have no ability to
exercise any control or influence over the management and conduct of HYENA's
business and therefore are non affiliates of HYENA.
ARTICLE III
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF
PLANCHE AND LUMITECH
PLANCHE AND LUMITECH hereby represent, agree and warrant that:
3.01 ORGANIZATION. LUMITECH is a corporation duly organized, validly
existing, and in good standing under the laws of Switzerland, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, is duly qualified to do business and is in good standing in
any jurisdiction its business requires qualification.
3.02 CAPITAL. The authorized capital stock of LUMITECH consists of 500
shares of common stock, of which 500 shares are currently issued and
outstanding. All of the issued and outstanding shares are validly issued, fully
paid and nonassesable.
3.03 SUBSIDIARIES. LUMITECH does not have any subsidiaries.
3.04 DIRECTORS AND OFFICERS. Exhibit 3.04 to this Agreement contains the
names and titles of all directors and officers of LUMITECH as of the date of
this Agreement.
3.05 FINANCIAL STATEMENTS. Exhibit 3.05 to this Agreement includes the
unaudited pro forma financial statements of LUMITECH as of July 23, 1998.
3.06 ABSENCE OF CHANGES. Since the date of LUMITECH's most recent
financial statements included in Exhibit 3.05 there have been no changes in its
financial condition or operations, except for changes in the ordinary course of
business.
3.07 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of LUMITECH's most
recent balance sheet included in Exhibit 3.05 it did not have any material debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected in such
balance sheet.
3.08 TAX RETURNS. Within the times and in the manner prescribed by law,
LUMITECH has filed all federal, state and local tax returns required by law, has
paid all taxes, assessments and penalties due and payable and has made adequate
provision on its most recent balance sheet for any unpaid taxes. There are no
present disputes as to taxes of any nature payable by LUMITECH.
3.09 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner
reducing or otherwise mitigating the representations contained herein, HYENA
and/or its attorneys shall have the opportunity to meet with
<PAGE>
accountants and attorneys to discuss the financial condition of LUMITECH.
LUMITECH shall make available to HYENA and/or its attorneys all books and
records of LUMITECH. If the transaction contemplated hereby is not completed,
all documents received by HYENA and/or its attorneys shall be returned to
LUMITECH and all information so received shall be treated as confidential.
3.10 PATENTS, TRADE NAMES AND RIGHTS. LUMITECH owns or holds all necessary
patents, trademarks, service marks, trade names, copyrights and other rights
necessary to the conduct or proposed conduct of its business.
3.11 COMPLIANCE WITH LAWS. LUMITECH has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
affecting its properties or the operation of its business.
3.12 LITIGATION. LUMITECH is not a party to, nor to the best of its
knowledge is there pending or threatened, any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation
concerning its business, assets or financial condition. LUMITECH is not in
default with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court or agency, nor is it engaged in any lawsuits to
recover monies due to it.
3.13 AUTHORITY. The Board of Directors of LUMITECH authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein and has full power and authority to execute, deliver and
perform this Agreement.
3.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by LUMITECH and the performance of its obligations hereunder in the
time and manner contemplated will not cause, constitute or conflict with or
result in (i) any breach of the provisions of any license, indenture, mortgage,
charter, instrument, certificate of incorporation, bylaw or other agreement or
instrument to which it is a party or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be required,
(ii) an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation, or (iii) an event that would result in the creation or imposition of
any lien, charge or encumbrance on any asset.
3.15 FULL DISCLOSURE. None of the representations and warranties made by
PLANCHE or LUMITECH herein or in any exhibit, certificate or memorandum
furnished or to be furnished by PLANCHE or LUMITECH, or on either's behalf,
contains or will contain any untrue statement of material fact, or omits any
material fact, the omission of which would be misleading.
3.16 ASSETS. LUMITECH has good and marketable title to all of its property
free and clear of any and all liens, claims or encumbrances except as may be
indicated in Exhibit 3.05.
3.17 INDEMNIFICATION. PLANCHE and LUMITECH agree to defend and hold HYENA
and its officers and directors harmless against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities or damages,
including interest, penalties and reasonable attorney's fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of this
Agreement or failure by PLANCHE or LUMITECH to perform with respect to any of
its representations, warranties or covenants contained in this Agreement or in
any exhibit or other instrument furnished or to be furnished under this
Agreement.
<PAGE>
3.18 AUTHORITY TO EXCHANGE. As of the date of this Agreement, PLANCHE
holds 100% of the shares of LUMITECH common stock. Such shares are owned of
record and beneficially by PLANCHE and such shares are not subject to any lien,
encumbrance or pledge. PLANCHE holds authority to exchange such shares pursuant
to this Agreement.
3.19 INVESTMENT INTENT. PLANCHE understands and acknowledges that the
shares of HYENA common stock offered for exchange or sale pursuant to this
Agreement are being offered in reliance upon the exemption from registration
requirements of the Securities Act of 1933, as amended (the "Act"), pursuant to
Section 4(2) of the Act and the rules and regulations promulgated thereunder,
for nonpublic offerings and makes the following representations, agreements and
warranties with the intent that the same may be relied upon in determining the
suitability of PLANCHE as a purchaser of HYENA common stock:
(a) The shares of HYENA common stock are being acquired solely for the
account of PLANCHE, for investment purposes only, and not with a view to, or for
sale in connection with, any distribution thereof, and with no present intention
of distributing or reselling any part of the HYENA common stock acquired;
(b) PLANCHE agrees not to dispose of his HYENA common stock or any
portion thereof unless and until counsel for HYENA shall have determined that
the intended disposition is permissible and does not violate the Act or any
applicable Federal or state securities laws, or the rules and regulations
thereunder;
(c) PLANCHE agrees that the certificates evidencing the HYENA common
stock acquired pursuant to this Agreement will have a legend placed thereon
stating that they have not been registered under the Act or any state securities
laws and setting forth or referring to the restrictions on transferability and
sale of the HYENA common stock, and that stop transfer instructions shall be
placed with the transfer agent for said certificate.
(d) PLANCHE acknowledges that HYENA has made all records and
documentation pertaining to HYENA common stock available to them and to their
qualified representatives, if any, and has offered such person or persons an
opportunity to ask questions and further discuss the proposed acquisition of
HYENA and that all such questions and information requested have been answered
by HYENA and its officers and directors to PLANCHE's satisfaction;
(e) PLANCHE has carefully evaluated his financial resources and
investment position and the risks associated with this transaction and is able
to bear the economic risks of this transaction; and he has substantial knowledge
and experience in financial, business and investment matters and is qualified as
a sophisticated investor, and is capable of evaluating the merits and risks of
this transaction; and he desires to acquire the HYENA common stock on the terms
and conditions set forth;
(f) PLANCHE is able to bear the economic risk of an investment in the
HYENA common stock; and
(g) PLANCHE understands that an investment in the HYENA common stock is
not liquid and PLANCHE has no need for liquidity in this investment.
