-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AqwcyFhNtwARnPWji8D3tMoKFwLx4uxEr307suozgId8PQDOiltG6jrsNpihx+l0 YD/jNDNtfdyEFZg3YrHCNA== 0001015402-00-001467.txt : 20000522 0001015402-00-001467.hdr.sgml : 20000522 ACCESSION NUMBER: 0001015402-00-001467 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA MOLECULAR ELECTRONICS CORP CENTRAL INDEX KEY: 0001069378 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 860888087 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 333-82493 FILM NUMBER: 640530 BUSINESS ADDRESS: STREET 1: 13924 N GREEN TREE DRIVE CITY: TUCSON STATE: AZ ZIP: 85737 BUSINESS PHONE: 5208258333 MAIL ADDRESS: STREET 1: 13924 N GREEN TREE DRIVE CITY: TUCSON STATE: AZ ZIP: 85737 10KSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20529 FORM 10-KSB ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 1999 This report contains only financial statements for the fiscal year ended December 31, 1999 Commission File No. 333-82493 CALIFORNIA MOLECULAR ELECTRONICS CORP. (Exact Name of Registrant as specified in its charter) ARIZONA 86-0888087 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 50 AIRPORT PARKWAY SAN JOSE, CALIFORNIA 95110 (Address of principal executive offices) 408-451-8404 (Registrant's telephone number) Securities registered under Section 12(b) of the Act: Title of each class to be registered: None Securities registered pursuant to section 12(g) of the Act: Title of each class to be registered: Common Stock, No Par Value Name of exchange: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes X No --- --- Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405 of this chapter) is not contained herein, 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-K or any amendment to this Form 10-KSB. [ X ] Revenue for the registrant's most recent fiscal year was $9,319. The aggregate market value of the voting stock held by non-affiliates of the registrant as of May 15, 2000 was $1,477,152. As of May 15, 2000 there were 5,064,743 outstanding shares of Common Stock. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X ] CALIFORNIA MOLECULAR ELECTRONICS CORP. TABLE OF CONTENTS FORM 10-KSB DECEMBER 31, 1999 ITEM NO. PAGE - -------- ---- PART II ITEM 7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 1 PART IV ITEM 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial Statements The financial statements listed below appear on the pages indicated: Balance Sheets at December 31, 1999 and 1998 . . . . . . . . . . . 3 Statements of Operations for the years ended December 31, 1999 and 1998 . . . . . . . . . . . . . . . . . 4 Statements of Stockholders' Equity (Deficit) for the period from March 17, 1997 (date of incorporation) to December 31, 1999 . . . . . . . . 5 Statements of Cash Flows for the years ended December 31, 1999 and 1998 . . . . . . . . . . . . . . . . . 6 Notes to Financial Statements . . . . . . . . . . . . . . . . . . 7 2. Financial Statement Schedules None. 3. Exhibits Exhibit No. 27.1 - Financial Data Schedule . . . . . . . . . . .15 (b) Reports on Form 8-K None. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 CALIFORNIA MOLECULAR ELECTRONICS CORP. -------------------------------------- (A DEVELOPMENT STAGE COMPANY) ----------------------------- FINANCIAL STATEMENTS -------------------- WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ------------------------------------------------------- * * * * * DECEMBER 31, 1999 ----------------- 1 March 17, 2000 To the Board of Directors and Stockholders of California Molecular Electronics Corp. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ------------------------------------------------------- In our opinion, the accompanying balance sheet and the related statements of operations, stockholders' equity (deficit) and cash flows present fairly, in all material respects, the financial position of California Molecular Electronics Corp. (a development stage company) at December 31, 1999 and 1998, and the results of its operations and its cash flows for the three year period ended December 31, 1999, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. ODENBERG, ULLAKKO, MURANISHI & CO. LLP San Francisco, California 2 CALIFORNIA MOLECULAR ELECTRONICS CORP. ----------------------------------------- (a development stage company) -----------------------------
