UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
10-KSB
[X] Annual Report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended 12/31/99.
Commission File Number ______________
Photonics Corporation
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(Name of Registrant as Specified In Its Charter)
California 77-0102343
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(State of Incorporation) (IRS Employer Number)
1222 Alderwood Avenue, 408-745-9318
Sunnyvale, California 94089
(Address of principal executive offices) (Issuer's telephone
number)
Securities registered under Section 12(b) of the Act: none
Securities registered under Section 12 (g) of the Act: none
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the
past 90 days
Yes (X) No ( )
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB.
Yes [X] No ( )
State issuer's revenues for the most recent fiscal year:
The estimated aggregate market value of the voting stock held by non-
affiliates of the registrant as of December 31, 1999 was $ 531,920. The
market value is based upon the average bid price of the Common Stock
of $ 0.14 per share on December 31, 1999.
The Company had 4,336,186 shares of common stock, par value of $ 0.001
per share, outstanding as of December 31, 1999.
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INDEX
Part I
Item 1 Business 5
General 5
Products and the Market 5
The Competition 6
Intellectual Property 6
Manufacturing and Suppliers 6
Patents and Licenses 6
Significant Customer 7
Backlog 7
Employees 7
Item 2
Properties 7
Item 3
Legal Proceedings 7
Item 4
Submission of Matters
to a Vote of Security Holders 8
Part II
Item 5
Market for Common Equity 8
Item 6
Management's Discussion and Analysis 9
Liquidity and Capital Resources 11
Other Matters 12
Item 7
Financial Statements 12
Item 8
Changes in and Disagreements
with Accountants on Accounting
And Financial Disclosures 12
Part III
Item 9
Director, Executive officers,
Promoters and Control Person:
Compliance with Section 16a of
the Exchange Act 12
Indemnification Agreement 13
Item 10
Executive Compensation 13
Board of Director's Report on
Repricing of Options/SARs 14
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Item 11
Security Ownership of Certain
Beneficial Owners and Management 14
Item 12
Certain Relationships and
Related Transactions 15
Item 13
Exhibits and Reports on Form 8K 16
Signature Page 16
Quarter 4 Income Statement Comparison 16
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Introduction
This report contains forward-looking statements and the Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of numerous factors, including
those set forth below and elsewhere in this report.
Part I
Item 1. Business
General
Photonics dba Data Technology resulted from the merger of Photonics
Corporation and DTC Data Technology Corporation in 1996. Shortly after
the merger, the Company focused on IDE, SCSI, I/O and BIOS upgrade
business of IBM compatible personal computer.
As DTC is a well-known brand name and has established sales channels,
while the legal name of the company is Photonics Corporation, the
company is doing business as DTC Data Technology. For brevity sake,
the Company is herein after referred to as DTC or the Company.
The acquisition of DTC was consummated on March 5, 1996. The agreement
as ratified by DTC Data Technology Corporation's Shareholders at their
meeting held on February 6, 1996, specifies "The Board of Directors of
DTC would file a Certificate of Dissolution in the state of Delaware
after consummation of the Acquisition. Thereafter, DTC shall continue
for a term of three years or longer". The dissolution is complete, the
conversion of DTC stock to Photonics stock is affected at a conversion
rate of 0.147853. All calculations of beneficial ownership, exercise
and conversion of all outstanding options, warrants and other right to
purchase shares of common or preferred stock uses this multiplier as
though the dissolution had in fact occurred. The Company started
conversion of DTC Data Technology shares to Photonics shares during
March 2000, handled by Corporate Stock Transfer of Denver, Colorado.
Products and the Market
The Company markets and sells IDE, I/O, BIOS upgrade, and SCSI products
for IBM compatible PCs to Value Added Resellers (VARs), and System
integrators through distribution and retailers for the upgrade after
market.
Integrated Device Electronics ("IDE"), and Input and Output ("I/O")
adapters connect between a PC's central processing unit and the storage
devices such as floppy and hard disks, CD-drives and other peripheral
devices such as printers, scanners, and digital cameras. The IDE I/O
add on card business has declined to less than $50 million dollars per
year as newer PCs have these functions built in on the mother boards
and seldom need additional add on cards.
The BIOS upgrade allows older machines to access large disks and/or be
Y2K compliant. While the Y2K market was strong for 1999, it died
after the New Year 2000.
