Unassociated Document
SCHEDULE
14C INFORMATION
(Rule
14c-107)
Information
Statement Pursuant to Section 14(c)
of
the Securities Exchange Act of 1934 (Amendment No. _______)
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the appropriate box:
o Preliminary Information Statement
o Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)2))
x Definitive Information Statement
SPECTRE
INDUSTRIES, INC.
(Name
of Registrant as Specified in its Charter)
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of Filing Fee (Check the appropriate box):
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14c-5(g) and 0-11
| 1. |
Title
of each class of securities to which transaction
applies: |
| 2. |
Aggregate
number of securities to which transaction
applies: |
| 3. |
Per
unit price or other underlying value of transaction, computed pursuant to
Exchange Act Rule O-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): |
| 4. |
Proposed
maximum aggregate value of transaction: |
o Fee paid previously with preliminary
materials.
o Check box if any part of the fee is offset as provided
by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
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1. Amount
Previously Paid:
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SCHEDULE
14C INFORMATION STATEMENT
Pursuant
to Regulation 14C
of
the Securities Exchange Act of 1934, as amended
Spectre
Industries, Inc.
#6
- 260 East Esplanade
North
Vancouver, British Columbia
Canada
V7L 1A3
WE
ARE NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND US A PROXY
This
Information Statement is furnished by the Board of Directors of Spectre
Industries, Inc., a Nevada corporation, to holders of record of our common stock
(the "Common Stock") at the close of business on October 21, 2004 (the "Record
Date"), pursuant to Rule 14c-2 promulgated under the Securities
Exchange Act of 1934,
as amended (the "Exchange Act"). The purpose of this Information Statement is to
inform our stockholders of the following (the "Actions"):
| 1. |
Change
the name of the corporation from "Spectre Industries, Inc." to Sensor
System Solutions, Inc." |
| 2. |
Increase
the number of authorized shares from 6,666,667 to
200,000,000. |
| 3. |
Authorize
20,000,000 shares of preferred stock (the "Preferred
Stock"). |
| 4. |
A
pending distribution by way of a dividend of 20,878,081 shares of common
stock (the "Shares") in the capital of Spectre Holdings, Inc., our
wholly-owned subsidiary. All of our stockholders of record as of
May 21, 2004, will be entitled to participate in such
dividend. |
On
May 25, 2004, the majority of our Board of Directors adopted a resolution
authorizing the Actions. As required under applicable Nevada corporate laws, our
Board of Directors thereafter sought, and received by way of written consents
executed and delivered by stockholders holding a majority of the outstanding
shares ("Consenting" Stockholders") of our Common Stock, stockholder approval of
the Actions in the manner contemplated by the resolution of our Board of
Directors. As mandated by Exchange Act Rule 14c-2, the Actions with the
exception of the distribution of the Spin-off Shares will not take place and
become effective for at least twenty (20) days after the filing and mailing of
this Information Statement. It is anticipated that the distribution will occur
immediately following the effectiveness of a Registration Statement of
Form 10-SB related to the Spin-off Shares.
The
entire cost of furnishing this Information Statement will be borne by our
corporation. We will request brokerage houses, nominees, custodians, fiduciaries
and other like parties to forward this Information Statement to the beneficial
owners of Common Stock held of record by them.
Our
Board of Directors has fixed the close of business on October 21, 2004 as the
Record Date for the determination of Stockholders of Record who are entitled to
receive this Information Statement. There were 3,976,868 shares of Common Stock
issued and outstanding on the Record Date. Our corporation anticipates that this
Information Statement will be mailed on or about October 29, 2004 to all
Stockholders of Record.
PLEASE
NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY STATEMENT, BUT RATHER
AN INFORMATION STATEMENT DESIGNED TO INFORM YOU OF THE PENDING DISTRIBUTION OF
OUR CORPORATION'S ASSETS BY WAY OF A DIVIDEND.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
PLEASE
NOTE THAT THIS IS NOT AN OFFER TO PURCHASE YOUR SHARES.
