COLORADO 94-3431032
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Check whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X 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 Issuer'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. [ ]
State Registrant's revenues for its most recent calendar year. December 31, 2003: $111,636.
State the aggregate market value of the common voting stock of the Registrant held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days.
April 7, 2004; $9,714,205. There are approximately 4,918,585 shares of our common voting stock of held by non-affiliates; the presented value is based upon the average bid prices of our common stock on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. (the "NASD"), the only nationally recognized medium on which our common stock publicly trades.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
None; not applicable.
State the number of outstanding shares of each of the Registrant's classes of common equity, as of the latest practicable date.
April 7, 2004: Common stock; 15,301,645 shares outstanding.
As used herein, the words and phrases "Oak Ridge Micro-Energy," the "Registrant," the "Company" or "Oak Ridge," and "we," "our," "us" and similar words of import, shall be considered synonymous references to Oak Ridge Micro-Energy, Inc.
Business.
Background summary.
Oak Ridge Micro-Energy is developing a new, thin-film lithium battery
technology for commercial, consumer, industrial, security and military
use. Our corporate objective is to capitalize on delivering solutions for the
world's micro-power needs.
The battery is lithium-based and is manufactured to be thinner than
common plastic wrap. Like the larger, traditional lithium batteries that
power laptops and cell phones, this lithium battery is also rechargeable.
Unlike traditional lithium batteries, the thin-film battery is intended for
small, hi-tech, low power applications, some of which have not yet been
developed or brought to market.
Current anticipated uses include "smart" credit cards, security cards,
wireless sensors, radio frequency identification tags, chip memory backup and
advanced drug delivery devices. Future applications will grow as the
availability of thin-film batteries increases.
The technology has evolved over the past decade at the Oak Ridge National
Laboratories ("ORNL"), a U. S. Government laboratory in Oak Ridge, Tennessee.
The U. S. Department of Energy has released the technology for
commercialization through their licensing agent, UT Battelle LLC. We are one
of a number of non-exclusive licensees of this technology. The primary
inventor of the technology for ORNL, Dr. John B. Bates, retired from ORNL and
is now our Chief Technology Officer and a member of our Board of Directors.
The batteries must be substantially manufactured in the United States,
under our licensing agreement (the "Licensing Agreement"), unless a waiver is
obtained. There may be exportation limitations into certain countries; there
are no environmental compliance issues that we know of; and raw materials and
manufacturing equipment are readily available from several vendors in the
United States.
We are developing prototype batteries using our current laboratory-scale
hardware. We recently raised additional capital to acquire equipment to
manufacture thin-film batteries for pilot production requirements. Prototype
batteries will be delivered to a variety of potential clients who desire
samples to evaluate for integration into their products. We will likely
develop a relationship with a third party manufacturing partner when
quantities dictate to preserve capital. Batteries will be shipped directly to
our customers, without the need for a distributor, in the short term.
Until such time as our Company's prospective clients have evaluated
prototypes and made commitments for commercial quantities of our product, we
intend to apply for revenue from U. S. Government grants and research
contracts, like similar grants we have received from the Department of
Defense. During fiscal 2004, we anticipate that we may have between one and
four clients, and would expect that number to grow in future years, as
applications and the availability of thin-film batteries increases. Dr. Bates
and our staff will continue to advance thin-film technology, which will result
in the creation of an intellectual property portfolio for our Company and our
shareholders. Currently, we have made patent applications for an improved
electrolyte; a new barrier coating to help the battery resist corrosion; to
improve the performance of the battery; and to better protect the battery from
natural elements.
We currently have three full-time employees and two part-time employees.
Business Development Activities.
On January 6, 2003, a one for 10 reverse split of our outstanding
securities, that was approved by our Board of Directors pursuant to the
authority outlined in our Articles of Incorporation, became effective,
reducing our outstanding securities from 86,505,078 shares to 8,650,415
shares, taking into account rounding up fractions to the nearest whole share.
All computations in our Annual Report and the accompanying financial
statements take these re-capitalizations into account.
We exercised our right to acquire a non-exclusive Licensing Agreement of
thin-film battery technology from the U.S. Department of Energy on January 9,
2003. Previously, we had held an option to license this technology, and based
upon our independent development of additional technology, intellectual
property and processes related to the thin-film battery, we exercised our
option.
In January, 2003, we were awarded a contract with the Department
of Defense to develop advanced battery materials. The program, funded through
the Office of the Secretary of Defense, will develop new, nano-structured
electrode materials for thin-film batteries. The $100,000 contract
is a Phase I Small Business Innovative Research ("SBIR") grant, with a Phase
II potential of $750,000 that was awarded to another applicant.
We completed a Phase I Small Business Innovative Research (SBIR) contract
on "Nanostructured Electrodes and Electrolytes for High Energy Density and
High Power Density Lithium and Lithium-Ion Batteries," sponsored by the
Department of Defense, Office of Naval Research. Several new anode materials
were developed during this project that show promise for improving
significantly the performance of conventional lithium-ion batteries and thin-
film lithium-ion batteries. The Company, which owns all intellectual property
discovered during this research, is optimistic that several new patents will
emerge from this work.
We also expanded our original intellectual property of the thin film
battery with the filing of two supplemental patents on behalf of our Company.
These additional patents improve the performance of the battery and better
protect the battery from natural elements. Moreover, Dr. Bates continues to
improve on the thin-film battery and we expect to file additional patents
pertaining to his invention.
Initial product development partnerships have been established with firms
in target market industries and with the U. S. government. We expect these
partnerships to lead to additional revenues, such that the Company can achieve
sustainability within 24 to 36 months.
Currently, we have the thin film battery for sale, although most of the
manufacturing capabilities are geared towards providing prototypes for
selected partners due to the small capacity. With additional investment, our
manufacturing capabilities should be increased greatly. We have begun to
develop visibility, which is now leading new to business leads. Perhaps even
more importantly, we are in the process of establishing ourselves as the
industry leaders and foremost experts of the thin film battery.
We have developed a thin film battery for devices, which will be
implanted deep inside the body and enable physicians to assess and treat a
variety of medical conditions in a noninvasive manner. The devices will have
the ability to frequently monitor and treat potentially life-threatening
conditions and to communicate with an external system. The devices can either
serve as a sensor, measuring parameters such as temperature and radiation
dosage, or as an activator for localized drug therapies and nerve or tissue
stimulation. The battery for this family of devices measures about 0.25" x
Our continuing development activities include developing a thin film
battery on a flexible substrate for a device that will provide up-to-date
product usage for warranty verification. The initial market for the device is
estimated at over 30,000,000 units per year.
The commercialization of all of these developments in thin film batteries
by our Company will require the development of mass manufacturing technology
and a manufacturing partner that has substantial funds that can be committed
to these products; no assurance can be given that the Company will be
successful in either prospect.
Commencing in November 2003, we offered 1,250,000 units at $1.25 per unit
in an overseas private placement. Each unit consisted of one share of common
stock and one warrant to purchase an additional share of common stock at $1.25
per share within one year from the closing of the offering. We had received
from this offering $197,807 as of December 31, 2003, and an additional
$729,638 as of the date of this Annual Report. The offering was closed at our
option with the sale of 741,956 units on or about April 1, 2004.
On December 3, 2003, we filed an S-8 Registration Statement to issue
700,000 shares of our common stock for services rendered that included 65,000
shares each to John Bates and Mark Meriwether, our two directors and executive
officers, pursuant to their respective Employment Agreements as amended on May
23, 2003; and an additional 185,000 shares to Mark Meriwether pursuant to a
further Addendum to his Employment Agreement on December 12, 2003. See Part
III, Item 13, for reference to this Registration Statement.