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Small Computer System Interface (SCSI) controller, due to its high
performance, and high connectivity, is the controller of choice for
high-end personal computers, engineering work stations, Internet and
enterprise file servers. The market is about $1 billion and is
dominated by Adaptec with over 70% of the market share. After a flat
year in 1998, this market resumes its growth at double digit rate.
During first half of 1999, the company introduced several new PCI I/O
products, and a family of Y2K BIOS compliant upgrade products by adding
Y2K BIOS firmware to the older products. However, due to financial
difficulties, no new products were introduced in the second half of
1999, and those new products introduced were not adequately supported.
The Competition
As the IDE I/O market declined, many vendors have dropped out of this
market. Due to lack of R&D funds, DTC plans to remain in that market
place until an alternative market is available. Promise and SIIG compete
with the Company's I/O and IDE family of products. In the BIOS upgrade
market, main competitors are Unicore and AMI. In the SCSI market,
Adaptec is the main competitor. The Company's low end Adaptec
compatible products sales has declined and level off during 1999. Due
to financial difficulties, DTC introduced no new high end SCSI products
during 1999.
Intellectual Property
The Company has studied the intellectual property issues and performed
patent searches related to the IDE, I/O and SCSI products which it is
marketing, and intends to market, and is unaware of any patents or
intellectual property owned by any other party which would impede the
development or sale of any of its current or planned IDE, I/O, or SCSI
products.
Manufacturers
Substantially all of DTC's products are manufactured by companies
located in the Far East. One time up to 90% of the Company's products
requirements were produced in China by Broadsino Computer Development,
Ltd. Of Hong Kong. However, Broadsino filed for bankruptcy during
1999. Company had found an alternative source, ActionMedia, that was
formed by a former managing director of Broadsino, K. C. Yeung, who was
also a former board member and officer of the Company.
Patents and Licenses
The Company holds various patents. DTC believes, however, that much of
its important technology resides in its proprietary hardware, software
and trade secrets. Due to lack of funds, the Company let several
patents expired after failing to sell them and did not have the funds
to maintain them.
Certain technologies are licensed to DTC from third parties. Those
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licenses are generally perpetual, worldwide and, DTC believes, on
commercially reasonable terms.
Significant Customer
During the fiscal year ended December 31, 1998 Ingram-Micro accounted
for approximately 47% of net sales with D&H Distribution accounted for
approximately 21% of net sales. However, Ingram Micro has indicated its
intention to terminate its relationship with the Company due to low level
of sales of the Company's products.
Backlog
DTC does not believe that its backlog is a meaningful indicator of
future sales. It is common industry practice for purchasers of DTC's
products to issue purchase orders on a month to month basis rather than
contract for delivery of products over an extended period of time.
DTC's sales are primarily made pursuant to purchase orders and
contracts which are consistent with common industry practice, and may
be canceled or modified by customers to provide for delivery at a later
date with little or no penalties.
Employees
As of December 31, 1999 DTC employed 2 full time employees. One of the
employees works in the warehouse, shipping and receiving area, and the
second employee performs the necessary task of book keeping and other
office work. James T. Koo, the former CEO works as a non-paid
consultant for orderly winding down the business and selling of the
Company as well as technical support of the current products sold.
Item 2. Properties
To reduce expenses, the Company has moved from a 15,000 square foot
facility in San Jose, Ca. to a 2,200 square foot building in Sunnyvale,
California in Aug 1998. Most office furniture and non-immediately
sellable inventories were sold off. The current monthly rental,
including common area maintenance, is approximately $2,800.
Item 3. Legal Proceedings
During 1999, two former employees filed claims against the company
involving claims whereby the company did not have the money to pay the
vacation pay earned, when they were laid off. One of the two employees
also filed sexual harassment and discrimination charges against the
Company. Company has settled both cases by paying their vacation pay
and a month salary penalty in March 2000.
Insight Electronics Distribution, Danka Financial, Bay Alarm, and
Innovative Vanguard, are former vendors and a sales representative of
the Company, all have filed legal claims against the Company. Due to
financial difficulties, the Company did not have the legal resources to
defend itself. Several of these cases are pending, while two (Bay
Alarm and Innovative Vanguard) default judgments have been issued
against the Company.
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At the end of Dec. 31, 1998, there was no further legal action pending,
however, due to the fact that the Company was not able to meet the back
payment to vendors, additional suits may be filed against the Company.
However, all vendors and other debt holders are being negotiated with
at the present time.
