U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
Commission file number 0-4846-3
MEMS USA, INC.
(Name of small business issuer in its charter)
Nevada 82-0288840
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
---------------------------------------- ---------------------------
5701 Lindero Canyon Road, Suite 2-100
Westlake Village, California 91362
---------------------------------------- ---------------------------
(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code (818) 735-4750
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes No X
The number of shares of the common stock outstanding as of August 15, 2005 was
17,404,197.
Documents incorporated by reference:
Form 8-K Dated April 29, 2005 Re. Can Am Ethanol One, Inc.
Form 8-K Dated July 1, 2005 Re. Departure of Directors, etc.
1
MEMS USA, INC.
Table of contents for Form 10-QSB
Quarter Ended June 30, 2005
Page
Number
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
o Consolidated Balance Sheet as of June 30, 2005 (unaudited) 2
o Consolidated Statements of Operations (unaudited) 3
For the three and nine months ended June 30, 2005 and 2004
o Consolidated Statements of Cash Flows (unaudited) 4
For the nine months ended June 30, 2005 and 2004
o Notes to Consolidated Financial Statements (unaudited) 5 - 12
ITEM 2. Management's Discussion and Analysis or Plan of Operations 12 - 17
ITEM 3. Controls And Procedures 17
PART II - OTHER INFORMATION
ITEM 1. Unregistered Sales of Equity Securities and Use of Proceeds 17
ITEM 2. Other Information 17
ITEM 3. Exhibits 18 - 23
2
ITEM 1. FINANCIAL STATEMENTS
MEMS USA, INC.
Consolidated Balance Sheet
June 30, 2005
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalent $ 388,131
Accounts receivable, net of allowance for
doubtful accounts of $52,240 842,072
Inventories 797,411
Other current assets 193,960
Receivable -related party 27,930
-----------
Total current assets 2,249,504
Plant, property and equipment, 2,097,366
Other assets 395,317
Goodwill 1,147,785
-----------
Total assets $ 5,889,972
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,369,952
Lines of credit 755,786
Current portion of long-term debt 29,011
-----------
Total current liabilities 2,154,749
Loans payable, long-term 241,117
Loan from shareholder 5,000
Common shares payable under terms of acquisition
agreement 809,966
Common shares with mandatory redemption 1,400,000
-----------
Total Liabilities 4,610,832
Stockholders' equity
Common stock, $0.001 par value; 100,000,000
shares authorized, 17,365,865 shares
issued and outstanding 17,366
Stock subscriptions receivable (2,050)
Additional paid in capital 6,085,268
Accumulated deficit (4,821,444)
-----------
Total stockholders' equity 1,279,140
-----------
Total liabilities and stockholders'
equity $ 5,889,972
===========
The accompanying notes are an integral part of these financial statements.
3
MEMS USA, INC.
Consolidated Statements of Operations
(Unaudited)
Three months ended June 30 Nine months ended June 30
2005 2004 2005 2004
--------------- --------------- --------------- ---------------
Revenues
Sales $ 1,878,580 $ 95,350 $ 6,757,819 $ 95,350
Cost of sales 1,558,758 280,952 5,018,238 495,931
--------------- --------------- --------------- ---------------
Gross profit 319,822 (185,602) 1,739,581 (400,581)
Selling expenses 321,360 0 634,645 0
General and administrative 768,650 444,149 2,811,948 1,174,712
Merger related expense 0 0 0 350,360
--------------- --------------- --------------- ---------------
Loss from operations (770,188) (629,751) (1,707,012) (1,925,653)
Other income 3,121 0 6,222 0
--------------- --------------- ---------------
---------------
Net loss $ (767,067) $ (629,751) $ (1,700,790) $ (1,925,653)
=============== =============== =============== ===============
Net loss per share, basic and diluted (0.04) (0.05) (0.11) (0.16)
Weighted average number of shares
outstanding, basic and diluted 17,240,840 13,385,779 16,102,581 11,913,477
The accompanying notes are an integral part of these financial statements.
4
MEMS USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
June 30,2005 June 30,2004
--------------- ---------------
Cash flows provided by (used for) operating activities:
Net loss $ (1,700,790) $ (1,926,003)
--------------- ---------------
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation 109,157 30,268
Common stock issued for services 25,000 350,360
Change in assets and liabilities net of effects from purchase of Bott and
Gulfgate:
(Increase) decrease in current assets:
Accounts receivable 164,779 0
Inventories (63,484) 0
Other assets (105,306) (138,597)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses 297,196 (168,919)
Lines of credit (100,612) 0
Current portion of long-term debt (21,439) 0
Deferred revenue 0 (28,333)
--------------- ---------------
Total adjustments 305,291 44,779
--------------- ---------------
Net cash provided by (used for) operating activities (1,395,499) (1,881,224)
Cash flows used (provided) by financing activities:
Loan from shareholder (5,000) 0
Payment on long term liabilities 47,119 0
Liability for stock subscribed 0 1,874,080
Common shares payable under terms of acquisition agreement 809,966
--------------- ---------------
Total cash used in investing activities 852,085 1,874,080
Cash flows provided (used) by investing activities:
Purchase of property and equipment (39,428) (97,297)
Collection of stock subscription receivable 0 (151)
Cash balance net of payments for purchase of Bott and Gulfgate 5,073 0
Issuance of common and preferred stock 2,643,631 139,251
--------------- ---------------
Net cash provided by financing activities 2,609,276 41,803
--------------- ---------------
Net increase in cash and cash equivalents 361,692 34,659
Cash and cash equivalents, beginning of period 26,439 23,613
--------------- ---------------
Cash and cash equivalents, end of period $ 388,131 $ 58,272
=============== ===============
Supplemental disclosure of cash flow information:
Income taxes paid 0 0
=============== ===============
Interest paid $ 37,545 $ 19,286
=============== ===============
Supplemental disclosure of non-cash financing activities:
Common stock (including $1,400,000 of shares subject to mandatory
redemption factor and $809,996 of penalty 3,059,996 0
shares) to be issued for acquisition of Bott and Gulfgate
Common stock issued for services 12,500 350,360
Issuance pf Series A preferred stock 0 228,250
The accompanying notes are an integral part of these financial statements.