<PAGE>
3.20 RECEIPT OF RELEVANT INFORMATION. PLANCHE and LUMITECH have received
from HYENA all financial and other information concerning HYENA and its
promoters, officers and directors, including, but not limited to Prospectus
dated June 30, 1993, Annual Report on Form 10-K for the year ended December 31,
1997, Forms 10-Q for the quarters ended March 30, 1998 and June 30, 1998, and
Forms 8-K dated April 17 and April 22,, 1997 as filed with the Securities and
Exchange Commission, and all other documents and information they have
requested.
3.21 PUBLIC "SHELL" CORPORATION. LUMITECH and PLANCHE are aware that HYENA
has public shareholders and is a "shell" corporation without significant assets
or liabilities, and further that public companies are subject to extensive and
complex state, federal and other regulations. Among other requirements, PLANCHE
and LUMITECH are aware that a Form 8-K must be filed with the United States
Securities and Exchange Commission within fifteen days after closing which
filing requires that audited financial statements be filed within sixty days
after the filing of the 8-K, and they agree that such responsibility shall not
be the responsibility of Capital General Corporation, its officers, directors or
employees nor the existing officers of HYENA, but the sole responsibility of the
new officers and directors of HYENA. PLANCHE and LUMITECH are aware of the legal
requirements and obligations of public companies, understand that regulatory
efforts regarding public shell transactions similar to the transaction
contemplated herein has been and is currently being exerted by some states, the
U.S. Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. (NASD), and are fully aware of their responsibilities,
following closing, to fully comply with all securities laws and regulations, and
agree to do so.
3.22 NO ASSURANCES OR WARRANTIES. PLANCHE and LUMITECH acknowledge that
there can be no assurance regarding the tax consequences of this transaction,
nor can there be any assurance that the Internal Revenue Code or the regulations
promulgated thereunder will not be amended in such manner as to deprive them of
any tax benefit that might otherwise be received. PLANCHE and LUMITECH are
relying upon the advice of their own tax advisors with respect to the tax
aspects of this transaction. No representations or warranties have been made by
HYENA, Capital General Corporation, or their officers, directors, affiliates or
agents, as to the benefits to be derived by PLANCHE and LUMITECH in completing
this transaction, nor have any of them made any warranty or agreement, expressed
or implied, as to the tax or securities consequences of the transactions
contemplated by this Agreement or the tax or securities consequences of any
action pursuant to or growing out of this Agreement.
ARTICLE IV
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF HYENA
HYENA represents, agrees and warrants that:
4.01 ORGANIZATION. HYENA is a corporation duly organized, validly
existing, and in good standing under the laws of Nevada, has all necessary
corporate powers to own properties and to carry on its business as now owned and
operated by it, is duly qualified to do business and is in good standing in each
of the jurisdictions where its business requires qualification.
4.02 CAPITAL. The authorized capital stock of HYENA consists of
100,000,000 share of $.001 par value common stock of which 1,000,000 shares are
currently issued and outstanding. All of the issued and
<PAGE>
outstanding shares are validly issued, fully paid and nonassessable. All
currently outstanding shares of HYENA Common Stock have been issued in
compliance with applicable federal and state securities laws.
4.03 SUBSIDIARIES. HYENA has no subsidiaries and does not own any interest
in any other enterprise, whether or not such enterprise is a corporation.
4.04 DIRECTORS AND OFFICERS. Exhibit 4.04 to this Agreement contains the
names and titles of all officers and directors of HYENA as of the date of this
Agreement.
4.05 FINANCIAL STATEMENTS. Exhibit 4.05 to this Agreement includes HYENA's
audited financial statements as of December 31, 1997. The financial statements
have been prepared in accordance with generally accepted accounting principles
and practices consistently followed throughout the period indicated and fairly
present the financial position of HYENA as of the dates of the balance sheets
included in the financial statements and the results of operations for the
periods indicated.
4.06 ABSENCE OF CHANGES. Since the date of HYENA's most recent financial
statements, there has not been any change in its financial condition or
operations except for changes in the ordinary course of business.
4.07 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of HYENA's most
recent balance sheet, included in Exhibit 4.05, it did not have any material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not reflected
in such balance sheet.
4.08 TAX RETURNS. Within the times an din the manner prescribed by law,
HYENA has filed all federal, state or local tax returns required by law, has
paid all taxes, assessments and penalties due and payable and has made adequate
provision on its most recent balance sheet for any unpaid taxes. There are no
present disputes as to taxes of any nature payable by HYENA.
4.09 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, LUMITECH and
PLANCHE shall have the opportunity to meet with HYENA's accountants and
attorneys to discuss the financial condition of HYENA. HYENA shall make
available to LUMITECH and PLANCHE all books and records of HYENA.
4.10 PATENTS, TRADE NAMES AND RIGHTS. HYENA does not use any patents,
trade marks, service marks, trade names or copyrights in its business.
4.11 COMPLIANCE WITH LAWS. HYENA has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
affecting its properties, securities or the operation of its business.
4.12 LITIGATION. HYENA is not a party to, nor to the best of its knowledge
is there pending or threatened, any suit, action, arbitration or legal,
administrative or other proceedings, or governmental investigation concerning
its business, assets or financial condition. HYENA is not in default with
respect to any order, writ, injunction or decree of any federal, state local or
foreign court or agency, nor is it engaged in, nor does it anticipate it will be
necessary to engage in, any lawsuits to recover money or real or personal
property.
<PAGE>
4.13 AUTHORITY. The Board of Directors of HYENA has authorized the
execution of this Agreement and the transactions contemplated herein, and it has
full power and authority to execute, deliver and perform this Agreement.
4.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of his
Agreement by HYENA and the performance of its obligations hereunder will not
cuase, constitute, conflict with or result in (i) any breach of the provisions
of any license, indenture, mortgage, charter, instrument, certificate of
incorporation, bylaw or other agreement or instrument to which it is a party or
by which it may be bound, nor will any consents or authorizations of any party
other that those hereto be required, (ii) an event that would permit any party
to any agreement or instrument to terminate it or to accelerate the maturity of
any indebtedness or other obligation, or (iii) an event that would result in a
creation or imposition of any lien, charge or encumbrance on any asset.
4.15 FULL DISCLOSURE. None of the representations and warranties made by
HYENA herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by it or on its behalf, contains or will contain any untrue statement
of a material fact, or omits any material fact the omission of which would be
misleading.
4.16 ASSETS. HYENA has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances, except as may be
indicated in Exhibit 4.05.
4.17 INDEMNIFICATION. HYENA agrees to indemnify, defend and hold harmless
against and in respect to any and all claims, demands, losses, cost, expenses,
obligations, liabilities or damages, including interest, penalties and
reasonable attorney's fees, incurred or suffered, which arise out of, result
from or relate to any breach of, or failure by HYENA to perform, any of its
representations, warranties or covenants in this Agreement or in any exhibit or
other instrument furnished or to be furnished under this Agreement.
4.18 VALIDITY OF HYENA SHARES. The shares of HYENA $.001 par value common
stock to be issued pursuant to this Agreement will be duly authorized, validly
issued, fully paid and nonassessable under Nevada law.
ARTICLE V
ACTIONS PRIOR TO CLOSING
5.01 INVESTIGATIVE RIGHTS. Prior to the Closing Date each party shall
provide to the other parties, including the parties' counsel, accountants and
other authorized representatives, full access during normal business hours (upon
reasonable advance written notice) to such parties' books and records.