Because the Company no longer carries director and officers insurance,
all directors and officers have resigned as of June 1999, except the
Corporate Secretary.
Item 4. Submission of Matter to a Vote of Security Holders
No matters were submitted during the year of 1999 to a vote of security
holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Common Equity
The Company's Common Stock trades on the Over The Counter Bulletin
Board ("OTCBB") under the symbol: PHOX for Photonics Corporation and
under the symbol DTEC for the pre-merger DTC Data Technology
Corporation. DTC Data Technology was legally dissolved as a Delaware
corporation in March 1999. Its stock symbol has been taken over by a
new company, Delano Technology in Feb. 2000. The Company is converting
all the DTC shares to Photonics shares in March 2000.
<TABLE>
<CAPTION>
Fiscal Yr. End 12/31/97 HIGH LOW
<S> <C> <C>
First Quarter .875 .050
Second Quarter .4375 .050
Third Quarter .4375 .027
Fourth Quarter .375 .020
Fiscal Yr. End 12/31/98
First Quarter .75 .03
Second Quarter .75 .04
Third Quarter 1.125 .04
Fourth Quarter .625 .03
Fiscal Yr. End 12/31/99
First Quarter .3125 .03
Second Quarter .25 .03
Third Quarter .25 .03
Fourth Quarter .25 .03
</TABLE>
The Company has not historically paid cash dividends. The Company does
not anticipate paying any cash dividends in the foreseeable future. As
of December 31, 1999, the Company had preferred dividends in arrears
greater than 12 months due of $443,414. These dividends in arrears are
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expected to be settled via the issuance of common stock. The Company
currently does not anticipate paying any cash dividends in the
foreseeable future.
Item 6. Management's Discussion and Analysis
The statements made concerning expected company performance and product
commercialization are forward-looking statements and as such are made
pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. The Company's 1997 10-KSB contains
detailed risk factors that may contribute to the actual results for
1998 and beyond which could materially differ from forward-looking
statements made by the Company.
The Company's revenues in fiscal 1999 decreased to $0.72 million, a 77%
decline from 1998 revenues of $3.484 million. Massive inventory write
off resulted from the Company's move to a much smaller headquarter space
during the year. This move negatively impacted the Gross Margin and
made it meaningless for detailed discussion.
Due to lack R&D in a rapidly changing market of Personal Computer, the
Company's products quickly become non-competitive or obsolete.
Approximately 34% ($0.263 million) sales during 1999 were derived from
Company's Y2K solutions for PCs. The sales for these products stopped
after January 1, 2000.
Also because lack of funds for needed inventory for sales, customer
orders have not been filled. Combined with lower overall sales, Ingram
Micro and Merisel, two largest customers of the Company representing
approximately 47% and 9% of Company's 1999 sales, have informed the
Company of their intention to terminate their relationship with the
Company. Other small customers also left the Company due to obsolete
products and slow or non-delivery.
Due to continued loss, failure to find additional funds, the Company
decided to cease its operations and laid off most of its employees in
June 1999. The Company has retained Mr. James T. Koo, the former CEO,
as a non-paid consultant to an orderly shut down and sell the business.
Effective June 23, 1999, Registrant's board of directors and officers,
except Board Secretary, resigned.
The Registrant has been following this procedure rather than filing for
Chapter 7 in order to maximize return to creditors. Should creditors
not go along with the procedure and individually attempt to seize
assets through writs of attachments or like devices the Registrant
would intend to file for Chapter 7, which Registrant believes, would
cause all creditors to receive less.
Since July, Coast Business Credit ("Coast"), the secured asset lender
has requested all customers of Company to send payments directly to
Coast, and then it advances needed operating expenses to the Company.
The Registrant had approximately $ 531,817 of Accounts Receivable,
approximately $22,760 of secured bank debt at the end of Oct. However,
in November 1999, Coast questioned the quality, and determined the
Accounts Receivable of the Company will not be able to pay back the
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bank debt, and had decided to stop advance to the Company unless a
personal guarantee was in place. Consultant James T. Koo had to
provided needed personal guarantee for the funds advanced the Company.
This loan was finally paid off on Nov. 31, 1999. However, in Feb.
2000, Coast claimed the auditing fee and the legal expenses involved in
the personal guarantee exceeded the $3,000 withholdings by $1,200 and
refused to remove the UCC claim. This is being disputed by the
Company.