5
Notes to consolidated financial statements:
(1) Company and Summary of Significant Accounting Policies: Nature of
Business: MEMS USA, Inc. (the "Company") was incorporated in Nevada in
2004. The Company is comprised of three wholly owned subsidiaries, MEMS
USA, Inc., a California Corporation ("MEMS CA"), Bott Equipment Company,
Inc. ("Bott") and Gulfgate Equipment, Inc. ("Gulfgate"). In November 2004,
the Company formed a joint venture, Can Am Ethanol One, Inc. ("Can Am").
We presently own forty-nine point three percent (49.3%) of Can Am and
maintain 50% of the company's voting rights.
MEMS CA is an engineering and design firm engaged in the development and
sale of instrumentation, blending skids and Intelligent Filtration Systems
("IFS").
Gulfgate produces particulate filtration equipment utilized in the oil and
power industries. Gulfgate also produces vacuum dehydration and coalescing
systems that are utilized to remove water from turbine engine oil. These
same systems are used by electric power generation facilities to remove
water from transformer oils. To help meet its customers' diverse needs,
Gulfgate maintains and operates a fleet of filtration and dehydration
systems.
Bott is a stocking distributor for various lines of industrial pumps,
valves and instrumentation such as those utilized in MEMS CA's IFS and
blending skid systems. Bott specializes in the construction of aviation
and refueling systems, including, but not limited to helicopter refueling
systems used on oil rigs throughout the world. Bott also constructs
refueling systems for commercial marine vessels. Bott's customers include
chemical plants, refineries, power plants and other industrial
applications. MEMS CA, Bott and Gulfgate utilize a combination direct
sales force as well as commissioned sales representatives to market and
distribute their products. Can Am Ethanol One was created to manufacture,
own and operate an ethanol production facilities in Canada. The joint
venture will utilize a synthetic biomass conversion process to convert
waste materials into ethanol. We intend to develop several other joint
venture ethanol plants in Canada that will use a synthetic biomass
conversion process, subject to receipt of required funding. In June 2005,
MEMS CA and its joint venture partner each made a CN$25,000 at risk
deposit to open escrow toward purchase of 2,150 acres of land which is
intended to serve as a plant site in British Columbia, Canada. We are
presently in the process of integrating our subsidiaries, which we believe
will promote efficiency and lower operating costs. While each of our
subsidiaries will remain a separate operating entity, we intend to
optimize the resources of each.
Revenue Recognition The majority of the Company's revenues are recognized
when products are shipped to or when services are performed for
unaffiliated customers. Other revenue recognition methods the Company uses
include the following: revenue on production contracts is recorded when
specific contract terms are fulfilled, which is when the product or
service is delivered; revenue from cost reimbursement contracts is
recorded as costs are incurred, plus fees earned (Can Am Ethanol One);
revenue under long-term contracts, for which delivery is an inappropriate
6
measure of performance, is recognized on the percentage-of-completion
method based upon incurred costs compared to total estimated costs under
the contract; and revenue under engineering contracts is generally
recognized as milestones are attained. Going Concern: The accompanying
financial statements have been prepared in conformity with accounting
principles generally accepted in the United States, which contemplates the
Company as a going concern. However, the Company has sustained substantial
operating losses in recent years and has used substantial amounts of
working capital in its operations. Realization of a major portion of the
assets reflected on the accompanying balance sheet is dependent upon
continued operations of the Company which, in turn, is dependent upon the
Company's ability to meet its financing requirements and succeed in its
future operations. Management believes that actions presently being taken
to revise the Company's operating and financial requirements provide them
with the opportunity for the Company to continue as a going concern.
Accounts Receivable: Accounts receivable have been reduced by an allowance
for amounts that may become uncollectible. This estimated allowance is
based primarily on Management's evaluation of the financial condition of
the customer and historical bad debt experience. The Company has provided
reserves for doubtful accounts as of June 30, 2005 in the amount of
$52,240 that the Company believes are adequate.
Inventories: Inventories are valued at the lower of cost (first-in,
first-out) or market value and have been reduced by an allowance for
excess, slow-moving and obsolete inventories. The estimated allowance is
based on Management's review of inventories on hand compared to historical
usage and estimated future usage and sales. Inventories under long-term
contracts reflect accumulated production costs, factory overhead, initial
tooling and other related costs less the portion of such costs charged to
cost of sales and any un-liquidated progress payments. In accordance with
industry practice, costs incurred on contracts in progress include amounts
relating to programs having production cycles longer than one year, and a
portion thereof may not be realized within one year.
Stock Based Compensation: Pro forma information regarding net loss and
loss per share, pursuant to the requirements of SFAS 123, for the three
and nine months ended June 30, 2005 and 2004 are as follows: (Amounts in
thousands except per share.)
Three months ended June 30 Nine months ended June 30
2005 2004 2005 2004
---------------- ------------- ---------------- --------------
Net loss, as reported $ (767) $ (379) $ (1,701) $ (1,569)
Deduct: Total stock-based employee
compensation
expenses determined under
the fair value Black-Scholes
method with a 3% volatility and a 6%
risk free rate of return
assumption ( 31) ( 17) ( 98) ( 51)
---------------- --------------- --------------- ----------------
Pro forma net loss $ (798) $ (396) $ (1,799) $ (1,620)
================ =============== =============== ================
Loss per share:
Weighted average shares, basic
and diluted - as
reported
17,241 13,386 16,103 11,913
---
Basic and diluted, pro forma, per share $ (0.05) $ (0.03) $ (0.11) $ (0.14)
================ =============== =============== ================
7
(2) Interim Financial Statements: The accompanying un-audited consolidated
financial statements for the three and nine months ended June 30, 2005 and
2004 include all adjustments (consisting of only normal recurring
accruals), which, in the opinion of management, are necessary for a fair
presentation of the results of operations for the periods presented.
Interim results are not necessarily indicative of the results to be
expected for a full year. These un-audited consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements for the period from November 17, 2000 (inception) to
September 30, 2004 included in the Company's Form 10-KSB/A.