5.02 CONDUCT OF BUSINESS. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not see, pledge or assign
any assets, without the prior written approval of the other parties. No party
shall amend its certificate of incorporation or bylaws, declare dividends,
redeem or sell stock or other securities, incur additional liabilities, acquire
or dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any
<PAGE>
balance sheet receivable for less that its stated amount, pay more on any
liability that its stated amount or enter into any other transaction other than
in the regular course of business.
ARTICLE VI
CLOSING
6.01 CLOSING. The closing (the "Closing") of this transaction shall be
held at the offices of HYENA, or such other place as shall be mutually agreed
upon, on or before August 13, 1998. (the "Closing Date"):
(a) HYENA shall issue 4,000,000 shares of its $.001 par value common
stock in a certificate or certificates representing such shares.
(b) PLANCHE shall deliver the certificates representing 100% of the
shares of LUMITECH common stock (500 shares).
(c) HYENA shall deliver a signed consent or minutes of its Board of
Directors, approving this Agreement and authorizing the matters set forth
herein;
(d) LUMITECH shall deliver a signed consent or minutes of its Board of
Directors approving this Agreement and authorizing the matters set forth herein;
(e) HYENA's existing Board of Directors will (i) elect three new
directors, as named by PLANCHE to act as officers and directors of HYENA in the
capacities set forth in Exhibit 6.01 and (ii) the two current directors will
resign their positions with HYENA effective the Closing Date.
ARTICLE VII
MISCELLANEOUS
7.01 CAPTIONS AND HEADINGS. The article and paragraph headings throughout
this Agreement are for convenience and reference only and shall not be deemed to
define, limit or add to the meaning of any provision of this Agreement.
7.02 NO ORAL CHANGE. This Agreement may not be changed or modified except
in writing signed by the party against whom enforcement of any change or
modification is sought.
7.03 NON-WAIVER. Except as otherwise expressly provided herein, no waiver
of a covenant, condition or provision of this Agreement shall be deemed to have
been made unless executed in writing and singed by the party against whom such
waiver is charged. The failure of any party to insist in any one or more cases
upon the performance of any covenant, condition or provision of this Agreement
shall not be construed as a waiver or relinquishment for the future of any such
covenant, condition or provision. no waiver by any party of one breach by the
other shall be construed as a waiver with respect to a subsequent breach.
<PAGE>
7.04 TIME OF ESSENCE. Time is of the essence of this Agreement and of
each and every provision hereof.
7.05 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties and supersedes all prior agreements and
understandings.
7.06 CHOICE OF LAW/ARBITRATION. This Agreement and its application,
shall be governed under the laws of the State of Nevada. Any and all disputes
and controversies of every kind and nature between the parties hereto arising
out of or relating to this Agreement relating to the existence, construction,
validity, interpretation or meaning, performance, non-performance, enforcement,
operation, breach, continuance or termination thereof shall be subject to an
arbitration mutually agreeable to the parties or, in the absence of such mutual
agreement, then subject to arbitration in accordance with the rules of the
American Arbitration Association. It is the intent of the parties hereto and the
purpose of this provision to make the submission to arbitration of any dispute
or controversy arising hereunder an express condition precedent to any legal or
equitable action or proceeding of any nature whatsoever.
7.07 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
7.08 NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been given on the date of service if served personally on the party to whom
notice is to be given, or on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
HYENA:
3098 So. Highland Drive, Suite 460
Salt Lake City, Utah 84106
LUMITECH and PLANCHE:
Avenue Cardinal Mermillod, 36
1227 Carouge, Switzerland
7.09 EXPENSES. The parties will pay their own legal, accounting and
other expenses incurred in connection with this Agreement.
7.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants set forth in this Agreement or in any instrument,
certificate, opinion or other writing provided for in it, shall survive the
Closing Date.
<PAGE>
7.11 FURTHER DOCUMENTS. The parties agree to execute any and all
other documents and to take such other action or corporate proceedings as may be
necessary or desirable to carry out the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first above written.
HYENA
___________________________________
President
LUMITECH, S.A.
____________________________________
President
____________________________________
Patrick Planche
<PAGE>
EXHIBIT 3.04
DIRECTORS AND OFFICERS
OF
LUMITECH, S.A.
Patrick Planche - President and Director
Francois Planche - Secretary and Director
<PAGE>
EXHIBIT 3.05
FINANCIAL STATEMENTS
OF
LUMITECH, S.A.
<PAGE>
EXHIBIT 4.04
DIRECTORS AND OFFICERS
OF
HYENA CAPITAL, INC.
Krista Nielson - President and Director
Sasha Belliston - Secretary/Treasurer and Director
<PAGE>
EXHIBIT 4.05
FINANCIAL STATEMENTS
OF
HYENA CAPITAL, INC.
<PAGE>
EXHIBIT 6.01
DIRECTORS AND OFFICERS
(TO BE ELECTED)
OF
HYENA CAPITAL, INC.
Patrick Planche - President and Chairman of the Board
Francois Planche - Secretary and Director
Jose Canales - Director
<PAGE>
EXHIBIT 10.2
AGREEMENT
Between
MISTER JACQUES-CHARLES COLLET, En Bons Voisin 1812 Rivaz
Below "Mr. Collet"
And
OTWD ON TIME DIFFUSION S.A. having its head office 4, rue des Clochettes 1206
Geneva, Switzerland validly represented by Mister Patrick PLANCHE, president of
council of administration.
Below "OTWD"
<PAGE>
INTRODUCTION
Mr. Collet, inventor of a new process of brilliant reproduction using the
technology of the passive luminescence, granted an exclusive licence to OTWD for
the exploitation, the production and marketing this invention, object the Swiss
patent No. CH 681713 in February, 1993,
Since the beginning of the 1993, OTWD made an analysis of the market on the
international plan, on its potential and on its imperatives to implant the
brilliant reproduction.
To arrive in the conditions of bases imposed by the laws of the current market,
OTWD had to and still must, develop the ranges of products luminescent, improve,
adapt and rationalize the brilliant reproduction and its manufacturing process.
The first developments of OTWD moreover required the deposit of a new French
application for a patent No. 95 06721 giving birth to a new generation of
reproduction luminescente, the precedent patent or application for a patent not
covering in a way enough significant and sure the process and the product.
In seen one enormous investments at time and cash when to supplied OTWD for this
first stage of technical development and when this last one still must supply
for the second stage of marketing as crucial as risked, OTWD asked Mr. Collet in
May on 1995 to transfer the property and the current and future rights on the
patents, applications for a patent and others with regard to the manufacturing
processes and the products luminescent.
Mr. Collet having understood the imperatives of this transfer, agreed to give up
the property and every right relative to the Swiss patent, to the current
applications for a patent and future and others with regard to the manufacturing
processes and the products luminescent.
<PAGE>
Being exposed to this, the parts agree of that follows :
1 DEFINITION
----------
It is heard by "reproduction luminescente, produces luminescent and process of
manufacturing ensuing of Swiss patent No. CH 681713, of future application for a
patent and / or only of the development of a knowledge not protected." every
process and / or produces which could be realized with or without image, but in
every case realized in the help of the technology of the passive luminescence.