In July, a potential buyer of the Company was identified if all
creditors would accept $0.15 for every dollar owed. However the
Company failed to obtain an affirmative answer from a major creditor,
CompUSA. After three months of waiting, several creditors have since
resumed legal claims against the Company.
Starting November 1999, the Company decided to seek a buyer for the
Company after Chapter 11 reorganization. In December, an offshore
potential buyer had been identified who has offered $200,000 for the
Company, included in this the legal expenses needed for reorganization,
Mr. Koo to stay on for an unspecified time and an investment of $50,000
or more.
During February 2000, days before the Company plans to file Chapter 11,
the Company was contacted by and reached an initial, non-binding
agreement to acquire RealEstate4Sale.com(RE4S). Subject to
shareholders approval, when the acquisition is completed, RE4S
shareholders will own 85% of the Company on a fully diluted basis,
including conversion of a majority of the Company's debt to stock
through a convertible debenture. Other major terms and conditions
including all the former Board Member, officers, and major shareholders
will agree to hold their stock holdings for a minimum period of six
months, and more than 85% (value of the debt) of the current debt
holders will accept a discount payment of .45 shares of Company's
common stock for each $1.00 debt. And the management of the Company will
sell off the DTC business with the proceeds benefiting Debt Holders of the
Company.
RealEstate4Sale.com started in May of 1999. It is an Internet based
company focusing on business-to-business commercial real-estate
listings and related business advertising.
James Vaughn, Chairman of RE4S, Thomas Bailey, President, CEO of RE4S,
Joseph F. Langston, VP, CFO, and director of RE4S, J. Doyle, Director
of RE4S together with James T, Koo, the former CEO of Photonics will be
recommended for forming the new Board of Directors of the Company after
the acquisition. The current executive officers of RE4S to expected to
assume the executive officer positions of the Company.
As part of this acquisition agreement, to allow the merged company
to focus on Internet and real-estate business, at the request of RE4S, Mr.
James T. Koo purchased the remaining DTC business with all associated
tangible and intangible assets and current liabilities for $75,000 in cash
paid to the Company. The sale was effective as of December 31, 1999, and
provides the Company with funds for legal and auditing fees relating to the
acquisition of RE4S. The Company is still actively soliciting other
offers.
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To avoid any failure resulting from a major creditor not accepting the
conversion of debt to common shares and at the request of RE4S, Mr.
James T. Koo agreed to indemnify the Company, conditioned upon and
following the acquisition of RE4S, for cash claims from existing
creditors of the Company above $500,000 for a period of one year.
The indemnity is limited to an amount equal to and is secured only by
Mr. Koo's holdings of stock in the Company. Such holdings total over
500,000 shares. In exchange for the indemnity, Mr. Koo will receive
approximately 193,000 shares of addition common stock of the Company as
part of the acquisition transaction.
Since this acquisition agreement is superior to the offer from the
offshore buyer, the company has stopped purchase discussions with him,
and the Chapter 11 filing; but has been actively pursuing the
acquisition of RE4S. However, no assurance can be given that the
acquisition will complete. Failure to consummate this acquisition, the
only alternative for the Company will be filing Chapter 7 for
liquidation. The Company estimates after paying off the priority
employee payroll and vacation debt, the unsecured debt holder will
receive less than two cents ($0.02) for every dollar of debt. No
assurance can be given that there will be funds generated to pay any
person. Registrant does not expect its shareholders to obtain any
monies if it is required to file liquidation.
The proposed acquisition, sale of DTC, election of directors and other
matters will be in a forth coming proxy for shareholders approval in a
shareholder's meeting.
Year 2000
The Company did not suffer any internal Year 2000 issues from its own
information system, databases, programs and communication equipment.
Additionally, it is our belief that the Company's hardware and software
are Year 2000 compliant.
The Company has not suffered any adverse effects on the Company's
operations for the year 2000 readiness of key distributors, suppliers,
customers, vendors and financial service organizations.
The Company introduced a line of new products of PC based Y2K BIOS
upgrade during 1999. The sales of this product dropped significantly
since the first of the year 2000.
There can be no assurance, however, that there will not be a delay in,
or increased costs associated issues related to Year 2000 still unknown
to the Company at this time, and potential impact and related costs are
unknown at this time.
