UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
RADIATE RESEARCH INC.
(Exact name of Company as specified in its charter)
Not Applicable
(Translation of Company's name into English)
Canada 1711 Not Applicable
(Jurisdiction of Incorporation or (Primary Standard Industrial (I.R.S. Employer Identification
Organization) Classification Code Number) Number)
Suite 444, 300 March Road,
Ottawa, ON, K2K 2E2, Canada
(613) 599-9108
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Micah Grinstead
Suite 444, 300 March Road,
Ottawa, ON, K2K 2E2, Canada
(613) 599-9108
Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
- ------------------------------------------------------- -----------------------------------------------------
David Dobbs Robert L. Sonfield, Jr.
DAVID M. DOBBS P.C. Sonfield & Sonfield:
8655 Via De Ventura, , Suite G-200 770 South Post Oak Lane
Scottsdale, AZ 85258 Houston, Texas 77056, USA
Telephone (480) 922-0077 Telephone: (713) 877-8333
Fax: (713) 877-1547
- ------------------------------------------------------- -----------------------------------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |-|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
|-|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
- ------------------------ -------------------------- -------------------- ------------------- ----------------
Number of Shares to be Proposed maximum Proposed maximum
Title of each class of registered offering price per aggregate Amount of
securities being share offering price registration
registered fee
- ------------------------ -------------------------- -------------------- ------------------- ----------------
Class A Common Shares 1,637,400(1) $0.10(2) $163,740(1) $19.27
- ------------------------ -------------------------- -------------------- ------------------- ----------------
Class A Common Shares 2,000,000 $0.075 $150,000 $17.55
issuable upon exercise
of Warrants(3)
- ------------------------ -------------------------- -------------------- ------------------- ----------------
Total 3,637,400 $ $313,740 $36.82
- ------------------------ -------------------------- -------------------- ------------------- ----------------
(1) There is also registered hereunder an indeterminate number of shares of
common stock as shall be issuable as a result of a stock split, stock
dividend, combination or other change in the outstanding shares of
common stock.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act. (3) The price per share is
based upon the exercise price of the warrants pursuant to which such shares of
common stock are issuable, in accordance with Rule 457(g).
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective on such date as the Commission, acting
pursuant to Section 8(a) of the Securities Act of 1933, as amended, may
determine.
The information in this prospectus is incomplete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated January_________, 2006
Prospectus
3,637,400 Shares of Class A Common Shares
This prospectus relates to our Class A Common Shares ("Common Stock") being
registered for possible resale, from time to time, to allow the shareholders
identified in this prospectus ("Selling Shareholders") to sell up to 3,637,400
shares of our Common Stock. The Selling Shareholders currently hold 1,637,400
shares of Common Stock and warrants to acquire 2,000,000 shares of our Common
Stock. See the section in this prospectus entitled "Selling Shareholders" for
the names of the Selling Shareholders.
We will receive no proceeds from the sale of any of our Common Stock by the
Selling Shareholders. We will receive the proceeds from the Selling
Shareholders' exercise of warrants. However, the Selling Shareholders are under
no obligation to exercise the warrants.
Our Common Stock is not traded on any securities exchange or on the OTC Bulletin
Board. We expect to apply to be quoted on the OTC Bulletin Board shortly after
our registration statement becomes effective. Shortly thereafter we intend to
apply to be quoted on the Frankfurt Exchange.
Investing in our Common Stock involves a high degree of risk. You should
purchase shares only if you can afford a complete loss of your investment. You
should read the "Risk Factors" section of this Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January____, 2006.
Table of Contents
Prospectus Summary 5
Risk Factors 6
Forward-Looking Statements 10
Use of Proceeds 10
Dividends 11
Selected Financial Data 11
Management Discussion and Analysis of Financial Condition
and Results of Operations 14
Business 17
Management 18
Principal Shareholders 22
Related Party Transactions 23
Selling Shareholders 23
Plan of Distribution 28
Description of Share Capital 30
Taxation 36
Legal Matters 37
Where You Can Find More Information 37
Index to Financial Statements 38
Except as otherwise required by the context, all references in this prospectus
to "we," "us, "our," the Company or "Radiate" refer to the operations of Radiate
Research, Inc., a Canadian corporation.
Prospectus Summary
This summary provides a brief overview of some information about us and
this offering. You should read the entire prospectus carefully including the
risk factors and our financial statements and related notes before deciding to
invest in our Common Stock.
Unless otherwise indicated all amounts included in this prospectus have
been expressed in Canadian Dollars.
Our Company
We are a Canadian company involved in the development and sale of products for
use with our low voltage foil heating system. Our primary product is the
Mothers Warmth Comfort Change System designed to provide a warm and comfortable
surface for changing baby's diapers. We commenced sales activities in Canada
in early 2005. We have targeted retail stores that specialize in baby products
and we intend to continue to develop our market in Canada and commence
marketing activities the United States. We have also developed products that
use our heating system for floor heating but we have not generated sales to
third parties. We were incorporated in Canada on June 10, 2004. Our principal
office is located at Suite 444, 300 March Road, Ottawa, ON K2K 2E2,
---
Canada and all of our executive administrative sales and research and
development functions are based at that office. Our telephone
number at our principal office is (613) 599-9108.
Risk Factors
For a discussion of some of the risks you should consider before purchasing
shares of our Common Stock, you are urged to carefully review and consider the
section entitled "Risk Factors" in this prospectus.
The Offering
The selling Shareholders identified in the section below of this prospectus
entitled "Selling Shareholders" are offering on a resale basis a total of
3,637,400 shares of the following shares of our Common Stock:
* 1,400,00 shares of our Common Stock issued in connection with our
November 2005 private placement;
* 37,400 shares of our Common Stock issued to our existing shareholders as
part of our November 9, 2005 corporate reorganization;
* 2,000,000 shares of our Common Stock issuable at a price of $0.075 per
share upon the exercise of warrants issued to certain of the Selling
Shareholders in our December 10, 2005 private placement
Risk Factors
An investment in our Common Stock is very risky. You may lose the entire amount
of your investment. Before you invest in shares of our Common Stock, you should
be aware of various risks, including those described below. You should carefully
consider these risk factors, together with all of the other information included
in this prospectus, before you decide whether to purchase the shares of our
Common Stock. The risks set out below are not the only risks we face.
We are a development stage company and we only have a limited operating history
on which to evaluate our business or prospects.
Our business was formed in June 2004 and we have only a limited operating
history on which you can base an evaluation of our business and prospects, with
only approximately $7,454 in net revenue generated from our initial product over
the period from June 10, 2005 (inception) to May 31, 2005. Accordingly, our
business prospects must be considered in light of the risks, uncertainties,
expenses and difficulties frequently encountered by companies in their early
stages of development.
We will require additional financing in order to continue the development of our
products and our business operations. Such financing may not be available on
acceptable terms, if at all.
We currently are dependent on the sale of one product. We don't know if it will
achieve significant levels of market acceptance or if we will be able to develop
other products that will achieve market acceptance. We may encounter unforeseen
difficulties that may deplete our limited capital resources more rapidly than
anticipated. We may be required to make significant product development
expenditures and spend additional money to maintain and expand our marketing
efforts. We may need to seek additional equity financing in the future if our
products do not generate revenue or if our expenses are greater than expected.
The timing and amount of any capital requirements cannot be predicted at this
time. We cannot be sure that any financing will be available on acceptable
terms, if at all. If such financing is not available on satisfactory terms, we
may be unable to continue, develop or expand our business, develop new products
or penetrate existing markets at the rate desired and our ability to continue in
business may be jeopardized. If adequate financing is not available, we may be
required to terminate or significantly curtail our operations. This would have a
negative impact on the value of your shares.
We have experienced significant losses since inception and there is doubt about
our ability to continue as a going concern.
Our continued existence is dependent upon our ability to generate additional
revenue, achieve profitability and maintain adequate financing arrangements.
Our failure to do so would have severe consequences on our business, financial
condition and results of operations. Since inception, through May 31, 2005 we
have generated revenue of $7454 and net losses totalling approximately $213,539.
We had working capital of Cdn$6,437 as of May 31, 2005. Because of our limited
revenue, our losses and our limited capital our auditor has expressed doubt
about our ability to continue as a going concern.
We may be held liable for harm caused by products that our customers use.
Our products are used in connection with infant care and home heating. Should
these devices fail to perform as intended, or should these devices directly or
indirectly cause injuries or illness to people, we may be required to incur
substantial costs in defending against claims and may be required to pay damages
arising from these actions. Damages awarded in a product liability action could
be substantial and our financial condition would be negatively affected.
Our success will be dependent upon our ability to adapt to technological
advances.
Our success will be dependent upon our ability to adapt to technological
advances and changes in the industry. There is no assurance that we will be
successful in our efforts in these respects. For example if another company
discovers a means of effective low temperature heating such as radiant heating
systems, it may have a negative impact on us. We must also keep abreast of
technological advances such as improved High Temperature Systems (such as
furnaces and radiators).
Our success will depend upon the continued services of our senior management.
Our success will depend upon the continued services of our President: Micah
Grinstead, President. The loss of his services of key personnel could have a
material adverse effect upon our business. We currently do not maintain any key
personnel insurance and we have no employment agreements with him.
We have never declared any dividends and we are not likely to declare any in
the near future.
We have not declared any dividends since inception, and we have no present
intention of paying any cash dividends on our Common Stock in the foreseeable
future. The payment of dividends, if any, in the future, rests in the discretion
of our Board of Directors and will depend, among other things, upon our
earnings, capital requirements and financial condition.
The issuance of additional shares may impact the value of our Common Stock.
We have an unlimited number of authorized shares of Common Stock. We may issue
more shares to fund our operations. Sales of substantial amounts of Common Stock
(including shares issuable upon the exercise of stock options, the conversion of
notes and the exercise of warrants), or the perception that such sales could
occur, could materially adversely affect prevailing market prices for our Common
Stock and our ability to raise equity capital in the future. In addition, our
board of directors has the authority without further shareholder approval to
issue special shares with rights superior to those currently held by our common
shareholders.