Afterward the set of the protected current and future manufacturing processes or
not by patents with or without image will be named "procede Lumi" and the set
of the protected current and future products or not by patents with or without
image will be named "produit Lumi".
2. OBJECT OF THE CONTRACT
----------------------
The object of the present contract is the transfer of the property and of rights
(notably of priorities) of patent and the demand of patent of Mr Collet in
favour of OTWD carrying on every process Lumi and produced Lumi. Notably:
2.1 Transfer of the property and of rights of the Swiss patent No. CH 681713.
2.2 Transfer of the property and of the right relatives to all other delivered
patents carrying on the processes Lumi and products Lumi.
2.3 Transfer of the property and of right of all abandoned applications for a
patent or not carrying on processes Lumi and products Lumi.
2.4 Transfer of the property and of rights of all applications for a patent
future carrying on processes Lumi and products Lumi.
<PAGE>
3. MR COLLET OBLIGATION
--------------------
Mr. Collet commits himself to:
3.1. Give in to OTWD the property and right relative in patents, the past and
future demand of patent such as described in the article 2 above.
3.2 Put back to OTWD every relative documents in patents and the demand of
patent in his ownership.
3.3 Inform the authorities interested in the owner's change, in correspondence
to object of the present contract and to that OTWD can resume the whole
administrative follow-up of these documents.
3.4 Hold secret during the whole duration of the contract and beyond this one,
every documents, and the confidential information knowledge of which it had
within the framework of the present contract.
3.5 Not accept a mandate or another activity which would directly make competes
in the activities and in the commercial structure of OTWD concerning the
object of the present contract.
3.6 Pass on to OTWD every new idea of process Lumi and / or of product Lumi who
could be developed and commercialized.
3.7 Respect the obligations stipulated in the present contract, in case of
OTWD's transfer in a third or of resumption by a third of the property and
of the right relatives in a present contract.
<PAGE>
4 OTWD'S OBLIGATIONS
OTWD commits himself to:
4.1 Put quite in work to value in best the patent and / or the processes Lumi
and the products Lumi.
4.2 Respect the commitments taken in the favours of Mr. Collet in the present
contract, as for a long time as there will be an exploitable potential,
same beyond the duration of patent covering processes Lumi and products
Lumi.
4.3 To provide itself in raw material luminescentes exclusively beside the
company, SOCOL S.A., rue du Lac 24, 1020 Renens Swiss, represented by
Mister Aldo Del Vecchio and Mister Benoit Markwalder.
4.4 Inform Mr. Collet of every OTWD's transfer in a third or of resumption by a
third of the property and of the right relatives in a present contract.
4.5 Make respect the taken commitments in favour of Mr. Collet in the present
contract, in the case of an OTWD's transfer in a third or of resumption by
a third of the property and of the right relatives in a present contract,
as for a long time as there will be an exploitable potential of the
processes Lumi and products Lumi, same beyond the duration of patent
covering processes Lumi and products Lumi.
5. COST FROM THERE TRANSFER
5.1 OTWD already pay to Mr Collet, the advances on following future fees, this
according to the first signed agreements between the parts :
- 15' 000.-- (fifteen thousand Swiss francs) on 23.03.1993
- 2' 500.-- (two thousand five hundred Swiss francs) on 31.08.1993
- 20' 000.-- (twenty thousand Swiss francs) on 05.11.1993
This total of CHF 37'500. -- on future fees must be considered from
signature of the present contract as the price paid by OTWD to Mr. Collet
for the present transfer according to the article 2 above.
<PAGE>
5.2 Besides of the sum above, OTWD will pay to Mr Collet the sum of CHF 22'
500.--. This sum will be released by the payment from several deposits and
this from the beginning from the effective sale of the produLumi. The total
amount must be settled for a period after the starting up of marketing
effective of two years.
6. FEES
- ---------
6.1.1 A charge will be due to Mr. Collet by OTWD on every product delivered
and settled Lumi, produced according to the processes Lumi.
6.2 Mr Collet will receive a fees of 7% of OTWD on the cost price of
manufacture of every product Lumi delivered and settled. This cost
price does not include the price for all the other constituents
forming the product finished Lumi ( cap, T-shirt, key ring, frame,
packing and another one).
To assure the success of marketing and by the same to adapt the
situation to the case of sort, this rate of fees will be able to be
modified according to produced, delivered and settled quantity and /
or according to the markets in which the Lumifoto or other product
according to a process having the same object will be commercialized.
This new rate of fees will be fixed unanimously among Mr. Collet and
OTWD. This rate of fees is fixed in respect for the general principles
of the equity and of the good faith.
This rate takes into account, on the one hand efforts spread by Mr.
Collet for the focus of the first process Lumi, and on the other hand
efforts spread by OTWD for the adaptation and the focus of new
processes Lumi and new products Lumi, as risks bound to the
realization of product finished Lumi and to their marketing.
6.3 The amount of the fees will be calculated on the basis of on account
put back by OTWD to Mr. Collet according to art. 6.4 and 6.5 below.
6.4 OTWD will hold a book of account concerning the products Lumi
delivered and settled.
6.5 OTWD will communicate to Mr. Colet a state of the accounts in the end
of every quarter, is in the end of March, June, September and
December.
<PAGE>
Mr. COLLET will be considered as accepting this accounts if he does
not dispute it before the end of month following the deposit, by
registered letter to OTWD.
6.6 The fees must be settled for every quarter by the end of the month
according to the deposit of the accounts such as established under
art. 6.4. And 6.5.
6.7 It will not be due any fees on the orders and the deliveries of
samples to advertising purposes or to the occasion of the negotiation
of orders.
However, if the samples are sold, a fees will be due according to the
article hen in the accounts according to art. 6.4 and 6.5.
7. MUTUAL OBLIGATIONS
7.1 trie to develop other applications proceeded Lumi and other products
Lumi.
7.2 All the improvements future brought in patents, in the other process
Lumi or in the other product Lumi are exclusive OTWD's properties. The
present contract also has for object the payment of a fees to Mr.
Collet on the new products Lumi commercialized by ensuing.
<PAGE>
8. TERM OF THE CONTRACT
--------------------
8.1 The present contract has an effect retroactif on May 17, 1995 and it from
- ---
signature of this agreement.
The present contract has an effect retroactif on May 17, 1995, because the
parts had already decided on this transfer in this date, but OTWD was not
able to finalize this contract before this day for reasons of working
excess load had to in the reorganization of its activity and of its
structure.
8.2 The present contract will be maintain as long as the processes Lumi and the
products Lumi will be exploitable and exploited successfully.
9. MISCELLANEOUS
-------------
<PAGE>
9.1 The present contract cancels and replaces every previous signed contract
- ---
between the two parts concerning processes Lumi and products Lumi.
9.2 Are a part integral of the present contract:
- The copy of the document of patent.
- The copy of the demand of patent.
10. RIGHT APPLICABLE
----------------
The present contract is subjected to the Swiss right.
11. JURISDICTION
------------
The jurisdiction place is Geneva - Switzerland.