CHANGE
THE NAME OF THE COMPANY
The
majority of our Board of Directors has adopted and the Consenting Stockholders
have approved an amendment to the Articles of Incorporation, as amended, Spectre
Industries, Inc. (the "Name Amendment") to change the name of the Corporation
from "Spectre Industries, Inc." to "Sensor System Solutions, Inc." The text of
the Name Amendment is attached as Appendix A and is incorporated herein by
reference. In the judgment of the Board of Directors, the change of corporate
name is desirable in light of the acquisition of Advanced Custom Sensors, Inc.
accurately describing the nature of its current and projected operations.
The
Name Amendment will become effective upon the filing of a Certificate of
Amendment relating thereto with the Secretary of State of the State of Nevada,
which is expected to occur on or about November 3, 2004. Under federal
securities laws, we cannot file the Certificate of Amendment until at least 20
days after the mailing of this Information Statement.
INCREASE
THE NUMBER OF AUTHORIZED SHARES
The
majority of our Board of Directors has adopted and the Consenting Shareholders
have approved an amendment to the Articles of Incorporation, as amended, to
increase the authorized capital from 6,666,667 to 200,000,000 (the "Additional
Shares") of which 20,000,000 shares will be designated as Preferred Stock and
180,000,000 shares will be Common Stock.
The
Company's current Articles of Incorporation authorized the issuance of up to
6,666,667 shares of Common Stock. As of the date of this Information Statement,
the Company had 3,976,868 shares of Common Stock outstanding.
The
Board of Directors believes that the authorization of Additional Shares is
advisable and in the best interests of the Company and its shareholders for
several reasons. The Additional Shares would permit the Board of Directors to
issue stock without the expense and delay associated with a special meeting of
the shareholders. This, thereby, provides the Company with maximum flexibility
in structuring acquisitions, joint ventures, strategic alliances, and
capital-raising transactions and for other corporate purposes. The Additional
Shares would enable the Company to respond promptly to and take advantage of
market conditions, other favorable opportunities and general corporate purposes.
Such corporate purposes could include, without limitation: (a) the
payment of stock dividends or issuances pursuant to stock splits, (b) the
issuance of Common Stock upon the exercise of options granted under a stock
option plan or in connection with other employee benefit plans, (c) the issuance
of Common Stock upon the conversion of any Preferred Stock, the exercise of
warrants or the conversion of other securities convertible into Common Stock
which may be outstanding from time to time, and (d) issuance in connection with
an offering to raise capital.
The
Board of Directors is not aware of any threat to obtain control the Company by
means of merger, tender offer, solicitation in opposition to management or
otherwise and has no plans, agreements, or commitments to issue any additional
shares of Common Stock. The following chart shows the Company's current
capitalization and proposed capitalization on the effective date of the Share
Amendment.
Because
of the proposed increase in capitalization, the authorization or issuance of
additional Common Stock may be viewed as being an anti-takeover device. In the
event of a proposed merger, tender offer, or attempt to gain control of the
company, which the Board of Directors does not believe to be in the best
interests of the company or its shareholders, the board could issue additional
common stock that could make any such takeover attempt more difficult to
complete by causing dilution to the person attempting to gain control of the
Company. While this may be beneficial to management in a hostile tender offer,
it may have an adverse impact on the shareholders that may want to participate
in such a tender offer.
Our
current Articles of Incorporation does not contain any anti-takeover provisions.
Neither our charter or by-laws provide for cumulative voting.
Authorize
Preferred Shares
The
Preferred Stock to be authorized is commonly referred to as "blank check"
Preferred Stock ("Blank Check Preferred") because the Blank Check Preferred
would have such voting rights, designations, preferences, and relative,
participating, option and conversion or other special rights, and such
qualifications, limitations or restrictions, as the Board of Directors may
designate for each class or series issued from time to time. As such, the Blank
Check Preferred would be available for issuance without further action by the
Company's shareholders, except as may be required by applicable law or pursuant
to the requirements of the exchange of quotation system upon which the Company's
securities are then trading or quoted.
The
Board of Directors believes that the creation of Blank Check Preferred is
advisable and in the best interests of the Company and its shareholders for
several reasons. The authorization of the Blank Check Preferred would permit the
Board of Directors to issue such stock without shareholder approval and,
thereby, provide the Company with maximum flexibility in structuring
acquisitions, joint ventures, strategic alliances, capital-raising transactions
and for other corporate purposes. The Blank Check Preferred would enable the
Company to respond promptly to and take advantage of market conditions and other
favorable opportunities without incurring the delay and expense associated with
calling a special shareholders' meeting to approve a contemplated stock
issuance.