Radiate is a Canadian company and it may be difficult for United States
shareholders to effect service on or to realize on judgments obtained against
Radiate in the United States.
Radiate is a Canadian corporation. All of our
directors and officers are residents of Canada and a significant part of our
assets are, or will be, located outside of the United States. As a result, it
may be difficult for shareholders resident in the United States to effect
service within the United States upon us or upon, directors, officers or experts
who are not residents of the United States, or to realize in the United States
judgments of courts of the United States predicated upon civil liability of
Radiate, or directors or officers. Accordingly, United States shareholders may
be forced to bring actions against Radiate and our directors and officers under
Canadian law and in Canadian courts in order to enforce any claims that they may
have against Radiate or our directors and officers.
There may be material tax consequences to United States investors
There may be material Canadian federal income tax consequences that apply to a
shareholder who is resident in the United States of America. You should consult
with your own tax adviser to determine whether an investment in the Common Stock
of Radiate is appropriate for you.
Our Officers and Directors and existing shareholders own a substantial interest
in our voting shares including our Class A Special Shares and Class B Special
Shares and purchasers of our Common Stock offered pursuant to this prospectus
will not have a significant voice in our management.
Our officers and directors currently collectively own approximately 2.06% of our
issued and outstanding shares of Common Stock. However, these officers and
directors also own Class A and B Special Shares which are convertible at the
option of the holder eighteen months after December 10, 2005, Upon conversion
our officers and directors will collectively own approximately 26.46%.
Collectively, our Class A Special Shares and Class B Special shares are entitled
to voting rights equal to the number of shares of Common Stock into which they
are convertible. The Class A Special Shares are convertible into the number of
shares that equal 75% of the then outstanding number of share of Common Stock.
Each Class B Special Share is convertible into five shares of Common Stock. The
holders of our Class A Special Shares and Class B Special Shares, if acting
together, will be able to significantly influence all matters requiring approval
by our stockholders, including the election of directors and the approval of
mergers or other business combination transactions.
There is no market for our Common Stock and there will be no market until a
market maker agrees to quote our stock and makes an application for listing our
stock on the OTC Bulletin and our application is accepted. There is no market
for our Common Stock and there will be no market for our Common Stock in the
United States until it is quoted on the OTC Bulletin Board. No application has
been filed but we intend to have our shares quoted on the OTC Bulletin Board. No
assurance can be given that our Common Stock will be quoted on the OTC Bulletin
Board or elsewhere. No application has been filed but we intend for our shares
to trade on the Frankfurt Exchange. Failure to obtain a Frankfurt Exchange
listing could result in adverse Canadian Income Tax results for our non-Canadian
Shareholders.
Our success will depend on our ability to protect our proprietary technology.
Our rights to a substantial portion of our technology are as the assignee of
United States patent applications. We have not been granted any patents and we
don't know when or if any patents will be granted. We hold no U.S. trademarks.
Our success will depend in part on our ability to protect and exploit our
intellectual property, to obtain patents, to defend patents once obtained, and
maintain our trade secrets. Failure to do so may introduce competition that
could significantly reduce our ability to generate revenue.
The sale or transfer of our Common Stock by shareholders in the United States
will be subject to the so-called "penny stock rules."
Under Rule 15g-9 of the
Exchange Act, a broker or dealer may not sell a "penny stock" (as defined in
Rule 3a51-1) to or effect the purchase of a penny stock by any person unless:
(a) such sale or purchase is exempt from Rule 15g-9;
(b) prior to the transaction the broker or dealer has (1) approved the
person's account for transaction in penny stocks in accordance with Rule
15g-9, and (2) received from the person a written agreement to the
transaction setting forth the identity and quantity of the penny stock to
be purchased; and
(c) the purchaser has been provided an appropriate disclosure statement as to
penny stock investment.
The SEC adopted regulations that generally define a
penny stock to be any equity security other than a security excluded from such
definition by Rule 3a51-1. Such exemptions include, but are not limited to (1)
an equity security issued by an issuer that has (i) net tangible assets of at
least $2,000,000, if such issuer has been in continuous operations for at least
three years, (ii) net tangible assets of at least $5,000,000, if such issuer has
been in continuous operation for less than three years, or (iii) average revenue
of at least $6,000,000 for the preceding three years; (2) except for purposes of
Section 7(b) of the Exchange Act and Rule 419, any security that has a price of
$5.00 or more; and (3) a security that is authorized or approved for
authorization upon notice of issuance for quotation on the NASDAQ Stock Market,
Inc.'s Automated Quotation System.
It is likely that shares of our Common Stock,
assuming a market were to develop in the United States, will be subject to the
regulations on penny stocks; consequently, the market liquidity for the Common
Stock may be adversely affected by such regulations limiting the ability of
broker/dealers to sell our Common Stock and the ability of shareholders to sell
their securities in the secondary market in the US.
Moreover, our shares may only be sold or transferred by shareholders in those
jurisdictions in the United States in which an exemption for such "secondary
trading" exists or in which the shares may have been registered.
Forward-Looking Statements
This prospectus contains various forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act and Section 21E of the Exchange Act that are based on our beliefs
as well as assumptions made by and information currently available to us. For
this purpose, any statements contained in this Prospectus that are not
statements of historical fact may be deemed to be forward-looking statements.
When used in this prospectus, the words "believe," "expect," "anticipate,"
"estimate," "plan" and similar expressions are intended to help identify
forward-looking statements. These statements are subject to certain risks,
uncertainties, and assumptions, including those identified under "Risk Factors"
above. These statements by their nature involve substantial risks and
uncertainties and actual results may differ materially depending on a variety of
factors, many of which are not within our control. These factors include, but
are not limited to, economic conditions generally and in our industry;
competition within our industry, including competition from much larger
competitors; technological advances which could render our products less
competitive or obsolete; failure by us to successfully develop new products or
to anticipate current or prospective customers' product needs; price increases
or supply limitations for components purchased by us for use in its products;
and delays, reductions, or cancellation of orders that may be placed with us.
There can be no assurance that we will be able to develop our products or
markets for our products in the future.
Use of Proceeds
We will not receive any proceeds from the Selling Shareholders' sale of shares
of our Common Stock. However, we will receive the proceeds from any sale of
Common Stock to the Selling Shareholders upon the exercise of the Selling
Shareholders' warrants, when and if they are exercised. If the Selling
Shareholders exercise their warrants, then we expect to use substantially all
the net proceeds for research and development of our products, and expansion of
sales and marketing activities, and other general working capital and corporate
purposes. The amounts we actually expend for working capital and other purposes
may vary significantly and will depend on a number of factors including, but not
limited to, the actual net proceeds received, the amount of our future revenues
and other factors described under "Risk Factors." Accordingly, our management
will retain broad discretion in the allocation of the net proceeds of these
funds.
Dividends
We have never declared or paid any cash dividends on our Common Stock. We
anticipate that any earnings will be retained for development and expansion of
our business and we do not anticipate paying any cash dividends in the near
future. Our board of directors has sole discretion to pay cash dividends or
other dividends with respect to our Common Stock based on our financial
condition, results of operations, capital requirements, contractual obligations
and other relevant factors.
Selected Financial Data
The following table sets forth, for the period indicated selected financial and
operating data for Radiate. This information should be read in conjunction with
our financial statements and notes thereto. The selected financial data provided
below are not necessarily indicative of our future results of operations or
financial performance. We have not paid any dividends on our common shares and
we do not expect to pay dividends in the foreseeable future.
The year end financial statements of Radiate have been audited by Malone &
Bailey, PC independent registered public accountants. The financial statements
are maintained in Canadian dollars, and have been prepared in accordance with
accounting principles generally accepted in the United States.
June 10, 2004
(Inception) Through
May 31, 2005
---------------------
Sales $ 7,454
Cost of goods sold 13,014
---------------------
Gross loss (5,560)
---------------------
Operating costs
Consulting 91,750
Research and development 54,970
Professional fees 16,010
Other general and administrative 45,249
---------------------
Total operating costs 207,979
---------------------
Net loss for the period $ (213,539)
---------------------
Net loss per share, basic and diluted $ (0.039)
Weighted average shares outstanding used
in per share computations 5,450,000
Balance Sheet Data May 31, 2005
Current assets
Cash $ 13,683
Accounts receivable 1,912
Value added taxes recoverable 3,072
Inventory 8,278
Prepaid assets 7,500
---------------------
Total assets $ 34,445
Current liabilities
Accounts payable and accrued liabilities 23,019
Sales taxes payable 444
Due to former officer 4,545
---------------------
Total current liabilities 28,008
Shareholders' equity
Deficit accumulated during the development stage (213,539)
---------------------
Total shareholders' equity 6,437
---------------------
Total liabilities and shareholders' equity $ 34,445
====================
The "Assets" figures contained in the above table, and in the table below,
include an item described as "Value Added Taxes Recoverable". Value Added Taxes
Recoverable is made up of value-added tax amounts incurred on qualified Canadian
expenditures net of Value Added Taxes charged on specified sales, that are
refundable from the Government of Canada. This amount is not related to other
income.
Currency Exchange Rate Information
The rate of exchange means the noon buying rate in New York City for cable
transfers in Canadian dollars as certified for customs proposed by the Federal
Reserve Bank of New York. The average rate means the average of the exchange
rates on the last date of each month during a year.
2004 2003 2002 2001 2000
High $1.3970 $1.5747 $1.6003 $1.6034 $1.5583
Low $1.1775 $1.3484 $1.5593 $1.4935 $1.4318
Average for Period $1.3015 $1.4615 $1.5597 $1.5494 $1.4854
End of Period $1.2034 $1.3484 $1.5593 $1.5928 $1.4995
The exchange rate on August 5, 2005 was $1.2185.
The high and low exchange rates for the six months through July 2005 are as
follows:
February March April May June July
2005 2005 2005 2005 2005 2005
High 1.2562 1.2463 1.2568 1.2703 1.2578 1.2437
Low 1.2294 1.2017 1.2146 1.2373 1.2256 1.2048
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
We have been engaged in the research, development and sale of our primary
product, Mothers Warmth Comfort Change System since our inception on June 10,
2004. Our revenue to date has consisted of sales of the Mothers Warmth Comfort
Change Systems commencing in January 2005.