Liquidity and Capital Resources
The Company has working capital of $.075 million and its current
liabilities exceed its current assets by $4.3 million. During the first
quarter of 1999, the Company retained Hagerty Steward, an investment
banking firm, and Donald Yu, a financial adviser to raise capital and
arrange a new loan for the Company. Both attempts failed. Liquidity
and capital resources of the Company became non-existent at December
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31, 1999. It is management's opinion that unless the above discussed
acquisition of RE4S is completed; the only alternative will be for the
Company to file either Chapter 11 for reorganization or Chapter 7
liquidation.
Other Matters
To reduce cost, the Company decided to change Company's independent
public auditor from BDO Seidman to Hein and Associates, LLC of Dallas
Texas.
On Aug. 1, 1999, to reduce operating the expenses, the Company moved to
smaller quarters at 1222 Alderwood Av., Sunnyvale, CA. 94089. The
Company is no longer able to maintain the old mainframe based MIS
system and installed a PC based MIS system for the Company's
financials. This together with change of financial personnel, and
document filing system may cause auditing difficulties at the year-end.
The Asian financial crisis impacted the Company negatively as two major
vendors of the Company went bankrupt in Asia, including Actionwell,
which supplied 90% of Company's products and provided major share of
business credit to the Company. Managing Director of Actionwell, K. C.
Yeung was a board member and officer of the Company.
Item 2.1 Financial Statements
The financial statements and supplementary data provided pursuant to
this Item are not available in final audited form as of the date hereof.
Item 8. Changes in and Disagreements with Accountants of Accounting
and Financial Disclosure
No Change
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16a of the Exchange Act
The following table sets forth certain information with respect to the
executive officers and directors of the Company. All board member and
officers of the Company resigned on June 23, 1999. Before resignation,
the Board appointed Mr. James T. Koo, the former CEO of the Company to
an orderly shut down and sell the Company.
Name Age
Position with the Company
James T. Koo 59 Managing Consultant
Mr. Koo is an unpaid consultant of the Company. He served as the
President and member of the Board of DTC since 1994. From 1992 to 1994
he was a Vice President of Qume Corporation and General Manager of DTC
Data Technology Corporation, then a wholly owned subsidiary of Qume
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Corporation. Prior to joining DTC, Mr. Koo was with Mosel-Vitelic, a
developer and manufacturer of memory integrated circuits, from 1984
until April 1992. There he held several positions including Senior
Vice President of Engineering, Operations, Marketing, Marketing and
Sales of Taiwan Operations, and other management positions.
Indemnification Agreement
The Company's Articles of Incorporation and Bylaws provide for
indemnification of the officers and directors of the Company to the
full extent permitted by law. The General Corporation Law of the State
of California permits a corporation to limit under certain
circumstances, a director's liability for monetary damages in actions
brought by or in the light of the corporation. The Company's Articles
of Incorporation also provide for the elimination of the liability of
directors for monetary damages to the full extent permitted by law.
However, as all the Board of Directors and Officers of the Company have
resigned, the Company no longer carries director and officers'
insurance. At present, there is no pending litigation or proceeding
involving a director, officer or employee of the Company as to which
indemnification is sought, nor is the Company aware of any threatened
litigation or proceeding that may result in claims for indemnification.
The Company understands that the staff of the SEC is of the opinion
that statutory, charter, and contractual provisions as those described
above have no effect on claims arising under the federal securities
laws. The Company is not aware of any material threatened or ongoing
litigation or proceeding, which may result in a claim for such
indemnification
Item 10. Executive Compensation
Executive officers having cash compensation in excess of $100,000 paid
or accrued for services rendered during the years ending December
31,1998 and December 31, 1999 are as follows:
Compensation Long Term Compensation
Name and Year Salary Bonus Stock Option All Other
Prin. Position Ending $ (3) $ Award $ (2)
Shares (1)
James T. Koo, 12/31/99 0 0 0 0
Pres,CEO,Dir. 12/31/98 124,744 0 5,000 2,000
1. In fiscal 1998 an option to purchase 5,000 shares of Photonics was
awarded to Mr. Koo and to each of the Directors who had served on
the Board for a full year. These options were granted in
appreciation of the time and effort afforded to the Company by the
Directors who serve without remuneration. As of December 31, 1999,
all outstanding options of Mr. Koo have expired.
2. Mr. Koo was a participant in the DTC 401(k) shared savings plan
during 1998. The Company, as provided for in the 'employer match'
provision of the plan, contributed $2,000.
