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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[ ] Annual report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the calendar year ended December 31, 1996
[ ] Transition report under Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the transition period from _____________ to ______________
Commission file number 0-26070
Moonlight International Corp..
(Name of Small Business Issuer in Its Charter)
Delaware 13-3859185
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
c/o M. Walter Levine., 1 River Road, Cos Cob, Connecticut 06807
- --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
203-869-8033
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock par value $.0001 per share
(Title of Class)
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 past 90 days. Yes [xx] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
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State issuer's revenues for its most recent calendar year - $-0-.
The aggregate market value for the 2,743,200 shares of voting stock
(all of one class of $.0001 par value Common Stock) held by non-affiliates * of
Registrant as of June 11, 1997 is $1,928,812.50 based upon an average of the bid
($.6875) and asked ($.71875) prices for such stock on the date heretofore
indicated. See Item 5 (a) which indicates the limited, if any, trading activity
in the Registrant's securities for the periods indicated. By virtue hereof, it
is difficult if not impossible to accurately arrive at a completely realistic
"aggregate market value" of Registrant shares held by non-affiliates as called
for herein especially in view of the fact that the existence of limited or
sporadic quotations should not of itself be deemed to constitute an "established
public trading market". The above statements regarding "aggregate market value"
and "established public trading market" should be taken into careful
consideration when considering the information contained herein regarding the
indicated "aggregate market value" of shares of voting stock held by
non-affiliates.
* Affiliates for the purpose of this item refers to the Registrant's
officers and directors and/or any persons or firms (excluding those
brokerage firms and/or clearing houses and/or depository companies
holding Registrant's securities as record holders only for their
respective clienteles' beneficial interest) owning 5% or more of the
Registrant's Common Stock, both of record and beneficially - all as of
June 11, 1997.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No Not
Applicable
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 10,563,200 shares as of
June 11, 1997.
Transitional Small Business Disclosure Format: Yes [ ] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.)into which the document is incorporated: (1) any annual report to
security-holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act").
None
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TABLE OF CONTENTS
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Page
Number
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PART I
Item 1. Description of Business 4
Item 2. Description of Property 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
PART II
Item 5. Market For Common Equity and Related
Stockholder Matters 12
Item 6. Plan of Operation 13
Item 7. Financial Statements 16
F1 - F9
Item 8. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure 17
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance With
Section 16(a) of the Exchange Act 17
Item 10. Executive Compensation 19
Item 11. Security Ownership of Certain Beneficial
Owners and Management 20
Item 12. Certain Relationships and Related
Transactions 21
Item 13. Exhibits, List and Reports on Form 8-K 21
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND SUMMARY
Moonlight International Corp. (formerly known as Compucolor Network
Ltd. until November 1995 and hereinafter referred to as the "Company" unless the
context otherwise requires) was incorporated under the laws of the State of
Delaware on July 15, 1987 under the name Wyler Acquisition Corp. From inception
to June 30, 1994, the Company did not operate any business and its principal
activity was seeking a business to acquire and operate. Effective June 30, 1994,
the Company acquired all of the shares of Compucolor Network Ltd., a Delaware
corporation which, through its then operating subsidiaries, engaged in a color
"print-on-demand" commercial offset printing business and related activities.
On May 12,1995 the Company filed a Form 10-SB Registration Statement
with the Securities & Exchange Commission ("SEC") under the Securities Exchange
Act of 1934 (the "Act") in order to register its securities under Section 12(g)
of the Act. Upon such Registration Statement having been declared effective in
July 1995 the Company became subject to the reporting requirements of the Act.
On or about October 25, 1995 certain then officers, directors and
principal stockholders of the Company (then known as Compucolor Network Ltd.
("CNL")) entered into an "Asset and Stock Purchase Agreement" and related
documents and agreements which resulted in changes in (a) officers and directors
of the Company, (b) control of the Company and (c) Company business purposes. A
summary of such Agreement appeared in the Company's Form 8-K with date of report
of October 25, 1995 and a copy of such Agreement was annexed thereto as Exhibit
A.
In accordance with the terms of such Agreement all then five
officers and/or directors of the Company resigned effective October 25, 1995 and
were replaced with the Company's current officers and directors.
Subsequent to completion of aforesaid Asset and Stock Purchase
Agreement, the Company changed its business purposes entirely from the aforesaid
commercial offset printing business to commencing to engage in certain
technology regarding lighting of primarily outdoor facilities utilizing
inflatable balloons and related paraphernalia in accordance with certain License
Agreements, patents and/or trademarks as more fully set forth in certain License
and Consulting Agreements entered into (in November 1995) with certain Isle of
Man corporations, as follows:
(a) License Agreement with Edgedale Limited ("Edgedale")
for the exclusive field- of-use worldwide rights to utilize certain proprietary
information including patent rights in exchange for the issuance by the Company
to Edgedale of 2,100,000 shares of Company common stock (see also Item 11). The
License Agreement also requires the Company to exclusively contract with
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Edgedale for the manufacturing of the final "balloon" product but solely with
respect to any sales that the Company may contract for in the "European" market
place with Edgedale agreeing that its charges to the Company for such
manufacturing will consist of Edgedale's costs plus 10% for each such "balloon"
product manufactured for the aforesaid "European" market (defined, for purposes
of such License Agreement, to consist of the entire European continent exclusive
of the United Kingdom). Aside from the aforesaid "European" market, the Company
retains the right, without limitation, to contract with whomever it desires
regarding product manufacture.
(b) License Agreement with Cootows Consultants Limited
("Cootows") for the exclusive field-of-use worldwide rights to utilize certain
proprietary information including patent rights in exchange for (i) the issuance
by the Company to Cootows of 3,000,000 shares of Company common stock (see also
Item 11) and (ii) the payment by the Company of a one (1) time $3,000,000
license fee with interest at the rate of 5% per annum. The full principal sum of
$3,000,000 has been paid to such licensor by the Company.
(c) The Company has also entered into a Consulting
Agreement with Cootows Consultants Limited ("Cootows") pursuant to which Cootows
has agreed to act as the Company's consultant for a period of 10 years during
which period of time Cootows shall consult with and advise the Company in
connection with (i) providing certain technology ability and know how with
respect to development, manufacturing, marketing and any advances in the
technology referred to in the License Agreement between the Company and Cootows
and (ii) ascertaining and evaluating any and all matters related to the above.
In exchange, therefore, the Company has agreed to pay Cootows the sum of
$200,000 per annum throughout the term of the Agreement. The Company is current
with respect to such required payments.
Neither the Company's current officers or directors nor anyone
affiliated or associated with such individuals has any record or beneficial
interest in or control over any of the securities of either Edgedale or Cootows
or any affiliation with either of said corporations. Such License Agreements
were negotiated on an arms-length basis with neither of the two Licensors having
any association or affiliation with the Company prior to entering into the
aforesaid Agreements.
Each of the Agreements summarized briefly above contain various
additional provisions as well as certain exhibits thereto. For further and more
specific information with respect to the mutual rights and obligations of the
Company and those corporations with whom it has entered into License and/or
Consulting Agreement(s), reference is herewith made to aforesaid Form 8-K with
date of report of October 25, 1995 and Exhibits B through D inclusive thereto.
All references and summaries to the terms and conditions of such Agreements are
qualified in their entirety by reference to such documents.