Commencing in February 2004, which is subsequent to the date of this
Annual Report, we offered 1,600,000 units at $1.25 per unit in a private
placement to "accredited investors" only. Each of these units also consisted
of one share of common stock and one warrant to purchase an additional share
of common stock at $1.25 per share within one year from the closing of the
offering. We received $1,765,250 for the purchase of 1,412,200 units through
one broker/dealer; and $450,000 for the purchase of 360,000 units from another
broker/dealer, for an aggregate of 1,772,200 units and gross proceeds of
$2,215,250. We amended the resolutions of our Board of Directors to provide
that the entire offering amounted to 1,772,200 units and closed the offering
on or about March 31, 2004.
We have agreed to pay advisor fees on the 1,250,000 unit offering
in the form of common stock at the rate of 40,000 shares per 200,000 units
sold and reduced to 20,000 shares per 200,000 units sold after April 30,
2004, along with a 40,000 share bonus if 600,000 units had been sold by
January 31, 2004. The commission due to date was 188,391 shares.
We also agreed to pay a 10% cash commission to certain registered
broker/dealers regarding the 1,772,200 units offered ($221,525) and 15% of the
units offered by one of the broker/dealers who sold 1,412,200 units; and 6% of
the units offered by the other the broker/dealer who sold 360,000 units.
For additional information on other material business developments
concerning our Company that occurred during the years ended December 31, 2002,
2001 and 2000, see our 10-KSB Annual Reports for the years then ended, which
have been previously filed with the Securities and Exchange Commission and
which is incorporated herein by reference, in Part III, Item 13.
Features of the Thin-Film Lithium and Lithium-Ion Batteries.
Thin-film rechargeable lithium and lithium-ion batteries were discovered
and developed at the Oak Ridge National Laboratory by Dr. John B. Bates and
his team of scientists and engineers from research that spanned more than a
decade. This new technology is based upon technical innovation that allow
fabrication of batteries that are less than 15 micrometers (about 0.0003 inch)
thick.
Some of the additional unique properties of thin-film lithium and
lithium-ion batteries that distinguish them from conventional batteries
include:
* All solid-state construction (no liquid electrolyte);
* Unaffected by G-forces or hydrostatic pressure (suitable for
lamination and ballistic applications);
* Can be recharged tens of thousands of times with negligible loss of
capacity;
Many integrated circuits are assembled by the solder reflow or surface
mount process in which all of the electronic components are soldered on to the
board at the same time by heating to temperatures as high as 300 degrees
Centigrade for a few minutes. Conventional batteries, such as coin or button
cells, contain organic liquid electrolytes which cannot survive such
temperatures, and therefore must be added to the circuits as a separate
component, often manually. Because they can tolerate much higher
temperatures, thin-film lithium-ion batteries can be integrated into circuits
using the solder reflow process, thus cutting time and manufacturing costs,
while adding recharge-ability and other valuable features.
Markets for Thin-Film Batteries.
Thin-film lithium and lithium-ion batteries are ideally suited for a
variety of applications where a small power source is needed. They can be
manufactured in a variety of shapes and sizes, as required by the customer.
By using the available space within a device, the battery can provide the
required power while occupying otherwise wasted space and adding negligible
mass.
The range of possible applications of these batteries derives from their
important advantages compared to conventional battery technologies. Because
of their all solid-state construction, the batteries are much more
environmentally friendly and are safer to use. They are unaffected by g-
forces, thus making them uniquely suited for smart munitions and other
applications in which extreme acceleration is experienced. They can be made
in virtually any shape and size to meet the requirements of each application.
The batteries can be cycled tens of thousands of times with negligible loss of
capacity. This means that the size of the batteries needs to be no larger
than required to satisfy the energy requirements on a single cycle, thus
reducing cost and weight, which in itself may give birth to new applications.
Recharging can take place using solar cells, by inductive coupling (including
through the skin), by motion, as well as by conventional electrical means.
We believe that numerous new applications will become apparent
continually. At this point, anticipated uses include:
* "smart" credit cards;
Detailed Market Applications.
In "smart" credit cards and security cards, a thin-film lithium battery
embedded in the card's plastic can provide unprecedented levels of consumer
protection. The cards may contain digitized fingerprints stored in memory
which would be compared to the "fingerprint swipe" information that is
generated when the owner uses the card. A thin battery is necessary to power
the memory and perform the comparison of fingerprints. There may be a variety
of biometrics involved in addition to, or in place of the fingerprint.
Thin-film lithium batteries will eventually power wireless sensors
smaller than the size of a dime that can detect biological or chemical
contaminants, movement and pressure, and transmit this information to a local
receiver.
Two decades ago, bar code technology revolutionized the way goods and
merchandise were identified, priced and inventoried. However, bar code
technology is limited in its application by the need for an unobstructed line-
of-sight or physical contact between the bar code and the reader. Radio
frequency identification eliminates this limitation. The tag would contain
circuitry that enables it to radio its location to a central receiver which
would sort out the information as needed. The tag requires a very thin
battery to power the devices contained within it.
Non-volatile static random access memory is used in numerous products
such as computers, time keeping chips and flash memory. When the active power
of a device with static random access memory is turned off, it is necessary to
have a backup source of energy in order to retain memory in the chips.
Because of the very low leakage currents of the complimentary metal-oxide
semiconductor transistors that make up the memory, only small batteries are
necessary to retain the memory during periods when the device is removed from
active power, such as might occur in a power outage. Presently, non-
rechargeable coin cells are used to backup non-volatile static access memory,
but because they are not rechargeable and are produced in standard minimum
sizes, the battery often dominates the size of the static random access memory
package. Since thin-film batteries can be cycled tens of thousands of times
with negligible loss of capacity, a thin-film battery many times smaller than
a coin cell can be used as a backup power source. Also, only solid-state
thin-film lithium-ion batteries can withstand the high temperatures required
for solder reflow assembly, allowing them to be integrated into circuits along
with the other components. Conventional coin cells must be added by hand.
Thin-film batteries also can be deposited directly onto memory chips or chip
packages, reducing the volume they occupy even further.
Drug delivery devices are being developed that would be inserted under
the skin. Thin-film batteries are of interest to the designers of such
devices because they contain no liquid electrolyte and because they are
rechargeable tens of thousands of times. The battery might be coupled with a
recharging system that capitalizes on body heat.
Micro-Electro-Mechanical Systems ("MEMS") is a relatively new technology
that exploits the existing microelectronics infrastructure to create complex
machines with micron feature sizes. This type of a device involves the
integration of mechanical elements, sensors, actuators and electronics on a
common silicon substrate through the utilization of micro-fabrication
technology. These miniature machines can have many functions, including
sensing, communication and actuation. This new technology enables the
realization of complex mechanical, electrical and chemical systems on a chip,
and the integration of these systems with on-chip control and communication
electronics. Miniature medical devices is one of the major future markets for
micro electrical systems. One of the devices envisioned is a "nanorobot"
small enough to navigate the narrowest blood vessel in order to check the
human body for disease, battle bacteria or cancer cells, perform cell surgery
and even repair genes. Miniature "rooters" will be able to work their way
through every vein and artery and completely clear them of any plaque or fix
potential problems. The successful development of autonomous micro-electronic
systems devices requires an on-board power source. Only thin-film batteries
are small enough to fill this need.
Financial Outlook.
We have made projections of revenues based on the achievement of certain
critical cost/performance goals. In addition, these goals must meet with a
willing marketplace learning to use a new technology. Our Company is
actively engaged in the commercialization and continued optimization of thin-
film battery technology. Accordingly, our goal is to generate returns to our
investors by manufacturing thin-film batteries, commercial prototyping of
thin-film battery applications, intellectual property creation and the ongoing
advancement of battery materials. We are developing partnerships based upon
commercial applications of thin-film batteries and the development of advanced
battery materials.
We continue to develop projections of the market potential of our
technology. In the event that we are successful in our efforts to
commercialize thin-film batteries and advanced battery materials, a
significant revenue stream is possible. The market for the overall lithium
based rechargeable batteries is several billion dollars annually. While the
share of that market which can be considered a "micro-battery" is currently
small, several factors are stimulating the development of a business
opportunity. The market for portable electronics devices, specifically card-
like and miniature products, is expected to grow dramatically based on
applications in supply chain management, national defense, homeland security,
and medicine.