(3) Business Acquisition:
On October 26, 2004 ("Closing Date"), effective October 1, 2004, the
Company purchased 100% of the outstanding shares of two Texas
corporations, Bott Equipment Company, Inc. ("Bott") and Gulfgate
Equipment, Inc. ("Gulfgate") from their president and sole shareholder,
Mr. Mark Trumble.
Under the terms of the stock purchase agreement, the Company acquired 100%
of the shares of Bott and Gulfgate from Mr. Trumble for $50,000 in cash
and 1,309,677 shares of the Company's newly issued common stock.
752,688 shares of the shares issued to Trumble are subject to a one time
put. The exercise of the put must occur, if at all, on or within 10
business days after the day which falls three hundred sixty-six (366) days
after the Closing Date. Under the terms of the put, Trumble may exchange
some or all of the 752,688 shares for an amount equal to $1.86 (which is
the average price of the Company's stock on the OTC BBC for the thirty
trading days comprising September 13, 2004 through October 22, 2004) times
the number of shares exchanged by Trumble pursuant to the put. Should
Trumble choose to exercise this put, the Company shall have sixty (60)
days from the date of exercise to pay off any sums due thereby. The
Company's performance under the terms of the put is secured by second
deeds of trust with vendors' liens in favor of Trumble on certain parcels
of the Companies' real estate.
The 752,688 shares subject to the put, have been properly treated as a
$1.4 million liability, pursuant to Statement of Financial Accounting
Standards no. 150 (SFAS 150) Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity until the terms of the
put expire.
The Company agreed to create an employee option plan for its employees and
those of its affiliates, including Bott and Gulfgate. In connection with
said plan, the Company agreed to file Form S-8 Registration Statement
under The Security Act of 1933 (securities to be offered to employees in
employee benefit plans) within 30 days of the Closing Date. The Company
had also agreed that it would issue Trumble an additional 123,659 shares
of the Company's restricted stock if it failed to achieve this milestone.
The Company filed the Form S-8 Registration Statement within 30 days of
the Closing Date thereby achieving this milestone and avoiding the
issuance of penalty shares to Mr. Trumble.
8
The Agreement also provided that Trumble will personally introduce the
Company's officers and representatives to five (5) qualified Texas bankers
and that the Company will utilize its best efforts to remove Trumble's
name as guarantor from the Bott and Gulfgate lines of credit (See notes 7
and 8) within 90 days of the fifth introduction. The Company has agreed
that it will issue Trumble an additional 370,977 shares of restricted
stock should it fail to achieve this milestone. Mr. Lawrence Weisdorn, Mr.
Daniel Moscaritolo and Dr. James Latty have also agreed to join Trumble as
guarantors on the Bott and Gulfgate credit lines. Mr. Weisdorn joined
Trumble as guarantor on the Bott and Gulfgate credit lines in or around
mid-November 2004. Mr. Moscaritolo and Mr. Latty have agreed to join as
guarantors should the Company fail to recognize the milestone of removing
Trumble's name as guarantor from the existing credit lines within the
specified time period. As of the date of this report, only four qualified
personal introductions have occurred. Thus, the 90 day milestone has not
been triggered. The Company is committed to removing Mark Trumble as
guarantor from the existing lines of credit and has submitted applications
for credit lines with a number of financial institutions.
The Company agreed to secure a best efforts underwriting commitment letter
from a qualified investment banker within 45 days of the Closing Date to
raise a minimum of $2 million in equity capital. An additional 123,659
shares of the Company's restricted stock were to be issued to Trumble
should the Company fail to achieve this milestone. The Company obtained a
commitment letter within 45 days of the Closing Date thereby achieving
this milestone and avoiding the issuance of penalty shares to Mr. Trumble.
The Company also agreed, in connection with the $2 million equity raise,
that the Company would receive $2,000,000 in gross equity funding within
120 days of the Closing Date. The Company has agreed that it will issue
Trumble an additional 123,659 shares of its restricted stock should it
fail to achieve this milestone. The Company did not achieve this milestone
and is obligated to issue 123,659 penalty shares to Mark Trumble.
Finally, the Company has recognized that Trumble shall sell 326,344 shares
of his stock at a purchase price of approximately $607,000 to private
parties, including a related party Lawrence Weisdorn, Sr., the CEO's
father and a shareholder and/or Weisdorn Sr.'s assignees pursuant to a
written agreement between Trumble and Weisdorn Sr.. Should Trumble fail to
recognize $607,000, through no fault of Trumble, the Company agreed to
issue up to 494,636 shares of restricted stock to Trumble. The percentage
of the Penalty Shares the Company shall issue, if any, shall be prorated
in accordance with any monies received by Trumble during the 60-day
period. It is further understood that the penalties are subject to the
following schedule: (1) Trumble shall have recognized at least $75,000
within 15 days of the Closing Date or he shall receive up to 61,829
Penalty Shares; (2) Trumble shall recognize an additional $75,000 within
30 days of the Closing Date or he shall receive up to an additional 61,829
Penalty Shares; (3) Trumble shall recognize an additional $150,000 within
45 days of the Closing Date or he shall receive up to an additional
123,659 Penalty Shares; and (4) Trumble shall recognize an additional
$307,000 within 60 days of Closing Date or he shall receive up to an
additional 247,318 Penalty Shares. Each milestone is to be calculated as a
stand-alone event. All of the above Penalty Share calculations shall be
subject to a pro-rata offset for monies received that fall short of the
indicated milestones.
During the first quarter, the Company, in order to avoid the issuance of
61,829 penalty shares, paid $75,000 directly to Mr. Trumble. The Company
has recorded this payment as a reduction to additional paid-in capital. As
of the date of this report the Company has received approximately $27,000
of the $75,000 from Mr. Weisdorn Sr. The Company is currently pursuing the
collection of the remaining balance of $48,000.
9
Mr. Trumble did not recognize $307,000 within 60 days of the closing date.
As a result, the Company is obligated to issue 247,318 penalty shares to
Mr. Trumble. Additionally, the covenant to remove Mr. Trumble from the
lines of credit remains and may require us to issue up to 370,977
additional penalty shares in the event that we fail to satisfy that
remaining covenant.