The
authorization of the Blank Check Preferred would also afford the Company greater
flexibility in responding to unsolicited acquisition proposals and hostile
takeover bids. The issuance of Blank Check Preferred could have the effect of
making it more difficult or time consuming for a third party to acquire a
majority of the outstanding voting stock of the Company or otherwise effect a
change of control. Shares of Blank Check Preferred may also be sold to third
parties that indicate that they would support the Board in opposing a hostile
takeover bid. The availability of Blank Check Preferred could have the effect of
delaying a change of control and of increasing the consideration ultimately paid
to the Company and its shareholders. The proposed Blank Check Preferred
amendment to the existing Articles of Incorporation is not intended to be an
anti-takeover measure, and the Company is not aware of any present third party
plans to gain control of the Company.
The
actual effect of the issuance of any shares of Blank Check Preferred upon the
rights of holders of the Common Stock cannot be stated until the Board
determines the specific rights of the holders of such Blank Check Preferred.
However, the effects might include, among other things, restricting dividends on
the Common Stock, diluting the voting power of the Common Stock, reducing the
market price of the Common Stock, or impairing the liquidation rights of the
Common Stock, without further action by the shareholders. Holders of the Common
Stock will not have preemptive rights with respect to the Blank Check
Preferred.
Although
the Company may consider issuing Blank Check Preferred in the future for
purposes of raising additional capital or in connection with acquisition
transactions, the Company currently has no binding agreements or commitments
with respect to the issuance of the Blank Check Preferred.
DISTRIBUTION
OF THE SHARES BY WAY OF A DIVIDEND
Overview
On
May 25, 2004, the majority of our Board of Directors approved the distribution
of the Shares by way of a dividend to our Stockholders of Record. The Shares
will be distributed to our Stockholders of Record on a pro-rata basis calculated
in accordance with their ownership of the Common Stock in our corporation.
Neither our corporation nor Spectre Holdings, Inc. shall receive any
consideration for the distribution of the Shares.
The
Shares will represent all of the issued and outstanding shares of Spectre
Holdings, Inc. Spectre Holdings, Inc. was incorporated in the State of Nevada on
December 12, 2003 as a wholly-owned subsidiary of our corporation. Spectre
Holdings, Inc. is authorized to issue 25,000,000 shares of common stock with a
par value of $0.001 per share. Our corporation first subscribed for one share of
common stock of Spectre Holdings, Inc. for consideration of $1.00 per share on
December 12, 2003.
Business
Purpose
As
described in more detail below, Spectre Holdings, Inc. owns and operates an
automated photo kiosk business. Our corporation's Board of Directors believes
that given our acquisition of ACSI custom sensors by way of a reverse
acquisition, our primary focus is no longer the photo kiosk business.
Accordingly, in order to make it possible for our corporation to focus on the
business of ACSI, our Board of Directors, in consultation with our corporation's
senior management, determined that it would be in the best interests of our
corporation to distribute the Shares to our corporation's stockholders by way of
dividend.
Relationship
of Spectre Industries, Inc. and Spectre Holdings, Inc. After the
Spin-off
After
the distribution of the Shares, we will no longer own any stock of Spectre
Holdings, Inc. In addition, we will not have any common board members after the
distribution. Further, as noted herein, we will be changing our name to more
accurately reflect our new business focus due to the acquisition of
ACSI.
Share
Distribution Ratio
One
Share will be distributed for each share of Common Stock held by a Stockholder
of Record as of the Record Date. The number and identity of stockholders of
Spectre Holdings, Inc. immediately after the distribution of the Shares will be
identical to that of our company on the Record Date.