Projections of our ongoing viability are based on the near term
attraction of additional investment, technical success of our contract
research effort, and development and commercial launch of our first
application of the thin-film battery in 2005. A significant amount of
resources, including people, equipment, and working capital, must come on line
in concert with the achievement of critical manufacturing milestones for our
projections to be realized.
While our Company is pursuing additional investment, we are also actively
engaged in the pursuit of new federal support for our advanced materials
development efforts. We were awarded a Small Business Innovative Research
grant by the Department of Defense in January of 2003. The active effort to
achieve the near-term technical goals of this program may enable us to be
awarded a Phase II program of up to $750,000. Additional programs of this
nature will be proposed now and for several years to agencies such as the
National Science Foundation, the National Institutes of Health and other
federal agencies as we gain capacity.
We also intend to create revenue through the sale of prototypes. We
have begun manufacturing thin-film batteries and will have samples available
for collaborators in the near future. Several of these programs are
anticipated with the additional resources called for in our plan of
operations. In addition, sales of consulting services and private development
contracts complete the range of expected revenues.
Success in our Company's prototyping activities will lead to revenues as
new products are distributed across global markets. With the success of our
current capitalization program, we expect to accomplish enough prototyping
programs in the near future in order to identify and launch at least one
commercial application in 2005. Certain critical cost/performance
milestones must be met with suitable partners, applications and additional
investment, for a successful commercial launch to occur.
The heightened need for security coupled with the critically important
national defense requirements ensures that many of the applications enabled by
the thin-film battery will be funded through prototyping. Federal agencies,
combined with their defense contractors, will be responsible to initiate an
unprecedented security upswing with a worldwide clientele. The Homeland
Security Initiative is forecasted to spend more than $300 billion in the next
few years, but has yet to devise a development plan. A new breed of micro-
electronic systems will spring from this funds pool, fueling growth in the
sensor, card, wireless and chip markets.
Research and Development expenditures for 2003 and 2002 were $133,830 and
$123,871 respectively.
Use of proceeds.
We have recently raised in certain private placements of our units as
described under the heading "Business Development Activities," above, gross
proceeds of approximately $3,142,695 (net proceeds were approximately
$2,900,000). A general illustration of the use of these proceeds is as
follows.
Estimated cash requirements for the next 24 months:
Presently, there are five other U.S. companies that have licenses for
manufacturing thin-film batteries using the Department of Energy's technology:
Effect of Existing or Probable Governmental Regulations on Business.
Sarbanes-Oxley Act.
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act
of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements will affect us. For example:
* Our chief executive officer and chief financial officer must now
certify the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer and
we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current procedures
and policies to determine whether they comply with the Sarbanes-Oxley Act and
the new regulations promulgated thereunder. We will continue to monitor our
compliance with all future regulations that are adopted under the Sarbanes-
Oxley Act and will take whatever actions are necessary to ensure that we are
in compliance.
Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation
system; or
* in issuers with net tangible assets less than $2,000,000, if the
issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or with
average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and
Exchange Commission require broker/dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the
document before making any transaction in a penny stock for the investor's
account. You are urged to obtain and read this disclosure carefully before
purchasing any of our shares.
Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:
* get information about the investor's financial situation,
investment experience and investment goals;
* reasonably determine, based on that information, that transactions
in penny stocks are suitable for the investor and that the investor can
evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth the
basis on which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the investor,
confirming that it accurately reflects the investors' financial situation,
investment experience and investment goals.
Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Section 14(a) of the Exchange Act requires all companies with securities
registered pursuant to Section 12(g) of the Exchange Act to comply with the
rules and regulations of the Securities and Exchange Commission
regarding proxy solicitations, as outlined in Regulation 14A. Matters
submitted to stockholders of our Company at a special or annual meeting
thereof or pursuant to a written consent will require our Company to provide
our stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to the
Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to our stockholders.
We are also required to file annual reports on Form 10-KSB and quarterly
reports on Form 10-QSB with the Securities Exchange Commission on a regular
basis, and will be required to timely disclose certain material
events (e.g., changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business;
and bankruptcy) in a current report on Form 8-K.
The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective
as of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25,000,000; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25,000,000 or
more. We are deemed to be a "small business issuer."
The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc. ("NASAA") have
expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
We have a five year lease on a 5,000 square foot laboratory facility in
the city of Oak Ridge, Tennessee. The rental cost is $2,200 per month. This
facility is adequate for us to develop prototypes in small quantities for
research and for supplying potential customers for their evaluation. If we
contract with a third party manufacturer for large quantities of the thin-film
battery, then this laboratory facility may remain adequate for years.
Dr. Bates' prior association with the Oak Ridge National Laboratory
allows us, through the ORNL Laboratory's user program for corporations (also
available to other licensees of the thin-film battery technology), to gain
access to specialized equipment. This eliminates the need for us to purchase
expensive equipment that is infrequently used but is critically important to
our intended business. In addition to the personnel at ORNL, the city of Oak
Ridge has a large talent pool of former and/or retired employees with special
skills in chemistry, physics and materials characterization. These
specialists can be hired as permanent or part-time employees or as
consultants.
We are not the subject of any pending legal proceedings; and to the
knowledge of management, no proceedings are presently contemplated against us
by any federal, state or local governmental agency.
Further, to the knowledge of management, no director or executive officer
is party to any action in which any has an interest adverse to us.
No matter was submitted to our shareholders during the year ended
December 31, 2003.
Market Information.
Our common stock is presently quoted on the OTC Bulletin Board of the
NASD under the symbol "OKRE" as reflected below, though the current trading
volume is small. No assurance can be given that any market for our common
stock will continue in the future or be maintained. If an "established
trading market" ever develops in the future, the sale of "restricted
securities" (common stock) pursuant to Rule 144 of the Securities and Exchange
Commission by members of management or others may have a substantial adverse
impact on any such market.
The range of high and low bid quotations for our common stock during the
each quarter of the years ended December 31, 2001 and 2002, is shown below.
Prices are inter-dealer quotations as reported by the NQB, LLC, and do not
necessarily reflect transactions, retail markups, mark downs or commissions.
*After 1 for 10 reverse split
The following "restricted securities" have been sold by us during the
past three years:
The number of record holders of our common stock as of April 7, 2004,
was approximately 441; this number does not include an indeterminate number of
stockholders whose shares are held by brokers in street name.
Dividends.
There are no present material restrictions that limit our ability to pay
dividends on common stock or that are likely to do so in the future. We have
not paid any dividends with respect to our common stock, and do not intend to
pay dividends in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Plans.
We have no equity compensation plans.
Plan of Operation.
During this year, we will begin operation of our prototype production
facility following the purchase of two refurbished sputter deposition tools
and the acquisition of a lithium deposition and protective coating systems.
These tools will allow us to increase the battery fabrication area from the
present 2"x2" footprint of the research system to 12"x12" in the larger
systems. With the prototype facility in operation, we will be able to meet
the thin film battery production requirements for customers of low volumes of
small batteries for medical implant devices and to supply potential high
volume customers with batteries for evaluation in non-volatile memory backup
products and RF ID tags.
Yuri Trachuk will join us during the week of April 21, 2004, as Vice
President of Manufacturing. Trachuk was a member of the RF Technical Staff of
Applied Materials and brings to us a wealth of experience in thin film
deposition. Trachuk holds a MS degree in Vacuum Electronics Techniques from
the Politechnical Institute Lvov in the former USSR and has international
business experience in Russia, Israel and Maylasia.
With our recent funding completed, we believe we have adequate funds for
the next 12 to 24 months of operations. We will continue our development of
thin film battery technology and expanding our patented intellectual property
Calendar year ended December 31, 2003, compared to calender year
ended December 31, 2002.