Non-Competition Agreement:
The agreement also provides that Trumble shall not for a period of
eighteen (18) months following his separation from the Company, unless
permitted to do so by the Company, engage, directly or indirectly as an
individual, representative or employee of others, in the business of
designing, manufacturing or selling products in competition with the
Company or any of its subsidiaries in any geographic area where the
Company or its subsidiaries are doing business.
Management believes that the acquisition of Bott and Gulfgate will provide
the Company with cost effective means to engineer, manufacture and
distribute products for its customers in the energy sector. Bott's
components and Gulfgate's fabrication abilities may also be utilized to
construct components to be used in Can AM Ethanol One, Inc.'s ethanol
production facilities. The acquisition has been accounted for as a
purchase transaction pursuant to Statement of Financial Accounting
Standards No. 141 Business Combinations (SFAS 141) and accordingly, the
acquired assets and liabilities assumed are recorded at their book values
at the effective date of acquisition except for the real property which
approximate the most current appraised value. Excess cost of $1,148,000
over the appraised real property and book value of the other acquired
assets and liabilities assumed was assigned to goodwill. Goodwill included
370,977 of penalty common shares valued at $809,966.
The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition (in thousand):
Current assets $ 1,846
Property, machinery, furniture and equipment 1,873
-----
Total assets acquired 3,719
=====
Current liabilities 1,619
Long term debt 138
---
Total liabilities assumed 1,757
-----
Net assets acquired 1,962
Excess Cost over fair value 1,148
-----
Total purchase price $ 3,110
=====
In the event that any purchase adjustments arise within one year of the
purchase date, the foregoing allocation may be adjusted. The $3,110,000
purchase price was comprised of the following (in thousand):
Cash $ 50
Common Stock (370,977 Penalty shares) 810
Common Stock (1,309,677 shares) 2,250
-----
Total $ 3,110
=====
The following pro-forma summary presents the consolidated results of
operations of the Company as if the acquisition had occurred at the
beginning of the three and nine months ended June 30, 2005 and 2004.
(Amounts in thousands except per share.)
Three months ended June 30 Nine months ended June 30
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $ 1,879 $ 2,360 $ 6,758 $ 5,583
Gross Profit 320 514 1,740 1,171
Net loss attributable to
common shareholders $ (767) $ (379) $ (1,701) $ (1,569)
Net loss per share $ (0.04) $ (0.03) $ (0.11) $ (0.14)
(4) Inventories:
Inventories, net of reserve for slow moving inventory ($50,000), consist
of finished goods and work in process in the amount of $534,555 and
$312,594 respectively.
(5) Property and Equipment:
A summary at June 30, 2005 is as follows (in thousand):
Land $ 502
Buildings and improvements 1,144
Furniture, Machinery and equipment 515
Automobiles and trucks 92
--------
Total 2,253
Less accumulated depreciation 156
--------
$2,097
========
Depreciation expense charged to operations totaled approximately $47,500
and $109,000, respectively, for the three and nine months ended June 30,
2005.
(6) Business Lines of Credits - Bott:
Bott maintains three lines of credits with a bank in Houston, Texas. The
credit lines are evidenced by three promissory notes, a Business Loan
Agreement and certain commercial guarantees issued in favor of the bank.
The material terms of these agreements follow:
In May 2004, Bott entered into a promissory note with a bank whereby Bott
may borrow up to $250,000 over a three year term. Bott may obtain credit
line advances based upon its asset base. The note requires monthly
payments of one thirty-sixth (1/36) of the outstanding principal balance
plus accrued interest at the Bank's prime rate plus 1.0 percent.
In June 2004, Bott executed a promissory note ("Note") with a bank whereby
Bott may borrow up to $600,000, at an interest rate equal to the bank's
prime rate. The Note provides for monthly payments of all accrued unpaid
interest due as of the date of each payment. The Note further provides for
a balloon payment of all principal and interest outstanding on the Note's
one year anniversary. The Company informed the bank that it would not
renew the line of credit and was engaged in discussions with other
financial institutions with the intent of securing more favorable terms.
The Company has a tentative agreement with the bank to payoff the
remaining balance ($376,499) over an 84 month period commencing September
1, 2005.
10
In October 2004, Bott executed a promissory note with a bank that
allows Bott to borrow up to $200,000, at an interest rate equal to the
bank's prime rate plus 1.0 percent. The note provides for monthly
payments of all accrued unpaid interest due. The note also provides for
the payment of $66,666 in the months of December 2004 and January 2005
and payment of the remaining principal and interest in February 2005.
The note was paid off in the second quarter.
All of the foregoing promissory notes contain the following common terms:
The notes specify that no advances under the notes may be used for
personal, family or household purposes and that all advances shall be used
solely for business, commercial, agricultural or similar purposes. Bott
may draw down on the lines of credit provided that: it is not in default
under the note evidencing the particular line of credit or any other
agreement that it might have with the bank; it is not insolvent; no
guarantor has revoked or limited the terms of his or her guarantee
respecting the note; Bott uses the funds available under the particular
note for an unauthorized purpose; and/or the bank believes that its
interests under the note are insecure. The notes provide the following
limitations on the use of methods and advancements respecting the credit
line, and the bank may not honor requests for additional advances if: the
requested advance would cause the amounts requested under the particular
note to exceed its initial limit; Bott's checks or bank cards relating to
the credit line are reported lost or stolen; the note is in default; or
the amount requested is less than allowed under the note. The notes permit
prepayment of all or part of the outstanding balances without penalty.
The Agreements and Notes are secured by the inventory, chattel paper,
accounts receivable and general intangibles. The Agreements and Notes are
also secured by the personal performance guarantees of Mr. Mark Trumble
and Mr. Lawrence Weisdorn (Commercial Guarantees). The Commercial
Guarantees require the guarantors to assure that all payments due under
the Notes are timely made or to make such payments. Amounts outstanding at
June 30, 2005 totaled $560,320.