BALANCE SHEET -------------- December 31 ------------------------- 1999 1998 ------------- ---------- A S S E T S ----------- Current assets: Cash $ 91,993 $ 154,626 Employee advance - 5,000 ------------- ---------- Total current assets 91,993 159,626 Furniture and fixtures, net 2,099 - Prepaid expenses 6,493 - Other 427 627 ------------- ---------- $ 101,012 $ 160,253 ============= ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- Current liabilities: Accounts payable and accrued liabilities $ 13,800 $ 2,392 Other payable 5,000 - Advance from related party - 1,366 Payable to related party - 14,500 ------------- ---------- Total current liabilities 18,800 18,258 ------------- ---------- Stockholders' equity (deficit): Common stock, no par value: Authorized 20 million shares; 4,994,065 and 4,887,520 issued and outstanding (including 4,800 and 0 treasury shares) at December 31, 1999 and 1998, respectively 1,280,242 636,556 Less: Treasury stock at cost; 4,800 shares at December 31, 1999 (28,800) - Deficit accumulated during development stage (1,169,230) (494,561) ------------- ---------- 82,212 141,995 ------------- ---------- Commitments (Notes 5 and 9) ------------- ---------- $ 101,012 $ 160,253 ============= ==========
See accompanying notes to financial statements. 3 CALIFORNIA MOLECULAR ELECTRONICS CORP. -------------------------------------- (a development stage company) ----------------------------- STATEMENT OF OPERATIONS -----------------------
Cumulative amounts from March 17, 1997 (date of incorporation) to Year ended December 31, December 31, ------------------------------------- 1999 1999 1998 1997 ------------ ----------- ----------- ----------- Revenue: Interest income $ 12,140 $ 9,319 $ 2,821 $ - ------------ ----------- ----------- ----------- Expenses: Research and development expenses 265,668 240,668 25,000 - Officers' compensation donated to the Company (Note 7) 688,333 270,000 270,000 148,333 Preoperating expenses 227,219 173,270 46,428 7,521 ------------ ----------- ----------- ----------- Total expenses 1,181,220 683,938 341,428 155,854 ------------ ----------- ----------- ----------- Loss before income taxes (1,169,080) (674,619) (338,607) (155,854) Provision for state income taxes 150 50 50 50 ------------ ----------- ----------- ----------- Net loss $(1,169,230) $ (674,669) $ (338,657) $ (155,904) ============ =========== =========== =========== Basic and diluted loss per common share $ (.24) $ (.14) $ (.07) $ (0.3) ============ =========== =========== =========== Weighted average number of common shares outstanding 4,875,996 4,930,858 4,832,658 4,800,000 ============ =========== =========== ===========
See accompanying notes to financial statements. 4 CALIFORNIA MOLECULAR ELECTRONICS CORP. -------------------------------------- (a development stage company) ----------------------------- STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) ------------------------------------------- FOR THE PERIOD FROM MARCH 17, 1997 (DATE OF INCORPORATION) ---------------------------------------------------------- TO DECEMBER 31, 1999 --------------------
Deficit Accumulated Common Stock During -------------------------- Treasury Development Shares Amount Stock Stage Total ------------- ----------- ------------- ------------ ---------- Stock issued in March 1997 4,000,000 $ 10,000 $ - $ - $ 10,000 Stock issued on hiring of executives 800,000 3,000 - - 3,000 Stock issuance costs - (2,296) - - (2,296) Officers' compensation donated to the Company (Note 7) - 148,333 148,333 Net loss - - - (155,904) (155,904) ------------- ----------- ------------- ------------ ---------- Balance at December 31, 1997 4,800,000 159,037 - (155,904) 3,133 Stock issued in private placement 87,520 218,800 - - 218,800 Stock issuance costs - (11,281) - - (11,281) Officers' compensation donated to the Company (Note 7) - 270,000 - - 270,000 Net loss - - - (338,657) (338,657) ------------- ----------- ------------- ------------ ---------- Balance at December 31, 1998 4,887,520 636,556 - (494,561) 141,995 Stock issued in private placement 91,540 347,900 - - 347,900 Stock issuance costs - (49,239) - - (49,239) Officers' compensation donated to the Company (Note 7) - 270,000 - - 270,000 Stock issued for license technology fee 15,005 75,025 - - 75,025 Treasury stock, at cost (4,800) - (28,800) - (28,800) Net loss - - - (674,669) (674,669) ------------- ----------- ------------- ------------ ---------- Balance at December 31, 1999 4,989,265 $1,280,242 $ (28,800) $(1,169,230) $ 82,212 ============= =========== ============= ============ ==========
See accompanying notes to financial statements. 5 CALIFORNIA MOLECULAR ELECTRONICS CORP. ----------------------------------------- (a development stage company) ----------------------------- STATEMENT OF CASH FLOWS -----------------------