We believe the following accounting policies are the most critical to us, in
that they are important to the portrayal of our financial statements and they
require our most difficult, subjective or complex judgments in the preparation
of our financial statements:
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, services
have been rendered, the sales price is fixed or determinable, and collectibility
is reasonably assured.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (R), "Accounting for
Stock-Based Compensation" SFAS No. 123 (R) establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123 (R) requires that the fair value of such equity
instruments be recognized as expense in the historical financial statements as
services are performed. Prior to SFAS No. 123 (R), only certain pro forma
disclosures of fair value were required. SFAS No. 123 (R) shall be effective for
small business issuers as of the beginning of the first interim or annual
reporting period that begins after December 15, 2005. The adoption of this new
accounting pronouncement is expected to have a material impact on the financial
statements of Radiate during the calendar year 2006.
Results of Operations
For the period from June 10, 2004 (Inception) through May 31, 2005
Revenue
We generated of Revenue of $7,454 and incurred Cost of Goods Sold of $13,014 for
the period from June 10, 2004 (inception) through May 31, 2005. The Gross Loss
was attributable to estimation issues and start up costs during our initial year
of operations together with additional product costs incurred due to low
volumes.
Operating Expenses
We expended $207,979 on operating costs for the period from June 10, 2004
(Inception) through May 31, 2005. Operating costs included Consulting Fees of
$91,750; Research and Development of $54,970; Professional Fees of $16,010 and
General and Administrative Costs of $45,249.
We incurred a net loss for the period from June 10, 2004 (Inception) through May
31, 2005 of $213,539.
Liquidity and Capital Resources
At May 31, 2005 we had Current and Total Assets of $34,445 comprised of Cash of
$13,683, Receivables of $4,984, Inventory of Raw Materials and Finished Goods of
$8,278 and Prepaid Assets of $7,500.
We had total liabilities of $28,008 as of May 31, 2005, consisting of $23,019 of
accounts payable and accrued expenses, $444 of sales taxes payable, and $4,545
of loans payable to a related party.
We had working capital of $6,437 at May 31, 2005.
We had a total accumulated deficit of $213,539 as of May 31, 2005.
We used $210,838 for operating activities for the period from June 10, 2004
(inception) through May 31, 2005, which included a net loss of $213,539 as well
as an increase in accounts payable and accrued expenses of $23,019 and Sales
Taxes Payable of $444 net of what we were able to generate from operating
activities by increases in Accounts Receivable of $1,912 Value Added Taxes
Recoverable of $3,072; Inventory of $8,278 and Prepared Assets of $7,500.
We had $224,521 in net cash provided by financing activities for the period from
June 10, 2004 (inception) through May 31, 2005. This resulted from advances from
related parties of $4,545, and proceeds from the sale of our common stock of
$219,976.
We believe we can satisfy our cash requirements until the end of the fourth
quarter of 2005, assuming the subscription of share warrants. The timing of
these additional subscriptions of share warrants is contingent upon our
obtaining effectiveness of this Registration Statement.
If we don't have sufficient funds to continue our operations as planned, we plan
to scale down our operations and/or accrue salaries and expenses until
additional financing can be raised. However, there can be no assurance that any
of the warrants will be exercised or that new capital will be available to us,
or that adequate funds for our operations, or will be available on terms
satisfactory to us. We have no commitments from officers, directors or
affiliates to provide funding. Our failure to obtain adequate additional
financing may require that we delay, curtail or scale back some or all of our
operations. Any additional financing may involve dilution to our then-existing
shareholders.
Our independent registered accounting firm issued its report that included an
explanatory paragraph to highlight items that raise substantial doubt about our
ability to continue as a going concern, and the financial statements as
presented do not include any adjustments relating to the classification of the
liabilities that might be necessary should we be unable to continue as a going
concern.
Amounts spent during each of last two years on research and development
activities
Our Research and Development expenses since inception relates to developing
systems and equipment utilizing foil heating technology. Since inception we have
spent $54,970 on Research and Development.
Business
Overview
Radiate Research, Inc. was incorporated in Canada on June 10, 2004. Since
inception we have been engaged in research and development of our primary
product, Mothers Warmth Comfort Change System. We are currently developing a
range of products for use with the low voltage foil system. Since inception we
have generated revenues of a total of $7,454.
Our Mothers Warmth Comfort Change System has been placed in retail locations
across Ontario, Canada, including, Ottawa, Kemptville, Barrie, Calgary and
Toronto.
Products
The Mothers Warmth Comfort Change System ("Change System") is a contour change
pad that has an
embedded low voltage heating element. This element is regulated to approximately
31(Degree)C to equal the surface body temperature of an adult human. The
temperature is regulated by an embedded thermostat that prevents the unit from
overheating. The heating element of the Change System is based on a low voltage
flat foil system that is only approximately 0.2mm thick. The foil is comprised
of two sheets of polyester with aluminium foil patterns laminated between these
sheets.
The Change System includes the heated change pad, a terry cloth cover
and a fleece blanket. The Change System will also warm diapers, wipes, and
ointment as a by-product of its normal function. One benefit of the Change
System is that the infant is less aroused during the changing process.
The Change System is currently manufactured pursuant to the terms of a License
Agreement with Abond Corporation ("Abond"). We have granted Abond a five-year
non-exclusive license to manufacture and sell the Change Systems and any
improvements or alterations.
We have also developed heated floor products using
the low voltage elements. We don't presently expect to actively market these
products.
Competition
We are involved primarily in the infant accessory market.
Although there are a number of products that include contour changing tables,
and warming devices for baby wipes we are not currently aware of any competitive
products that include the features of our Mother's Warmth Contour Comfort Change
System.
We also have developed products for the floor heating market that we
don't presently intend to market. There are several competitors in the radiant
floor heating market.
Research and Development, Patents and Licenses
Since inception in June 2004 we have been engaged in research and development of
products using a low voltage foil heating system. We have focused our efforts on
the infant accessory market and the home comfort market. We intend to focus on
the infant accessory market in the future. We have expended approximately
$54,970 on research and development of our low voltage foil heating system and
the development of our Mothers Warmth Comfort Change System and related
products.
We are the assignee of a United States design patent application for a heated
change pad system that was originally filed with the United States Patent and
Trademark Office in December 2004. We are the assignee of a United States
utility provisional patent application filed in March of 2005.
Sales and Marketing
We have targeted the specialty infant retail stores in Canada and we intend to
target the same market in the United States. Our sales strategy includes using
Abond to sell to large retailers in Canada. Under the terms of our license
agreement Abond is entitled to sell to retailers with more than 15 stores. Abond
has agreed to pay us an annual royalty of 7% of the Net Sale Price of our Change
System. Abond intends to market our Change System under its own brand.
Property
Our executive office is located at Suite 444, 300 March Road, Ottawa, ON, K2K
2E2, Canada.
Employees
We currently have one full time employee and one consultant.
Management
The names, ages and titles of our directors and executive officers are set forth
below:
Other Reporting Companies
Name Age Position in Canada or the United States
Company Position
Micah Grinstead 42 President & CEO - None None
Director
Chris Skillen 58 Director Endo Networks Inc Chairman,
Park Avenue Investments, Inc. Director
Harry Keays 55 Director None
Edward Napke 81 Director None
Ronen Katz 42 Director None
William L Sklar 57 Director Pathogenics, Inc Director
PaperFree Medical Solutions, Inc. President,
Director
The following sets out the principal occupations and related experience for the
directors and senior officers of the Company over the past five years.
Micah Grinstead - Director and President
Mr. Grinstead is President of the Company and
has been a Director since May 2, 2005. Prior thereto, he gained extensive
progressive operational experience, manufacturing both on and off shore. His
employment background includes such companies as Siltronics, SilCom Research
Limited, GDI Hong Kong as Manager of Canadian Operations, Cygnus Satellite
Systems, SiGEM and most recently, he served as the Canadian Operations Manager
at Dowslake MicroSystems.
Chris Skillen - Director
Mr. Skillen has been a Director of the Company May 2, 2005. He heads a
consulting company providing investment and advisory services to small and
medium sized technology companies. Mr. Skillen founded The Crowntek Business
Centers, a significant Canadian computer distributor in the early eighties. Mr.
Skillen was CEO of Telepanel Systems Inc., a TSX and Nasdaq listed company until
August 2000. Mr. Skillen is Chairman of Metasoft Systems Inc., a Vancouver
company, which provides online searchable databases to non-profit organizations
and charitable foundations in North America. Mr. Skillen is also Chairman of
Endo Networks Inc., a Nasdaq listed company providing consumer engaging
applications through the internet and kiosk interfaces. Mr. Skillen is also a
director Of Park Avenue Investments, Inc. a TSX-V listed company. Mr. Skillen is
also a director and advisor in a number of private companies including Hotspex
and ES3.
Harry Keays - Director
Mr. Keays has been a Director since October 26, 2005. Mr. Keays graduated from
Queens University in 1973. Mr. Keays is presently President of Keays Business
Management, Inc. He was previously employed and the Chief Financial Officer of
United Marine Electronics and Communications, Inc. formerly known as United
Telephone Company, Ltd. He is a member of the Institute of Chartered Accountants
of Ontario.
Dr. Edward Napke, MD - Director
Dr. Napke has been a Director since October 26, 2005. Dr. Napke is currently
serving as a consultant for a World Health Organization Collaborating Centre for
Drug Monitoring. He served as the Canadian representative in developing the
World Health Organization drug monitoring program.
Ronen Katz - Director
Mr. Katz has been a Director since October 26, 2005. Mr. Katz was employed by
Abond Corporation in 1987. In 1996 he became President of Abond Corporation and
he continues to serve in that capacity. William Sklar - Director Mr. Sklar has
served as a Director since October 26, 2005. Mr. Sklar has served as a
consultant with Willmar Management Corp. since 1988. Since September 2004 Mr.