During the calendar year ended December 31, 2003, we received total
revenues of $111,636 as compared to $4,570 for the year ended December 31,
2002. The increase in fiscal 2003 was the result of a $100,000 contract with
the Department of Defense. We recorded license fees of $20,000 during fiscal
2003 (to acquire the ORNL License Agreement rights) as compared to $10,000 in
fiscal 2002 (to acquire an option to acquire the ORNL License Agreement). Our
research and development expenses remained relatively the same, with $133,830
in fiscal 2003 as compared to $123,871 in fiscal 2002. General and
administrative expenses were $1,552,703 during fiscal 2003 as compared to
$549,696 in fiscal 2002, with the fiscal 2003 increase primarily resulting
from an expense of $1,003,375 recognized for common stock issued for services.
Our net loss, before interest income of $2,799, was ($1,669,089) in fiscal
2003, compared to our net loss, before interest income of $8,765, of
($706,718) for fiscal 2002. Our total net loss for the year ended December
31, 2003, was ($1,666,290), compared to a total net loss of ($697,953) for
fiscal 2002. The fiscal 2003 increase in losses was also a result of an
expense of $1,003,375 recognized for common stock issued for services.
Our cash resources for fiscal 2003 were provided by our revenues
($111,636); and $297,082 from subscriptions and private placements of our
common stock to "accredited investors." Our cash resources for fiscal 2003
were provided by our revenues ($4,570); and $1,418,000 from subscriptions and
private placements of our common stock to "accredited investors." Subsequent
to December 31, 2003, we raised gross proceeds of approximately $3,142,695
from subscriptions and private placements of our common stock to "accredited
investors."
PRELIMINARY NOTES REGARDING FORWARD-LOOKING STATEMENTS.
ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, AND SPECIFICALLY UNDER THIS
HEADING, ARE DEEMED BY OUR COMPANY TO BE COVERED BY AND TO QUALIFY FOR THE
SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. STOCKHOLDERS AND PROSPECTIVE STOCKHOLDERS SHOULD UNDERSTAND
THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD-LOOKING STATEMENT CONTAINED
HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THESE FACTORS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE FORWARD-
LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE
OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND THE
FUTURE ECONOMIC PERFORMANCE OF OUR COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND
THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL
OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH
ARE BEYOND THE CONTROL OF OUR COMPANY. ALTHOUGH WE BELIEVE THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD-
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL
EXPERIENCE AND BUSINESS DEVELOPMENTS, THE IMPACT OF WHICH MAY CAUSE OUR
COMPANY TO ALTER OUR MARKETING, CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS,
WHICH MAY IN TURN AFFECT OUR COMPANY'S RESULTS OF OPERATIONS IN LIGHT OF THE
SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS INCLUDED
HEREIN, THE INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A
REPRESENTATION BY OUR COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS
OF OUR COMPANY WILL BE ACHIEVED.
Board of Directors
We have audited the accompanying balance sheet of Oak Ridge Micro-Energy,
Inc. ( development stage company) at December 31, 2003 and the related
statement of operations, stockholders' equity, and cash flows for the years
ended December 31, 2003 and 2002 and the period January 1, 1996 (date of
inception of development stage) to December 31, 2003. 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Oak Ridge Micro-Energy,
Inc. at December 31, 2003, and the results of operations, and cash flows
for the years ended December 31, 2003 and 2002 and the period January 1, 1996
(date of inception of development stage) to December 31, 2003, in conformity
with accounting principles generally accepted in the United States of America.
March 23, 2004
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of the financial statements.
1. ORGANIZATION
The Company was incorporated on August 15, 1986, under the laws of the state
of Colorado, with the name "Vates Corp." with authorized common stock of
100,000,000 shares with no par value. Since inception, the Company has
completed five name changes resulting in its present name.
On March 6, 2000 the authorized common stock was changed to a par value of
$.001. Since inception, the Company has completed five stock splits with the
latest completed on January 6, 2003, resulting in its present
capitalization. This report has been prepared showing after stock split
shares with a par value of $.001 from inception.
The Company is in the business to further develop a rechargeable thin-film
lithium battery for use in a variety of applications.
The Company has been in the development stage since 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method deferred tax assets and liabilities are determined
based on the differences between financial reporting and the tax bases of the
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect, when the differences are expected to reverse. An
allowance against deferred tax assets is recorded, when it is more likely than
not, that such tax benefits will not be realized.
On December 31, 2003, the Company had an accumulated net operating loss
available for carryover of $2,262,874. The tax benefit of approximately
$679,000 from the loss carry forward has been fully offset by a valuation
reserve because the use of the future tax benefit is doubtful since the
Company has not started operations. The net operating loss will expire
starting in 2014 through 2024.
Research and Development
All costs of research and development are expensed as incurred.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States
of America. Those estimates and assumptions affect the reported amounts of
the assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were assumed in preparing the financial
statements.
Equipment consists of office and other equipment used in the research and
development of the thin-film lithium battery and is being depreciated over
five and seven years using the straight line method of depreciation.
The Company periodically evaluates the economic lives of its long-lived assets
and if there has been an impairment in the value a loss would be recognized
in the operating statement.
Patents Pending
Patents pending have been determined by management to have a useful life of
five years from the date of filing.
Financial Instruments
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if the shares had been issued on
the exercise of any common share rights unless the exercise becomes
antidilutive and then only the basic per share amounts are shown in the
report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Revenue Recognition
Revenue is recognized on the sale and delivery of a product or the completion
of services provided.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be cash
equivalents.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk
except that the Company maintains cash in banks over the insured amounts of
$100,000, however they are considered to be in banks of high quality.
Advertising and Market Development
The Company expenses advertising and market development costs as incurred.
Other Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. LICENSE AND ROYALTY AGREEMENT
On December 28, 2001, the Company entered into a license and royalty agreement
to further develop and market a rechargeable thin-film lithium battery for use
in a variety of applications, such as, RFID tags for airlines and supply chain
management, drug delivery systems and implantable medical devices, and non-volatile
memory backup, by the payment of $10,000 to UT Battelle LC. The terms of the
agreement includes a payment of $10,000 due by April 1, 2003 (paid), $40,000
by June 30, 2004 and $20,000 in common stock of the Company by July 30, 2004,
and the payment of a 5% royalty on all net sales with minimum royalties to begin
in 2006.
4. PURCHASE OF ALL SHARES OF OAK RIDGE MICRO-ENERGY INC.
On January 15, 2002, the Company acquired all of the outstanding stock of Oak
Ridge Micro-Energy, Inc., a Nevada corporation ("Oak Ridge Nevada") from its
sole stockholder John B. Bates, PhD. in a forward triangular merger between
our newly formed wholly-owned subsidiary and Oak Ridge Nevada. The shares of
Oak Ridge Nevada were converted into and exchanged for 2,304,903 shares of the
Company or approximately 29% of the post-acquisition outstanding stock after
the cancellation of 2,275,000 shares that were owned by Mark Meriwether,
President and sole pre-acquisition director and executive officer, and as part
of the acquisition on February 13, 2002 the Company changed its name to Oak
Ridge Micro- Energy, Inc. On February 13, 2002, the subsidiary was merged
into the parent.
Oak Ridge Nevada was organized under the laws of the state of Nevada on
December 12, 2001 for the purpose of the commercializing the thin-film
battery outlined in note 3. Oak Ridge Nevada has had no operations and its
only asset was the license and royalty agreement outlined in note 3.
The acquisition has been recorded under the purchase method of reporting with
no good will recognized.
5. COMMON CAPITAL STOCK
During 2001, the Company sold 15,000 common shares, in a private placement, at
$2.00 per share for $30,000. The shares have not been issued by this report
date. During September 2002 the Company completed a private placement sale of
37,500 common shares for $75,000. During May 2002 the Company completed a
private placement sale of 200,000 common shares for $500,000 and also
received $888,000, after costs, resulting from a settlement of litigation in
which an unrelated party was issued 400,006 shares of common stock.