Further, and as a direct result of the above referenced transactions
and the entry by the Company into the aforesaid License Agreements in November
1995, the Company acquired certain exclusive field-of-use worldwide rights to
utilize certain proprietary information including patent rights and
technological know-how relating to lighting of primarily outdoor facilities
utilizing
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inflatable balloons and related paraphernalia hereinafter discussed and in that
respect has developed and currently is commercializing a line of unique
helium-filled lighting balloons providing non- dazzling luminosity with an
extremely low energy consumption (all as more specifically described directly
below).
MOONLIGHT BALLOON
The Moonlight Balloon is a helium-filled balloon which floats above
the ground and is thereby able to illuminate an area of 5,000 to 215,000 square
feet dependent upon particular unit utilized. The Balloon provides high
luminosity with low energy consumption, is mobile, and provides non- dazzling
light and is an innovative product protected by certain patents.
With the Moonlight Balloon areas without electric power supply can
be illuminated. Its main benefits, compared to the conventional illuminates, are
quick employability, mobility of application, and the aforesaid non-dazzling
light thereby essentially increasing the safety of nocturnal operations (as well
as being available for entertainment type purposes (see License Agreement with
Golf Lite, Inc.).
Management believes that the Moonlight Balloon is fit for a wide
variety of applications and intends to focus on the following potential (amongst
other) customer categories: (a) border and other police activities as well as
military forces activities, (b) construction including railway industry, (c)
fire department, rescue services and disaster relief services, (d) navigation
and/or aviation activities and (e) sports and major outdoor events (such as
concerts and trade fairs).
The foregoing is intended only as a brief outline of potential
manners in which the Moonlight Balloon may be utilized.
The essential components of the Moonlight Balloon/mobile light
system are: a balloon (fluorescent), special lamp (halogen or hark), control
unit, helium bottle, and generator for mobile application.
With all Moonlight Balloon types, operations start and work as
follows:
1. At first the fluorescent tube is tested via the control
unit so that a possible exchange can be effected before
the Balloon is filled with helium;
2. The Balloon is filled with helium via the control unit.
When the necessary pressure is attained, the control
unit automatically interrupts the filling process and
3. The Balloon is placed in the right position above ground
(at 10 to 125 feet above ground according to Balloon
type). Thereafter, the lamp inside the envelope is
switched on and operated by the generator or via
conventional current.
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The Company currently offers approximately four different types of
Moonlight Balloons; each type varying as a result of (a) Balloon size, (b) bulb
wattage, (c) area of illumination, (d) number of foot placement above ground,
and/or (e) length of time of service between necessary helium filling (with
helium/filling time different dependent upon size of Balloon). For instance, the
Company's type A portable unit with generator for field operation has the
following approximate specifications as compared to its type C unit for
professional applications.
<TABLE>
<CAPTION>
Description Type A Type C
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Balloon: 4 feet 7 feet
Halogen lamp: 300 watt 1200 watt
Service height: Hand-guided up to 10 feet 50 feet
Set up time: 1 minute 5 minutes
Illuminated area: 4,900 sq. ft. 215,000 sq. ft.
Max. time of service: 8 hours 72 hours
</TABLE>
The type A portable unit weighs approximately 44 pounds and,
accordingly, is quite appropriate for repositioning in untracked or unlit
terrain. The Company's type B portable unit is substantially identical to above
indicated type A excepting for its packaging and its being trolley mounted,
thereby allowing for application on ships, rescue vehicles, aircraft and other
mobile units. It is also excellently suited for marking of accident sites on
roads quickly and efficiently and has been demonstrated to both police and
various rescue services for such applications as road-blocks and frontier border
guarding. The type C unit described above is intended to be sold or rented to
companies or governmental institutions to be utilized for activities which can
be adapted to night work activities in such areas as surface and civil
engineering, road construction and maintenance, and tracklaying/line
construction.
The Company also has a type D unit for promotional and rental
purposes with a Balloon size of approximately 13 to 16 feet with a service
height of approximately 114 feet and dependent upon type of hark lamp utilized
(i.e. 2,500, 6,000 or 18,000 watt) can illuminate different sized areas (36,000,
120,000 and 420,000 square yards respectively). The type D unit is intended to
offer new possibilities for visual promotion at night in an effort to sell
advertising space throughout evening events (thereby intending to initiate and
establish a new type of corporate promotion events, primarily for the consumer
goods industry). The Company also intends to rent its Moonlight Balloon as a
mobile luminous advertising source permitting the advertiser to call attention
to itself and/or its products through utilization of the Balloon at such
campaigns as sports events and outdoor concerts.
Balloon quality management is subject to ISO 9001, while operation
of the fluorescent balloon corresponds to safety standard JP 97 and the control
unit corresponds to safety standard JP 65.
Helium utilized is non-explosive and non-toxic.
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LICENSE AGREEMENT WITH GOLF LITE, INC.
In its on-going efforts to commercialize the line of unique
helium-filled balloons providing (as heretofore indicated) non-dazzling
luminosity with an extremely low energy consumption, the Company entered into a
License agreement (in April 1996) with Golf Lite, Inc. ("Golf"), whereby Golf
has obtained an exclusive field-of-use license to utilize certain proprietary
information and technology, including patents rights throughout the term of such
Agreement with such use being expressly limited to exclusive worldwide license
to sell the Company helium balloons/light source products to golf courses only.
In exchange therefore the Company is to receive the sum of $1,000,000 as a
non-refundable one-time licensing fee and an initial $100,000 payment was
received by the Company in September of 1996 with the balance of $900,000 being
due and payable, pursuant to promissory note (bearing interest at the rate of 5%
per annum) on or before April 30, 1998. Amongst other related matters, the
License Agreement provides for the Company to receive an on-going 15% royalty
fee on gross revenues of the Company balloon sales made by Golf throughout the
term of the Agreement and certain additional payments based upon gross income
derived from any and all revenues received as a result of installation of
Company products by Golf including any and all publicity, endorsement and/or
contracts which may generate revenues as a result of such installation.
The License is perpetual or until the propriety information (defined
to include patented and patentable inventions, technical know-how and rights,
including trademark rights) becomes public and there are no further outstanding
patent rights. Under the License, Golf has the right to sublicense the rights
granted to it by the Company. Failure on the part of Golf to make the required
payments on a timely basis will result in loss of exclusivity of the License
unless cured within 30 days after receiving notice of failure.
Golf may be considered to be an affiliate of the Company by virtue
of the fact that the Company's President (Werner Heim) is President, a director
and a principal stockholder of Golf; Golf having been incorporated in the State
of New Jersey in February of 1996.
Aside from the aforementioned one-time licensing fee all other
payments as may be made to the Company by Golf are dependent upon Golf's ability
to commercially exploit the License granted to it within its parameters (i.e.,
for utilization by golf courses). While golf driving ranges and a limited number
of golf courses are lighted for nighttime activity, the Company's (and
accordingly Golf's) concept of utilizing large helium filled balloons to light
entire golf courses at night is considered by management to be unprecedented.
Accordingly, there can be no assurance that night time golf will be popular or
successful nor that (a) a sufficient number of golfers will choose to play golf
at night or (b) a sufficient number of golf courses will choose to utilize the
Company's balloons. Absent Golf's ability to commercially exploit the License,
fees to the Company (exclusive of the aforementioned licensing fee) will be
limited.