Sklar has been the President and a Director of PaperFree Medical Solutions,
Inc., a company trading on the OTC BB. He has also served as a Director of
Pathogenics, Inc., a public company since January 2005. From July 1983 to
October 1988 Mr. Sklar was the owner of Western Bag & Burlap a textile
manufacturer.
Ross Tuddenham - Senior Advisor
Mr. Tuddenham has served as a consultant to Radiate since March 2005. In 2004 to
2005 he served as a consultant to SM Systems , a strategic sourcing solutions
company. He has been involved in the creation, acquisition, management and
structuring of businesses for the past thirty years.
Neither the Company nor any of its officers, directors or controlling
shareholders has (i) been the subject of any penalties or sanctions imposed by a
court relating to Canadian securities legislation or by a Canadian securities
regulatory authority, (ii) entered into a settlement agreement with a Canadian
securities regulatory authority, or (iii) been subject to any other penalties or
sanctions imposed by a court or regulatory authority that would likely be
considered important to a reasonable investor making an investment decision.
Executive Compensation
There is presently one Executive Officer of Radiate, Micah Grinstead, President
& CEO "Executive Officer" means the president,any vice-president in charge of a
principal business unit such as sales, finance or production, any officer of the
Company or a subsidiary who performs a policy-making function for the Company
whether or not that person is also a director of the Company or the subsidiary,
and the chairman and any vice-chairman of the board of directors of the Company
if that person performs the functions of that office on a full-time basis.
Set out below is a summary of compensation paid during the Company's most
recently completed fiscal year to the Company's Executive Officers:
Summary Compensation Table
All Other
Compen-
Name and sation
Principal Position Year Annual Compensation Long Term Compensation ($)
Awards Payouts
Securities Restricted Long
Other Under Shares or Term
Annual Options/ Restricted Incentive
Compen- SARs Share Plan
Salary Bonus sation Granted Units Payouts
($) ($) ($) (#) ($) ($)
Micah Grinstead 2005 $15,000 0 0 0 0 0 0
President and Director
Ross Tuddenham 2005 0 0 0 0 0 0 0
Senior Advisor
Chris Skillen 2005 0 0 0 0 0 0 0
Director
Dr. Edward Napke 2005 0 0 0 0 0 0 0
Director
William L Sklar 2005 0 0 0 0 0 0 0
Director
Ronen Katz 2005 0 0 0 0 0 0 0
Director
Harry Keays 2005 0 0 0 0 0 0 0
Director
Options and Stock Appreciation Rights (SARs)
No options or SARS have been granted to Directors, Officers or employees of the
Company. The board of Directors of the Company have not adopted a stock option
plan but may do so in the future. The terms of any such plan have not been
determined.
Compensation of Directors
The Company has no arrangements, standard
or otherwise, pursuant to which directors are compensated by the Company for
their services in their capacity as directors, or for committee participation,
involvement in special assignments or for services as consultant or expert
during the most recently completed financial year.
None of our directors have received any manner of compensation for services
provided in their capacity as directors during the Company's most recently
completed financial year.
Long Term Incentive Plan (LTIP) Awards
The Company does not have LTIP awards pursuant to which cash or non-cash
compensation is intended to serve as an incentive for performance whereby
performance is measured by reference to financial performance or the price of
the Company's securities, was paid or distributed.
Defined Benefit or Actuarial Plan Disclosure
The Company has no defined benefit or actuarial plans
Board Practices
The board of Directors of the Company is currently comprised of Micah Grinstead,
Harry Keays, Dr. Ed Napke, Chris Skillen, Ronen Katz and William L. Sklar. Each
Director of the Company is elected annually and holds office until the next
Annual General Meeting of Shareholders unless that person ceases to be a
Director before that date. As soon as reasonably practicable after the effective
date of our registration statement we intend to establish an audit committee
comprised of independent directors who have suitable financial expertise.
Employment Agreements
We currently have no employment agreements.
Principal Shareholders
The following table lists as of December 1, 2005 the share ownership of all of
our Directors, executive officers, and holders of 5% or more of our outstanding
Common Stock on both an issued and fully diluted basis. The A and B Special
Shares, while unconverted have voting rights which are not reflected in the
percentage of Shares Held in the Current Holdings column below. We have no
incentive stock options outstanding.
----------------------------------------------------------------
Current Holdings Post Conversion
----------------------------
Name and Position Number of Percentage of Number of Percentage of
Common Shares held Common Shares
Shares Held (%) Held Shares held (%)
----------------------------------------------------------
Micah Grinstead, President 32,000 0.88% 2,951,939 10.22% (1)
and Director
Harry Keays, Director 3,000 0.08% 276,744 0.96% (1)
Dr. Edward Napke, Director 3,800 0.10% 350,543 1.21% (1)
Chris Skillen, Director 3,600 0.99% 3,320,932 11.50% (1)
William L Sklar, Director 250,000 0.86% (2)
Ross Tuddenham, consultant 500,000 1.71% (2)
Bayside Associates Ltd. 280,000 18.69% 680,000 2.33% (3)
Manillo Investors, Ltd. 280,000 18.69% 680,000 2.33% (3)
Kensington Group, Ltd. 280,000 18.69% 680,000 2.33% (3)
Trufello Associates, Ltd. 280,000 18.69% 680,000 2.33% (3)
Castlegate Group Ltd 280,000 18.69% 680,000 2.33% (3)
(1) after conversion of the Class A Special Shares
(2) after conversion of the Class B Special Shares
(3) after the exercise of the Warrants held by the
holder and after taking into consideration the
conversion of outstanding Preferred Class A and
Class B Special Shares.
As of December 10, 2005, 2005 Radiate had 54 shareholders of record. Other than
as disclosed above we are not aware of any other company, any foreign government
or any other person, jointly or severally, that directly or indirectly controls
Radiate. We are not aware of any arrangements the operation of which may at a
future date result in a change in control of Radiate.
Related Party Transactions
We entered into a License Agreement with Abond Corporation on March 9, 2005. One
of our Directors, Mr. Ronen Katz is an officer and director of Abond Corporation
and he owns 50% of the outstanding common stock of Abond. The License Agreement
grants Abond Corporation the non-exclusive right to manufacture and market our
Mothers Warmth Comfort Change System for a period of five years. The License
Agreement requires that Abond Corporation pay us an annual royalty of seven
percent (7%) of the Net Sales Price of Change System.
We made payments of $78,000 to John Roberts for the period ending May 31, 2005.
Mr. Roberts was a member of our Board of Directors and he was our President
until May 2, 2005.
Selling Shareholders
The following table sets forth the name of each Selling Shareholder,
the number of shares of Common Stock and the number of shares underlying the
warrants owned by each Selling Shareholder. Because the Selling Shareholders may
sell all, a portion or none of their shares, no estimate can be made of the
aggregate number of shares that may actually be sold by any Selling Shareholder
or that may be subsequently owned by any Selling Shareholder. The shares offered
by this prospectus may be sold from time to time by the Selling Shareholders
listed below. This table includes shares of Common Stock owned outright by the
Selling Shareholders listed below, as well as shares of Common Stock underlying
warrants owned by the Selling Shareholders.
- -----------------------------------------------------------------------------------------
Number of Shares Offered Under This
Selling Shareholders Offering
------------------------------------------
Name Address Number Of Shares Number Of Number Of Percent
Beneficially Shares Shares Class(3)
Owned Before Offered By Offered By
Offering(1) Selling Selling
Security Security
holder holder Upon
Exercise Of of
Warrants(2)
- --------------------------------------------------------------------------------------------------
John R. Allen 40 Kingsford Crescent,
Ottawa, Ontario K2K 1T4
Canada 3,000 3,000 3,000 *
Azra Alvi 76 Charing Road
Nepean, Ontario K2G 4C9
Canada 800 800 800 *
Michelle Begin 70 MacNabb Place,
Rockliffe Park, Ontario
K1L 8J4
Canada 3,000 3,000 3,000 *
Richard Bertrand 32 Selwyn Crescent
Ottawa, Ontario K2K 1N8
Canada 1,000 1,000 1,000 *
Angela Borrello 52 Ashburn Drive
Nepean, Ontario K2E 6N3
Canada 1,000 1,000 1,000 *
John R. Booth 1050 Morrison Drive, 3rd
Floor
Ottawa, ON K2H 8K7
Canada 2,000 2,000 2,000 *
Robert A. 2450 Upper Dwyer Hill Road
Broomfield RR#2 Carp, Ontario K0A 1L0
Canada 3,000 3,000 3,000 *
Mary Pat 109 James Street
Burroughs Davidson Ottawa, Ontario K1B 5M2
Canada 2,000 2,000 2,000 *
Roberta J. Cain 55 Robinson Avenue
Ottawa, Ontario K1N 8N8
Canada 1,500 1,500 1,500 *
Sandro Campagna 1316 Squire Drive
Manotick, Ontario
Canada 1,000 1,000 1,000 *
Sebastian Citro 101-C 997 North River Road
Ottawa, Ontario K1K 3V5
Canada 3,000 3,000 3,000 *
Richard Clark 73 Seabrooke Drive
Ottawa, Ontario K2L 2K4
Canada 3,000 3,000 3,000 *
Margaret A. Coolen 31 Drainie Dr.,
Ottawa, Ontario K2L 3J8
Canada 1,200 1,200 1,200 *
David R. Cox 9 McKay Crescent
Unionville, Ontario L3R 3M7
Canada 3,000 3,000 3,000 *
Elizabeth Dattilo 27 Cinnabar Way
Stittsville, Ontario K2S
1Y6
Canada 3,000 3,000 3,000 *
John W. Davies 7 Oakes Wood
Ottawa, Ontario K2K 2B3
Canada 800 800 800 *
T.G. Davies T. G. Davies
7 Oakes Wood Lane