(7) Business Line of Credit - Gulfgate: In June 2002, Gulfgate executed a
promissory note ("Note") with a bank that allows Gulfgate to borrow up to
$200,000 at an interest rate equal to the bank's prime rate, or a minimum
interest rate of 5.00% per annum, whichever is greater. Gulfgate may draw
down on the line of credit provided: that it is not in default on this
Note or any other agreement that it might have with the bank; it is not
insolvent; any guarantor revokes or limits the terms of his guarantee; the
Borrower uses the funds available under the Note for an unauthorized
purpose (i.e., other than for a business purpose without first obtaining
the bank's written consent); and /or the bank believes that its interests
are insecure. The Note provides the following limitations on the use of
methods and advancements respecting the credit line, and the bank may not
honor requests for advances if: the requested advance would cause the
amounts requested under the Note to exceed $200,000; Gulfgate's checks or
bank cards relating to the credit line are reported lost or stolen; the
Note is in default; or the amount requested is less than allowed under the
Note. The Note provides for monthly payments of all accrued unpaid
interest due as of the date of each payment. The Note remains in force and
effect until the bank provides notice to Gulfgate that no additional
withdrawals are permitted (Final Availability Date). Thereafter, payments
equal to either $250 or the outstanding interest plus one percent of the
outstanding principal as of the Final Availability Date are due monthly
until the Note is repaid in full. The Note allows for prepayment of all or
part of the outstanding principal or interest without penalty. The Note is
secured by Gulfgate's accounts with the bank, and by Gulfgate's inventory,
11
chattel paper, accounts receivable, and general intangibles. The Agreement
is also secured by the performance guarantees of Mr. Mark Trumble, Mr.
Lawrence Weisdorn (prior CEO) and the Company. The personal guarantees
require the guarantors to assure that all payments due under the Note are
timely made or to make such payments. Amounts outstanding at June 30, 2005
totaled $195,466. The Company informed the bank that it will not renew the
line of credit and was engaged in discussions with other financial
institutions with the intent of securing more favorable terms. The Company
has a tentative agreement with the bank to payoff the remaining balance
($195,466) over an 84 month period commencing September 1, 2005.
(8) Promissory Notes:
In November 2002, Gulfgate executed a promissory note with a bank in the
amount of $35,782 at an interest rate equal to the bank's prime rate plus
one-quarter of one percent (0.25%) for a vehicle purchase. The term of the
note is for forty-seven (47) months. The Note is secured by Gulfgate's
deposit accounts at the bank. Balance outstanding at June 30, 2005 was
$16,178.
In May 2003, Bott executed a promissory note with a bank in the amount of
$26,398 at an interest rate equals to four point fifty five percent
(4.55%) for a vehicle purchase. The term of the note is for fifty-nine
(59) months at $494 per month. Balance outstanding at June 30, 2005 is
$16,099.
(9) Mortgage:
On May 31, 2002, Gulfgate entered into a $140,000 promissory note ("Note")
with a bank in connection with the refinancing of Gulfgate's real estate.
The Note bears a fixed interest rate of seven percent (7.00%) per annum.
The Loan provided for fifty-nine monthly payments of $1,267 due beginning
July 2002 and ending June 2007. The Note may be prepaid without fee or
penalty and is secured by a deed of trust on Gulfgate's realty. Gulfgate
is required under the terms of a separate agreement to provide replacement
value fire and extended coverage insurance having a $2,500 deductible.
Balance outstanding at June 30, 2005 was $61,106.
(10) Financing Lease Agreement:
In September 2002, Gulfgate entered into a non-cancelable debt financing
agreement ("Agreement") with the bank's leasing corporation for the
financing of certain equipment and a paint booth. The Agreement calls for
the payment of forty-eight (48) monthly installment payments of $1,556
beginning September 2002 at the interest rate of 6.90 percent per annum.
Summary of long-term notes payable and financing lease are as follow:
Convertible loan $150,000
Promissory notes for automobiles 32,277
Mortgage payable 61,106
Financing lease agreement payable 22,566
Other 4,179
-----------
270,128
Less current portion 29,011
----------
Long-term $241,117
========
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(11) Resignation of Executive Officer and Board Member:
On June 25, 2005, Lawrence Weisdorn, resigned his position as Chief
Executive Officer and Chairman of the Board. An abstract of Mr. Weisdorn's
separation agreement with the Company may be found in the Company's July
1, 2005 8K filing with the Securities Exchange Commission. At the same
time, Mr. Weisdorn also resigned his position as a director of the
Company. James A. Latty, Ph.D, PE was appointed by the Board of Directors
to the position of Chief Executive Officer and Chairman of the Board. Dr.
Latty will continue as President of the Company, a position he has held
since September of 2004.
(12) Subsequent Event: During the month of July 2005, the company raised
$50,000 through private placement of its common stock to pre-existing,
qualified, non-affiliated investors at $1.50 per share.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Unless otherwise indicated, all references to our company include our
wholly-owned subsidiaries, MEMS USA, Inc. a California corporation, Bott
Equipment Company, Inc., a Texas corporation, Gulfgate Equipment, Inc., a Texas
corporation and our joint venture Can Am Ethanol One, Inc., a British Columbia
corporation.
Plan of Operations:
We are engaged in the business of developing and manufacturing advanced
engineered products, systems and plants, mostly for the energy, oil and natural
gas industries. Our business is divided into three operating divisions,
including (i) the design, development and operation of ethanol facilities, (ii)
the provision of systems and components to the energy sector, and (iii) the
engineering applications and sale of micro electro mechanical systems (MEMS) for
scientific and engineering companies. As related in our annual report, in
October 2004, the Company acquired two Texas corporations, Bott Equipment
Company, Inc. ("Bott") and Gulfgate Equipment, Inc. ("Gulfgate"). In November
2004, the Company formed a joint venture, Can Am Ethanol One, Inc. ("Can Am").
As of the date of this report, the Company owns 49.3% of the outstanding shares
of Can Am and has voting rights equal to 50%. Two of MEMS directors sit on the
Can Am board. The purpose of this joint venture is to design, build and operate
an ethanol production facility. We believe that these strategic acquisitions and
alliances will allow us to grow our businesses. The Company is currently in the
process of becoming ISO 9001:2000 certified. This certification will provide the
Company with worldwide recognition that we have high quality products and
standards and will allow us a greater ability to compete on a national and
International basis.