The foregoing is intended as a brief summary of the License
Agreement and is qualified in its entirety by reference to such Agreement and
all such underlying documents referred to therein.
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EXCLUSIVE DISTRIBUTION AGREEMENT WITH CARBA HOLDING AG ("CARBA").
Effective as of July 1, 1996 the Company entered into an exclusive
five year (with option for extension) distributorship agreement with Carba, a
leading German carbon gas and helium producer to market proprietary
helium-filled lighting balloons and operating accessories developed by the
Company. Under the terms of the agreement, Carba is to provide customers with
special helium-filled cylinders and subsequently assure their proper
replacement, while the Company will be responsible for the manufacture and
assembly of all other system components: the balloons themselves, spring
regulated telescopic supports, halogen or hark lamps and hand-held control
units.
Carba, a 30% owned subsidiary of Air Liquid, one of the largest
French industrial conglomerates and one of the five largest helium producers
worldwide, provides to the Company a highly beneficial link with helium
production allowing the Company to offer its customers superior product
maintenance and enabling it to add bottle resellers as an integral part of its
distribution network.
Pursuant to the terms of the agreement, Carba is to purchase the
products from the Company at a pre-determined and agreed upon price and
thereafter resell them on its own account, setting the retail price levels at
its own discretion. The exclusivity terms - presuming minimum sales volume of
600 units in the first 18 months with at least 20% annual growth thereafter -
cover the territories of Switzerland and Liechtenstein (with possible extension
to other regions in the future) and include the full responsibility of Carba for
promotional and advertising activity in these territories, in which Carba is
committed to allocate not less than 1.5% of revenues generated from the sale of
this minimal yearly quantity. Carba is also obligated to take upon itself all
duties connected with the guarantee for defective products and organize for this
purpose a network of after-sale service in the above mentioned territories.
The Company is required to provide Carba with some promotional
material, demonstration units and may offer certain discounts (of approximately
2%) in consideration for the after-sale servicing of its products. The Company
will also assume the costs related to inspections and will undertake such
measures as are necessary to eventually obtain any ISO certificate(s). The
Company is entitled to receive a 5% royalty for all helium sold by Carba to the
balloon's purchasers. Assuming substantial balloons purchased (of which there
can be no assurance), a high volume of helium replacement orders would in all
probability occur thereby creating royalties so as to generate an additional
revenue source for the Company.
Moonlight balloons (as heretofore described) are capable of floating
above ground by proper lifting power, and provide a non-dazzling luminosity with
a low energy consumption. They have a quick employability (1-5 minutes) and
compact packaging. Having these characteristics and a number of what management
considers to be unique features - resulting from an extensive 4-year R&D program
with substantial monetary expenditures - these balloons have varied potential
for utilization worldwide.
As an exclusive distributor, Carba is expected to market these
products in Switzerland and Liechtenstein to a vast array of customers,
including government or quasi-government institutions,
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private companies and international organizations which carry out large or small
scale night operations, such as search and rescue, disaster relief, road and
industrial construction, police surveillance and accident site lighting and
related activities. At the same time, the exclusivity granted by the Company to
Carba does not cover another major area of the balloon's application, namely its
use as a promotional tool. Under the terms of the agreement, the Company retains
all the rights to sell or lease its products, on its own or through third party
agents, to any customer wishing to use them for publicity, advertising, and
sales promotions.
The Company has filed applications to patent its products in various
countries and has registered the trademark "Moonlight" in a number of nations.
Under the terms of the agreement with Carba, all Company rights on the invention
patent, on filing of patents and on the know-how pertaining to its products
remain its own exclusive property, and Carba is restricted from filing competing
patents and/or registering similar trademarks.
The foregoing references to the aforesaid Distribution Agreement are
intended as a brief summary of such Agreement and the intentions expressed by
the parties thereto and is qualified in its entirety by reference to the
underlying documents referred to herein.
There can be no assurance that each or all of the aims and goals
indicated directly above can be achieved within the foreseeable future, if ever,
or that the necessary expenditures inherent in attempting to achieve such goals
will result in sufficient revenues so as to justify the time and effort involved
as well as the expenditure incurred.
COMPETITION
Management of the Company is not aware of any other company within
or without the United States which is currently offering the form of state of
art technology offered by the Company with respect to the patented technology
utilizing helium filled balloons discussed herein. The Company believes that the
licenses received by it in November 1995 (as heretofore discussed) and the
patents related thereto - all for which the Company holds exclusive worldwide
field-of-use license rights provides the Company with a competitive advantage
over other companies that might wish to provide similar services.
Notwithstanding the aforesaid licenses, the Company believes that, especially if
successful, it will face substantial and significant competition from many
companies, it being anticipated that many of such companies may have greater
financial and other resources than the Company and may be in a position to
develop competitive technologies (notwithstanding the aforesaid patent rights),
i.e. while the aforesaid patents afford the Company a great deal of protection
against competitors copying or duplicating its technology, such potential
competitors may nevertheless be in a position to develop other technology and/or
methods placing them in a position to offer products that may be competitive
with those offered by the Company. Accordingly, while the Company intends to
continue to rely upon the protection afforded to it pursuant to its license
agreements (and underlying patents) so as to maintain a competitive advantage,
it is expected that, in the future (and as competition develops and becomes more
intense) it will have to rely upon its particular expertise and experience as
well as the effectiveness of the Moonlight Balloon in providing
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a high quality of lighting and will have to similarly rely upon its efforts to
conduct an effective marketing and promotion program for Company products.
LETTER OF INTENT WITH GMR GROUP AG ("GMR")
The Company entered into a letter of intent with GMR, a major South
African corporation and the exclusive agent for such companies as General
Instruments, Mobile, Westinghouse, Singer, Asea-Brown Boveri.
After ongoing discussions and negotiations and subsequent
demonstrations of the Company's mobile helium-filled lighting balloons and the
subsequent conclusion of a marketing study, GMR indicated its intent to become
the Company's exclusive agent for the region of South Africa and Zambia.
The current status regarding such Agreement is as follows:
While no formal contract has been entered into as of June 10, 1997,
the Company has shipped and delivered certain demonstration equipment to GMR for
the latter's follow up review and expects to receive GMR's final business plan
on or about July 15, 1997, at which time it similarly expects to receive GMR's
business proposal; the latter to be formalized into a written contract (although
no assurance can be given that such will be the case).
MAJOR PRODUCT DEMONSTRATIONS.
The Company has significantly expanded its demonstration program so
as to further introduce its mobile helium-filled lighting balloons to potential
clientele and the general population. In that regard demonstrations of Company
lighting systems took place in Kitzbuhl, Austria during the world famous
downhill ski racing event in January 1997 as well as the international horse
jumping event in Koessen/Kitzbuhl - both so as to facilitate the lighting of
such events during the evening hours. Further demonstrations were held so as to
light up night skiing on the Suvretta hill in St. Moritz in February of 1997 and
to demonstrate the additional potential safety measures of the Company's system.
The Company intends to continuously expand its demonstration program so as to
include demonstrations for (amongst others) hotels, ski schools and emergency
services.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's U.S. offices are located at c/o M. Walter Levine., 1
River Road, Cos Cob, Connecticut 06807 and its telephone number is 203-869-8033.
These premises are owned by the Company's current CFO, Secretary-Treasurer (M.