Requirement
For Stockholder Approval
The
Shares will represent substantially all of the assets of our corporation
immediately prior to the acquisition of ACSI. As a result, our corporation is
required under Section 78.565 of the Nevada Revised Statutes to obtain the
approval of our stockholders before disposing of the Shares. Section 78.565 of
the Nevada Revised Statutes provides that such stockholder approval must be
given by an affirmative vote of stockholders holding sufficient Common Stock
entitling them to exercise at least a majority of the voting power at a
stockholders' meeting called for that purpose. However, Section 78.320 of the
Nevada Revised Statutes and our bylaws permit any action that is otherwise
required or permitted to be taken at a meeting of stockholders to be taken
without a meeting if, before or after the action, a written consent thereto is
signed by stockholders holding at least a majority of the voting power. On May
30, 2004 (the "Shareholder Approval Date"), our corporation received written
consents from the Consenting Stockholders the distribution of the Shares by way
of a dividend. As indicated above, it is anticipated that the distribution of
the Shares will take place once a registration statement in regards to the
Shares on Form 10-SB has been declared effective by the SEC.
Exemption
From Registration Under the Securities Act
The
distribution of the Shares by way of a dividend will be exempt from registration
under the Securities
Act of 1933,
as amended (the "Securities Act"). However, Spectre Holdings, Inc. will be
required to file a registration on Form 10-SB registering its shares of Common
Stock under the Exchange Act.
Market
for the Shares
There
is currently no active trading market for the Shares of Spectre Holdings, Inc.
and such a market may not develop.
BUSINESS
OF SPECTRE HOLDINGS, INC.
General
This
information statement contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "will",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our company's or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
As
used in this information statement, the terms "we", "us", "our", and "Spectre"
mean Spectre Industries, Inc. and Spectre Holdings, Inc., unless otherwise
indicated. In this information statement the discussion of our business includes
the discussion of the business of Spectre Holdings, Inc., which will continue to
be the business of Spectre Holdings, Inc. the spin-off.
Spectre
Holdings, Inc.'s Business
The
following discussion is a discussion of our business operations that are to be
spun off to Spectre Holdings as part of the spin off of the Spectre Holding's
Shares to our shareholders who are eligible to receive them.
In
an effort to diversify Spectre's business operations, on September 4, 2001, we
founded Auto Photo Kiosk GmbH ("APK"), a limited liability corporation under the
laws of Germany, together with three other shareholders: Joachim Zweifel (Euro)6,500
(13%), Gerhildt Voigtlaender (Euro)6,500 (13%) and Vending Concept GmbH (Euro)10,000
(20%). Spectre paid (Euro)27,000 (approximately US$24,519) for a 54% interest in APK.
Pursuant to a shareholder's agreement dated July 5, 2002 (the "APK Agreement"),
we acquired without paying a premium, 26% of the capital of APK for (Euro)13.000
(approximately US$12,736) from
two of the four shareholders of APK, Joachim Zweifel and Gerhild Voigtlaender,
both residing in Germany. We also took over two shareholder loans as part of the
agreement. Each loan amounting to (Euro)18.453,60 (approximately US$18,079) for a
total of (Euro)36,907.20 (approximately US$36,159), with no accumulated interest;
from the selling shareholders Zweifel and Voigtlaender. We now own 80%, and
Vending Concept GmbH, a Swiss corporation, continues to own the remaining 20% of
the share capital of APK.
APK
was incorporated in September 2001 as a service company to operate instant photo
booths and related products, in major public access areas, primarily in
Germany.
APK's
existing customers are government and municipal agencies, malls and shopping
centres. APK currently has 16 instant photo booths installed. The end users are
individuals who go to the photo booths for photos to use in forms of personal
identification (such as passports, driver's licenses, personal identification,
etc.). APK's photo booths produce photos using digital technology and require no
photo processing chemicals.
The
locations for installation of a photo booth are made available by APK's
customers who provide the locations for the photo booths. APK remunerates its
customers, the location provider, through a revenue sharing arrangement of
approximately 30-44% of the net revenues (gross revenues less 16%
value-added-tax ("V.A.T.")), generated by each installed photo booth, or
alternatively through a fixed rental rate. The length of the contracts for the
location rentals vary from one year (contracts with written termination three
months prior to expiration) up to 10 years.