Ottawa, Ontario K2K 2B3
Canada 800 800 800 *
David Edwards 23 Golding Crescent
Ottawa, Ontario K2K 2N9
Canada 1,000 1,000 1,000 *
Douglas J. Edwards 65 Brecken Drive
Keswick, Ontario L4P 4A6
Canada 3,000 3,000 3,000 *
Micah Grinstead 778 Pattersons Corners Road
RR#2 Oxford Mills, Ontario
K0G 1S0
Canada 32,000 32,000 32,000 *
David J. S. 55 Robinson Avenue
Hamilton Ottawa, Ontario K1N 8N8
Canada 1,500 1,500 1,500 *
J.D. Family Trust 7 Oakes Wood
(4) Ottawa, Ontario K2K 2B3
Canada 3,000 3,000 3,000 *
J.R. Saint & 1550 Laperriere Avenue,
Associates suite 100
Insurance Agencies Ottawa, ON K1Z 7T2
Ltd. (5) Canada 1,000 1,000 1,000 *
Mary P. Jardine 13 Myrle Avenue
Nepean, Ontario K2H 8E5
Canada 2,000 2,000 2,000 *
Joan & Stewart 84 Pentland Place
Smith Ottawa, Ontario K2K 1V8
Canada 3,000 3,000 3,000 *
Harry Keays 20 Forsyth Lane
Ottawa, Ontario K2H 9G9
Canada 3,000 3,000 3,000 *
Bill Kiss 307 Beechgrove Avenue
Ottawa, Ontario K1Z 6R4
Canada 1,000 1,000 1,000 *
John LaGamba 8 Winton Road
Toronto, Ontario M4N 3E3
Canada 3,000 3,000 3,000 *
George Langill 17 Windeyer Crescent
Ottawa, Ontario K2K 2P1
Canada 3,000 3,000 3,000 *
Leach Technologies 4132 Appleton Side Road
Ltd R. R. # 3
(6). Almonte, Ontario K0A 1A0
Canada 1,000 1,000 1,000 *
David Levy 723 Upper Dwyer Hill Road
West Carleton, Ontario K0A
1A0
Canada 3,000 3,000 3,000 *
Maria A. Mancini 2710 Travers Drive
Ottawa, Ontario K1V 8B1
Canada 1,000 1,000 1,000 *
Marlay & Ford LLP 535 Legget Drive, Suite 204
(7) Ottawa, Ontario K2K 3B8
Canada 1,000 1,000 1,000 *
Ann Matthews 68 Marsh Sparrow Lane
Ottawa, Ontario K2K 3P2
Canada 4,000 4,000 4,000 *
J. Peter McNaughton695 Hillcrest Avenue
Ottawa, Ontario K2A 2N2
Canada 3,000 3,000 3,000 *
Mary E. M. Mills 30 Pentland Crescent
Ottawa, Ontario K2K 1V5
Canada 3,000 3,000 3,000 *
Dr. Edward Napke 124 Amberwood Crescent
Nepean, Ontario K2E 7H8
Canada 3,800 3,800 3,800 *
Raj Narula 770 MontcrestDrive
Orleans, Ontario K4A 2M6
Canada 3,000 3,000 3,000 *
Avril Patrick 101-C 997 North River Road
Ottawa, Ontario K1K 3V5
Canada 3,000 3,000 3,000 *
Brian Penney 5224B Harvey Street
Hailfax, Nova Scotia B3J
1A7
Canada 13,000 13,000 13,000 *
William Petrie 415 Greenview Avenue, Suite
801
Ottawa, Ontario K2B 8G5
Canada 1,000 1,000 1,000 *
John A. Roberts 151 Robson Court
Ottawa, Ontario K2K 2W1
Canada 35,000 35,000 35,000 *
David Schenkel 205 Rideau Place
Ottawa, Ontario
Canada 3,000 3,000 3,000 *
John Scott 16 Fencerow Way
Nepean, Ontario K2J 4X8
Canada 1,000 1,000 1,000 *
Chris Skillen 7 Winton Road
Toronto, Ontario M4N 3E2
Canada 36,000 36,000 36,000 *
Robert C. Snell 221 Timber Lane
RR#1, Fitzroy Harbour,
Ontario K0A 1X0
Canada 3,000 3,000 3,000 *
Ron Suter 51 Foxleigh Crescent
Ottawa, Ontario K2M 1B6
Canada 8,000 8,000 8,000 *
Kim A. Teron 53 Creeks End Lane
Ottawa, Ontario K2H 1C7
Canada 20,000 20,000 20,000 *
Terry Zanatta 53 Newcastle Avenue
Ottawa, Ontario K2K 3B5
Canada 2,000 2,000 2,000 *
---------------------------------------------------
-
237,400 237,400 237,400 6.53%
ost warrant
P Exercise
Bayside Associates Hunkins Waterfront Plaza
Ltd. (8) P.O. Box 556
Main Street,
Nevis, West Indies 280,000 280,000 680,000 18.69%
Manillo Investors, 37 Shepherd Street,
Ltd. (9) London. W1J 4LH.
United Kingdom 280,000 280,000 680,000 18.69%
Kensington Group, 38 Hertford Street,
Ltd. (10) London. W1Y 7TG.
United Kingdom. 280,000 280,000 680,000 18.69%
Trufello Hunkins Waterfront Plaza
Associates, Ltd. P.O. Box 556
(11) Main Street,
Nevis, West Indies 280,000 280,000 680,000 18.69%
Castlegate Group Suite 4002a,
Ltd (12) Central Plaza,
18 Harbour Road,
Wanchai, Hong Kong 280,000 280,000 680,000 93.47%
---------------------------------------------------
1,637,400 1,637,400 3,637,400 100.00%
* less than one percent (1%)
The number and percentage of shares beneficially owned is determined
in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling security holder has sole or shared voting power or investment power
and also any shares, which the selling security holder has the right to acquire
within 60 days. Shares of Common Stock subject to a Convertible Note or Warrant
currently convertible or exercisable, or convertible or exercisable within 60
days are deemed outstanding for computing the percentage of the selling security
holder holding such Convertible Note or Warrant, but are not deemed outstanding
for computing the percentage of any other person.
The shares being registered include shares held by Directors of the Company,
Micah Grinstead, Harry Keays, Dr.Edward Napke, and Chris Skillen, which are
subject to the volume limitations of Rule 144.
(1) Using 1,637,400 shares outstanding as of December 10, 2005.
(2) Assumes that all Common Stock beneficially owned before the offering will be
sold.
(3) Assumes exercise of Warrants but excludes the effects of the conversion of
Class A and Class B special shares, which are not convertible for eighteen (18)
months.
(4) John Davies is the trustee of J.D. Family Trust and in such capacity has
dispositive authority over the Company's shares held in the name of J.D. Family
Trust.
(5) James Saint has dispositive authority over the Company's shares held in the
name of J.R. Saint & Associates Insurance Agencies Ltd
(6) Peter Leach has dispositive authority over the Company's shares held in the
name Leach Technologies Ltd
(7) Robert Ford has dispositive authority over the Company's shares held in the
name Marlay & Ford LLP
(8) Margareta Hedstrom, has dispositive authority over the Company's shares held
in the name of Bayside Associates Ltd. ("Bayside"). The amounts listed for
Bayside includes 100% of the shares isssuable upon the exercise of the 400,000
share warrants.
(9) Megan Agha, has dispositive authority over the Company's shares held in the
name of Manillo Investors, Ltd... ("Manillo"). The amounts listed for Manillo
includes 100% of the shares isssuable upon the exercise of the 400,000 share
warrants.
(10) James Loughran, has dispositive authority over the Company's shares held in
the name of Kensington Group, Ltd. ("Kensington"). The amounts listed for
Kensington includes 100% of the shares isssuable upon the exercise of the
400,000 share warrants.
(11) Sophie Leacacos, has dispositive authority over the Company's shares held
in the name of ("Trufello"). The amounts listed for Trufello includes 100% of
the shares isssuable upon the exercise of the 400,000 share warrants.
(12) Barry Taleghany has dispositive authority over the Company's shares held in
the name of Castlegate Group, Ltd. ("Castlegate"). The amount listed for
Castlegate includes 100% of the shares issuable upon the exercise of the 400,000
share warrants.
Plan of Distribution
Upon the effectiveness of a registration statement pursuant to the
Securities Act to which this Prospectus is a part, 3,595,000 shares of Common
Stock will be freely tradable without restriction or further registration under
the Securities Act, and 42,400 shares being registered on behalf of four of our
Directors, Micah Grinstead, Chris Skillen, Harry Keays, Edward Napke, will be
subject to the volume limitations of Rule 144. Sales of a substantial number of
shares of the Company's Common Stock in the public market following this
offering could adversely affect the market price of the Common Stock.
As we currently lack a public market for our Common Stock, Selling Shareholders
will sell at a price of $0.10 per share until our shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices. If before our shares are quoted on the OTC Bulletin Board,
the Selling Shareholders wish to sell at a price different from $0.10 per share,
we will file a post-effective amendment.
Manner of Sale
The shares being offered by the Selling Shareholders may be sold from time to
time in one or more transactions (which may involve block transactions):
* on the OTC Bulletin Board or on such other market on which the Common Stock
may from time to time be trading;
* in privately-negotiated transactions;
* short sales; or
* any combination of the above.
The sale price to the public may be
the market price prevailing at the time of sale, a price related to the
prevailing market price, at negotiated prices or another price as the Selling
Shareholders determine from time to time. The Selling Shareholders have the sole
and absolute discretion not to accept any purchase offer or make any sale of
shares if they deem the purchase price to be unsatisfactory at any particular
time.
The Selling Shareholders may also sell the shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principal, or both, which compensation as to a
particular broker-dealer might be in excess of customary commissions. Market
makers and block purchasers purchasing the shares will do so for their own
account and at their own risk. It is possible that a Selling Shareholder will
attempt to sell shares of Common Stock in block transactions to market makers or
other purchasers at a price per share that may be below the then market price.
There can be no assurance that all or any of the shares offered by this
prospectus will be sold by the Selling Shareholders. The Selling Shareholders
and any brokers, dealers or agents, upon effecting the sale of any of the shares
offered by this prospectus, may be deemed "underwriters" as that term is defined
under the Securities Act of 1933 or the Securities Exchange Act of 1934, or the
rules and regulations there under.
The Selling Shareholders and any other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations there under,
including, without limitation, Regulation M, which may restrict certain
activities of, and limit the timing of purchases and sales of any of the shares
by the Selling Shareholders or any other such person. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions. All of these limitations may affect the marketability of the shares.