Walter Levine) and are being provided to the Company, at the present time, free
of any charge whatsoever. Additionally the Company's wholly owned Swiss
subsidiary, Moonlight SA, maintains an office overseas at Residenza 51, 6528
Camorino, Switzerland and its telephone number is 011 41 91 857 8401.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not presently a part to any material litigation nor,
to the knowledge of management, is any material litigation threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not held an annual meeting of stockholders during
calendar years 1994- 1996 inclusive. While it currently intends to hold an
annual meeting of stockholders for its calendar year ended December 31, 1996 it
has not, as yet, formalized any specific plans as to any proposed date or site
for such meeting.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Marketing Information. The following table sets forth, for the
periods indicated, the range of high and low bid prices on the dates indicated
for the Company's securities indicated below for each full quarterly period
within the two most recent calendar years (if applicable) and any subsequent
interim period for which financial statements are included and/or required to be
included.
<TABLE>
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Calendar Year Ended December 31, 1995 Quarterly Common Stock Price
By Quarter Ranges (1)
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Quarter Date High Low
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1st March 31, 1995 $ (2) $ (2)
2nd June 30, 1995 $5.00 $3.50
3rd September 31, 1995 $4.00 $3.00
4th December 31, 1995 $4.00 $2.00
</TABLE>
<TABLE>
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Calendar Year Ended December 31, 1996 Quarterly Common Stock Price
By Quarter Ranges (1)
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Quarter Date High Low
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1st March 31, 1996 $4.625 $1.875
2nd June 30, 1996 $ 5.25 $4.625
3rd September 31, 1996 $ 5.50 $ 3.50
4th December 31, 1996 $ 4.00 $ 1.75
</TABLE>
<TABLE>
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Calendar Year Ended December 31, 1997 Quarterly Common Stock Price
By Quarter Ranges (1)
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Quarter Date High Low
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1st March 31, 1997 $ 3.00 $1.875
</TABLE>
(1) The existence of limited or sporadic quotations should not of itself
be deemed to constitute an "established public trading market". To
the extent that limited trading in the Company's Common Stock has
taken place, such transactions have been limited to the
over-the-counter market (except as otherwise may be indicated
hereinafter). All
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prices indicated herein are as reported to the Company by
broker-dealer(s) making a market in its securities in the National
Quotation Data Service ("pink sheets") and/or in the Electronic
Over-the-Counter Bulletin Board (the latter under the symbol LYTE).
The aforesaid securities were not traded or quoted on any automated
quotation system (other than as may be indicated herein). The
over-the-counter market quotes indicated above reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.
(2) The Company has been unable to obtain any reliable stock price
quotes for the period(s) indicated. The first printed quotation it
has been able to receive has been as of April 7, 1995, shortly after
the submission of a Rule 15c2-11 application to the NASD under the
Securities Exchange Act of 1934 was cleared (on April 5, 1996) on
the Electronic Over-the-Counter Bulletin Board under the Company's
then symbol CPNW. Since such date trading has continued on a
sporadic basis with limited, if any, traded volume. Reported volume
during the most recent quarter ended March 31, 1997 exceeded 30,000
Shares on only 16 occasions, with no volume being reported on 23
dates during such quarter.
(b) Holders. As of June 11, 1997 the approximate number of
stockholders of the Company's Common Stock amounted to 64 persons and/or firms
(inclusive of those brokerage firms and/or clearing houses and/or depository
companies holding the Company's securities for their respective clientele - each
such brokerage house, clearing house and/or depository firm being considered as
one record holder). The exact number of beneficial owners of the Company's
securities is not known but would necessarily exceed the number of record owners
indicated above in that brokerage firms and/or clearing house and/or depository
companies are normally record owners for presumably any number of unidentified
beneficial owners.
(c) Dividends. The payment by the Company of dividends, if any, in
the future rests within the discretion of its Board of Directors and will
depend, among other things, upon the Company's earnings, its capital
requirements and its financial condition, as well as other relevant factors. The
Company has not paid or declared any dividends upon its Common Stock since its
inception and, by reason of its present financial status and its contemplated
financial requirements , does not contemplate or anticipate paying any dividends
upon its Common Stock in the foreseeable future.
ITEM 6. PLAN OF OPERATION
Background
As reported in the Company's Form 10-KSB for calendar year ended
December 31, 1995, the Company discontinued all operations as related to its
then commercial offset printing business in late October 1995 and all then
officers and directors resigned.
The Company's Plan of Operation for calendar year 1997 continues to
revolve around those activities involving commercial applications of rights
granted to it in accordance with license agreements entered into in November
1995 involving the "Moonlight Balloon" as indicated in Item 1 hereof.
This Form 10-KSB contains to the extent practicable, substantial
information regarding current activities involving (a) such license agreements,
terms and conditions thereof and mutual rights and obligations thereunder, (b)
the Moonlight Balloon, its qualities, applications and
13
<PAGE> 14
summarized specifications and (c) certain agreements entered into during 1996
regarding ongoing efforts to commercialize the Moonlight Balloon, its technology
and attributes through (i) an April 1996 license agreement with Golf Lite, Inc.
- - limited to golf course applications and (ii) a July 1996 exclusive five year
distributorship agreement (for Switzerland and Liechtenstein) with Carba Holding
AG, a major German carbon gas and helium producer.
Entry into and payment by the Company of consideration for the two
November 1995 License Agreements upon which the Company's business operations
are currently based, was facilitated in great part, by the fact that the Company
is a "public" company whose shares of common stock are listed on the Electronic
Over-the-Counter Bulletin Board thereby creating a "value" for the Company
securities which might not otherwise exist. In this manner the Company was able
to issue an aggregate of 5,100,000 shares of its common stock with an assigned
valuation of $2,550,000 thereby reducing its necessary cash consideration outlay
to $3,000,000 (which $3,000,000 was paid in full during 1996).
Consolidated Balance Sheet
Total Assets of the Company at year ended December 31, 1996 were
$5,614,807 with current assets amounting to $348,690 and with a substantial
portion of such total assets being attributable to certain License agreements
valued at $5,118,333.
Total Current Liabilities of the Company at year ended December 31,
1996 were $869,020.
At December 31, 1996 there was one long term liability of a note
payable of $222,222. See note 7 to audited consolidated financial statements
which indicates that such loan was paid in full in February of 1997 through the
Company's issuance of 176,000 shares of its common stock.
Working capital at December 31, 1996 was $(520,330).
The functional currency of the Company's wholly owned Swiss
subsidiary(ies)) is Swiss Francs. Gains and losses resulting from foreign
currency transactions which are included in operations have been insignificant
for all periods reported. However, the effects of exchange rate fluctuations on
translating foreign currency assets and liabilities and results of operations
from functional currency to Unites States dollars has been significant. The
cumulative foreign currency translation adjustment (loss) to stockholders'
equity at December 31, 1996 was $(29,710).
Consolidated Statement of Operation
Notwithstanding the fact that comparative information for applicable
years ended December 31, 1995 and 1996 appears in the Company's Consolidated
Statement of Operations, no analysis of same is being given since basically all
1995 information refers to the printing press business operations and management
at that time which operations were discontinued and which management resigned
both in October 1995. Accordingly, all post October 1995 information and all
1996 information
14
<PAGE> 15
refers to new business operations regarding Moonlight Balloon and new and/or
current management and is not properly susceptible to narrative comparison
(i.e., any attempt to compare unrelated business activities - discontinued
printing operations to on-going Moonlight Balloon operations which activities
were conducted by an entirely different management team, would not serve any
useful purpose in clarifying or expounding upon comparative periods presented in
the Company's Consolidated Statement of Operation).