Cumulative amounts from March 17, 1997 (date of incorporation) to December 31, Year ended December 31, ------------------------------------ 1999 1999 1998 1997 ------------ ---------- ----------- ----------- Operations: Net loss $(1,169,230) $(674,669) $(338,657) $(155,904) Items not requiring current use of cash: Officers' compensation, donated to the Company (Note 7) 688,333 270,000 270,000 148,333 License fees 75,025 75,025 - - Depreciation 525 525 - - Changes in other operating items: Payable to related party - (14,500) 14,500 - Employee advances (25,147) (20,147) (5,000) - Accounts payable and accrued liabilities 13,800 11,408 36 2,356 Other payable 5,000 5,000 - - Prepaid expenses (6,493) (6,493) - - Other (427) 200 (200) (427) ------------ ---------- ---------- ---------- Cash used for operating activities (418,614) (353,651) (59,321) (5,642) ------------ ---------- ---------- ---------- Investments: Furniture and fixtures (2,624) (2,624) - - ------------ ---------- ---------- ---------- Cash used for investing activities (2,624) (2,624) - - ------------ ---------- ---------- ---------- Financing: Advance from related party - (1,366) 1,366 - Issuance of common stock, after stock issuance expense 516,884 298,661 212,487 5,736 Purchase of Treasury stock (3,653) (3,653) - - ------------ ---------- ---------- ---------- Cash provided by financing activities 513,231 293,642 213,853 5,736 ------------ ---------- ---------- ---------- Increase (decrease) in cash 91,993 (62,633) 154,532 94 Cash at beginning of period - 154,626 94 - ------------ ---------- ---------- ---------- Cash at end of period $ 91,993 $ 91,993 $ 154,626 $ 94 ============ ========== ========== ========== Supplemental cash flow disclosures: Taxes paid $ 150 $ 50 $ 50 $ 50 ============ ========== ========== ========== Supplemental schedule of noncash investing and financing activities: Payable for purchase of license $ - $ - $ 14,500 $ - ============ ========== ========== ========== Receivable from sale of common stock $ - $ - $ - $ 4,968 ============ ========== ========== ========== Acquisition of Treasury stock $ (25,147) $ (25,147) $ - $ - For cancellation of employee advances 25,147 25,147 - $ - ------------ ---------- ---------- ---------- $ - $ - $ - $ - ============ ========== ========== ==========
See accompanying notes to financial statements. 6 CALIFORNIA MOLECULAR ELECTRONICS CORP. ----------------------------------------- (a development stage company) ----------------------------- NOTES TO FINANCIAL STATEMENTS -------------------------------- NOTE 1 - Operations and summary of significant accounting policies: California Molecular Electronics Corp. ("CALMEC" or the "Company"), an Arizona corporation, was incorporated on March 17, 1997. CALMEC was formed to engage primarily in the business of producing and selling products and services related to the new technological field of molecular electronics. Molecular electronics is the technology of using single molecules to form the components of electronic devices. CALMEC is currently attempting to raise equity through a public offering of its common stock (see Note 11). A summary of significant accounting policies follows: Use of estimates ------------------ The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair value of financial instruments --------------------------------------- The carrying values of financial instruments, such as accounts payable and debt obligations, approximate their fair market value. Concentration of credit risk ------------------------------- The Company maintains its cash in bank deposit accounts at well-established financial institutions. At times the balances per the records of the financial institutions may exceed federally insured limits. Furniture and fixtures ------------------------ Furniture and fixtures are stated at cost. Expenditures for maintenance and repairs are charged to expense. Depreciation is computed using accelerated methods over the estimated useful lives of the assets of five years. Income taxes ------------- The Company uses the asset and liability method in accounting for deferred income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the carrying amount of assets and liabilities for financial reporting and tax purposes (primarily relating to start-up costs) at each fiscal year end. 7 Loss per share ---------------- Basic and dilutive loss per common share is calculated by dividing the net loss for the period by the average number of common shares outstanding. In 1999, 1998, and 1997, dilutive loss per share excludes the effect of options, because the effect would have been antidilutive.