Of
the 16 instant photo booths that are installed, 11 are leased from EFS Business
Consult GmbH & Co. Hora OHG in Germany under two lease agreements at a price
of (Euro)12,271 plus 16% V.A.T. Both lease agreements have the same terms, and are
for a period of 36 months with an automatic extension of an additional 24
months. The terms of the lease agreements are such that during months 1 through
36, APK pays a fixed lease payment of (Euro)300 per month per machine, plus the
applicable 16% V.A.T. Additionally, there is a variable lease payment component
in months 1 through 36 that is payable annually, beginning December 31, 2003
(applicable for the period from August 2002 to the end of December 2003). This
is an amount that is based upon net revenues less costs (i.e. sales, service
& maintenance). Upon extension of the lease agreement, in months 37 through
60, APK's lease payment is completely variable. The payment will be based upon a
value that is in the middle of a range, which is based upon three calculations:
(1) 25% of the monthly net revenues per photo booth, (2) 2.5% of the purchase
price ((Euro)12,271 x (Euro) 306.78 x 24 months per machine), and (3) 4% of the purchase
price ((Euro)12,271 x (Euro)490.84 x 24 months per machine). The lease agreements assume
there will be a residual value at the end of the extension period (60 months).
This is estimated to be approximately (Euro)250-(Euro)500 per machine.
The
remaining five machines are directly owned by APK, having been purchased at a
cost of (Euro)14, 271 plus 16% V.A.T. per booth. Of the instant photo booths that are
installed, 4 are located in shopping centres and 12 are located in various city
government buildings.
APK
currently has only one full time employee and expects to hire more employees as
required.
Employees
As
of October 21, 2004, we did not have any employees other than our directors and
officers. Our company is managed by Ian S. Grant under a consulting agreement
with Grant & Co., dated June 1, 1998. Over the twelve months ending October
31, 2005, we do not expect to hire any employees.
Purchase
or Sale of Equipment
We
do not intend to purchase any significant equipment over the twelve months
ending October 31, 2005.
Competition
According
to available industry information, our largest competitor is FotoFix GmbH, a
subsidiary of Photo-Me International PLC, who have approximately 1800 instant
photo booth installations in the German market.
Risk
Factors
Stockholders
of Record will not be required to pay any consideration for their pro rata
allocation of the Shares. However, readers should be aware that an investment in
Spectre Holdings, Inc.'s common stock involves a high degree of risk. The
following factors concerning the business of Spectre Holdings, Inc. should be
considered and readers are encouraged to consult independent advisors as to the
technical, tax, business and legal considerations regarding an investment in
shares of its common stock.
Much
of the information included in this annual report includes or is based upon
estimates, projections or other "forward looking statements". Such forward
looking statements include any projections or estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such
estimates, projections or other "forward looking statements" involve various
risks and uncertainties as outlined below. We caution the reader that important
factors in some cases have affected and, in the future, could materially affect
actual results and cause actual results to differ materially from the results
expressed in any such estimates, projections or other "forward looking
statements".
Our
common shares are considered speculative during the development of our new
business operations. Prospective investors should consider carefully the risk
factors set out below.
"Penny
Stock" Rules
Limited
Operating History In Providing Services to the Instant Photo Booth
Industry
On
September 4, 2001 we commenced the operation of our current business in the
instant photo booth market. As such, Spectre Holdings Inc. has a limited
operating history on which to base an evaluation of our business and prospects.
Our prospects must be considered in light of the risks, uncertainties, expenses
and difficulties frequently encountered by companies in their early stages of
development. Some of these risks and uncertainties relate to Spectre Holdings
Inc.'s ability to:
-
establish and maintain relationships with key location providers for Spectre
Holdings Inc.'s instant photo booths;
-
respond effectively to competitive and technological developments;
-
build an infrastructure to support Spectre Holdings Inc.'s
business;
-
attract, retain and motivate qualified personnel.
We
cannot be sure that Spectre Holdings Inc. will be successful in addressing these
risks and uncertainties and our failure to do so may impair Spectre Holdings
Inc.'s ability to capture market share and generate revenues. In addition,
Spectre Holdings Inc.'s operating results are dependent to a large degree upon
factors outside of our control, including the general strength and viability of
the automotive after-market industry and the acceptance of our instant photo
booths in the German market.
Many
of Spectre Holdings Inc.'s Competitors Have Greater Resources And Better Name
Recognition
Many
of Spectre Holdings Inc.'s competitors are substantially larger than Spectre
Holdings Inc. and have significantly greater financial resources and marketing
capabilities than Spectre Holdings Inc. has, together with better name
recognition. Competitors with superior resources and capabilities may be better
able to utilize such advantages to market their services better, faster and/or
cheaper than Spectre Holdings Inc. can.