Cash Requirements and Liquidity
The Company has been able to satisfy its cash requirements and raise
the necessary capital in order to finance its proposed growth through the sale
and issuance of 2,032,200 shares of its common stock for an aggregate gross cash
consideration of $6,092,306 (said sales having taken place during calendar year
ended 1996). The shares of Company common stock referred to herein were sold in
accordance with certain terms and conditions contained in Off-Shore Securities
Subscription Agreements and, accordingly, were sold outside the U.S., not as a
registered public offering but rather in reliance upon Regulation S of the
General Rules and Regulations under the Securities Act of 1933 ("Reg S").
To further satisfy its aforesaid cash requirements, during the first
quarter of 1997 the Company issued an additional 775,000 shares for an aggregate
gross cash consideration of $1,531,250. The Company also issued an additional
176,000 shares in order to convert existing Company debt of Sfr 300,000
(approximately $222,000) into equity. The transactions referred to herein were
similarly conducted in accordance with Reg S and reported in Forms 8-K dated
January 23, 1997 and February 19, 1997.
The Company sustained a significant loss during the year ended
December 31, 1996 of close to $3,000,000 and as at such date its current
liabilities exceeded its current assets by $520,330. The Company's auditor cited
these factors (in note 1 to the Company's audited consolidated financial
statements) as creating an uncertainty as to the Company's ability to continue
to operate as a going concern. If and when the need for additional funds arises,
management anticipates (although no assurance can be given) that the Company
will be able to finance and meet such requirements through such income as may be
derived from commercial utilization of its license agreements. However, if
sufficient revenues, if any, are not generated and if an unforeseen need arises
management contemplates being able to satisfy same in a manner similar to equity
financing previously conducted or through an as yet undetermined, if necessary,
combination of debt and/or equity financing and/or bank loans.
Management does not currently anticipate any further expenditures of
significant sums for product research and development nor does it currently
expect (a) to purchase or sell any plant or significant equipment or (b) to
significantly increase or change the number of its current employees.
15
<PAGE> 16
ITEM 7. FINANCIAL STATEMENTS
The following financial statements have been prepared in accordance
with the requirements of Regulation S-B and supplementary financial information
included herein, if any, has been prepared in accordance with Item 302 of
Regulation S-K, such information appears on pages F-1 through F- 9 inclusive for
calendar year ended December 31, 1996 of this Form 10-KSB, which pages follow
this page.
MOONLIGHT INTERNATIONAL CORP.
DECEMBER 31, 1996
CONTENTS
Page
----
Independent Auditor's Report F-1
Consolidated Balance Sheet F-2
Consolidated Statement of Operations F-3
Consolidated Statement of Shareholders' Equity F-4
Consolidated Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 -F-9
16
<PAGE> 17
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Moonlight International Corp.
We have audited the accompanying consolidated balance sheet of
Moonlight International Corp. (a development stage company) as of December 31,
1996 and the related consolidated statements of operations, shareholders' equity
and cash flows for the year ended December 31, 1996 and for the periods January
1, 1995 to October 25, 1995, October 25, 1995 to December 31, 1995 and from
inception (October 25, 1995) to December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform 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 audit provides a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the consolidated financial position of
Moonlight International Corp. at December 31, 1996 and the consolidated results
of their operations and their cash flows for the year ended December 31, 1996
and for the periods January 1, 1995 to October 25, 1995, October 25, 1995 to
December 31, 1995 and from inception (October 25, 1995) to December 31, 1996.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the company has sustained
recurring losses and has a working capital deficiency that raise substantial
doubts about its ability to continue as a going concern. The Company's plans in
regard to these matters are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
ALLEN G. ROTH, P.A.
/Allen G. Roth, P.A./
New York, New York
March 13, 1997, except Note 9
which is dated April 14, 1997
<PAGE> 18
<TABLE>
<CAPTION>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
Consolidated Balance Sheet
December 31, 1996
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 23,210
Advances to contractor (Note 4) 300,000
Prepaid expenses and other assets 25,480
-----------
TOTAL CURRENT ASSETS 348,690
PROPERTY AND EQUIPMENT, less accumulated
depreciation of $14,560 106,136
LICENSING AGREEMENTS, less accumulated
amortization of $431,667 (Note 5) 5,118,333
OTHER ASSETS 41,648
-----------
$ 5,614,807
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 324,550
Loan payable 357,073
Due to officers 87,397
Deposit - licensee (Note 6) 100,000
-----------
TOTAL CURRENT LIABILITIES 869,020
-----------
LOAN PAYABLE (Note 7) 222,222
-----------
COMMITMENT (Note 8)
SHAREHOLDERS' EQUITY: (Note 9)
Common stock, par value $.0001;
authorized 25,000,000 shares;
issued and outstanding 9,612,200
shares 961
Additional paid-in capital 8,127,171
Accumulated deficit (461,353)
Deficit accumulated during the
development stage (3,113,504)
Foreign currency translation adjustment (29,710)
-----------
TOTAL SHAREHOLDERS' EQUITY 4,523,565
-----------
$ 5,614,807
===========
See notes to financial statements.
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
Consolidated Statement of Operations
October 25, 1995 January 1, 1995 Inception
Year Ended to to (October 25, 1995)
December 31, December 31, October 25, To December 31,
1996 1995 1995 (a) 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ --
OPERATING EXPENSES:
General and administrative 1,381,804 52,866 105,501 1,434,670
Depreciation and amortization 388,854 61,954 -- 450,808
Research and development 1,163,045 -- -- 1,163,045
----------- ----------- ------------ ------------
2,933,703 114,820 105,501 3,048,523
----------- ----------- ------------ ------------
OPERATING LOSS (2,933,703) (114,820) (105,501) (3,048,523)
INTEREST EXPENSE 40,734 24,247 -- 64,981
----------- ----------- ------------ ------------
LOSS BEFORE DISCONTINUED
OPERATIONS (2,974,437) (139,067) (105,501) (3,113,504)
----------- ----------- ------------ ------------
DISCONTINUED OPERATIONS:
Loss from discontinued operations -- -- 232,865 --
Loss on disposal of net assets of
discontinued operations -- -- 27,339 --
----------- ----------- ------------ ------------
-- -- 260,204 --
----------- ----------- ------------ ------------
NET LOSS $(2,974,437) $ (139,067) $ (365,705) $ (3,113,504)
=========== =========== ============ ============
LOSS PER SHARE:
Continuing operations $ (.33) $ (.02) $ (.01) $ (.35)
Discontinued operations -- -- (.03) --
----------- ----------- ------------ ------------
Net loss $ (.33) $ (.02) $ (.04) $ (.35)
=========== =========== ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 8,967,930 7,742,647 10,000,000 10,000,000
=========== =========== ============ ============
(a) Prior to development stage period
See notes to financial statements.