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3. The salary compensation reflected a temporary 10% salary reduction
instituted during the year 1998. Starting Nov. 8, 1998, Mr. Koo has
been working without pay due to financial difficulties of the
Company.
4. Company Executive Officers exercised no stock options during 1999.
5. Board of Director's Report on Repricing of Options/SARs
Item 10. There was no repricing of options/SARs during the year ended Dec.
31, 1999. All outstanding options of the Company, included those granted
to all employees, officers and board directors have expired as of
December 31, 1999.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth the shares of the Company's Common Stock
beneficially owned on December 31, 1999, by (i) each person who is
known by the Company to be the beneficial owner of more than five
percent of the Common Stock, (ii) by each of the former directors,
(iii) by each of the former executive officers listed in the Summary
Compensation Table for 1999, and (iv) by all former directors and
officers as a group. The options, warrants and common and preferred
stock represented in this table reflect the 1 for 7 reverse split of
Photonics stock with became effective February 9, 1996 prior to the
finalization of the merger.
The acquisition of DTC was consummated on March 5, 1996. The agreement
as ratified by DTC Data Technology Corporation's Shareholders at their
meeting held on February 6, 1996, specifies "The Board of Directors of
DTC would file a Certificate of Dissolution in the state of Delaware
after consummation of the Acquisition. Thereafter, DTC shall continue
for a term of three years or longer". The dissolution is complete, the
conversion of DTC stock to Photonics stock is affected at a conversion
rate of 0.147853. All calculations of beneficial ownership, exercise
and conversion of all outstanding options, warrants and other right to
purchase shares of common or preferred stock uses this multiplier as
though the dissolution had in fact occurred.
Shares
Beneficially Note # Percent
Beneficial Owner Owned (1) Owned
David S. Lee,
Chairman of the Board 1,106,521 17.5%
c/o Photonics Corporation
1222 Alderwood Avenue,
Sunnyvale, CA 94089
Broadsino Computer
Development, Ltd. (2) 891,412 13.7%
K.C. Yeung
Room 1101, 1103
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and 1104 Star Center
443-451 Castle Peak Road
Kwai Chung NT, Hong Kong
Domex Technology
Corporation 779,612 11.7%
No. 2, Technology Rd. 1,
Science-Based Industrial Park
Hsinchu, Taiwan, ROC
James T. Koo, President 536,762 8.1%
c/o Photonics Corporation
1222 Alderwood Avenue,
Sunnyvale, CA 94089
Robert P. Dilworth,
Director 15,491 *
c/o Photonics Corporation
1222 Alderwood Avenue,
Sunnyvale, CA 94089
John Miao, Director 155,000 2.3 %
c/o Photonics Corporation
1222 Alderwood Avenue,
Sunnyvale, CA 94089
All Officers and Directors
as a group (5 persons) 2,710,288 40.6%
* Denotes less than 1%
1. Percentage calculations are based upon 4,336,186 shares of
Common Stock, 2,328,136 shares of Preferred stocks. All
warrants or options have expired as of December 31, 1999.
Beneficial Ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Except as
indicated by footnote, and subject to community property laws
where applicable, the persons named in the table above have sole
voting and investment power with respect to all shares of Common
and Preferred Stock and options or warrants to purchase stock.
2. Broadsino filed for bankruptcy at the end of 1999. UCO Bank Hong
Kong took over the ownership of both common and preferred shares
previously owned by Broadsino in 2000.
Percentage calculations are based upon 4,336,186 shares of
Common Stock, 2,328,136 shares of Preferred stocks. All
warrants or options have expired as of December 31, 1999.
Item 12. Certain Relationships and Related Transactions
A former member of the Board of Directors and Vice President of DTC
Hong Kong (See Item 11, note 6) is also President of the Company's
prime subcontractor, ActionMedia, for the production of the Company's
storage controllers, which meets approximately 90% of the Company's
product requirements. ActionMedia filed bankruptcy in 1999.
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The Company entered into an agreement with CMC Industries ("CMCI"), a
company owned by DTC's largest shareholder and Chairman of the Board,
wherein CMCI assumed and paid specific vendor invoices of the related
party who is the Company's prime sub-contractor. This note bore
interest at 12% per annum, balance due upon demand. At December 31,
1996 the Company owed a total in principle and interest of $431,894.
In conjunction with the private placement of the Company's Series A
Convertible Preferred Stock, this debt was converted to said stock at
$1.00 per share.