Increased
competition from future or existing competitors in the instant photo booth
market will likely impair Spectre Holdings Inc.'s ability to establish and
maintain market share. If Spectre Holdings Inc. is unsuccessful in establishing
and maintaining a sufficient number of instant photo booths in profitable
locations, it is unlikely that Spectre Holdings Inc. will be able to generate
sufficient revenues to sustain operations
Spectre
Holdings Inc. lacks working capital and due to the losses incurred since
inception, Spectre Holdings Inc.'s stockholders' deficiencies and lack of
revenues, there is substantial doubt about Spectre Holdings Inc.'s ability to
continue as a going concern.
There
is substantial doubt about Spectre Holdings Inc.'s ability to continue as a
going concern due to the losses incurred since inception, our stockholders'
deficiency, and lack of revenues.
Spectre
Holdings Inc. has not generated sufficient revenues to cover its operational
expenses and do not anticipate doing so in the near future. If Spectre Holdings
Inc.'s business does not meet our intended income goals, Spectre Holdings Inc.
will require additional financing. If Spectre Holdings Inc. is not successful in
obtaining additional financing by the end of 2004, Spectre Holdings Inc. may be
required to reduce operations to a sustainable level until any such financing is
obtained, or sufficient revenues are generated to sustain operations. There can
be no assurances that additional equity or other financing will be available at
all or available on terms acceptable to Spectre Holdings Inc.
Spectre
Holdings Inc.'s ability to continue in business in part depends upon its
continued ability to obtain financing. There can be no assurance that any such
financing would be available upon terms and conditions acceptable to Spectre
Holdings Inc., if at all. The inability to obtain additional financing in a
sufficient amount when needed and upon acceptable terms and conditions could
have a materially adverse effect upon Spectre Holdings Inc. Inadequate funding
could impair our ability to compete in the marketplace and could result in our
dissolution.
Risk
of Termination of Site Contracts
The
contracts pursuant to which Spectre Holdings Inc. will place instant photo
booths on site locations that are short-term, i.e. one year "evergreen"
contracts that are easily terminated by either party. There can be no assurance
that contracts to place instant photo booths will not be terminated at any time.
The termination of a contract or other arrangement with a provider of multiple
sites, would significantly reduce Spectre Holdings Inc.'s number of auto photo
kiosk installations and limit access to prime site locations in the future. Such
a termination could have a material adverse effect on Spectre Holdings Inc.'s
business, financial condition and results of operations, as a result of which
Spectre Holdings Inc.'s photo booth business would fail.
Dependence
on a Single Product; Rapid Technological Change
Going
forward Spectre Holdings Inc. will derive the majority of Spectre Holdings
Inc.'s revenues from the operation of Spectre Holdings Inc.'s instant photo
booths. The digital technology incorporated by Spectre Holdings Inc.'s instant
photo booths is characterized by rapid technological change, new products and
services, evolving industry standards and changing client preferences. Spectre
Holdings Inc.'s success will depend, in significant part, upon Spectre Holdings
Inc.'s ability to make timely and cost-effective enhancements and additions to
the auto photo kiosk technology and to introduce new products and services that
meet customer demands. Spectre Holdings Inc. expects new products and services
to be developed and introduced by other companies that compete with Spectre
Holdings Inc.'s products and services. The proliferation of new digital
photographic technology may reduce demand for Spectre Holdings Inc.'s instant
photo booths. There can be no assurance that Spectre Holdings Inc. will be
successful in responding to these or other technological changes, to evolving
industry standards or to new products and services offered by Spectre Holdings
Inc.'s current and future competitors. In addition, Spectre Holdings Inc. may
not have access to sufficient capital for our research and development needs in
order to develop or acquire new products and services.