NOTE 2 - Furniture and fixtures: December 31 ------------------- 1999 1998 ------------ ----- Computer equipment $ 2,624 $ - Less - accumulated depreciation 525 - ------------ ----- $ 2,099 $ - ============ =====
NOTE 3 - Common stock offering: In April 1998, CALMEC commenced a private placement offering of its common stock. The offering agreement allowed for the sale of up to 400,000 shares of CALMEC's common stock at $2.50 per share (restated for stock dividend), for a maximum value of $1 million. There was no minimum number of securities which were required to be sold in the offering. In February 1999, the Company increased the price of the shares to $5 per share (restated for the stock dividend; see Note 4). On March 1, 1999, the Company began providing stock purchasers with a warrant for each share purchased. The warrant entitles the purchasers to buy an additional share for $5 through February 2002. CALMEC terminated the offering in June 1999. CALMEC is in the process of raising equity financing through a public offering of its common stock. On January 31, 2000, CALMEC filed a Form SB-2, Registration Statement Under The Securities Act of 1933, with the Securities and Exchange Commission ("SEC"), which became effective on February 7, 2000 (see Note 11). NOTE 4 - Issuances of capital stock: On March 19, 1997, the Company's chairman agreed to pay expenses he deemed essential to the Company's start-up phase, with the understanding that the Company would reimburse him for these costs at 10% per annum, until such time as the Board of Directors determined the Company had attained sufficient capital for its operations. The chairman agreed to cancel the first $10,000 of such obligations owed to him by the Company in exchange for 10 million shares of the Company's no par common stock valued at $.001 per share. On June 5, 1997, upon the execution of certain long-term employment and other agreements related to CALMEC, the Company issued 1 million shares of common stock to an officer/director of CALMEC at $.001 per share. On September 17, 1997, upon the execution of certain employment agreements, CALMEC issued 1 million shares of its common stock to the Company's president and CEO at $.002 per share. On January 1, 1998, each of the stockholders voluntarily contributed back to the Company 80% of his stock to effect a pro-rata voluntary 80% reduction in their ownership. The stock that was contributed back to the Company was deemed to be authorized and unissued stock rather than treasury stock. In 1998, the Company issued 87,520 shares of its common stock to accredited investors, as defined under Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission, at $2.50 per share. In 1999, the Company issued 106,545 shares of its common stock to accredited investors at prices ranging from $2.50 to $5.00 per share. On February 15, 1999, the Board of Directors declared a 100% stock dividend. All shares and per share data have been restated to reflect the stock dividend. 8 NOTE 5 - Leases: The Company has entered into a cost reimbursable contract with San Jose State University Foundation ("Foundation") for the period from April 1, 1999 through March 31, 2000. The contract includes advisory services to be provided by the San Jose State University Department of Chemistry, facilities, supplies and equipment use. The Foundation shall be reimbursed for costs incurred in providing the aforementioned items not to exceed a maximum amount of $72,794 over the period of the contract. Rent expense was $36,326 and $3,726 for the years ended December 31, 1999 and 1998, respectively, and no rent expense was incurred in 1997. NOTE 6 - Licenses: CALMEC has entered into an exclusive license and patent assignment agreement with an officer/director of the Company. The agreement provides the Company with the exclusive rights to use ChiropticeneTM switches, a class of molecular electronic switches. The agreement also called for the assignment to CALMEC of all of the officer/director's rights to Chiropticene technology on May 1, 1999. CALMEC paid the officer/director a license fee of $25,000 ($10,500 of the license fee was paid in 1998, and the balance was paid in 1999.) The cost of the license fee has been expensed in the accompanying financial statements as research and development costs. During 1999, CALMEC entered into license agreements with certain universities which provide the Company with exclusive licenses to use or sell products using technology owned by the universities. The Company has paid the universities $25,000, and has issued 15,005 shares of common stock to a university and certain inventors for license fees. CALMEC has