MEMS CA was incorporated in November 2000. MEMS CA is an engineering and design
firm. MEMS CA has been engaged in the engineering and sale of instrumentation,
blending skids and Intelligent Filtration Systems (IFS). During 2004, MEMS CA's
engineers designed and constructed an acoustic viscometer. This instrument
utilizes sound waves traveling through a fluid stream to determine the fluid's
viscosity. To date, the Company has determined that the instrument may be
utilized to measure the viscosity of a range of aqueous and organic fluids,
including refined and crude oils. In May 2005 the Company filed a utility patent
application respecting this device which replaces the previously filed
provisional patent. MEMS CA is presently designing a multi-variant pressure,
temperature and flow meter for use in industrial applications.
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During 2004, MEMS CA's engineers also built a hydrocarbon blending system
technology. One system we produced mixes three organic fluids, in differing
percentages with accuracy. One of the Company's long term goals is to be able to
build blending systems to mix ethanol with motor gasoline. When properly mixed,
ethanol and gasoline provide a higher octane, cleaner burning fuel for
automobiles.
MEMS CA's engineers have also been charged by the Company to oversee the
Company's IFS business. These systems are utilized to filter wastes from amine,
oil or water streams. Unlike a typical canister filter system, such as the oil
filter in an automobile, which needs to be periodically replaced and disposed
of, the filters utilized in intelligent filtration systems can last for decades.
Furthermore, the filter system is self cleaning. Once the system recognizes that
its filter is becoming clogged by debris filtered from the fluid flow, it turns
the fluid flow through the filter off and "back flushes" the debris caked on the
filter into a collection vessel. The system then turns the fluid flow through
the system back on through the freshly cleaned filter. The filter cleaning
process takes only seconds to complete and repeats as necessary to assure
optimum filtration. A facility utilizing IFS technology needn't dispose of
contaminated filters, but only need dispose of the contaminate itself. Thus,
while a filtration system based upon IFS technology typically requires a greater
capital investment on the part of the purchaser, these costs are offset in the
long run by savings in filter replacement and disposal costs. The Company
anticipates that it may be able to utilize its intelligent filtration systems as
an integral part of any ethanol production facility that it may design. The
Company is presently aware of three competitors offering similar technologies to
MEMS IFS technology.
Presently, MEMS CA utilizes a combination direct sales force as well as
commissioned sales representatives to market and distribute its products. MEMS
CA targets niche business segments and is not dependent upon any one or a few
major customers. A typical contract requires MEMS CA to engineer a product that
previously did not exist or improve upon an existing technology using MEMS
(Micro Electro Mechanical Systems) devices. The vast majority of the monies
raised since the Company's acquisition of MEMS CA have been utilized to fund
MEMS CA's acquisition and development of new technologies.
Gulfgate produces particulate filtration equipment utilized in the oil and power
industries. Gulfgate also produces vacuum dehydration and coalescing systems
that are utilized to remove water from ground based turbine engine oil. These
same systems are used by electric power generation facilities to remove water
from transformer oils. To help meet its customer's diverse needs, Gulfgate
maintains and operates a rental fleet of filtration and dehydration systems.
Presently, Gulfgate utilizes a combination direct sales force as well as
commissioned sales representatives to market and distribute its products.
Bott is a stocking distributor for various lines of industrial pumps, valves and
instrumentation such as those utilized in MEMS CA's IFS and blending skid
systems. Bott specializes in the construction of aviation and refueling systems,
including, but not limited to, helicopter refueling systems on oil rigs
throughout the world. Bott also constructs refueling systems for commercial
marine vessels. Bott's customers include chemical plants, refineries, power
plants and other industrial applications. Bott utilizes a combination direct
sales force as well as commissioned sales representatives to market and
distribute its products.
Can Am was created to manufacture, own and operate one ethanol production
facility in Canada. The joint venture will utilize a synthetic biomass
conversion process to convert waste materials into ethanol. We are aware of
several commercially available conversion processes which we believe will meet
our requirements and are presently evaluating the processes in relation to their
required capital investment, operating costs, conversion yield and product
quality as a prerequisite to licensing or acquiring the process technology. It
is anticipated that the ethanol manufactured by the joint venture will be sold
to companies which blend ethanol with motor fuel. The blending of ethanol with
14
motor fuel reduces emissions and will help countries such as Canada meet the
Kyoto Accords for reduced greenhouse gas emissions. We intend to develop several
ethanol plants in Canada that will use a synthetic biomass conversion process,
subject to receipt of required funding. We estimate that each ethanol plant will
require approximately $150 million in capital. MEMS USA's engineering group,
headquartered in Westlake Village, CA, has entered into a contract with Can Am
to develop the engineering data and direct the plant engineering and
construction projects. It is anticipated that the Company's Texas subsidiaries
will be called upon to supply instrumentation for the project and assist in its
modular construction, subject to receipt of funding.
On April 25, 2005 the Company and Accelon Energy System, Inc. ("Accelon")
entered into a contract with Can Am whereby the Company and Accelon agreed to
provide certain services to Can Am on the condition that Can Am receives project
funding on or before June 1st, 2005. Please refer to the Company's Form 8-K
filing dated April 29, 2005 for details relating to this contract. The contract
was amended on May 24, 2005 by the parties to extend the termination date from
June 1, 2005 to October 31, 2005. Please see Exhibit 10.2 for details relating
to this amendment.
We are presently in the process of integrating and improving our subsidiaries,
which we believe will promote efficiency and lower operating costs. While each
of our subsidiaries will remain a separate operating entity, we intend to
optimize the resources of each. MEMS CA's primary responsibility will be to
design and engineer new products and systems for the energy sector. It is
anticipated that Bott will supply component parts for these systems, which will
be assembled in Texas under MEMS CA's supervision. We have already transferred
our IFS and other technology to Texas in order to establish lines of
communication and a working relationship. We also anticipate that once we obtain
the necessary funding, the symbiotic relationship between our subsidiaries will
allow us to engineer, design, and partially construct ethanol plants for our
Canadian joint venture.