During June 2003, the Company sold 65,020 common shares at $1.25 per share, in
a private placement sale.
During November 2003,the Company offered 1,250,000 units at $1.25 per unit,,
in a private placement sale, each unit consisting of one common share and one
warrant to purchase an additional share at $1.25 per share within one year
from the closing of the offering. $197,807 was received by December 31,
2003, ad an additional $729,638 was received by this report date. The offering
will close in April 2004.
During February 2004, the Company offered 1,600,000 units at $1.25 per unit,
in a private placement sale, each unit consisting of one common share and one
warrant to purchase an additional share at $1.25 per share within one year
from the closing of the offering. The offering was closed in March 2004,
after receiving $2,215,250 for the purchase of 1,772,200 units. The Company
amended the total offering of 1,600,000 units as an offering of the 1,772,200
units sold.
The Company has agreed to pay advisor fees, on the above 1,250,000 offering,
in the form of common stock at the rate of 40,000 shares per 200,000 units
sold and reduced to 20,000 shares per 200,000 units sold after April 30,
2004, along with a 40,000 share bonus if 600,000 units had been sold by
January 31, 2004. The commission due on the report date was 188,391 shares.
The Company has also agreed to pay a 10% cash commission to certain registered
broker/dealers regarding the 1,772,200 units offered ($221,525) and 15% of the
units offered by one of the broker/dealers who sold 1,412,200 units; and 6% of
the units offered by the other the broker/dealer who sold 360,000 units.
5. COMMON CAPITAL STOCK - continued
During December 2002, the Company issued 125,000 shares of common stock for
services and during 2003 3,347,167 shares for services. During January 2004
245,000 common shares were issued for services.
The board of directors have authorized the issuance of 2,000,000 common shares
to officers of the Company in March 2004, for services.
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors (and their families) and their controlled entities have
acquired 66% of the outstanding common stock.
On January 25, 2002, Mark Meriwether, President and former sole director,
returned 2,275,000 common shares to the Company for cancellation with no
consideration in connection with the issuance of 2,304,903 common shares for
the acquisition of all of the outstanding stock of Oak Ridge Micro-Energy,
Inc. (Note 4)
During 2003, 2,500,000 common shares were issued to an officer and 315,000
common shares to directors for services.
7. CONTINUING LIABILITIES
The Company has an operating lease for its office space located in Oak Ridge,
Tennessee. The rental expense for 2002 was $15,400 and for 2003 $26,400.
Future minimum rental payments required under the non-cancelable operating
lease follows:
Year ending December 31,
We were notified that effective January 30, 2004, which is subsequent to
the date of this Annual Report, that Sellers and Andersen, L.L.C., our former
auditors, had merged with Ted Madsen, CPA to form Madsen & Associates, CPA's,
Inc. On February 19, 2004, our Board of Directors resolved to engage Madsen &
Associates, CPA's, Inc., Certified Public Accountants, of Salt Lake City,
Utah, to audit our financial statements for the calendar year ended December
31, 2003. For more information on this change in accountants see the 8-K
Current Report, as amended filed with the Securities and Exchange Commission
on February 26, 2004. See Part III, Part 1.
As of the period of this Annual Report or December 31, 2003, we carried out an
evaluation, under the supervision and with the participation of our CEO and
CFO, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our CEO and CFO concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information required to be included in our periodic
Securities and Exchange Commission reports. It should be noted that the
design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote. In addition, we reviewed our internal
controls, and there have been no significant changes in our internal controls
or in other factors that could significantly affect those controls subsequent
to the date of their last evaluation.
The following table sets forth, in alphabetical order, the names and the
nature of all positions and offices held by all directors and executive
officers of our Company for the calendar year ended December 31, 2002, and to
the date of this Annual Report, and the period or periods during which each
such director or executive officer has served in his respective positions.
* These persons presently serve in the capacities indicated
opposite their respective names.
Term of Office.
The term of office of our current directors shall continue until the
annual meeting of our stockholders, which is scheduled in accordance with the
direction of our Board of Directors. The annual meeting of our Board of
Directors immediately follows the annual meeting of our stockholders, at which
officers for the coming year are elected.
Business Experience.
Dr. John B. Bates, Ph.D. Dr. Bates is 62 years of age and was employed
by Oak Ridge National Laboratory or ORNL for nearly 30 years. He recently
left ORNL with a plan to commercialize the thin-film batteries. Dr. Bates
invented or co-invented 12 patents, authored or co-authored 60 articles and
wrote three book chapters in the field of rechargeable thin-film lithium
batteries while at ORNL. Awards and honors include: the 1996 Lockheed-Martin
Energy Systems Inventor of the Year; the 1996 R&D 100 Award (Thin-Film
Battery); the 1998 Lockheed-Martin Energy Research Corp. Technical Achievement
Award; and the 2000 Electrochemical Society Battery Research Award. Through
his scientific achievements, Dr. Bates is internationally recognized as the
foremost authority in thin-film battery technology.
Mark Meriwether. Mr. Meriwether is 47 years of age, and for the past
18 years, his principal occupation has involved providing services to public
and private companies in the areas of corporate restructuring and
reorganizations, mergers and funding as an independent contractor.
Involvement in Certain Legal Proceedings.
To the knowledge of management, no present or former director, person
nominated to become a director, executive officer, promoter or control person
of our Company:
(1) Was a general partner or executive officer of any business
by or against which any bankruptcy petition was filed,
whether at the time of such filing or two years prior
thereto;
(2) Was convicted in a criminal proceeding or named the subject
of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
him from or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant,
associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or
employee of any investment company, bank, savings and
loan association or insurance company, or engaging in
or continuing any conduct or practice in connection
with such activity;
(ii) Engaging in any type of business practice; or
ii) Engaging in any activity in connection with the
purchase or sale of any security or commodity or
in connection with any violation of federal or
state securities laws or federal commodities
laws;
(4) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal
or state authority barring, suspending or otherwise limiting
for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be
associated with persons engaged in any such activity;
(5) Was found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission to have
violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities
and Exchange Commission has not been subsequently reversed,
suspended, or vacated; or
(6) Was found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to
have violated any federal commodities law, and the judgment
in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed,
suspended or vacated.
Compliance with Section 16(a) of the Exchange Act.
On June 3, 2003, Mark Meriwether, our President, filed with the
Securities and Exchange Commission a Form 4, as amended, Statement of Changes
in Beneficial Ownership, disclosing his acquisition of 2,350,000 shares of our
common stock.
On June 3, 2003, John B. Bates, a director, filed with the Securities and
Exchange Commission a Form 4, Statement of Changes in Beneficial Ownership,
disclosing his acquisition of 2,150,000 shares of our common stock.
On September 4, 2003, Mark Meriwether filed with the Securities and
Exchange Commission a Form 4, Statement of Changes in Beneficial Ownership,
disclosing his gift of 100,000 shares of our common stock and the disposal of
60,000 shares as a settlement of a contract dispute.
On October 10, 2003, Mark Meriwether filed with the Securities and
Exchange Commission a Form 4, Statement of Changes in Beneficial Ownership,
disclosing his sale of 75,000 shares of our common stock.
On December 17, 2003, Mark Meriwether filed with the Securities and
Exchange Commission a Form 4, Statement of Changes in Beneficial Ownership,
disclosing his acquisition of 65,000 shares of our common stock.
On December 17, 2003, John B. Bates filed with the Securities and
Exchange Commission a Form 4, Statement of Changes in Beneficial Ownership,
disclosing his acquisition of 65,000 shares of our common stock.
To the best knowledge of our management, all required reports of
directors, executive officers and 10% stockholders required to be filed under
Code of Ethics.
The Company has adopted a Code of Ethics, and it is attached as
Exhibit 14 to this Annual Report. See Item 13, Part III.