<PAGE>
12. COMPETENT COURT
---------------
Every dispute which could arise, as for the interpretation of the present
contract, will be carried along the common Courts.
So drawn up in Geneva in duplicate, the 26 January
(Make preceded signature of date and of the handwritten mention: read and
approved)
JEAN-CHARLES COLLET OTWD ON TIME DIFFUSION S.A.
PATRIK PLANCHE
<PAGE>
================================================================================
AGREEMENT
================================================================================
BETWEEN
LUMITECH S.A., a limited company (formerly, and prior to June 13, 1996, OTWD On
- ------------
Time Diffusion S.A.), having its head office at Avenue Cardinal Mermillod 36,
1227 Carouge (the "Company"), represented for the purposes of the present by its
President, Patrick Planche, who has executed the following agreement on behalf
of the Company.
AND
MISTER JACQUES-CHARLES COLLET, having a principal residence at En Bons Voisin
- -----------------------------
1812 RIVAZ ("Collet")
<PAGE>
1- INTRODUCTION:
-------------
Subject to and upon the terms and conditions set forth in this Agreement,
including the modifications and amendments set forth in this Agreement, the
Assignment Agreement (as such term is defined in clause (d) below), hereby is
ratified, approved and confirmed. The factual background to this Agreement is as
follows:
- - (a) Collet is the inventor of a process of brilliant reproductions using
passive luminescence technology respecting (i) products that incorporate or
otherwise are based upon such passive luminescence technology, and (ii)
methods or processes of using such passive luminescence technology (such
products and processes collectively, the "Initial Technology") and, on July
24, 1993, Collet filed an application for a patent with respect to the
Initial Technology, registered under 681713 (the subject matter of Swiss
Patent 681713 and any U.S. or foreign applications, continuations,
divisionals, continuations-in-part of said applications and patents
resulting therefrom and any reissues, reexaminations or extensions of said
patents, and including the French Patent, as such term is defined below,
collectively are referred to herein as the "Patent Rights").
- - (b) Since the beginning of 1993 the Company has collaborated actively with
Collet in the further development of the Initial Technology and the
products and methods covered by one or more of the unexpired claims falling
within the Patent Rights, including without limitation the development of
different manufacturing processes, techniques, methods, information and
data, including improvements, which pertain to the manufacture, use, sale
or other exploitation of the same.
- - (c) A new application for a patent respecting Initial Technologie, the
Patent Rights, and additional claims was filed in France on June 7, 1995,
identifieing Collet as a co-inventor and the Company as owner, registered
under figure 2.735.247 (the "French Patent").
- - (d) Pursuant to an oral agreement between the Company and Collet dated May
17, 1995, and subsequent written agreement dated January 26, 1996 (such
agreements collectively, the "Assignment Agreement"), Collet assigned the
Patent Rights to the Company, including all of his rights and interest in
and to said Patent Rights.
<PAGE>
- - (e) Subsequent to the 1996 Assignment Agreement, the Company initiated the
recording or filing of patent applications respecting the Patent Rights in
24 countries.
- - (f) On August 13, 1998, the Company was involved in a reverse merger with
a United States corporation incorporated in the State of Nevada, resulting
in, among other things, the Company becoming a wholly-owned subsidiary of
said Nevada corporation which, effective on the date of such merger changed
its name to Advanced Lumitech, Inc. ("ADLU"), and the former shareholders
of the Company became the holders of eight percent (80%) of the capital
stock of ADLU.
- - (g) ADLU currently has authorized 100,000,000 shares of common stock, par
value $001 per share; and as of December 31, 1998, there were 25,000,000
shares issued and outstanding, and ADLU was committed to issue, 2 667 602
shares of ADLU common stock.
2. MODIFICATION AND AMENDMENT OF PAYMENT PROVSIONS AND DURATION
The provisions of the Assignment Agreement respecting payment and duration set
forth in Articles 5, 6 and 8, are hereby cancelled in their entirety.
3. CONFIRMATION OF ASSIGNMENT.
Collet hereby assigns and transfers, or hereby confirms the prior assignment and
transfer, to the Company of all of his rights of property, title and interest in
and to the Patent Rights, such assignment and transfer to include, without
limitation, an assignment and transfer of Collet's property rights and interests
in and to the following patents and patent applications:
- Swiss Recording N"CH 681713
- France Recording N"2.735.247
- United States Recording N"PCT 1B 96 /00556
- Canada Recording N"2,225,495
- Mexico Recording N"9709720
- Brazil Recording N"P1 9608576-2
- Europe Recording N"on 9691 4363-5 in the fourteen
Main countries, enclosing Switzerland.
- Poland Recording N"P-323818
- Turkey Recording N"PCT 1B 96 /00556
- Russia Recording N"98100249
- China Recording N"96195595-3
- Hong-Kong Recording N"98112061.2
- Singapore Recording N"9705183.3
- Japan Recording N"9-500263
- - Collet hereby further confirms that the foregoing transfer of property is
intended to permit the Company, to alienate or pawn one or several patents
<PAGE>
and register every new patent incorporating improvements or enhancements to
the subject matter of any of the foregoing patents and patent applications.
- - Collet hereby further confirms that the foregoing transfer of property is
intended to permit the Company, without limitation and on an exclusive,
world wide and royalty-free basis to use and exploit the Patent Rights and
the subject matter of the foregoing patents and patent applications.
- - Collet further agrees, for the consideration described in Section 4 of this
Agreement, that the Company shall have property and exclusive rights to
use, without further compensation to Collet any and all patents,
copyrights, trademarks, trade secrets, know how or other intellectual
property that Collet invents or develops after the date of this Agreement
which constitute (a) improvements or enhancements to any of the Patent
Rights or to any of the subject matter of the foregoing patents and patent
applications, or (b) derivative products, materials and processes which
relate to the manufacuring or use or sale of passive luminesence technology
or related materials.
4. CONSIDERATION
(a) The Company already has paid Collet, and Collet hereby confirms
receipt in 1993 of CHF 37'500.
(b) The Company has agreement to pay Collet an additional US $ 160'000,
and to issue and deliver to Collet 800'000 shares of the common stock
of ADLU, payble as follows:
- US $ 30'000, of which US $25,000 was received by Collet on or about
December 29, 1998, and US $5000 was received on or about- February,
1999; and
- US $5000, upon the execution and delivery of this Agreement;and
- US $ 125'000 payable from time to time after the completion by the
Company (or its affiliate, ADLU) of its current round of equity
financing.
5 GOVERNING LAW
The present contract is subjected to the Swiss right and for the international
agreements signed by this country, in intellectual property.
6. JURISDICTION AND VENUE
- ---------------------------
<PAGE>
In case of dispute, only the Courts of the canton of Geneva are competent, an
appeal to the Swiss Federal Court being however reserved.
So made for Geneva in duplicate, March 31, 1999
LUMITECH S.A. MR. JACQUES-CHARLES COLLET
Mr. Patrick Planche, President
<PAGE>
EXHIBIT 10.3
- --------------------------------------------------------------------------------
AGREEMENT
- --------------------------------------------------------------------------------
BETWEEN
LUMITECH S.A. having its head office at Cardinal Mermillod 36, 1227 Carouge (the
- ------------
"Company"), represented by its President Mister Patrick Planche, having an
authority to sign and deliver this Agreement on behalf of the Company.