Comparison of Operations
Net sales were $1,878,580 and $95,350 for the three months ended June 30, 2005
and 2004, respectively. Net sales for the nine-month periods ended June 30, 2005
and 2004 were $6,757,819 and $95,350, respectively. The sales increases for the
three months and for the nine months ended June 30, 2005 as compared to the
prior year were due to the acquisition of Gulfgate and Bott. Net sales increased
to $1,878,580 for the third quarter of fiscal 2005 from $1,864,543 for the
second quarter of fiscal 2005. Sales for the third quarter of fiscal 2005 were
at expected levels. This coupled with a record level of orders in sales backlog
($2.6 million) positions the company for a strong fourth quarter.
Operating expenses were $1,090,010 and $444,149 for the fiscal quarters ended
June 30, 2005 and 2004, respectively. Operating expenses for the nine-month
periods ended June 30, 2005 and 2004 were $3,446,593 and $1,525,072,
respectively. Operating expense increases for the quarter ended and for the nine
months ended June 30, 2005 as compared to the prior year were due to the
acquisition of Gulfgate and Bott. We expect operating expenses to increase
further as we undertake the design, engineering and construction of one or more
ethanol plants in Canada.
For the quarter ended June 30, 2005, shareholder's equity was $1,279,140 as
compared to a deficit of $1,394,050 for the prior year period ended June 30,
2004. The increase in shareholder equity is attributable to the acquisition of
Gulfgate and Bott and the sale of MEMS common stock in several private placement
offerings.
Interest expense was $18,929 and $-0- for the fiscal quarters ended June 30,
2005 and 2004, respectively. Interest expense for the nine-month periods ended
June 30, 2005 and 2004 was $46,811 and $-0-, respectively. The increase is
attributable to the interest payments made pursuant to the terms of the credit
lines of Bott and Gulfgate.
In summary, net losses were $767,067 and $629,751 for the fiscal quarters ended
15
June 30, 2005 and 2004, respectively. Net losses for the nine-month periods
ended June 30, 2005 and 2004 were $1,700,790 and $1,925,653, respectively. The
increased net loss for the fiscal quarter ended June 30, 2005 as compared to the
prior year was primarily due to higher MEMS general and administrative expenses
resulting from a ramping up of operations to accommodate the acquisition of Bott
and Gulfgate and the initial start-up efforts associated with the Can-Am Ethanol
One contract. Reduction in net loss for the nine months ended June 30, 2005 as
compared to the prior year was primarily due to the acquisition of Gulfgate and
Bott.
Liquidity and Capital Resources
Our plan of operations over the next 12 months includes the continued pursuit of
our goal to design, engineer, build and operate one or more ethanol plants. In
that regard we are dependent upon Can Am Ethanol One, Inc.'s efforts to raise
the necessary capital. We also intend to continue to develop our sensor
technology. We believe that our working capital as of the date of this report
will not be sufficient to satisfy our estimated working capital requirements at
our current level of operations for the next twelve months. Our cash and cash
equivalents were $388,131 as of June 30, 2005, compared to cash and cash
equivalents of $26,439 as of September 30, 2004. At our current cash "burn
rate", we will need to raise additional cash through debt or equity financings
during the fourth quarter of 2005 and the first half of 2006 in order to fund
our continued development of our sensor technology and devices and to finance
possible future losses from operations as we expand our business lines and reach
a profitable level of operations. Before considering Can Am, we believe that we
require a minimum of $2,000,000 in order to fund our planned operations over the
next 12 months, in addition to the capital required for the establishment of any
ethanol production facilities. We plan to obtain the additional working capital
through private placement sales of our equity securities and are currently
evaluating several opportunities. However, as of the date of this report, we
have no firm commitments for the sale of our securities nor can there be any
assurance that such funds will be available on commercially reasonable terms, if
at all. Should we be unable to raise the required funds, our ability to finance
our continued operations will be materially adversely affected.
During the month of April 2005, the company raised $750,000 through private
placement of its common stock to Registrant's pre-existing, qualified,
non-affiliated investors at $2.00 per share. The purchase agreement also
provided the investors with a warrant to purchase an additional 222,222 shares
of the Company's common stock at a price of $2.50 per share as well as a .7
percent (0.7%) equity interest in any wood waste-to-ethanol plant or project,
including the first ten ethanol plants or any biomass feedstock, in which the
Company holds or will hold an equity position. The warrants granted pursuant to
this transaction expired on July 15, 2005 without being exercised. The purchase
agreement also granted MEMS the right to vote the investor's 0.7% interest.
Thus, MEMS maintains the same 50% voting interest as Accelon Energy System. An
exemplar of this contract is attached hereto as Exhibit 10.1.
Subsequent Event
During the month of July 2005, the company raised $50,000 through private
placement of its common stock to pre-existing, qualified, non-affiliated
investors at $1.50 per share.
Cautionary Statement Regarding Future Results, Forward-Looking Information and
Certain Important Factors
We make written and oral statements from time to time regarding our business and
prospects, such as projections of future performance, statements of management's
plans and objectives, forecasts of market trends, and other matters that are
forward-looking statements. Statements containing the words or phrases "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimates," "projects," "believes," "expects," "anticipates," "intends,"
"target," "goal," "plans," "objective," "should" or similar expressions identify
forward-looking statements, which may appear in documents, reports, filings with
the Securities and Exchange Commission, news releases, written or oral
presentations made by officers or other representatives made by us to analysts,
stockholders, investors, news organizations and others, and discussions with
management and other representatives of us.
16
Our future results, including results related to forward-looking statements,
involve a number of risks and uncertainties. No assurance can be given that the
results reflected in any forward-looking statements will be achieved. Any
forward-looking statement made by or on behalf of us speaks only as of the date
on which such statement is made. Our forward-looking statements are based upon
assumptions that are sometimes based upon estimates, data, communications and
other information from suppliers, government agencies and other sources that may
be subject to revision. Except as required by law, we do not undertake any
obligation to update or keep current either (i) any forward-looking statement to
reflect events or circumstances arising after the date of such statement, or
(ii) the important factors that could cause our future results to differ
materially from historical results or trends, results anticipated or planned by
us, or which are reflected from time to time in any forward-looking statement
which may be made by or on behalf of us.