reimbursed one of the universities $15,237 for prior expenses incurred. The Company has reflected the payments and common stock issuance in the amount of $115,262 as research and development costs in 1999 in the accompanying financial statements, with a credit to cash in the amount of $40,237 and to common stock in the amount of $75,025. NOTE 7 - Related party transactions: CALMEC's three officers have devoted 100% of their time to the business of the Company since their hire in 1997. The officers have elected to forego their salaries until such time after the Company has completed its startup phase and upon determination by the Board of Directors that sufficient capital is available for operations. Planned annual remuneration for the three officers is as follows: $40,000 - Chairman and Treasurer; $110,000 - President and Chief Executive Officer; and $120,000 - Executive Vice President and Secretary. As required by the Securities and Exchange Commission accounting rules, in the accompanying financial statements the officers' unpaid salaries totaling $270,000 for the years ended December 31, 1999 and 1998 and $148,333 for the year ended December 31, 1997 are reflected as compensation expense and a credit to common stock, as the Company does not intend to repay such forfeited salaries in the future. 9 In December 1999, the Company repurchased from an officer of the Company 4,800 shares of common stock at $6.00 per share, of which $25,147 was applied against outstanding advances from the officer. NOTE 8 - Stock option plan: On May 1, 1997, the Board of Directors of CALMEC adopted the 1997 Stock Option Plan (the "1997 Plan"). The aggregate number of shares that are available for issuance pursuant to the exercise of options granted under the 1997 Plan may not exceed 1,600,000 shares of common stock. Options granted in 1999 have vesting periods ranging from immediate to five years. Options granted in 1998 generally vest within one year from the date of grant. Incentive stock options are priced at the fair market value of the stock at the date of grant. Nonqualified stock options are priced at eight-five percent (85%) of the fair market value at the date of grant. Options generally have a life of seven to ten years. During 1997, CALMEC adopted Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123") and, pursuant to the provisions of SFAS No. 123, applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") to the 1997 Plan. Accordingly, no compensation cost has been recognized for the Plan in 1999 and 1998. Had CALMEC elected to adopt the fair value approach of SFAS No. 123, the net loss of $674,669 as reported for the year ended December 31, 1999 would compare to a pro forma net loss of $737,762; the net loss of $338,657 as reported for the year ended December 31, 1998 would compare to a pro forma net loss of $366,197 and the net loss of $155,904 as reported for the period from March 17, 1997 (date of inception) to December 31, 1997 would not change. Basic and diluted loss per share of $.14 as reported for the year ended December 31, 1999 would compare to a pro forma net loss per share of $.15. Basic and diluted loss per share of $0.07 for the year ended December 31, 1998 would compare to a basic and diluted loss per share of $0.08 on a pro forma basis. Basic and diluted loss per share of $0.03 for the period from March 17, 1997 (date of inception) to December 31, 1997 would not change on a pro forma basis. The effects of applying SFAS No. 123 in the preceding pro forma disclosure are not indicative of the effect on reported net income for future years. The fair value of each option grant is estimated on the date of grant using the minimum value method with the following assumptions used for grants in 1999 and 1998, respectively: risk-free interest rates of 6.4% for both years, and expected lives of 5.8 and 5.9 years. No dividend yield was used as CALMEC has not paid dividends in the past and does not anticipate paying dividends in the future. 10 A summary of the status of CALMEC's stock option plan as of December 31, 1999 and 1998, and changes during the years then ended, is presented below:
1999 1998 ---------- ---------- Weighted Weighted Average Average Number Exercise Number Exercise of Shares Price of Shares Price ---------- ---------- --------- --------- Outstanding at beginning of year 886,000 $ 0.2156 800,000 $ 0.0038 Granted 48,520 $ 5.0000 86,000 $ 2.1860 Canceled (16,500) $ (2.1250) - - ---------- ---------- --------- --------- Outstanding at end of year 918,020 $ .4341 886,000 $ 0.2156 ========== ========== ========= ========= Options exercisable at year end 418,020 207,000 Weighted average grant-date fair value of options granted during the year whose exercise price equaled market price on date of grant $ 1.37 $ .39 Weighted average grant-date fair value of options granted during the year whose exercise price was less than market price on date of grant $ - $ .92