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
Consolidated Statement of Shareholders' Equity
Deficit
Accumulated Foreign
Additional During the Currency
Common Stock Paid-In Accumulated Development Translation
Shares Amount Capital Deficit Stage Adjustment
----------- ------- ---------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 10,000,000 $ 1,000 $ 155.952 $ (95,648) $ -- $ --
Retirement of common shares (7,600,000) (760) 760 -- -- --
Issuance of common shares:
license acquisitions 5,100,000 510 2,549,490 -- -- --
Cash 500,000 50 494,450 -- -- --
Shareholder loans contributed
to capital -- -- 198,000 -- -- --
Translation adjustment -- -- -- -- -- 2,721
Net loss -- -- -- (365,705) (139,067) --
----------- ------- ---------- --------- ----------- --------
Balance, December 31, 1995 8,000,000 800 3,398,652 (461,353) (139,067) 2,721
Issuance of common shares
for cash 1,612,200 161 4,728,519 -- -- --
Translation adjustment -- -- -- -- -- (32,431)
Net Loss -- -- -- -- (2,974,437) --
----------- ------- ---------- --------- ----------- --------
Balance, December 31, 1996 9,612,200 $ 961 $8,127,171 $(461,353) $(3,113,504) $(29,710)
=========== ======= ========== ========= =========== ========
See notes to financial statements.
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
MOONLIGHT INTERNATIONAL CORP.
A Development Stage Company
Consolidated Statement of Cash Flows
Inception
(October 25, 1995)
Year Ended October 25, 1995 January 1, 1995 To
December 31, to to December 31,
1996 December 31, 1995 October 25, 1995(a) 1996
----------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,974,437) $ (139,067) $(365,705) $(3,113,504)
Adjustments to reconcile net loss to net cash used
in operating activities:
Loss from discontinued operations -- -- 232,865 --
Loss on disposal of net assets of discontinued
operations -- -- 27,339 --
Depreciation and amortization 388,854 61,954 -- 450,808
Changes in assets and liabilities:
Deposits - licensee 100,000 -- -- 100,000
Advances to contractor -- (300,000) -- (300,000)
Prepaid expenses (19,989) (5,491) -- (25,480)
Accounts payable and accrued liabilities 212,588 5,561 105,501 218,149
Other assets (37,608) (8,621) -- (46,229)
----------- ----------- --------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,330,592) (385,664) -- (2,716,256)
----------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (111,789) (8,907) -- (120,696)
Advances to subsidiaries -- -- (198,000) --
Payments to licensor (3,000,000) -- -- (3,000,000)
----------- ----------- --------- -----------
NET CASH USED IN INVESTING ACTIVITIES (3,111,789) (8,907) (198,000) (3,120,696)
----------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans received from shareholders and others 666,692 -- 198,000 666,692
Net proceeds from issuance of common shares 4,728,680 494,500 -- 5,223,180
----------- ----------- --------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 5,395,372 494,500 198,000 5,889,872
----------- ----------- --------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (32,431) 2,721 -- (29,710)
----------- ----------- --------- -----------
NET INCREASE (DECREASE) IN CASH (79,440) 102,650 -- 23.210
CASH - BEGINNING OF PERIOD 102,650 -- -- --
----------- ----------- --------- -----------
CASH - END OF PERIOD $ 23,210 $ 102,650 $ -- $ 23,210
----------- ----------- --------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 33,661 None None None
Income taxes None None None None
Non-cash investing and financing activities:
Issuance of purchase money note to
acquire licenses $ -- $ 3,000,000 None None
Issuance of common shares to
acquire licenses $ -- $ 2,550,000 None None
(a) Prior to development stage period.
See notes to financial statements.
</TABLE>
<PAGE> 22
MOONLIGHT INTERNATIONAL CORP.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. GOING CONCERN
The accompanying financial statements have been prepared
in conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. However,
the Company has sustained a substantial loss during the year ended
December 31, 1996. In addition, at December 31, 1996 current
liabilities exceeded current assets by $520,330. These factors
create uncertainty as to the Company's ability to continue as a
going concern. Management believes that the Company will be able to
raise additional capital through the issuance of common stock and
that its operations will improve upon commencing sales activity. The
ability of the company to continue as a going concern is dependent
on obtaining capital from the issuance of common stock and
commencing sales. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.
2. DESCRIPTION OF BUSINESS
Moonlight International Corp. (the "Company"), formerly
Compucolor Network Ltd. is presently engaged in the development of
production, marketing and distribution capabilities for its
helium-filled balloons designed to provide high luminosity without
requiring high energy consumption.
On October 25, 1995 the Company ceased its multi-color
printing operations and concurrently disposed of all the net assets
relating to such operations. In November 1995 the Company acquired
exclusive "field of use" worldwide rights, including patent rights,
to the illumination technology referred to above. The Company was in
the development stage from October 25, 1995 to December 31, 1996.
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned Swiss
subsidiaries, commencing October 25, 1995. All intercompany
transactions and balances have been eliminated in consolidation.
Property and equipment and depreciation
Property and equipment consisting primarily of small
tools and furniture and equipment are recorded at cost. Depreciation
is provided by the straight line method over three years and five
years respectively, commencing when such assets are put into
service.
Amortization of license agreements
Amortization is provided over fifteen years, the
estimated useful lives of such assets.
Use of estimates
Management uses estimates and assumptions in preparing
financial statements. These estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported revenues and
expenses.
<PAGE> 23
MOONLIGHT INTERNATIONAL CORP.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair value of financial instruments
The Company measures its financial assets and
liabilities in accordance with generally accepted accounting
principles. The carrying values of the Company's financial
instruments, including cash, accounts payable and accrued expenses
and loans payable approximate fair value due to their short
maturities.
Expenses related to sales of securities
All costs incurred in connection with the sale of the
Company's common shares were charged to additional paid-in capital.
Foreign currency translation
All assets and liabilities of the foreign subsidiaries
are translated at year-end exchange rates while revenues and
expenses are translated at the average rates of exchange prevailing
throughout the period. Gains and losses resulting from foreign
currency translation are accumulated as a separate component of
shareholders' equity.
Research and development costs
Research and development costs are changed to expense as
incurred.
Reclassifications
Certain accounts in the 1995 financial statements were
reclassified to conform with the current year presentation.
Loss per share
Net loss per common share is based on the weighted
average number of shares outstanding during each period.
4. ADVANCES TO CONTRACTOR
The Company retained the services of an independent
contractor to perform certain research and to develop proto-types
for the various models of helium-filled balloon kits. As of December
31, 1996, the Company had made total payments to the contractor of
$1,500,000 for services of which $300,000 was applicable to work to
be done in 1997 while the balance was charged to research and
development costs in the 1996 financial statements. The project was
completed in February 1997.
5. LICENSING AGREEMENTS
In November, 1995 the Company entered into two separate
licensing agreements with two Isle of Man corporations as follows:
<PAGE> 24
MOONLIGHT INTERNATIONAL CORP.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
5. LICENSING AGREEMENTS (Continued)
(a) License Agreement with Edgedale Limited ("Edgedale")
for the exclusive field-of- use worldwide rights to utilize certain
proprietary information including patent rights in exchange for the
issuance by the Company to Edgedale of 2,100,000 shares of Company
common stock valued at $1,050,000.
(b) License Agreement with Cootows Consultants Limited
("Cootows") for the exclusive field-of-use worldwide rights to
utilize certain proprietary information including patent rights in
exchange for (i) the issuance by the Company to Cootows of 3,000,000
shares of Company common stock valued at $1,500,000 and (ii) the
payment by the Company of a one time $3,000,000 license fee with
interest at the rate of 5% per annum. The financial statements
include interest charged to operations of $33,000 in 1996 and
$24,000 in 1995. The license fee was paid in full on October 15,
1996.