Audit Committee.
We do not have an Audit Committee; however, we do not believe that the
failure to have an Audit Committee is material, based upon our current
operations.
Cash Compensation.
The following table sets forth the aggregate executive compensation paid
by our Company for services rendered during the periods indicated:
John B. 12/31/03 $ 66,666 0 0 * 0 0 0
Bates 12/31/02 $115,000 0 0 0 0 0 0
CTO 12/31/01 0 0 0 0 0 0 0
and Director
* On May 23, 2003, our Board of Directors resolved to issue Mark
Meriwether 2,350,000 shares of our common stock that were
"restricted securities" as compensation, 1,350,000 on that date
and 1,000,000 on March 31, 2004. Our Board of Directors also
resolved to issue John B. Bates 2,150,000 shares of our common
stock that were "restricted securities" as compensation, 1,150,000
on that date and 1,000,000 on March 31, 2004. Pursuant to an
Addendum to the Employment Agreements of Messrs. Meriwether and
Bates effective on May 23, 2003, Messrs. Meriwether and Bates were
also resolved to be issued 65,000 shares each that would be
registered on an S-8 Registration Statement; and on December 12,
2003, Mr. Meriwether's Employment Agreement was again amended by
an Addendum to provide for the issuance of an additional 185,000
shares that would also be included in an S-8 Registration
Statement. This Registration Statement was filed on December 3,
2003. For additional information about these grants, see our 8-K
Current Report dated May 23, 2003, and filed with the Securities
and Exchange Commission on June 9, 2003, referenced in Part III,
Item 1.
Stock Option Plans.
There are no cash compensation, deferred compensation or long term
incentive plans that have been adopted by our Company. Further, except as
indicated in the note to the Summary Compensation Table above, no member of
our Company's management has been granted any option or stock appreciation
right; accordingly, no tables relating to such items have been included within
this Item. However, it is anticipated that a Stock Option Plan and management
"restricted securities" grants or other options and awards will be considered
and adopted by the Board of Directors in fiscal 2004 to compensate our current
members of management, attract new members of management and to retain persons
presently serving with us.
Compensation of Directors.
There are no standard arrangements pursuant to which our Company's
directors are compensated for any services provided as director. No
additional amounts are payable to our Company's directors for committee
participation or special assignments.
There are no arrangements pursuant to which any of our Company's
directors was compensated during our Company's last completed calendar year or
the previous two calendar years for any service provided as director. See the
Summary Compensation Table of this Item.
Termination of Employment and Change of Control Arrangement.
There are presently no compensatory plans or arrangements, including
payments to be received from our Company, with respect to any person named in
the Summary Compensation Table set out above which would in any way result in
payments to any such person because of his resignation, retirement or other
termination of such person's employment with our Company or our subsidiaries,
or any change in control of our Company, or a change in the person's
responsibilities following a change in control of our Company.
The following table sets forth the share holdings of those persons
who own more than 5% of our Company's common stock as of April 7, 2004:
(1) Percentages are based on 15,301,645 shares of common stock
outstanding at April 7, 2004.
(2) Confetti Enterprises is solely owned by Mr. Meriwether's wife,
Collette Meriwether.
(3) This number includes 20,000 shares that are in the name of Collette
Meriwether, Mr. Meriwether's wife.
The following table sets forth the share holdings of our Company's
directors and executive officers as of April 7, 2004:
(1) Percentages are based on 15,301,645 shares of common stock
outstanding at April 7, 2004.
(2) Confetti Enterprises, which is solely owned by Mr. Meriwether'
wife, owns 600,000 shares of our common stock; and 20,000 shares that are in
the name of Collette Meriwether; these shares are included in the beneficial
ownership of Mr. Meriwether.
Changes in Control.
There has been no change in control of our Company since January 6, 2001.
See our 8-K Current Report dated January 6, 2001, which has been
previously filed with the Securities and Exchange Commission and which is
incorporated herein by reference in Part III, Item 13. Also see our 8-K
Current Report dated January 15, 2002, which has been previously filed with
the Securities and Exchange Commission and which is incorporated herein by
reference in Part III, Item 13.
Transactions with Management and Others.
Except as indicated below under Part II, Items 10 and 11, there were no
material transactions, or series of similar transactions, during our last two
calendar years, or any currently proposed transactions, or series of similar
transactions, to which we or any of our subsidiaries was or is to be a party,
in which the amount involved exceeded $60,000 and in which any director,
executive officer, any security holder who is known to us to own of record or
beneficially more than 5% of any class of our common stock, or any member of
the immediate family of any of the foregoing persons, or any promoter had a
material interest.
8-K Current Report dated May 23, 2003, and filed with the
Securities and Exchange Commission on June 9, 2003.**
8-K Current Report, as amended dated February 19, 2004, and filed
with the Securities and Exchange Commission on February 24, 2004.**
* Summaries of all Exhibits are modified in their entirety by
reference to the actual Exhibit.
** These documents and related Exhibits have previously been filed
with the Securities and Exchange Commission and are incorporated herein by
this reference.
The following is a summary of the fees billed to Oak Ridge by its
principal accountants during the calendar years ended December 31, 2003 and
2002:
Audit fees. Consists of fees for professional services rendered by our
principal accountants for the audit of our annual financial statements and the
review of financial statements included in our Forms 10-QSB Quarterly Reports
or services that are normally provided by our principal accountants in
connection with statutory and regulatory filings or engagements.
Audit-related fees. Consists of fees for assurance and related services
by our principal accountants that are reasonably related to the performance of
the audit or review of Oak Ridge's financial statements and are not reported
under "Audit fees."
Tax fees. Consists of fees for professional services rendered by our
principal accountants for tax compliance, tax advice and tax planning.
All other fees. Consists of fees for products and services provided by
our principal accountants, other than the services reported under "Audit
fees," "Audit-related fees" and "Tax fees" above.
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
In accordance with the Exchange Act, this Annual Report has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
0.08" x 0.0003" thick.
* Can be operated at high and low temperatures (tests have been
conducted between -20 degrees C and 125 degrees C);
* Rechargeable by solar cells, motion, body heat, and common
rechargers;
* Superior energy and power densities;
* Cost does not increase with reduction in size; and
* Can be made in virtually any shape or size, and is flexible when
fabricated on flexible substrates;
* security cards;
* wireless sensors;
* radio frequency identification tags;
* chip memory backup;
* advanced drug delivery devices; and
* Micro-Electro-Mechanical Systems.
Personnel $ 400,000
Equipment $ 800,000
Intellectual property and license $ 200,000
Working Capital $ 1,500,000
---------------
Total $ 2,900,000
===============
The Competition.
----------------
Infinite Power Solutions, Inc. (Littleton, CO); Front Edge Technology, Inc.
(Baldwin Park, CA); Cymbet Corporation (Minneapolis, MN); Teledyne Electronic
Technologies (Newport Beach, CA); and Excellatron (Atlanta, GA). The
worldwide market for thin-film batteries may become quite large, and we view
these other licensees as allies in promoting the value of thin-film batteries
in the early years, whereas all licensees may become more competitive in later
years. The other licensees began their businesses in 1998 or later. Some are
better capitalized than we are; and some have greater manufacturing capacity
at this point. Some are focused on solely developing batteries, while others
are diversified.