And
LUMINESCENT EUROPE TECHNOLOGIES B.V. having its head office at De Spaarpot 5
- -----------------------------------
5667 KV Geldrop, The Netherlands ("Lumi Europe") represented for the purpose of
this Agreement by Holding Canales, b.v., represented itself by Jose Canales in
his capacity as director of said Holding Canales, b.v.
<PAGE>
INTRODUCTION
Reference is made to the following facts:
- - The Company is the holder of all rights of property and other rights and
interests in and to certain technology and related processes with respect
to which certain patents have been issued or patent applications are
pending in Switzerland, France, the United States and other countries (the
"Licensed Technology"), which Licensed Technology is used or useful in the
production of products incorporating and featuring luminescent materials
and effects;
- - On Jun 30, 1997, in consideration of a payment by Lumi Europe to the
Company of US $100,000, the Company granted Lumi Europe a license, with the
right to sublicense, in and to the Licensed Technology (the "Lumi Europe
License"), the terms of which contemplated the commercial exploitation of
the Licensed Technology by Lumi Europe, on an exclusive basis in a
territory comprised of the European nations (the "Territory");
- - Subsequent to the grant of the Europe Lumi License, Europe Lumi paid and
incurred significant expenses in connection with its efforts to identify
and develop products and processes incorporating or based upon the Licensed
Technology for sale and/or licensing to third parties within the Territory;
Lumi Europe has determined that a continuing effort to sell and license
products and processes incorporating or based upon the Licensed Technology
is not consistent with its business strategy and purpose; and the Company
has determined that the development and sale or licensing of products and
processes incorporating or based upon the Licensed Technology will be a
central part of its core business on a going forward basis.
Subject to and upon the terms and conditions set forth in this Agreement,
the parties hereto have agreed to rescind and terminate the Europe Lumi
License, and Europe Lumi will surrender the Company all of its rights as a
licensee of the Licensed Technology.
ARTICLE 1
- ---------
Lumi Europe hereby agrees (a) that the Lumi Europe License hereby is terminated,
and Lumi Europe shall not have, from and after the date of this Agreement, any
right to use or exploit the Licensed Technology any where in the world,
including any right to manufacture, market
<PAGE>
or sell any products based upon or incorporating any of the Licensed Technology,
(b) that promptly following the execution and delivery of this Agreement Lumi
Europe shall cause its name to be changed by filing appropriate amendments to
its charter in the jurisdiction of its organization, so that the Lumi Europe
corporate name shall not include the term "Luminescent" or any similar or
derivative term. Lumi Europe hereby conveys and transfers to the Company any
developments or enhancements to the Licensed Technology and any related goodwill
it has developed or owns as of the date of this Agreement.
ARTICLE 2
- ---------
In consideration of Lumi Europe's agreements and undertakings set forth herein,
the Company hereby agrees to pay Lumi Europe an aggregate amount equal to US
$170,000, representing (a) the repayment of Lumi Europe's original US $100,000
payment for the Europe Lumi License to the Licensed Technology, plus (b) the
reimbursement of approximately US $70,000 in expenses paid or incurred by Lumi
Europe during the term of the Europe Lumi License for the development of
products, processes and markets for the Licensed Technology. Said US $ 170'000
will be paid from time to time as and when the Company has sufficient working
capital to make payments on account of such obligation, but in any event said
amount shall be paid on or before March 31,2004.
ARTICLE 3
- ---------
Each of the parties to this agreement hereby waives and agrees not to assert any
claim against the other based upon or arising out of the Europe Lumi License or
the relationship of the parties hereto; provided, however, that Lumi Europe
reserves the right to pursue collection of the amounts which the Company is
obliged to pay pursuant to the provisions of Article 2 of this Agreement.
ARTICLE 4
- ---------
For a period of ten years following the execution and delivery of this Agreement
(or such shorter period as any court or tribunal of competent jurisdiction
hereafter determines to be reasonable), neither Lumi Europe nor its officers and
directors shall engage, directly or indirectly anywhere in the world, as
stockholders or other equity holders, partners, co-
<PAGE>
venturers, managers, employees, consultants or otherwise, in any business or
activity that uses or otherwise employs luminescent or similar technologies.
In case of violation by Lumi Europe of the provisions set forth in this Article,
as the same may be proved by the Company in a court or tribunal of competent
jurisdiction, Lumi Europe shall pay the Company, in addition to monetary damages
found by such court or tribunal, the costs and expenses paid or incurred by the
Company in the pursuit of its claims against Lumi Europe.
ARTICLE 5
- ---------
The Swiss right is applicable to the present agreement.
ARTICLE 6
- ---------
In case of dispute, only the courts of the canton of Geneva, Switzerland are
competent, an appeal to the Federal Court being however reserved.
LUMITECH S.A. LUMINESCENCE TECHNOLOGY EUROPE B.V.
Mr. Patrick PLANCHE, President Mr. Jose CANALES, Director
March 31, 1999 March 31, 1999
<PAGE>
EXHIBIT 10.4
Tuesday 31 March 1999
SOCOL S.A.
Rue du Lac 24
1020 Renens, Switzerland
Attention: Mr. Benoit MARKWALDER
Dear Mr. B. Markwalder,
We have discussed the continuing relationship between Advanced Lumitech, Inc.
and its affiliated, Lumitech S.A. (collectively, "Lumitech") and Socol, S.A.,
with respect to the ongoing development of the Lumitech luminescent substances
and related technology, including the patented and proprietary Lumitech/Collet
patents relating to such technology. Lumitech is grateful for the continuing
support of Socol.
We also have discussed consideration for Socol's expected future contributions
in the further development of Lumitech's technology and business. This will
confirm our understanding that Lumitech will cause the issuance to Socol of
1,000,000 shares of the Common Stock of Advanced Lumitech, Inc. in consideration
of Socol's contributions and efforts in the development of Lumitech's technology
and know-how, and other consideration that will be described in a definitive
agreement between Lumitech S.A. and Socol, S.A. that will, among other things,
be governed by Swiss law and enforceable in a competent tribunal in Geneva,
Switzerland.
You have acknowledged, and your execution of the enclosed counterpart of this
letter in the place indicated below for your signature will confirm, that Socol
has agreed to accept the delivery of the Initial Shares in full consideration
for Socol's participation in and efforts in connection with the development of
the Lumitech products and related technology and know-how, and that Socol does
not have and disclaims any right or interest in or to Lumitech's Brightec
products, the Lumitech/Collet patents, and the proprietary information and know-
how relating to the same.
Sincerely,
Advanced Lumitech, Inc.
Lumitech, S.A.
By: /s/ Patrick Planche, C.E.O. and President
Acknowledge, agreed and confirmed this day of March 31, 1999.
Socol S.A.