In addition to other matters identified or described by us from time to time in
filings with the SEC, there are several important factors that could cause our
future results to differ materially from historical results or trends, results
anticipated or planned by us, or results that are reflected from time to time in
any forward-looking statement that may be made by or on behalf of us. Some of
these important factors, but not necessarily all important factors, include
those risk factors set forth in our 2004 Annual Report on Form 10-KSB/A filed
with the SEC on February 3, 2005
ITEM 3. Controls and Procedures
-------------------------------
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to our
management, as appropriate, to allow timely decisions regarding required
disclosure. Our President and Chief Financial Officer have reviewed the
effectiveness of our disclosure controls and procedures and have concluded that
the disclosure controls and procedures, overall, are effective as of the end of
the period covered by this report. There has been no change in the Company's
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) during the period covered by this report that have materially
affected, or are reasonably likely to materially affected, the Company's
internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Unregistered Sales of Equity Securities and Use of Proceeds
The Company issued 1,309,667 shares of its common stock to Mr. Mark Trumble in
consideration for the purchase of 100% of the shares of Bott Equipment Company,
Inc. and Gulfgate Equipment, Inc. in accordance with the Stock Purchase
Agreement ("Agreement") entered into by the Company and Mr. Trumble. (A copy of
the Agreement was filed as an Exhibit to our form 10KSB/A filed with the SEC on
February 3, 2005.) The Agreement contains covenants in favor of Mr. Trumble that
are secured with our promise to issue up to a total of 1,236,591 additional
shares of our stock to Mr. Trumble in the event we fail to satisfy those
covenants. As of the date of this report, the Company is obligated to issue
370,977 penalty shares to Mr. Trumble. Additionally, certain outstanding
covenants may require us to issue up to 370,977 additional penalty shares in the
event that we fail to satisfy those covenants. During the month of April 2005,
the company raised $750,000 through private placement of its common stock to
pre-existing, qualified, non-affiliated investors at $2.00 per share. The
purchase agreement also provided the investors with a warrant to purchase an
additional 222,222 shares of the Company's common stock at a price of $2.50 per
17
share as well as a .7 percent (0.7%) equity interest in any wood
waste-to-ethanol plant or project, including the first ten ethanol plants or any
biomass feedstock, in which the Company holds or will hold an equity position.
The warrants granted pursuant to this transaction expired on July 15, 2005
without being exercised. The purchase agreement also granted MEMS the right to
vote the investor's 0.7% interest. Thus, MEMS maintains the same 50% voting
interest as Accelon Energy System. An exemplar of this contract is attached
hereto as Exhibit 10.1.
Item 2. Other Information:
In its stock purchase agreement with Mr. Trumble, respecting the purchase of
Gulfgate and Bott, the Company recognized that Trumble would sell 326,344 shares
of its stock at a purchase price of approximately $607,000 to private parties,
including a related party Lawrence Weisdorn, Sr., the CEO's father and a
shareholder and/or Weisdorn Sr.'s assignees pursuant to a written agreement
between Trumble and Weisdorn Sr.. As part of the Company's agreement with Mr.
Trumble, the Company agreed that if Mr. Trumble failed to recognize $607,000,
portions of which were due on specific dates following the closing date of the
transaction, the Company agreed to issue up to 494,636 shares of restricted
stock to Trumble.
In December 2004 the Company paid $75,000 to Mr. Mark Trumble in order to avoid
the issuance of 61,829 Penalty Shares to Mr. Trumble. In January 2005, the
Company paid Mr. Trumble $158,000 to avoid the issuance of 123,659 Penalty
Shares to Mr. Trumble. Although the Company had no obligation to make these
payments under its agreement with Mr. Trumble, it did have an obligation to
issue penalty shares to Mr. Trumble if Mr. Trumble did not recognize these
monies through the sale of stock. When the Company learned that the primary
obligor, Mr. Lawrence Weisdorn Sr., was then unable to fulfill his contractual
obligations to Mr. Trumble, the Company believed that it was in the
shareholder's best interests to avoid dilution by making these payments and
seeking to recoup the monies paid by the Company from Mr. Weisdorn Sr. at a
later date. As of this date the company has received $185,000 from Lawrence
Weisdorn Sr. The Company believes that it will recover some or all of the
remaining balance, $48,000, before the close of the next quarter. The Company is
obligated to issue to Mr. Trumble 247,318 Penalty Shares because Mr. Trumble did
not recognize $307,000 within 60 days of the close of the acquisition. Finally,
the Company is obligated to issue to Mr. Trumble an additional 123,659 Penalty
Shares since the Company did not receive $2,000,000 in gross equity funding
within 120 days of the Closing Date. In summary, the Company's obligation to
issue penalty shares totaling 370,977 valued at $810,000 to Mr. Trumble has
significantly increased goodwill. This increase in goodwill could give rise to
impairment loss recognition at the company's measurement date, September 30,
2005.
On June 25, 2005, Lawrence Weisdorn, resigned his position as Chief Executive
Officer and Chairman of the Board. An abstract of Mr. Weisdorn's separation
agreement with the Company may be found in the Company's July 1, 2005 8K filing
with the Securities Exchange Commission. At the same time, Mr. Weisdorn also
resigned his position as a director of the Company. James A. Latty, Ph.D, PE was
appointed by the Board of Directors to the position of Chief Executive Officer
and Chairman of the Board. Dr. Latty will continue as President of the Company,
a position he has held since September of 2004.
Item 3. Exhibits.
--------
(a) Exhibits
10.1 Securities Purchase Agreement dated April 22, 2005 (Filed
electronically herewith)
18
10.2 Can-Am Ethanol One, Inc. Amendment to Contract dated May 24, 2005
(Filed electronically herewith)
31.1 Certification of President Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934 (Filed electronically herewith)
31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
of the Securities Exchange Act of 1934 (Filed electronically
herewith)
32.2 Certification of President and Chief Financial Officer Pursuant to
18 U.S.C Section 1350 (Furnished electronically herewith).
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEMS USA, Inc.
(Registrant)
Date: August 15, 2005 /s/
----------------------------------
James A. Latty
Chief Executive Officer
20