Quarter ended: High Low
-------------- ---- ---
March 31, 2002 6.70 3.00
June 30, 2002 5.20 3.90
September 30, 2002 4.40 1.10
December 31, 2002 2.60 1.10
January 2, 2003 through
January 3, 2003 .14 .11
January 6, 2003 through
March 31, 2003* 1.85 1.01
June 30, 2003* 1.60 .80
September 30, 2003* 1.05 .49
December 31, 2003* 3.00 .95
Common Stock Issued for Number of Shares Sold Consideration
----------------------- --------------------- -------------
Services-2000 990,000 $31,470
Expenses-2000 678,730 $23,730
Settlement of Debt-2000 9,481,592 $174,490
Retirement of Preferred stock-2000 77,702 $33,195
Settlement of Debt-2001 175,000 $48,716
Sale of common stock at $0.20
per share 20,000 $40,000
Agreement and Plan of
Reorganization-2002 2,304,901 100% of the
outstanding shares of
Oak Ridge Nevada
Private Placement to
"Accredited Investors" in
2002 637,506 $1,463,000
United Capital 125,000 $62,000
Consulting Agreement
Issuance of common stock for
services at $.39 average 3,347,167 $1,171,508
Common stock issued for cash 65,020 $81,275
Holders.
--------
Title of Document Page
Report of Independent Accountants F-1
Consolidated Balance Sheet as of December 31, 2003 F-2
Consolidated Statements of Operations for the years ended
December 31, 2003 and 2002 and for the period from January
1, 1996 (date of inception of development stage company) to
December 31, 2003 F-3
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the period from January 1,1996 (date of
inception of development stage company) to December 31,
2003 F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2003 and 2002 and for the period from January 1,
1996 (date of inception of development stage company) to
December 31, 2003 F-6
Notes to Consolidated Financial Statements F-7
MADSEN & ASSOCIATES, CPA's INC. 684 East Vine St, # 3
Certified Public Accountants and Business Consultants Murray, Utah 84107
Telephone 801-268-2632
Fax 801-262-3978
Oak Ridge Micro-Energy, Inc.
Salt Lake City, Utah
s/Madsen & Associates, CPA's Inc.
Salt Lake City, Utah
OAK RIDGE MICRO-ENERGY, INC.
(Development Stage Company)
BALANCE SHEET
December 31, 2003
ASSETS
CURRENT ASSETS
Cash $ 327,678
------------
Total current assets 327,678
------------
EQUIPMENT - net of accumulated depreciation 389,432
------------
PATENT PENDING - net of amortization 12,411
------------
DEPOSIT 2,200
------------
$ 731,721
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 19,317
------------
Total current liabilities 19,317
------------
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized, $0.001 par value,
12,062,602 shares issued and outstanding 12,062
Capital in excess of par value 8,722,108
Stock subscriptions received - note 5 227,807
Accumulated deficit - note 1 (8,249,573)
-----------
Total stockholders' equity 712,404
-----------
$ 731,721
===========
OAK RIDGE MICRO-ENERGY, INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2003 and 2002 and for the Period from
January 1, 1996 (date of inception of development stage) to December 31, 2003
Period from
January 1,
1996 to
December 31, December 31,
2003 2002 2003
REVENUES $ 111,636 $ 4,570 $ 116,206
--------- --------- ---------
EXPENSES
License fees 20,000 10,000 30,000
Research and development 133,830 123,871 355,201
Administrative 1,552,703 549,696 2,236,789
Depreciation & amortization 74,192 27,721 101,913
--------- --------- ---------
1,780,725 711,288 2,723,903
--------- --------- ---------
NET LOSS - before other income and
expense (706,718) (116,761) (938,609)
OTHER INCOME AND EXPENSE
Interest income 2,799 8,765 11,564
Interest expense - - (340,159)
Loss on assets - - (4,608,767)
Gain on settlement of debt - - 1,615,082
--------- --------- ----------
NET LOSS $(1,666,290) $(697,953) $(5,929,977)
========= ========= ==========
NET LOSS PER COMMON SHARE
Basic and diluted $(0.16) $(0.08)
========= =========
AVERAGE OUTSTANDING SHARES
Basic (stated in 1000's) 10,356 8,261
------ -----
OAK RIDGE MICRO-ENERGY, INC.
(a Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the Period from January 1, 1996 (date of inception of development
stage) to December 31, 2003
______________________________________________________________________________
Common Stock Additional Accumulated
Shares Amount Paid-in Capital Deficit
Balance January 1, 1996 405,084 $ 405 $5,422,666 $(2,327,295)
Issuance of common stock for
services at $.70 29,898 30 20,903 -
Net operating loss for the year
ended December 31, 1996 - - - (4,748,837)
Net operating loss for the year
ended December 31, 1997 - - - (111,272)
Net operating loss for the year
ended December 31, 1998 - - - (31,347)
Net operating loss for the year
ended December 31, 1999 - - - (31,347)
Issuance of common stock for
services at $0.032 990,000 990 30,480 -
Issuance of common stock for
expenses at $0.035 678,730 679 23,051 -
Issuance of common stock for
settlement of debt at $0.018 9,481,592 9,481 165,009 -
Issuance of common stock for
retirement of preferred stock 77,702 78 33,117 -
Contributions to capital-expenses - - 15,000 -
Net operating profit for the year
ended December 31, 2000 - - - 1,473,829
Return and cancellation of common
stock (4,000,000)(4,000) 4,000 -
Issuance of common stock for payment
of debt at $0.28 175,000 175 48,541 -
Issuance of common stock for cash at
$2.00 20,000 20 39,980 -
Net operating loss for the year
ended December 31, 2001 - - - (116,761)
Issuance of common stock for all stock
of Oak Ridge Micro Energy - note 4 29,903 30 9,970 -
Issuance of common stock for cash-net
of costs-at $2.37-May 2002 600,006 600 1,387,400 -
Issuance of common stock for cash
at $2.00-September 2002 37,500 37 74,963 -
Issuance of common stock for services
at $2.00-December 2002 125,000 125 61,875 -
Net operating loss for the year ended
December 31, 2002 - - - (697,953)
Balance at December 31, 2002 8,650,415 8,650 7,336,955 (6,583,283)
OAK RIDGE MICRO-ENERGY, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the Period from January 1, 1996 (date of inception of development
stage) to December 31, 2003
______________________________________________________________________________
Common Stock Additional Accumulated
Shares Amount Paid-in Capital Deficit
Issuance of common stock for services
at $.39 average - 2003 3,347,167 3,347 1,303,943 -
Issuance of common stock for cash
at $1.25 - June 20, 2003 65,020 65 81,210 -
Net operating loss for the year
ended December 31, 2003 - - - (1,666,290)
Balance December 31, 2003 12,062,602 $12,062$8,722,108 $(8,249,573)
========== ======= ========= ===========
OAK RIDGE MICRO-ENERGY, INC.
(Development State Company)
STATEMENTS OF CASH FLOWS
for the Years Ended December 31, 2003 and 2002 and for the Period from
January 1, 1996 (date of inception of development stage) to December 31, 2003
Period from
January 1,
1996 to
December 31, December 31,
2003 2002 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,666,290) $(697,953) $(5,929,977)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation & amortization 74,192 27,721 101,913
Changes in deposits - (2,200) (2,200)
Changes in accounts payable (54,226) 70,325 385,510
Issuance of common stock for expenses
and contributions to capital for
expenses 1,307,293 72,000 1,551,699
Loss on assets - - 4,608,767
Gain on settlement of debt - - (1,615,082)
-------- --------- -----------
Net cash used in operating activities (339,031) (530,107) (899,370)
-------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (25,029) (462,363) (462,363)
Acquisition of patent pending (2,705) (13,662) (16,367)
-------- --------- -----------
(27,734) (476,025) (503,759)
-------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock subscriptions received 197,807 30,000 227,807
Proceeds from stock issued 81,275 1,388,000 1,503,000
--------- --------- -----------
279,082 1,418,000 1,730,807
--------- --------- -----------
Net change in Cash (87,683) 411,868 327,678
Cash at Beginning of Period 415,361 3,493 -
--------- --------- -----------
Cash at End of Period $ 327,678 $ 415,361 $ 327,678
========= ========= ===========
Issuance of 29,898 shares common stock for services-1996 $ 20,933
Issuance of 1,668,730 shares common stock for services
and expenses-2000 55,200
Issuance of 9,481,592 shares common stock for settlement of
debt-2000 174,490
Contribution to capital-expenses 15,000
Issuance of 175,000 shares common stock for payment of debt
-2001 48,716
Issuance of 125,000 shares common stock for services-2002 72,000
Issuance of 3,347,167 shares common stock for services-2003 1,307,293
Cost $ 487,392
Less accumulated depreciation 97,960
389,432
Long Lived-Assets
2004 26,400
2005 26,400
2006 11,000
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
---- --------- ----------- --------------
John B. Bates, President & 1/15/02 3/31/02
Ph.D. Director 1/15/02 *
CEO 1/15/02 3/31/02
CTO 3/31/02 *
Mark Meriwether
CEO 3/31/02 *
President 2/14/01 1/15/02
President 3/31/02 *
Director 2/14/01 *
Secretary 2/14/01 *
Treasurer 2/14/01 *
Section 16(a) of the Exchange Act have been timely filed and no other report
are presently required to be filed.