By: /s/ Benoit Markwalder, C.E.O. By: /s/ Aldo Delvecchio, President
<PAGE>
EXHIBIT 10.5
CONTRAT DE CREDIT
entre
LUMITECH SA
Avenue Cardinal-Mermillod 36
1227 CAROUGE GE
(ci-apres denomme "'l'emprunteur")
et
CREDIT SUISSE, CAROUGE
(ci-apres denommee "la banque")
Montant du credit : CHF 470'000.--
(Francs suisses quatre cent septante mille).
Utilisation : - credit en compte de base no 0251-484125-51 et/ou
- avance ferme et/ou
- en limite pour cautionnements
But : fonds de roulement et emission de cautionnements.
Taux d'interet : Credit en compte de base
actuellement 5 3/4% l'an. La banque se reserve le
droit de modifier ce taux en tout temps, sans
preavis, pour l'adapter a la situation du marche de
l'argent et des capitaux.
Avance ferme
les conditions sont definies a la conclusion de
l'avance, le cas echeant, notamment en fonction des
conditions du marche a ce moment-la.
Commission de
credit : 1/4% par trimestre ou fraction, calculee sur le solde
debiteur le plus eleve en cas d'utilisation sous
forme de credit en compte courant.
Commission de
depassement : dans des cas exceptionnels fondes, la banque peut,
selon sa libre appreciation, autoriser des
depassements de la limite de credit fixee. Dans ce
cas, elle prelevera en sus de l'interet debiteur et
de la commission de credit, une commission qui est
actuellement de 1% par trimestre sur le montant de
depassement moyen.
Summary of Terms of Credit Agreement
Lumitech SA and Credit Suisse
August 6, 1997, as amended September 9, 1998
- --------------------------------------------------------------------------------
Amount of Credit: $470,000 Swiss Francs
Bank, in its sole discretion, reserves right to advance
funds over the 470,000 SFr limit (and such advance, an
"Over Advance")
Use: Working capital
Interest Rate: Initially set at 5.75%, subject to the bank's right,
exercisable in its sole discretion, to adjust the rate from
time to time in accordance with market conditions.
The rates were adjusted in September, 1997, as follows:
Amount of Advances Rate
0 - 300,000 SFr 5.500%
300,000 - 370,000 SFr 6.375%
370,000 SFr and above 7.625%
Fees: Quarterly payment of one-fourth of one percent ( .25%) of
the outstanding principal balance during such quarter. In
addition, the bank will charge a quarterly fee in an amount
equal to one percent of any Over Advance amount.
Security/Collateral: All receivables of Lumitech SA; collateral assignment of a
policy on the life of one of the directors in the amount of
100,000 SFr.
Guaranty: Advances, up to 480,000 SFr, are guaranteed by a relative
of a director/shareholder, and such guaranty is secured by
a mortgage against real estate owned by such guarantor.
<PAGE>
Resiliation : cette convention-cadre peut etre resiliee en tout
temps, de part et d'autres, avec effet immediat. La
resiliation reste sans effet sur les credits inclus
dans la convention, qui ont ete accordes
anterieurement. En outre la resiliation de l'un des
credits accordes dans le cadre de cette convention
n'entraine pas la resiliation automatique de la
presente convention-cadre.
Arretes des
comptes : trimestriels.
Port et menus
frais : a charge de l'emprunteur.
Garanties : nantissement par Mme Claire-Lise Marini de: CHF
480'000.-- cedule hypothecaire au porteur en 1er
reng, datee du 03.03.1992, grevant sans concours
l'appartement de 5 pieces au 5eme etage no 7.02
(feuillet 2648 No11) representant 74,6/1000 de la
parcelle No 2648, fo 32, de Geneve Eaux-Vives, sise
Chemin de la Petite-Boissiere 40, propriete de Mme
Claire-Lise Marini
conformement a la formule "Acte de nantissement
special" a signer.
Nantissement par M. Patrick Planche de pretentions
decoulant de la police d'assurance risque deces
portant sur CHF 100'000.--. No 7.233.795 de la
ZURICH, datee du 10.05.1995 et echeant le 10.05.2000.
Preneur4 et personne assuree: Patrick Planche
conformement a la formule "Nantissement de police
d'assurance-vie" a signer et a la "Notification a
la compagnie d'assurances".
L'original de la police est conserve aupres de la
banque.
Autres conditions : l'emprunteur s'engage a remettre a la banque, dans
les quatre mois qui suivent la cloture de chaque
exercise annuel, ses bilan et compte de pertes et
profits dument dates et signes, accompagnes de
l'original du rapport de son organe de revision,
documents qui seront traites de maniere strictement
confidentielle; les bilann et compte de pertes et
profits 1996 audites sont a remettre d'ici au
31.08.1997.
L'"Acte de nantissement special", le "Nantissement de
<PAGE>
police d'assurance-vie" et les "conditions generales"
de la banque font partie integrante du present
contrat.
Ce contrat de credit annule et remplace tous les
prededents. Il est etabli en quatre exemplaires, un
pour l'emprunteur, un pour chacun des garants et un
pour la banque.
CREDIT SUISSE Lumitech SA
/s/ Patrick Python /s/ Pierre Tzaut /s/
- ------------------ ---------------- ------------------------------
(Signature de l'emprunteur)
Claire Marini
/s/
------------------------------
(Signature du garant)
Patrick Planche
/s/
------------------------------
(Signature du garant)
------------------------------
(Lieu et date)
Geneve, le 6 aout 1997
Ref. DCJ23/CV/cp
"Conditions generales"
"Acte de nantissement special"
"Nantissement de police d'assurance-vie"
<PAGE>
CREDIT SUISSE
Case postale 100 Telephone 022 391 21 11
CH-1211 Geneve 70 Telefax 022 393 47 70
Telex 425 251
SWIFT CRESCHZZ12A
CCP 12-35-2
Affaires speciales
Lionel Zulferey
CKRW21C LUMITECH SA
Avenue Cardinal-Mermillod
1227 Carouge
022/393 27 89
9 septembre 1998 zuf
Votre relation No 0251-484125-5
Messieurs,
Nous nous referons a la seance du 24 juillet 1998 ainsi qu'a notre courrier
du 19 aout 1998, relativement a l'objet mentionne sous rubrique.
Lors de ces discussions, il avait ete convenu en particulier que la
regularisation du depassement de credit, meme partielle, interviendrait au plus
tard au 31 aout 1998. Or, a ce jour, nous constatons que le depassement en
compte n'est nullement resorbe.
Ainsi, comme annonce lors de dite seance, et conformement a la politique de
credit de notre Etablissement qui entend differencier le prix en fonction
durisque de credit, nous vous communiquons que le taux d'interets debiteur sur
votre compte courant No 0251-484125-51 sera de 5.5% jusqu'a CHF 300'000.--, de
6.375% entre CHF 300'000.-- et CHF 370'000.--, puis de 7.625% au dela de ce
dernier montant, ceci des le 1er septembre 1998.
De meme, differents documents et informations devaient nous etre communiques.
A nouveau, nous sommes forces de constater que seule la police d'assurance - vie
Zurich no 7.283.833, nantie en notre faveur selon acte signe le 11 fevrier 1998,
nous a ete remise.