Disruption
in Manufacturing and Repair; Inability to Manufacture or Service Instant Photo
Booths
The
supply, manufacture technical updates and servicing of the instant photo booths
is provided exclusively by Vending Concepts GmbH. Spectre Holdings Inc. is
dependent on this one supplier for the provision, repair and servicing of the
instant photo booths. Spectre Holdings Inc.'s reliance on this supplier, as well
as industry supply conditions generally, subject Spectre Holdings Inc. to
various risks, including the possibility of a shortage or a lack of availability
of instant photo booths, key components, quality control problems, increases in
component costs and reduced control over delivery schedules, any of which could
adversely affect Spectre Holdings Inc.'s business and results of operations. In
situations where Spectre Holdings Inc. is unable to rectify supply or quality
problems associated with Spectre Holdings Inc.'s instant photo booths costly
delays could result. Although Spectre Holdings Inc. believes that Spectre
Holdings Inc.'s supplier has current manufacturing capabilities to enable it to
produce sufficient instant photo booths for Spectre Holdings Inc.'s purposes
through fiscal 2003, there can be no assurance that this will be adequate for
unanticipated future growth.
Uncertain
Ability To Achieve, Manage Or Sustain Growth
It
may be necessary for Spectre Holdings Inc. to grow in order to remain
competitive. Spectre Holdings Inc.'s ability to grow is dependent upon a number
of factors including, but not limited to, Spectre Holdings Inc.'s ability to
hire, train and assimilate management and other employees, the adequacy of
Spectre Holdings Inc.'s financial resources, Spectre Holdings Inc.'s ability to
identify and efficiently provide new services as may be demanded by Spectre
Holdings Inc.'s customers in the future and Spectre Holdings Inc.'s ability to
adapt our services to accommodate necessary operational changes. In addition,
there can be no assurance that Spectre Holdings Inc. will be able to achieve
such expansion or that Spectre Holdings Inc. will be able to manage expanded
opera tions successfully. Failure to manage growth effectively and efficiently
could have an adverse effect on Spectre Holdings Inc.'s ability to acquire
sufficient market share and remain competitive.
Dependence
Upon Ian S. Grant
Spectre
Holdings Inc.'s key personnel is limited at present to Ian S. Grant, its
President. The loss of the services of Mr. Grant and other employees, for any
reason, may have a materially adverse effect on Spectre Holdings Inc.'s
prospects. Although Spectre Holdings Inc. believes that the loss of any of our
management or other key employees (apart from Mr. Grant) will not have a
material adverse impact upon Spectre Holdings Inc., there can be no assurance in
this regard, nor any assurance that Spectre Holdings Inc. will be able to find
suitable replacements. In addition, competition for personnel is intense, making
it difficult to find highly skilled employees with appropriate qualifications.
Furthermore, Spectre Holdings Inc. does not maintain "key man" life insurance on
the lives of any of our management or other of our key employees. To the extent
that the services of any key employee of Spectre Holdings Inc. becomes
unavailable, Spectre Holdings Inc. will be required to retain other qualified
persons. However, there can be no assurance that Spectre Holdings Inc. will be
able to employ qualified persons upon acceptable terms.
Because
the sole director and officer of Spectre Holdings, Inc. is located in a non-U.S.
Jurisdiction, investors may have no effective recourse against management for
misconduct and investors may not be able to enforce judgments and civil
liabilities against its officer and director.
The
sole director, President and Secretary of Spectre Holdings, Inc. is a resident
of Canada, and a substantial portion of his assets are located outside the
United States. As a result, it may be difficult for investors to effect service
of process within the United States upon the director and officer of Spectre
Holdings, Inc. or to enforce against him judgments of courts of the United
States based upon civil liability under the federal securities laws of the
United States. There is doubt as to the enforceability in Canada against the
director and officer who is not a resident of the United States, in original
actions or in actions for enforcement of judgments of United States courts and
of liabilities based solely upon the federal securities laws of the United
States.
There
is no active trading market for the common stock of Spectre Holdings,
Inc.
There
is currently no active trading market for the common stock of Spectre Holdings,
Inc., and such a market may not develop or be sustained.
Spectre
Holdings, Inc. is required by Section 78.7502 of the Nevada General Corporation
Law to indemnify its officers and directors in certain circumstances for claims
against them.
Spectre
Holdings, Inc. is required to indemnify its officers, directors, employees and
agents against liability to the company in any proceeding in which such person
wholly prevails on the merits. Generally, Spectre Holdings, Inc. may indemnify
its officers and directors against such liability if the officer or director
acted in good faith believing his or her actions to be in the best interests of
the company. The Articles of Incorporation of Spectre Holdings, Inc. provide
that a director or officer has no liability for monetary damages for breach of
fiduciary duty unless such person committed fraud or engaged in intentional
misconduct. These provisions may limit the recovery for any claims against
Spectre Holdings, Inc.'s officers and directors.