Grant of Registration Rights
We granted registration rights to certain of the Selling Shareholders to enable
them to sell the Common Stock and shares underlying the warrants they purchased
from us. In connection with any such registration, we will have no obligation:
* to assist or cooperate with the Selling Shareholders in the offering or
disposition of such shares;
* to indemnify or hold harmless the holders of any such shares, other than the
Selling Shareholders, or any underwriter designated by such holders;
* to obtain a commitment from an underwriter relative to the sale of any such
shares;
* We assume no obligation or responsibility whatsoever to determine a method of
disposition for such shares.
We will use our best efforts to file, during any period during which we
are required to do so under our agreement with the Selling Shareholders, one or
more post-effective amendments to the registration statement of which this
prospectus is a part to describe any material information with respect to the
plan of distribution not previously disclosed in this prospectus or any material
change to such information in this prospectus. This obligation may include, to
the extent required under the Securities Act of 1933, that a supplemental
prospectus be filed, disclosing:
o the name of any broker-dealers;
o the number of common shares involved;
o the price at which the common shares are to be sold;
o the commissions paid or discounts or concessions allowed to broker-
dealers, where applicable;
o that broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus,
as supplemented; and
o any other facts material to the transaction.
Description of Share Capital
General
We are a Canadian corporation and our affairs are governed by our Articles of
Incorporation, our Bylaws and the Canadian Business Corporations Act. The terms
of our current share capital are set forth in the Certificate of Amendment to
our Articles of Incorporation dated November 9, 2005 and are summarized below.
Class A Common Shares
Our Articles of Incorporation authorize us to issue an unlimited number of Class
A Common Shares. The holders of Class Common Shares are entitled to one vote
with respect to each Class A Common Share held by such holder. As of December
10, 2005 there are 1.637,400 shares of Class A Common issued and outstanding.
The holders of our Class A Common Shares are entitled to receive such dividends,
if any, as may be declared by our board of directors from time to time out of
legally available funds. The holders of our Class A Common Shares are entitled
to receive distributions upon our liquidation, dissolution or winding up of our
assets that are legally available for distribution, after payment of all debt
and other liabilities, ratably with the holders of our Class A Special Shares
and Class B Special Shares.
Class A Special Shares
Our Articles of Incorporation authorize the issuance of up to 11,632,600 Class A
Special Shares. Each Class A Special Share is convertible at the option of the
holder into fully paid and nonassessable Class A Common Shares in an amount
determined by dividing 75% of the Conversion Amount by the number of Class A
Special Shares outstanding on the Conversion Trigger Date (as defined in our
Articles). As of December 10, 2005 there were 11,632,600 shares of Class A
Special Shares outstanding
Holders of Class A Special Shares are entitled to vote and to such dividends
paid and distributions made to the holders of Class A Common Shares to the same
extent as if such holders had converted their Class A Special Shares into Class
A Common Shares and participate ratably with the holders of any Common Shares
and Class B Special Shares.
Class B Special Shares
Our Articles of Incorporation authorizes the issuance of up to 170,000 Class B
Special Shares. Holders of our Class B Special Shares are entitled to vote on
any matter submitted to the shareholders. The holders of Class B Special Shares
vote together as a class with holders of Class A Common Shares and Class A
Special Shares. Each Class B Special Share is convertible into five Class A
Common Shares. As of December 10, 2005 there were no shares of Class B Special
Shares outstanding.
The following table sets forth the number of shares of common stock issued and
outstanding during the year ended May 31, 2005 Total Consideration Subscription
Amount
Total Subscription Amount (Cdn#)
Shared Issued Number Consideration Receivable Net of Subscription Receivable
----------------------------------------------------------------------------------------------------------
- pursuant to a private 6,850,000 121
placement at $0001 685 (564)
----------------------------------------------------------------------------------------------------------
- pursuant to a private 3,900,000 195,000 (145) 194,855
placement at $0.05
----------------------------------------------------------------------------------------------------------
- pursuant to a private 100,000 25,000
placement at $0.25 25,000
----------------------------------------------------------------------------------------------------------
- (less issue costs)
----------------------------------------------------------------------------------------------------------
Balance at May 31, 2005 10,850,000 219,976
220,685 (709)
----------------------------------------------------------------------------------------------------------
Options
We have no stock options outstanding.
Share Purchase Warrants
As at the date of this prospectus, the Company had the following share purchase
warrants outstanding:
Potential
Number of Number of Exercise
Warrants Shares to Exercisable Price >
Outstanding be Issued Until Per Share
- ----------------------------------------------------------------------------
2,000,000 2,000,000 One year $0.075
Articles of Incorporation and By-Laws
The following summarizes certain provisions of our Articles of Incorporation,
Bylaws and related provisions of the Canada Business Corporation Act. (1) The
Company's objects and purposes as set forth in the Company's Articles of
Incorporation.
The Company's Articles of Incorporation are silent as to the Company's objects
and purposes.
(2) Matters relating to Directors of the Company:
(i) Director's power to vote on a proposal, arrangement or contract in
which the director is materially interested:
A Director who is interested in an existing or proposed contract or
transaction with the Company or who holds any office or possesses any
property which might created a conflict with his duty or interest as
a Director shall declare the nature and extent of such interest or
conflict or potential conflict with his duty and interest as a
Director in accordance with the Canada Business Corporations Act (the
"Company Act") . A Director shall not vote in respect of any contract
or transaction with the Company in which he is interested. The
foregoing shall not apply to:
(a) any contract or transaction relating to a loan to the Company,
which a Director or a corporation or firm in which he has an
interest has guaranteed or joined in guaranteeing the repayment
of the loan or any part of the loan;
(b) any contract or transaction made with, or for the benefit of a
holding or subsidiary
corporation of which a Director is a director;
(c) any contract by a Director to subscribe for or underwrite
shares, debentures or debt obligations to be issued by the
Company, or any contract, arrangement or transaction in which a
Director is interested if all the other Directors are also
interested therein; or
(d) determining the remuneration of the directors.
The foregoing prohibitions and exceptions may from time to time be
suspended or amended by ordinary resolution, either generally or in
respect of a particular contract, arrangement or transaction or for
any particular period.
(ii) Directors' power, in the absence of an independent quorum, to vote
compensation to themselves or any members of their body:
The remuneration of the Directors may be determined by the
shareholders, unless the Directors are authorized to determine
their remuneration. Such remuneration may be in addition to any
salary or other remuneration paid to any officer or employee of the
Company who is also a Director. The Directors shall be repaid such
reasonable expenses as they may incur on behalf of the Company and
if any Director shall perform any services for the Company that in
the opinion of the Directors are outside the ordinary duties of a
Director or shall otherwise be occupied in the Company's business,
he may be paid a remuneration to be fixed by the Board, or, at the
option of such Director, by the Company in general meeting, and
such remuneration may be either in addition to, or in substitution
for any other remuneration that he may be entitled to receive. The
Directors on behalf of the Company, unless otherwise determined by
ordinary resolution, may pay a gratuity or pension or allowance on
retirement to any Director who has held any salaried office or
place of profit with the Company or to his spouse or dependents and
may make contributions to any fund and pay premiums for the
purchase or provision of any such gratuity, pension or allowance."
(iii) Borrowing powers exercisable by the directors and how such
borrowing powers can be varied:
The Directors may at their discretion authorize the Company to
borrow any sum of money for the purposes of the Company and may
raise or secure the repayment of that sum in such manner and upon
such terms and conditions as they think fit, and in particular by
the issue of bonds or debentures, on any mortgage or charge,
whether specific or floating, or other security on the undertaking
or the whole or any part of the property of the Company, both
present and future.
(iv) The Company's Articles are silent as to the retirement or
non-retirement of directors under an age limit requirement.
(v) Number of shares, if any, required for qualification:
No Director shall be required to hold a share in the Company as qualification
for his office.
(3) Rights, preferences and restrictions attaching to each class of shares:
(i) Dividend rights, including time limit after which dividend
entitlement lapses.
The Company's shareholders, subject to the rights, privileges
and restrictions attaching to a particular class of shares, have
the right to receive dividends if, as and when declared by the
Board of Directors. Neither the Company Act nor the Company's
Articles provides for lapses in dividend entitlement.
(ii) Voting rights; staggered re-election intervals; cumulative
voting.
Each of the Company's Common Shares entitles the holder to one
vote at any annual or special meeting of shareholders. The
Company's Articles provide for election of directors on a
rotation basis. The Company's shareholders do not have
cumulative voting.
(iii) Rights to share in surplus in event of liquidation
In the event of the Company's liquidation, dissolution or
winding-up or other distribution of the Company's assets, the
holders of Common Shares, Class A and B Special Shares will be
entitled to receive, on a pro rata basis, all of the assets
remaining after the Company's liabilities have been paid out.
(iv) Other
There are no redemption or sinking fund provisions with respect
to the Company's Common Shares. Common shareholders have no
liability as to further capital calls by the Company. There are
no provisions discriminating against any existing or prospective
holder of the Company's Common Shares as a result of such
shareholder owning a substantial number of the Company's Common
Shares. Holders of the Company's Common Shares do not have pre-
emptive rights.
(4) Actions necessary to change the rights of holders of the Company's stock:
In order to change the rights of holders of a class of the Company's
stock, a vote of at least three- quarters of the issued and outstanding
shares of that class is required.
(5) Conditions governing manner in which annual general meetings and
extraordinary general meetings of shareholders are convoked, including
conditions of admission:
(i) Annual Meeting
The first annual general meeting shall be held within 15 months
from the date of incorporation and thereafter an annual general
meeting shall be held once in every calendar year at such time,
not being more than 13 months after the holding of the last
preceding annual general meeting and place as the Directors
shall appoint.
(ii) Special Meetings
The Directors may, whenever they think fit, convene an
extraordinary general meeting. An extraordinary general meeting
may also be convened if requisitioned in accordance with the
Company Act, by the Directors or, if not convened by the
Directors, by the requisitionists as provided in the Company
Act.