The following table summarizes information about stock options outstanding at December 31, 1999:
Options Outstanding Options Exercisable - ----------------------------------------------------------------- ---------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price - -------------------- ----------- ------------------- --------- ----------- --------- 5.0000 48,520 8.3 years $ 5.0000 28,520 $ 5.0000 .0025 400,000 4.3 years $ .0025 160,000 $ .0025 .0050 400,000 4.7 years $ .0050 160,000 $ .0050 2.1250 55,500 8.5 years $ 2.1250 55,500 $ 2.1250 2.5000 14,000 5.3 years $ 2.5000 14,000 $ 2.5000 - -------------------- ----------- ------------------- --------- ----------- --------- .0025 - $5.00 918,020 4.9 years $ .4341 418,020 $ .7099 ==================== =========== =================== ========= =========== =========
11 NOTE 9 - Commitments: In accordance with the Company's license agreement with a university (see Note 6), beginning January 1, 2002 and on January 1 of every year thereafter as long as the license is in effect, the Company shall pay the university a maintenance fee equal to either, at the university's option, 2,000 shares of the Company's common stock or a cash payment equal to the fair value of the 2,000 shares on the due date, not to be less than $10,000. NOTE 10 - Income taxes: The Company's operating loss for financial reporting purposes has been reported as deferred start-up costs for federal and state income tax purposes. Deferred tax assets are comprised of the following:
Year ended December 31, ---------------------------------- 1999 1998 -------- ---------- ---------- Deferred start-up costs $ 167,581 $ 26,843 $ (2,557) Valuation allowance for deferred tax assets (167,581) (26,843) (2,557) ---------- --------- --------- Net deferred tax asset $ - $ - $ - ========== ========= =========
A valuation allowance is provided for deferred tax assets as future deductibility is uncertain. At December 31, 1999, 1998, and 1997 all of the deferred tax assets were noncurrent. The change in valuation allowance is comprised of increases due to net operating losses. A reconciliation of income tax computed at the federal statutory tax rate to the provision for income taxes is as follows:
Cumulative amounts from March 17, 1997 (date of Year ended December 31, incorporation) to ---------------------------------------------------------- December 31, 1999 1999 1998 1997 ------------------ ------------------ ------------------ ------------------ Amount % Amount % Amount % Amount % ---------- ------ ---------- ------ ---------- ------ ---------- ------ Income taxes at federal statutory rate $(397,487) (34.0) $(229,370) (34.0) $(115,126) (34.0) $ (53,007) (34.0) Increase (decrease) in income taxes resulting from: State and local income taxes, net of federal tax benefit (58,454) (5.0) (33,731) (5.0) (16,930) (5.0) ( 7,795) (5.0) Permanent differences 234,033 20.0 91,800 13.6 91,800 27.1 50,433 32.3 State minimum tax 150 0.0 50 0.0 50 0.0 50 0.0 Net operating loss 221,908 19.0 171,301 25.4 40,256 11.9 10,369 6.7 ---------- ------ ---------- ------ ---------- ------ ---------- ------ $ 150 0.0 $ 50 0.0 $ 50 0.0 $ 50 0.0 ========== ====== ========== ====== ========== ====== ========== ======
12 NOTE 11 - Subsequent event: On January 31, 2000, CALMEC filed Form SB-2, Registration Statement under the Securities Act of 1933, with the SEC. On February 7, 2000, the Registration Statement became effective and CALMEC commenced its sale of up to 1,000,000 shares of common stock at $6.00 per share. CALMEC plans to raise $6 million with this offering, before payment of estimated offering expenses of $50,000, although no assurance can be made as to how many shares the Company will sell. Subsequent to the effective date of the Registration Statement through March 17, 2000, CALMEC has sold 40,266 shares of its common stock, for a total of $241,596. 13 SIGNATURES Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 18, 2000. California Molecular Electronics Corp. /s/ James Marek, Jr. -------------------------------------- James Marek, Jr. President and Chief Executive Officer 14 EX-27 2
5 1 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 91993 0 0 0 0 91993 2624 (525) 101012 18800 0 0 0 1280242 (1198030) 101012 0 9319 0 683938 0 0 0 (674619) 50 (674669) 0 0 0 (674669) (.14) (.14)
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