Item 13. Exhibits and Reports on Form 8-K
EXHIBT II
Computation of Earning per Common Share
December 31, December 31,
1999 1998
Weighted Average
Common Shares
Outstanding 4,336,186 4,485,595
Net <loss> income <$1,416,000> $<2,706,000>
Basic <loss> earnings
per common share $ <.32> $ <0.60>
Exhibit 2.1 Plan of Acquisition, Reorganization, etc.
The Company transferred all assets of its operating division,
DTC data technologies, to Sunnyvale Technologies Corporation and
sold 90% of Sunnyvale Technologies Corporation. See Management
Discussion and Analysis above.
Exhibit 27.1 Financial Data Schedule
The Company filed a Form 8-K on June 25, 1999 reporting the Company's
decision of cease operation and sale of the Company.
The Company filed a Form 80K on April 12, 2000 reporting a change in
Auditors, Sale of Sunnyvale Technologies and change of location for
The corporate headquarters.
SIGNATURE
Pursuant to the requirements of Section 3 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Photonics Corporation
/s/ Koo
__________________________________
James T. Koo
Managing Consultant
Dated: April 14, 2000
Sunnyvale, California
-16-
<PAGE>
EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
for
DTC Data Technology Assets and Certain Liabilities
This agreement is made effective December 31, 1999, by and between James
Koo ("Buyer"), and Photonics Corporation,1222 Alderwood Ave., Sunnyvale, CA
94089, a California corporation ("Seller").
Whereas, Seller is operating under an plan of liquidation for the benefit
of its debt holders and shareholders: and
Whereas, DTC Data Technology ("DTC") is an operating division of Seller,
but is not a core asset for reorganization; and
Whereas, Seller has received two offers to purchase the inventory of
DTC, consisting of two lots, for $ 14,500 and $ 5,100 , respectively, both
offers dated July 29, 1999, and attached hereto as Exhibit "A"; and
Whereas the line of credit established by Seller against the accounts
receivable 's of DTC has been reduced to the loan balance of $22,760 against
an Accounts Receivable of $531, 816 at end of October 1999 after an auditing
by the bank, without the guarantee of Buyer but conditioned upon an advance
of $ 15,000 by Buyer as further described in Exhibit "B" attached; and
Whereas, Seller has received one purchase offer for the name, trademark
and other intangible assets of DTC in an amount equal to $ 50,000 which offer
has expired under its own terms , as further described in Exhibit "C" attached;
and
Whereas Buyer is a major shareholder of Seller, the former CEO, and has
been a member of the Board of Directors and now serves in the capacity of
Liquidation Trustee; and
Whereas Seller has entered into an acquisition/merger agreement with
RealEsate4Sale.com (RE4S) as of February 2, 2000; And
Whereas, after proper due diligence, the Board of Directors of
RealEstate4Sale.com has determined that the DTC assets are not core assets for
the purpose of the merger and future operations.
Now therefore, in consideration of the mutual promises and conditions
contained in this agreement and for valuable consideration, the receipt and
adequacy of which are hereby acknowledged and confessed, the parties hereto
agree as follows:
1.0 Incorporation of DTC. Seller agrees to incorporate its operating
division, DTC as follows:
(a) Incorporate the business owned by Seller, being conducted under the
business name DTC, located at 1222 Alderwood Av. Sunnyvale,
California into a new entity ("the Business");
(b) The Business shall include as its assets and liabilities the
following:
(i) all of the stock in trade, inventory, and merchandise of DTC as
described in Exhibit "D" attached to this agreement;
(ii) all of the fixtures, equipment, and other tangible assets of DTC as
shown on attached Exhibit "E";
(iii) any leasehold interest owned by Seller under the lease for the
premises where DTC is located;
(iv) all the accounts receivable, trade, business name, trademark,
patents, goodwill, and other tangible or intangible assets of DTC; and
(v) all business operating liabilities incurred by DTC after December
31, 1999 save and except for any liabilities relating to any claim, lawsuit,
judgment or other civil action that was commenced or relates to the time period
prior to December 31, 1999. Such liabilities are listed in Exhibit "F" attached
hereto.
(vi) All shares owned by Seller of DTC Hong Kong, a corporation
incorporated in the special district of Hong Kong, China.