Not less than 10 days notice of any general meeting specifying
the time and place of meeting and in case of special business,
the general nature of that business shall be given to any person
as may be entitled to receive such notice from the Company. The
accidental omission to give such notice or the non-receipt of
such notice by any of such persons shall not invalidate any
proceedings at that meeting.
Exchange Controls
There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of common stock, other than
withholding tax requirements. See "Taxation" below.
There is no limitation imposed by Canadian law or by the constituent documents
of the Company on the right of a non-resident to hold or vote Common Shares,
other than are provided in the Investment Canada Act (Canada). The following
summarizes the principal features of the Investment Canada Act (Canada).
Investment Canada Act
The Investment Canada Act (the "ICA") provides, among other things, that an
acquisition by a non-Canadian as defined by the ICA (which includes an
individual, a government or an agency thereof, or a corporation, partnership,
trust or joint venture, which is not Canadian or Canadian-controlled) of more
than 50 percent of the voting shares of a corporation incorporated in Canada
carrying on a Canadian business is deemed to be an acquisition of control and,
if the value of the Canadian business exceeds certain stipulated thresholds, is
subject to Canadian Government administrative review and possible prohibition if
the Canadian Minister of Industry is not satisfied that the acquisition is of
"net benefit" to Canada. The ICA further provides that the acquisition of less
than a majority but one-third or more of the voting shares of a corporation
incorporated in Canada carrying on a Canadian business is presumed to be an
acquisition of control of that corporation unless it can be established that, on
the acquisition, the corporation is not controlled in fact by the acquirer
through the ownership of voting shares.
Markets
The common shares of Radiate are not listed on any stock exchange although it is
the intention of our management to seek a quotation of our common shares on the
OTC Bulletin Board. There will continue to be no market for our Common Stock in
the United States until our Common Stock is quoted on the OTC Bulletin Board.
It is likely that shares of our Common Stock, assuming a market were to develop
in the United States, will be subject to the regulations on penny stocks;
consequently, the market liquidity for the Common Stock may be adversely
affected by such regulations limiting the ability of broker/dealers to sell our
Common Stock and the ability of shareholders to sell their securities in the
secondary market in the United States.
Moreover, shares may only be sold or transferred by shareholders in those
jurisdictions in the United States in which an exemption for such "secondary
trading" exists or in which the shares may have been registered. Cottonwood
Stock Transfer, located in Salt Lake City, Utah, will be the registrar and
transfer agent for the Company's common shares.
Taxation
Material Canadian Federal Income Tax Consequences
Management of the Company considers that the following discussion describes the
material Canadian federal income tax consequences applicable to a holder of
Common Stock of the Company who is: (a) a resident of the United States and who
is not a resident of Canada for purposes of the Canada - United States Tax
Convention (1980), as amended (the "Convention"); and (b) who does not use or
hold, and is not deemed to use or hold, his shares of Common Stock of the
Company in connection with carrying on a business in Canada (a "Non-Resident
Shareholder"). Management of the Company intends file an application to have our
shares quoted on the OTC Bulletin Board and immediately thereafter intends to
make an application to apply to list the shares of the Company on the Frankfurt
Stock Exchange in Germany . The following discussion assumes that the shares of
the Company are listed on the Frankfurt Stock Exchange.
This summary is based upon the current provisions of the Income Tax Act (Canada)
(the "ITA"), the regulations thereunder (the "Regulations"), the current
publicly announced administrative and assessing policies of the Canada Revenue
Agency and all specific proposals (the "Tax Proposals") to amend the ITA and
Regulations announced by the Minister of Finance (Canada) prior to the date
hereof. This description is not exhaustive of all possible Canadian federal
income tax consequences and, except for the Tax Proposals, does not take into
account or anticipate any changes in law, whether by legislative, governmental
or judicial action.
Dividends
Dividends paid on the common stock of the Company to a Non-Resident Shareholder
will be subject to withholding tax. The Convention provides that the normal 25%
withholding tax rate is reduced to 15% on dividends paid on shares of the
Company to most Non-Resident Shareholders, and provides for a further reduction
of this rate to 5% where the beneficial owner of the dividends is a Non-Resident
Shareholder which is a corporation and which owns at least 10% of the voting
shares of the Company.
Capital Gains
A Non-Resident Shareholder will not be subject to tax under the ITA with respect
to any capital gains realized upon the disposition of shares of Common Stock of
the Company unless such shares constitute "taxable Canadian property" of a
Non-Resident Shareholder (as defined in the ITA). Even if such shares constitute
"taxable Canadian Property" of a Non-Resident Shareholder, the Non-Resident
Shareholder will be entitled to relief from Canadian income tax under the
Convention unless the value of the Company's shares is derived principally from
real property situated in Canada.
The Common Stock of the Company will not constitute taxable Canadian property of
a Non-Resident Shareholder at any time provided such Non-Resident Shareholder,
person's with whom the Non-Resident Shareholder did not deal at arm's length or
the Non-Resident Shareholder together with such persons, did not own at any time
during the five year period immediately preceding that time, 25% or more of the
issued shares of any class or series of the capital stock of the Company.
Legal matters
Certain legal matters with respect to the issuance of shares of Common Stock
offered hereby will be passed upon by David M. Dobbs, P.C.
Where You Can Find More Information
We file reports and other information with the U.S. Securities and Exchange
Commission. You may read and copy any document that we file at the SEC's public
reference facilities at 450 Fifth Street N.W., Room 1024, Washington, D.C.
20549. Please call the SEC at 1-800-732-0330 for more information about its
public reference facilities. Our SEC filings are also available to you free of
charge at the SEC's web site at www.sec.gov.
Index to Financial Statements
Report of Independent Registered Public Accounting Firm 39
Balance Sheet dated May 31, 2005 40
Statement of Operations for the period from inception (June 10, 2004)
through May 31, 2005 41
Statement of Changes in Shareholders' Equity for the period from
inception (June 10, 2004) through May 31, 2005 42
Statement of Cash Flows for the period from
inception (June 20, 2004) through May 31, 2005 43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Radiate Research Inc.
(A Development Stage Company)
Ottawa, Canada
We have audited the accompanying balance sheet of Radiate Research Inc. (a
development stage company) as of May 31, 2005, and the related statements of
operations, shareholders' equity and cash flows for the period from June 10,
2004 (inception) to May 31, 2005. These financial statements are the
responsibility of Radiate Research Inc.'s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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 Radiate Research Inc. as of May
31, 2005, and the results of its operations and its cash flows for the period
described above in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming that Radiate
Research Inc. will continue as a going concern. As discussed in Note 2 to the
financial statements, Radiate Research Inc. had net assets of $6,437 and
incurred net losses of $213,539 as of May 31, 2005, which raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to those matters are described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas
November 16, 2005
RADIATE RESEARCH INC.
(A Development Stage Company)
BALANCE SHEET
May 31, 2005
(Amounts in Canadian dollars, unless otherwise noted)
ASSETS
Current assets
Cash $ 13,683
Accounts receivable 1,912
Value added taxes recoverable 3,072
Inventory 8,278
Prepaid assets 7,500
---------------------
Total assets
$ 34,445
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 23,019
Sales taxes payable 444
Due to former officer 4,545
---------------------
Total current liabilities
28,008
Commitments -
Shareholders' equity
Special Shares: (Note 3)
Class A convertible special shares, without par value,
11,632,600 shares authorized, none issued and outstanding -
Class B convertible special shares, without par value, 170,000
shares authorized, none issued and outstanding -
Common stock, without par value, unlimited shares authorized,
10,850,000 shares issued and outstanding (note 3) 220,685
Subscription receivable (709)
Deficit accumulated during the development stage (213,539)
---------------------
Total shareholders' equity 6,437
---------------------
Total liabilities and shareholders' equity $ 34,445
====================
RADIATE RESEARCH INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period from June 10, 2004
(Inception) Through May 31, 2005
(Amounts in Canadian dollars, unless
otherwise noted)
Inception Through May
31, 2005
-------------------------------
Sales $ 7,454
Cost of goods sold 13,014
-------------------------------
Gross loss (5,560)
-------------------------------
Operating costs
Consulting 91,750
Research and development 54,970
Professional fees 16,010
Other general and administrative 45,249
-------------------------------
Total operating costs 207,979
-------------------------------
Net loss for the period $ (213,539)
-------------------------------
Net loss per share, basic and diluted $ (0.04)
Weighted average shares outstanding used
in per share computations 5,450,000
RADIATE RESEARCH INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Period from June 10, 2004
(Inception) Through May 31, 2005
(Amounts in Canadian dollars, unless
otherwise noted)
Deficit
Accumulated
During the
Special Shares Common Stock Subscription Development
-------------- ------------
Shares Amount Shares Amount Receivable Stage Total
-----------------------------------------------------------------------------------
Stock issued for cash - $ - 10,850,000$ 220,685 $ (709) $ - $ 219,976
Net loss - - - - - (213,539) (213,539)
-----------------------------------------------------------------------------------
Balance at May 31, 2005 - $ - 10,850,000$ 220,685 $ (709) $ (213,539) $ 6,437
===================================================================================
RADIATE RESEARCH INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from June 10, 2004
(Inception) Through May 31, 2005
(Amounts in Canadian dollars, unless
otherwise noted)
Inception Through May
31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (213,539)
Adjustments to reconcile net loss to cash provided by operating activities:
Change in
Accounts Receivable (1,912)
Value Added Taxes Recoverable (3,072)
Inventory (8,278)
Prepaid Assets (7,500)
Accounts Payable and Accrued Liabilities 23,019
Sales Taxes Payable 444
------------------------
NET CASH USED IN OPERATING ACTIVITIES (210,838)
CASH FLOWS FROM FINANCING ACTIVITIES
Due to Former Officer 4,545
Issuance of Common Shares for cash 219,976
------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 224,521
------------------------
NET CHANGE IN CASH 13,683
CASH AT BEGINNING OF PERIOD -
------------------------
CASH AT END OF PERIOD $ 13,683
========================
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ -
Cash paid for income taxes $ -
RADIATE RESEARCH INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Amounts in Canadian dollars, unless otherwise noted)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
Radiate Research Inc. ("Radiate") was incorporated under the Canada
Business Corporations Act on June 10, 2004, and filed Articles of
Amendment on November 9, 2005. Radiate is developing systems and
equipment utilizing foil heating technology.