Each of the license agreements referred to above is for
an indefinite term or until all of the proprietary information
becomes public knowledge and the patent rights expire.
The Company has also entered into a Consulting Agreement
with Cootows pursuant to which Cootows has agreed to act as the
Company's consultant for a period of ten years during which Cootows
shall consult with and advise the Company in connection with matters
relating to the license agreement technology. The Company has agreed
to pay Cootows the sum of $200,000 per annum in equal monthly
installments through November 2006. Consulting fees of $200,000 and
$32,000 were charged to operations in 1996 and 1995 respectively.
6. DEPOSIT - LICENSEE
The Company has entered into a sub-licensing agreement
with Golf Lite, Inc. ("Golf") an entity whose principal officer is
also the Company's President. The agreement grants Golf an exclusive
worldwide license to sell the Company's helium balloons and other
related light source products to golf courses only. The Company is
to receive a licensing fee of $1,000,000, payable $100,000 at
closing and the balance with interest at 5% per annum on or before
April 30, 1998. The initial payment was received in September 1996
and for accounting purposes is reflected in the financial statements
as a deposit received from the licensee. The Company has recorded a
valuation allowance for the full amount of the note receivable. The
Company will also receive royalties of 15% of Golf's gross revenues,
as defined in the agreement.
7. LOAN PAYABLE
In February 1997, the Company issued 176,000 shares of
common stock as payment in full of the amount due to the lender.
8. LEASE COMMITMENT
The Company is obligated under leases for its Swiss
operating facilities for annual rentals approximating $58,000
through December 2006.
<PAGE> 25
MOONLIGHT INTERNATIONAL CORP.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
9. STOCK OPTION PLAN
In March 1996 the Company adopted a Non-Statutory Stock
Option Plan and reserved 2,000,000 shares for issuance to eligible
participants. Options are non-transferable and those issued to date
are exercisable during a term of not more than five years from the
grant date. The options are issuable in amounts and prices
determined by the Board of Directors, except that each option price
will not be less than twenty percent of the market value of such
shares on the grant date.
The following summarizes common stock options as of April 14, 1997:
<TABLE>
<CAPTION>
Exercise Price Options Options Options
Date Granted Per Share Granted Exercised Outstanding
------------ --------- ------- --------- -----------
<S> <C> <C> <C> <C>
March 31, 1996 $2.00 1,190,000 -0- 1,190,000
January 21, 1997 $1.00 125,000 -0- 125,000
April 14, 1997 $1.00 250,000 -0- 250,000
--------- ------ ---------
Totals 1,565,000 -0- 1,565,000
========= ====== =========
</TABLE>
<PAGE> 26
ITEM 8. CHANGES IN THE AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No disagreements with accountants on accounting and financial
disclosure matters existed during the Company's calendar year ended December 31,
1996. Notwithstanding the above, the Registrant did change its auditing firm
from Bederson & Company LLP to Allen G. Roth, P.A. in October of 1996 and filed
a Form 8-K with date of report of October 17, 1996 on November 21, 1996.
Bederson and Company LLP had acted as Company auditors at the time when the
Company was known as Compucolor Network Ltd. while Allen G. Roth, P.A. has acted
as Company auditor with respect to all activities resulting from change of
business purposes in November 1995 and corresponding change of corporate name to
the Company's current name.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Directors and Executive Officers of the Company, as of March 31,
1997, were as follows (unless otherwise indicated):
<TABLE>
<CAPTION>
Name and Address Position(s) Held Age
- ---------------- ---------------- ---
<S> <C> <C>
Werner Heim President and Chairman of 63
Witikonerstrasse 311B the Board of Directors
CH-8053 Zurich
Switzerland
M. Walter Levine CFO Secretary-Treasurer 60
c/o M. Walter Levine and a Director
1 River Road
Cos Cob, CT 06807
Alfons Anderhub President of Moonlight SA 50
Luessirainstrasse 51 (A wholly owned subsidiary)
CH-6300 Zug
Switzerland
Leon Golden Former CFO, Secretary-Treasurer 34
135 Irwin Street and a Director *
Brooklyn, NY 11235
</TABLE>
* Resigned from all positions held effective April 24, 1997.
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
17
<PAGE> 27
have been elected and have qualified.
WERNER HEIM has been a President and Chairman of the Board of Director of the
Company since October, 1995. Mr. Heim has approximately 30 years of experience
in international business development in high technology industries with a
background which includes participation within the following industries;
computer systems, biotechnology, microfiltration and environmental waste
processing. In addition to the positions that Mr. Heim currently holds with the
Company he currently serves as (a) President and Chairman of the Board of
Directors of Seiler Pollution Control Systems, Inc. ("SEPC"), an international
environmental service and equipment company and (b) a Director since November
1994 and Secretary-Treasurer since November 1995 of Odessa Foods International,
Inc. ("ODSA"), a firm engaged in the manufacture of sausage and related products
in Odessa, Ukraine. SEPC is currently publicly traded in the NASDAQ SmallCap
Market under the stock symbol SEPC while ODSA is currently trading on the
Electronic Over-the-Counter Bulletin Board under the stock symbol ODSA.
Securities owned of record and/or beneficially: -0- shares of Common Stock as of
June 11, 1997. On March 31, 1996 Mr. Heim was granted options to purchase up to
250,000 shares of Company common stock exercisable at $2.00 per share in
accordance with the Company's 1996 Non-Statutory Stock Option Plan . Such
options are non transferable, expire five years from date of issuance and remain
unexercised as of June 11, 1997.
M. WALTER LEVINE has served as CFO and Secretary-Treasurer since April 1997 and
has been a Director of the Company since January 1997. Mr. Levine founded The
Amtax Group ("Amtax"), a private investment banking company in 1978 and has
structured investment programs valued at over $300,000,000 in equipment leasing,
oil & gas and real estate partnerships, thereby enabling Amtax to expand and
control investments worth in excess of $700,000,000. Amtax has raised
significant start-up and growth capital for various corporate clients and
recently (in 1993) raised the necessary financing to commence a partnership
known as Interactive Television. Mr. Levine also serves on the Boards of
Directors of such companies as the Calzone Case Company, James Daniel
Entertainment, Vanco Manufacturing, The John Brown Company and Protective
Alarms, Inc. and has served as a consultant to the executive committee of Radio
City Music Hall Productions.
Securities owned of record and/or beneficially: 1,000 shares of Common Stock as
of June 11, 1997.
ALFONS ANDERHUB currently serves as President of Moonlight SA, a Company wholly
owned subsidiary located in Switzerland. He has also served as a Director of
ODSA since November 1994 (see biographical information with respect to Werner
Heim above). Mr. Anderhub has approximately 25 years of experience in
construction and consulting of private and industrial projects having developed
various multi million dollar projects in Switzerland.
Securities owned of record and/or beneficially: -0- shares of Common Stock as of
June 11, 1997. On March 31, 1996 Mr. Anderhub was granted options to purchase up
to 250,000 shares of Company common stock exercisable at $2.00 per share in
accordance with the Company's 1996 Non- Statutory Stock Option Plan . Such
options are non transferable, expire five years from date of
18
<PAGE> 28
issuance and remain unexercised as of June 11, 1997.