1.1 Stock Dividend. Following the incorporation of the Business, Seller
shall declare a stock dividend to its shareholders, which shall be comprised of
ten percent (10%) of the shares of the Business. Seller shall be responsible
for the issuance of the appropriate shares to its shareholders and shall use
the date of the incorporation of the Business as the "record date" for the
determination of the recipients of the stock dividend.
2.0 Purchase Price. The total purchase price ("Purchase Price") to be
paid by Buyer to Seller for ninety percent (90%) of the shares of the
Business shall be $ 75,000 cash.
3.0 Approval by the Shareholders of Seller. The obligations of both the
Buyer and Seller are subject to the ratification and approval of the closing of
this Agreement by the shareholders and board of directors of Seller. Such
approval shall be obtained by the calling of a special meeting of the
shareholders and a special meeting of the board of directors of Seller. The
ratification and approval of this Agreement shall be listed as part of the
agenda in the "Notice and Call for a Special Meeting of the Shareholder of
Photonics Corporation". At the special meeting of the shareholders, this
Agreement shall be read into the minutes of the meeting and its ratification
and approval shall be voted upon by the shareholders. The procedure for such
ratification and approval of the closing of this agreement shall be in
accordance with the Articles and By-laws of Photonics Corporation. The
shareholders shall elect a board of directors that shall then approve this
Agreement.
4.0 Closing. The closing of the sale and purchase of the Business ("the
Closing") shall take place at the law firm of Cecil Shelton Mathis, PC, on or
before March 31, 2000, or at such other place and date as the parties may agree
to in writing.
At the closing the Seller shall:
(a) Transfer ninety percent (90%) of the shares of the Business to Buyer;
(b) execute the Assignment of Assumed Name Certificate attached as Exhibit
"H" to this agreement;
(c) execute any other documents necessary to finalize this Agreement.
At the Closing the Buyer shall:
(a) pay the Purchase Price to Seller; and
(b) execute any other documents necessary to finalize this Agreement.
The liabilities and obligations incurred by Seller in connection with the
Business prior to December 31, 2000 are assumed by Seller, except the lease
obligation of the office located at 1222 Alderwood Av. Sunnyvale, Ca.
Liabilities and obligations relating to DTC or the Business incurred after
December 31, 1999 will be assumed by the Buyer, except those derived from
liabilities and obligations incurred before December 31, 1999.
5.0 Conditional Agreement. In the event that the shareholders and the
board of directors of the Seller fail to ratify and approve this agreement,
this agreement shall be null and void and the Buyer will have a right of first
refusal for any sale of the assets of Photonics Corp. Seller shall refund the
$75,000, less any costs paid relating to the pending sale, immediately upon any
such failure to ratify before June 30, 2000 and within three business days
thereafter, Buyer shall transfer the 90% of the shares of the Business to
Seller. Pending shareholder and board of director approval of Seller, Buyer
shall continue to operate the Business as he in his sole discretion deems to be
in the shareholders best interests, provided, Buyer shall not incur any debt
in the name of the Business or distribute any assets of the Business.
6.0 Choice of Law. This Agreement shall be governed by the laws of the
State of California.
AGREED the first date stated above.
SELLER: BUYER:
Photonics Corporation James T. Koo
/s/ Steve Wurzburg /s/ James T. Koo
By: Steve Wurzburg, Secretary
/s/ James T. Koo
By: James T. Koo, Consultant & Former CEO
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND THE UNAUDITED
CONNSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1999 OF PHOTONICS CORPORATION, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 75 42
<SECURITIES> 8 0
<RECEIVABLES> 0 313
<ALLOWANCES> 0 0
<INVENTORY> 0 350
<CURRENT-ASSETS> 75 816
<PP&E> 0 21
<DEPRECIATION> 00 14
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<CURRENT-LIABILITIES> 000 4018
<BONDS> 0 0
0 0
2328 2,328
<COMMON> 44085 44,085
<OTHER-SE> 0 (3291)
<TOTAL-LIABILITY-AND-EQUITY> 75 852
<SALES> 724 3,484
<TOTAL-REVENUES> 724 3,484
<CGS> 230 2,952
<TOTAL-COSTS> 918 3,140
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 540 389
<INCOME-PRETAX> (964) ( 2,705)
<INCOME-TAX> 0 1
<INCOME-CONTINUING> (964) ( 2,705)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (452) 0
<CHANGES> 0 0
<NET-INCOME> (1,416) ( 2,708)
<EPS-BASIC> (.32) ( .62)
<EPS-DILUTED> (.32) ( .62)
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