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years or Other All
principal periods Annual Restricted Option/ LTIP Other
position Ended $ $ Compen- Stock SAR's Payouts Compen-
Salary Bonus sation Awards$ # $ sation
------------------------------------------------------------------------------
Mark 12/31/03 0 0 $37,914 * 0 0 0
Meriwether 12/31/02 0 0 $62,000 0 0 0 0
President 12/31/01 0 0 0 0 0 0 0
Sec'y/
Treasurer
Director
Number and Percentage
Name and Address of Shares Beneficially Owned (1)
---------------- --------------------------------
John B. Bates, Ph.D. 4,519,902 - 29.5%
74 Rolling Links Blvd.
Oak Ridge, TN 37830
Confetti Enterprises, Inc. (2) 600,000 - 3.9%
3046 East Brighton Place
Salt Lake City, Utah 84121
Mark Meriwether (3) 4,629,410 - 30.2%
3046 East Brighton Place
Salt Lake City, Utah 84121
David W. Floor 975,000 - 6.3%
5820 So. Tolcate Woods Lane
Salt Lake City, Utah 84121
Number and Percentage
Name and Address of Shares Beneficially Owned (1)
---------------- --------------------------------
John B. Bates, Ph.D. 4,519,902 - 29.5%
74 Rolling Links Blvd.
Oak Ridge, TN 37830
Mark Meriwether (3) 5,229,410 - 34.1%
3046 East Brighton Place
Salt Lake City, Utah 84121
Exhibits*
Number
------
(i)
14 Code of Ethics
31 302 Certification of Mark Meriwether
32 906 Certification
(ii) Where Incorporated
In This Annual Report
---------------------
S-8 Registration Statement filed December Part I, Item 1
3, 2003**
8-K Current Report dated May 23, 2003, filed Part II, Item 10
June 9, 2003**
Form 8-A Registration Statement filed Part I, Item 1
August 10, 2002**
10-KSB Annual Report for the year ended Part I, Item 1
December 31, 2002**
8-K Current Report dated January 15, 2002, Part II, Item 11
filed January 24, 2002**
10-KSB Annual Report for the year ended Part I, Item 1
December 31, 2001**
8-K Current Report dated January 6, 2001, Part II, Item 11
filed February 14, 2001.
10-KSB Annual Report for the year ended
December 31, 2000** Part I, Item 1
Fee category 2003 2002
------------ ---- ----
Audit fees $5,875 $4,675
Audit-related fees $ 0 $ 0
Tax fees $ 250 $ 250
All other fees $ 0 $ 0
------- -------
Total fees $6,125 $4,925
Date: 04/14/04 By /s/ Mark Meriwether
Mark Meriwether, President and Director
Date: 04/14/04 By /s/ Mark Meriwether
Mark Meriwether, President/CEO and Director
This Code of Conduct (this "Code") is applicable to the (1) President and Chief Executive Officer, (2) Chief Financial Officer, (3) Chief Accounting Officer or Controller and (4) other persons performing similar functions (collectively, the "Covered Executives") of Oak Ridge Micro-Energy, Inc. ("Oak Ridge"). As used in this Code, "we", "our" or "us" means Oak Ridge, and "you" means a Covered Executive. The Covered Executives hold an important and elevated role in corporate governance, and are uniquely positioned and empowered to ensure that Oak Ridge's interests are appropriately balanced, protected and preserved. Oak Ridge's Board of Directors (the "Board") has adopted this Code to deter wrongdoing and to promote honest and ethical conduct, proper disclosure of financial information in Oak Ridge's periodic reports and compliance with applicable laws, rules and regulations by Oak Ridge's senior officers who have financial responsibilities.
General obligations.
In performing your duties, we expect you to:
* Conduct yourself honestly and ethically, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Refrain from using your position for personal gain or competing directly or indirectly with Oak Ridge.
* Provide, or cause to be provided, full, fair, accurate, timely and understandable disclosures in (i) reports and documents that we file with the Securities and Exchange Commission (the "SEC") and (ii) in other public communications made by us.
* Comply, and encourage others reporting to you to comply, in all material respects to all applicable rules and regulations of federal, state and local governments, the SEC and other appropriate private and public regulatory agencies.
* Comply, and encourage others reporting to you to comply, with this Code and all other codes of business conduct or ethics adopted by us from time to time.
* Promptly report, and encourage others reporting to you to report, any known waiver or violation of this Code to a member of the Board.
1 This Code is specifically intended to meet the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 (including any amendments).
The Board will have the sole and absolute discretionary authority to approve any changes to this Code and any waivers from this Code. Any waiver from this Code, including an implicit waiver, for a Covered Executive will be promptly disclosed on a Form 8-K or any other means approved by the SEC. Such disclosure will include the nature of the waiver, the name of the Covered Executive to whom the Board granted the waiver and the date of the waiver. Any change to this Code will be promptly disclosed as required by law or regulation of the SEC.
Administration of and Compliance with this Code.
Procedures for Raising Concerns. You are expected to comply with this Code and to report any possible violation of this Code, so that it can be investigated and evaluated. Concerns may be presented in person or in writing a member of the Board. Concerns may be reported on a confidential and anonymous basis. Written concerns should be addressed to a member of the Board at Oak Ridge Micro-Energy, Inc., Attention: Board of Directors, 275 Midway Lane, Oak Ridge, Tennessee, 37830.
Procedures for Investigating and Resolving Concerns. Reports of possible violations will be forwarded to a member of the Board, who may, in their discretion, assume responsibility for evaluating any possible violation and directing or conducting any investigation or may delegate any portion of such responsibility to a committee of the Board or another person or entity. The Board will have the authority to engage independent counsel and other advisers, as it deems necessary, to assist in its investigation and decision process.
After conducting the investigation, the results will be evaluated and the Board will authorize such response, follow-up and preventive actions, if any, as are deemed necessary and appropriate to address the substance of the reported possible violation. We reserve the right to take whatever action it believes appropriate, up to and including discharge of any Covered Executive determined to have engaged in improper conduct.
We will not penalize or retaliate against any person or entity for reporting a possible violation in good faith. We will not tolerate retaliation against any person or entity for submitting, or for cooperating in the investigation of, a possible violation. Any retaliation will warrant disciplinary action against the person who wrongfully retaliates, up to and including termination of employment.
I, Mark Meriwether, CEO, President and Secretary/Treasurer of Oak Ridge Micro-Energy, Inc. (the "small business issuer"), certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the small business issuer;
2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this Annual Report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and
c) disclosed in this Annual Report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions);
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Dated: 04/14/04 Signature: /s/Mark Meriwether
Mark Meriwether
President/Treasurer
|
In connection with the Annual Report of Oak Ridge Micro-Energy, Inc. (the "Registrant") on Form 10-KSB for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Annual Report"), I, Mark Meriwether, CEO, President, Secretary/Treasurer and director of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Annual Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Annual Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.
Dated: 04/14/04 /s/Mark Meriwether
-------------------------
President
CEO
Treasurer
Director
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