LEON GOLDEN served as CFO, Secretary-Treasurer and a Director of the Company
from October 1995 until his resignation in April 1997. Mr. Golden has over ten
years of experience in public finance and is working for a public accounting
firm in the United States. Mr. Golden for the past few years has been
specializing his financial experience in the food industry. Additionally, Mr.
Golden served as President and a Director of ODSA (see biographical information
with respect to Werner Heim appearing above) until his resignation in April
1997. Neither of such resignations were as a result of any disagreements with
either the Company or ODSA on any matters relating to their respective
operations, policies or practices.
Securities owned of record and/or beneficially: -0- shares of Common Stock as of
June 11, 1997.
ITEM 10. EXECUTIVE COMPENSATION
Remuneration paid (and/or accrued, if applicable and so specifically
indicated) to current officers and/or directors of the Company during calendar
year ended December 31, 1996 is indicated in the chart appearing directly
hereinafter.
<TABLE>
<CAPTION>
Securities
Salaries, Fees, or Property, Aggregate of
Capacities Directors' Fees, Insurance Benefits Contingent
Name of In Which Commissions or Reimbursement, Forms of
Individual Served and Bonuses Personal Benefits Remuneration
- ---------- ---------- -------------- ----------------- ------------
<S> <C> <C> <C> <C>
Werner Heim President and $145,382 (1) -0-
Chairman of the
Board of Directors
Leon Golden Former CFO, $ 40,000 -0- -0-
Secretary-Treasurer
and a Director (3)
Alfons Anderhub (2) $165,836 -0- -0-
M. Walter Levine CFO, Secretary- $ -0- -0- -0-
Treasurer and a
Director (4)
</TABLE>
(1) On March 31, 1996 Mr. Heim was granted options to purchase up to
250,000 shares of Company common stock exercisable at $2.00 per
share. None of such options have been exercised as of June 11, 1997.
(2) Mr. Anderhub currently serves as President to the Company's wholly
owned subsidiary, Moonlight SA, located in Switzerland. On March 31,
1996 Mr. Anderhub was granted options to purchase up to 250,000
shares of Company common stock exercisable at $2.00 per share. None
of such options have been exercised as of June 11, 1997
(3) Resigned from all positions held effective April 1997.
(4) Became a Company Director in January 1997 and assumed the other
positions indicated in April 1997.
There are no current written employment agreements between the
Company and any of its officers and directors except as may be indicated herein
and/or in the audited consolidated financial statements and notes thereto.
19
<PAGE> 29
No compensation of any nature was paid to any director for services
rendered to the Company in such capacity excepting as indicated herein or for
repayment made, if any, for accountable expenses incurred on the Company's
behalf.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - The following
persons and/or firms are known to the Company to be the beneficial owners of
more than 5% of the 10,563,200 shares of the Company's outstanding $.0001 par
value Common Stock as of June 11, 1997. To the best of the Company's knowledge
each individual and/or firm has beneficial ownership of the shares and each
individual and/or firm has sole voting power and sole investment power with
respect to the number of shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
Brookfield Associates Ltd. 2,020,000 19.12%
FL-9490 Vaduz
Liechtenstein
Cootows Consultants Limited 3,000,000 28.40%
26 Duke Street
Douglas Isle of Man
Great Britain
Edgedale Limited 2,100,000 19.88%
26 Duke Street
Douglas Isle of Man
Great Britain
Trianon Opus One Inc. 700,000 6.63%
Corporate Centre
West Bay Road
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands, BWI
</TABLE>
In addition, the only other record holder known by the Company to
hold more than five percent of the Company's Common stock is Cede & Co., New
York, New York. As of June 11, 1997 Cede & Co. held a total of 1,665,700 shares
of the Company's Common Stock, which represented approximately 16% of the total
number of shares outstanding. Cede & Co. is a nominee of the Depository Trust
Company, which held such shares of record on behalf of various of its customers.
The names of the beneficial owners of the shares held by those stockholders are
unknown to Management.
20
<PAGE> 30
(b) Security Ownership of Management - The number and percentage of
shares of $.0001 par value Common Stock of the Company owned of record and
beneficially, by each current officer and director of the Company and by all
current officers and directors of the Company as a group, is as follows - as of
June 11, 1997. To the best of the Company's knowledge each individual has
beneficial ownership of the shares and each individual has sole voting power and
sole investment power with respect to the number of shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
Werner Heim -0-(1) -0-%
Witikonerstrasse 311B
CH-8053 Zurich
Switzerland
Alfons Anderhub -0-(2) -0-%
Luessirainstrasse 51
CH-6300 Zug
Switzerland
Leon Golden (3) -0- -0-%
135 Irwin Street
Brooklyn, New York 11235
M. Walter Levine (4) 1,000 .01%
c/o M. Walter Levine
1 River Road
Cos Cob, Connecticut 06807
All Officers and Directors 1,000 .01%
as a Group ( 2 persons)
</TABLE>
(1) Does not include 250,000 options issued on March 31, 1996 pursuant
to 1996 Non-Statutory Stock Option Plan whereby Mr. Heim has the
right to purchase (for a period of 5 years from the date of grant)
up to 250,000 shares of Company common stock at $2.00 per share.
(2) Does not include 250,000 options issued on March 31, 1996 pursuant
to 1996 Non-Statutory Stock Option Plan whereby Mr. Anderhub has the
right to purchase (for a period of 5 years from the date of grant)
up to 250,000 shares of Company common stock at $2.00 per share.
(3) Resigned from all positions held in the Company effective April
1997.
(4) Became a Company Director in January 1997.
The Company does not know of any arrangement or pledge of its
securities by persons now considered in control of the Company that might result
in a change of control.
21
<PAGE> 31
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the calendar year ended December 31, 1996 there have not been
any material transactions between the Company and any director, executive
officer, security holder or any member of the immediate family of any of the
aforementioned which exceeded $60,000 other than as may be indicated in this
Form 10-KSB and/or the audited consolidated financial statements which are a
part hereof.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
Reference is herewith made to page F-1 through F-9 inclusive of this
10-KSB with respect to the financial statements and notes thereto included
therein.
No exhibits are being filed with this Form 10-KSB.
During the last quarter of the Company's calendar year ended
December 31, 1996 one Form 8-K was filed on November 21, 1996 with date of
report of October 17, 1996.
22
<PAGE> 32
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MOONLIGHT INTERNATIONAL CORP.
/Werner Heim/
By _______________________
Werner Heim, President
Date: June 13, 1997
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/Werner Heim/ President and Dated: June 13, 1997
- ---------------------------------- Chairman of the
Werner Heim Board of Directors
/M. Walter Levine/ CFO, Secretary- Dated: June 13, 1997
- ---------------------------------- Treasurer and a
M. Walter Levin Director
</TABLE>
23
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,210
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 348,690
<PP&E> 120,696
<DEPRECIATION> 14,560
<TOTAL-ASSETS> 5,614,807
<CURRENT-LIABILITIES> 869,020
<BONDS> 0
0
0
<COMMON> 961
<OTHER-SE> 4,522,604
<TOTAL-LIABILITY-AND-EQUITY> 5,614,807
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,933,703
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,734
<INCOME-PRETAX> (2,974,437)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,974,437)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,974,437)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