Revenue recognition
Radiate recognizes revenues at the time of shipping or substantial
completion of installation of the products. Billings in advance of
services rendered will be recorded as deferred revenue and are
recognized at the time services are rendered.
Research and development
Research costs are expensed as incurred. Development costs are expensed
in the year incurred unless management believes a development project
meets the generally accepted accounting criteria for deferral and
amortization. In the opinion of management, no development costs
incurred to date meet all the criteria for deferral and amortization.
Therefore, all development costs have been expensed as incurred. While
there are government programs available to provide assistance on
eligible research and development expenses, it is not presently the
company's intention to apply for such assistance given the relatively
modest amounts involved vs. the effort required.
Income taxes
Future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Future tax assets and liabilities are measured using enacted
or substantively enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on future tax assets and liabilities of
a change in tax rates is recognized in income in the period that
includes the enactment date.
Foreign currency
Foreign currency transactions are translated into Canadian dollars at
exchange rates in effect on the date of the transactions. Monetary
assets and liabilities are translated into Canadian dollars at the
exchange rate in effect as at the balance sheet date. Foreign currency
gains and losses are included in income.
Use of estimates
The preparation of financial statements in conformity with US generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
Earnings (loss) per share
For the purposes of the basic and fully diluted earnings (loss) per
share computation, the weighted average number of common shares has been
used.
Concentrations of credit risk
Radiate is exposed to credit-related losses in the event of
non-performance by counterparties. Credit exposure is minimized by
dealing with only creditworthy counterparties.
Fair values
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities and notes payable approximate
fair values due to the short-term maturities of these instruments.
Recently issued accounting pronouncements
Radiate does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on Radiate's results of
operations, financial position or cash flow.
NOTE 2 - GOING CONCERN
Radiate has had minimal operations since inception, is a development stage
company and has limited capital resources. As shown in the attached financial
statements, Radiate had net assets of $6,437 and had incurred net losses of
$213,539 as of May 31, 2005. Radiate has not obtained profitable operations and
is dependent upon obtaining financing to pursue research and development
activities. These matters raise substantial doubt about Radiate's ability to
continue as a going concern. The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. These
financials statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should Radiate be unable to continue as a going concern. Management
believes that Radiate will be able to fund its capital needs as a result of a
funding it has arranged subsequent to the period end.
NOTE 3 - COMMON STOCK AND SPECIAL SHARES
Subsequent to the year end, on November 9, 2005 the company filed Articles of
Amendment pursuant to the Canada Business Corporations Act, to
(a) change the status of the company from Private to Public
(b) to crate a new class of shares of the Corporation consisting of an
unlimited number of shares and designated as the "Class A Common Shares"
(c) To create a new class of shares in the capital of the Corporation
consisting of 11,632,600 shares and designated as the "Class A Special
Shares"
(d) To create a new class of shares in the capital of the Corporation
consisting of 170,000 shares and designated as the "Class B Special Shares"
The Share Capital at May 31, 2005 after giving retroactive effect to the changes
above, is as follows:
(a) Special shares
1. Class A Special Shares
Rank in priority to the Common Shares and any other class of
shares currently outstanding or created hereafter, other than the
Class B Special Shares. Except in the case of liquidation, no
dividends are payable on the Class A Special Shares. Except as
otherwise provided by law, the Class A shares are entitled to the
number of votes as if the shares had been converted to Common
Shares.
The Class A Special Shares are convertible at the option of the
holders, after eighteen months, into the number of common shares
sufficient to ensure that the former Class A Special Shareholders,
as a class, will hold 75% of the then issued and outstanding
common shares.
Authorized: 11,632,600 shares
Issued and outstanding: Nil
2. Class B Special Shares
Rank in priority to the Common Shares and any other class of
shares currently outstanding or created hereafter, other than the
Class A Special Shares. Except in the case of liquidation, no
dividends are payable on the Class B Special Shares. Except as
otherwise provided by law, the Class B shares are entitled to the
number of votes as if the shares had been converted to Common
Shares.
The Class B Special Shares are convertible at the option of the
holders, after eighteen months, into five (5) common shares of the
Corporation.
Authorized: 170,000 shares
Issued and outstanding: Nil
(b) Common shares - During fiscal 2005, 10,850,000 common shares were
issued for $219,976 in cash and $709 in subscription
receivables.
NOTE 4 - RELATED PARTY TRANSACTION:
Contract fees of $78,000 were paid to related parties during fiscal 2005.
Related parties also advanced $6,500 to the company as demand loans, $2,000 of
which were repaid during the period.
NOTE 5 INCOME TAXES
Radiate has a loss at May 31, 2005 available to reduce future years' taxable
income. The approximate amounts and expiry dates of these non-capital loss carry
forwards are as follows:
- -------------------------------------------------------------------------------
Year expired Federal Provincial
- -------------------------------------------------------------------------------
2011-12 $ 213,000 $ 213,000
- -------------------------------------------------------------------------------
$ 213,000 $ 213,000
Deferred tax assets $ 31,950
Less: valuation allowance (31,950)
--------
Net deferred taxes $ -
---------
NOTE 6 - SUBSEQUENT EVENT
On October 17, 2005 the company entered into a Securities Purchase Agreement
involving the potential issuance of 47,791,667 Common Shares, whereby investors
would subscribe for a combination of Common Shares and Warrants which would
yield up to $780,000 to the company should all the warrants be exercised.
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors and Officers.
Commission Policy on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to
contracts, statutes, or otherwise, the SEC has advised us that in its opinion,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by our
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether our
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
By-laws
Our By-laws provide that we shall indemnify our officers and directors against
all costs, charges and expenses reasonably incurred by them regarding any civil,
criminal or administrative claim to which that person is made a party by reason
of having been an officer or director of Radiate provided that the indemnified
person acted in good faith in the best interests of Radiate and the indemnified
person, in any criminal or administrative proceeding resulting in a monetary
penalty, had reasonable grounds for believing that the conduct was lawful..
Item 7. Recent Sales of Unregistered Securities.
On December 10, 2005_2005, we completed a private placement of units consisting
of our Common Stock and warrants to purchase our Common Stock. In connection
with the private placement, we issued 1,400,000shares of our Common Stock and
warrants to purchase an aggregate of 2,000,000 shares of Common Stock.
The following table sets forth our private sale of our shares of common stock
from inception through May 31, 2005
Total Subscription Amount (Cdn#)
Shared Issued Number Consideration Receivable Net of Subscription Receivable
----------------------------------------------------------------------------------------------------------
- pursuant to a private 6,850,000 121
placement at $0001 685 (564)
----------------------------------------------------------------------------------------------------------
- pursuant to a private 3,900,000 195,000 (145) 194,855
placement at $0.05
----------------------------------------------------------------------------------------------------------
- pursuant to a private 100,000 25,000
placement at $0.25 25,000
----------------------------------------------------------------------------------------------------------
- (less issue costs)
----------------------------------------------------------------------------------------------------------
Balance at May 31, 2005 10,850,000 219,976
220,685 (709)
----------------------------------------------------------------------------------------------------------
Item 8. Exhibits and Financial Statement Schedules.
(a) The following Exhibits are filed as part of this Registration Statement:
3.1 Articles of Incorporation
3.2 Certificate of Amendment of Articles of Incorporation
3.3 Bylaws
4.1 Specimen Share Certificate
5.1 Opinion of David M. Dobbs, P.C.
10.1 Assignment of Patent Application from Micah Grinstead, John Roberts and
Chris Skillen to Registrant
10.2 License Agreement between the Registrant and Abond Corporation
10.3 Form of Securities Purchase Agreement among the Registrant and the named
Purchasers
10.4 Consulting Agreement between the Registrant and Ross Tuddenham
23.1 Consent of Malone & Bailey, PC
23.2 Consent of David M. Dobbs, P.C. (included with Exhibit 5.1)
(b) All schedules have been omitted because information required has been
included with the Financial Statements or notes thereto or is otherwise not
applicable.
Item 9. Undertakings.
1. The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to
this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; provided, however, that paragraphs (a)
and (b) shall not apply if such information is contained in periodic
reports filed by the Registrant under Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference
into this Registration Statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. The undersigned Registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of
the offering.
4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report under Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report under Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference into this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
5. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to Shareholders that is
incorporated by reference in the prospectus and furnished under and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are
not set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
6. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the undersigned Registrant according the
foregoing provisions, or otherwise, the undersigned
Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of
such issue.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ottawa, Province of Ontario, Canada on January 24,
2005.
RADIATE RESEARCH INC.
By: /s/ Micah Grinstead
-------------------------
Micah Grinstead, President
Each person whose signature appears below constitutes and appoints Micah
Grinstead his true and lawful attorney-in-fact with full power of substitution
and resubstitution for him and in his name place and stead in any and all
capacities to sign any and all amendments including post-effective amendments to
this registration statement and to file the same with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission hereby ratifying and confirming all that said attorney-in-fact or his
substitute each acting alone may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
(Signature) _________________________________________________________________
(Title) _____________________________________________________________________
(Date) ______________________________________________________________________
Micah Grinstead, CEO and Director
Chris Skillen, Director
Harry Keays, Director
Edward Napke, Director
William L. Sklar, Director
Exhibit Index
3.1 Articles of Incorporation
3.2 Certificate of Amendment of Articles of Incorporation
3.3 Bylaws
4.1 Specimen Share Certificate
5.1 Opinion of David M. Dobbs, P.C.
10.1 Assignment of Patent Application from Micah Grinstead, John Roberts and
Chris Skillen to Registrant
10.2 License Agreement between the Registrant and Abond Corporation
10.3 Form of Securities Purchase Agreement among the Registrant and the named
Purchasers
10.4 Consulting Agreement between the Registrant and Ross Tuddenham
23.1 Consent of Malone & Bailey, PC
23.2 Consent of David M. Dobbs, P.C. (included with Exhibit 5.1)