Nous vous rappelons donc que nous souhaitons encore recevoir une copie signee de
vos bilan et compte de pertes et profits au 31 decembre 1997, accompagnee du
rapport original de l'organe de revision, ainsi que, pour la villa de Madame
Claire Marini faisant l'objet de notre gage, copies du bail y relatif et du
contrat d'assurance batiment en vigeur.
Nous vous remercions de prendre note de ce qui predede et, dans l'attente de
vous nouvelles, nous vous presentions, Messierus, nos salutations distinguees.
CREDIT SUISSE
/s/ /s/
- ----------------------------- ---------------------------
Pierre Laurent Rochat Lionel Zufferey
<PAGE>
EXHIBIT 10.6
AGREEMENT
Between
LUMI CORP, a general partnership duly existing under the laws of Switzerland
- ---------
under the articles 530 CO, and represented by its partners Mister Patrick
PLANCHE, Mister Francois PLANCHE, Holding CANALES b.v. and Holding Nijhuis b.v.
("Lumi Corp").
AND
LUMITECH S.A. (formerly, prior to the change to its current name, OTWD On Time
- -------------
Diffusion, S. A.), having its head office at Cardinal Mermillod 36, 1227 Carouge
(the "Company"), represented for the purposes of this Agreement by Mister
Patrick Planche, President who is authorized to sign and deliver this Agreement
in the name and on behalf of the Company.
<PAGE>
INTRODUCTION
- ------------
Reference is made to the following facts:
- - Mister Jacques-Charles Collet ("Collet"), is the inventor of a new process of
reproduction using technology of the passive luminescence (such technology,
and the methods, techniques, processes and know-how related thereto are
referred to in this Agreement as the "Technology").
- - The Collet invention is the object of a patent registration Collet's name,
registered in Switzerland on July 24, 1993 under figure 681713.
- - A new application for a patent was filed in France in the name of the
Company, on June 7, 1995, under figure 95 06721, and later issued as
Recording N 2,735,247; and additional patents and patent applications
respecting the Technology have been filed or issued in 24 other countries.
- - By agreement dated January 26, 1996, Collet assigned and transferred all of
his rights of property and other rights and interests in and to the Technolgy
and such patents and patent applications to the Company
- - Mister Patrick Planche, Francois Planche, Holding Canales and Hodling Nijhuis
established Lumi Corp under the laws of Switzerland Jun 14, 1995, for the
purpose of development and marketing of products incorporating or based upon
the claims covered by the above-mentioned patents and patent applications.
- - Pursuant to an agreement dated as of January 14, 1996 (the "Transfer
Agreement"), the Company assigned and transferred its right of property and
other rights and interests in and to the Swiss patent No. 681713, French
patent No. 2,735,247 (which was then pending) and the other patents and
patent applications relating to the Technology to Lumi Corp.
- - The style of OTWD On Time Diffusion S.A. was formally transformed into
LUMITECH S.A., on June 13, 1996.
Subject to and upon the terms and conditions set forth in this agreement, Lumi
Corp has agreed to transfer back to the Company all of its property rights and
other rights and interests in and to the Technology, the patents and the patent
applications relating to the Technology, and any trade or service marks,
copyrights, improvements, enhancements and related good will that, as of the
date of this Agreement, has been developed and is owned by Lumi Corp.
<PAGE>
ARTICLE 1
- ---------
Lumi Corp and each of its partners hereby gives up irrevocably in favour of the
Company the completeness of the rights having made the object of the Transfer
Agreement including without limitation the following:
- - Transfer of the property and of all related rights, products, processes,
methods, techniques and know-how relating to or arising from the Swiss patent
No. CH 681713 ;
- - Transfer of the property and of all related rights, products, processes,
methods, techniques and know-how relating to or arising from the French
patent No. 2,735,247.
- - Transfer of the property and of all related rights, products, processes,
methods, techniques and know-how relating to or arising from the following
patents and patent applications :
- Swiss Recording N " CH 681713
- France Recording N " 2.735.247
- United States Recording N " PCT 1B 96 /00556
- Canada Recording N " 2,225,495
- Mexico Recording N " 9709720
- Brazil Recording N " P1 9608576-2
- Europe Recording N " on 9691 4363-5 in the fourteen
Main countries, enclosing Switzerland.
- Poland Recording N " P-323818
- Turkey Recording N " PCT 1B 96 /00556
- Russia Recording N " 98100249
- China Recording N " 96195595-3
- Hong-Kong Recording N " 98112061.2
- Singapore Recording N " 9705183.3
- Japan Recording N " 9-500263
- - Transfer of the mark " Lumifoto ".
Lumi Corp acknowledges that, effective upon the execution and delivery of this
Agreement, any and all rights of any nature that it had with regard to the
above-mentioned patents, patent applications, trade and service marks and other
rights ensuing from these, shall terminate and be of no further or continuing
force or effect.
<PAGE>
ARTICLE 2
- ---------
Lumi Corp hereby acknowledges that the Company already is registered as the
owner of the above referenced patents and patent applications, all of which were
filed and recorded in the name and on behalf of the Company as owner.
ARTICLE 3
- ---------
The Company has offered, and Lumi Corp has agreed to accept CHF 50 000 in full
consideration of the transfer of rights from Lumi Corp back to the Company
described in this Agreement and hereby acknowledges receipt, as of the
December 28, 1998 effective date of this Agreement, receipt of said amount.
ARTICLE 4
- ---------
Effective upon the execution and delivery of this Agreement, neither party will
have, and each party hereby agrees not to assert, against the other (or against
the others' partners or principals) any claim.
ARTICLE 5
- ---------
Lumi Corp hereby agrees to wind up its affairs, identify and pay its creditors,
and to dissolve as a "simple company" or partnership under Swiss law, as soon as
reasonably practicable following the execution and delivery of this Agreement.
ARTICLE 6
- ---------
The present contract is subjected to the Swiss law.
In case of dispute the courts of the canton of Geneva are competent, an appeal
to the Federal Court being however reserved.
<PAGE>
The present agreement was established in five copies, on December 28, 1998
LUMITECH S.A. LUMI CORP
Mr. Patrick Planche Mr. Patrick Planche Mr. Francois Planche
Holding CANALES Holding Nijhuis
Mr. Jose Canales la Rosa Mr.J.H. Nijhuis
<PAGE>
EXHIBIT 21
Subsidiaries of Advanced Lumitech, Inc.
Lumitech S.A., a corporation organized under the laws of Switzerland, is a
wholly-owned subsidiary of Advanced Lumitech, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 207,938 494
<SECURITIES> 0 0
<RECEIVABLES> 0 66,672
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 217,816 69,436
<PP&E> 26,509 7,980
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 244,325 77,416
<CURRENT-LIABILITIES> 760,818 783,577
<BONDS> 0 0
0 0
0 0
<COMMON> 25,000 25,000
<OTHER-SE> (797,302) (1,092,637)
<TOTAL-LIABILITY-AND-EQUITY> 244,325 77,416
<SALES> 0 148,352
<TOTAL-REVENUES> 0 148,492
<CGS> 0 223,791
<TOTAL-COSTS> 291,455 316,981
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<INTEREST-EXPENSE> 48,660 51,042
<INCOME-PRETAX> (340,115) (219,531)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (340,115) (219,531)
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