Plan
of Operations
During
next 12 months, Spectre Holdings, Inc. intends to continue developing and
marketing its automated photo booth business in Germany. Spectre Holdings, Inc.
currently has one employee and APK currently has one employee. Spectre Holdings,
Inc.
Plan
of Operation.
Overview
The
following discussion of the financial condition of Spectre Holdings is the
financial condition of Spectre Industries prior to the merger with ACSI, as
Spectre Holdings will be the successor company to the operations of Spectre
Industries prior to the merger. This discussion contains forward-looking
statements that reflect Spectre Holdings' plans, estimates and beliefs. Actual
results could differ materially from those anticipated in these forward-looking
statements.
Results
of Operations
Spectre
Industries incurred a net loss of $424,725 for the year ended December 31, 2003
compared to a net loss of $654,491 for the comparative period in 2002. The
decrease in the net loss occurred primarily as a result of the elimination of
losses from Spectre Industries discontinued operations, for which it had
incurred a loss of $258,627 for the year ended December 31, 2002.
Revenues
Spectre
Holdings has not generated any revenue since inception, and will not generate
any revenue unless and until the spin off is effected.
Spectre
Industries recognized an increase in revenues to $292,629 for the year ended
December 31, 2003. During the comparable period in 2002, Spectre Industries
recognized revenues of $174,066. The increase in revenue was due to an increase
in photo kiosk revenue as a result of having more photo booths in operation, and
the receipt of consulting revenue of $50,000. Spectre Industries gross margins
decreased slightly to $89,269 for the year ended December 31, 2003 from $86,499
for the year ended December 31, 2002.
General,
Administration and Professional Fees
Spectre
Industries experienced an increase in general and administration expenses in the
year ended December 31, 2003 to $261,822, as compared to general and
administration expenses for the same period in 2002 of $238,650. This increase
was primarily due to the increased professional fees in relation to the sale of
its subsidiary and the financing of additional photo booths for
APK.
Liquidity
and Capital Resources
Net
cash used in operating activities of Spectre Industries for the year ended
December 31, 2003 was $130,530 compared to net cash used in operating activities
of $385,914 during the comparative period in 2002.
Net
cash used in investing activities during the year ended December 31, 2003 was
$0, compared to cash provided by investing activities of $36,892 for the same
period in 2002. Net cash provided by financing activities of Spectre Industries
was $102,766 for the year ended December 31, 2003, compared to $63,119 for the
comparative period in 2002. The net decrease in cash during the year ended
December 31, 2003 was $27,764, leaving us with a cash balance at December 31,
2003 of $23,669.
Spectre
Holdings' capital requirements are difficult to plan in light of its current
strategy to expand its customer base for the automated photo booth operations of
APK. Spectre Holdings will be dependent on investment capital as an important
source of liquidity. The operations of Spectre Industries which it will be
acquiring in the spin off have been generating negative cash flow, and Spectre
Holdings does not expect positive cash flow from such operations in the near
term. Spectre Holdings will need to secure additional working capital in the
short-term in order to sustain operations and execute its business plan. It is
Spectre Holdings' intention to raise sufficient funds necessary to carry the
company through to positive cash flow and profitability. Management projects
that Spectre Holdings may require an additional $200,000 to $250,000 to help
fund its operating expenses and working capital requirements for the next twelve
months.
Future
Operations
An
investment in Spectre Holdings common stock involves a number of very
significant risks. You should carefully consider the risks and uncertainties in
addition to other information in this information statement in evaluating
Spectre Holdings and its business. It is possible that Spectre Holdings'
business, operating results and financial condition could be seriously harmed
due to any of the risks disclosed herein. As a result of any of these risks you
could lose all or part of your investment.
Due
to the uncertainty of Spectre Industries' ability to meet its operating and
capital expenses, in their report on Spectre Industries' consolidated annual
financial statements for the year ended December 31, 2003, its independent
auditors included an explanatory paragraph regarding concerns about Spectre
Industries' ability to continue as a going concern. Spectre Industries'
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by its independent
auditors.
As
a result, there will also be substantial doubt about Spectre Holdings' ability
to continue as a going concern as the continuation of its business will be
dependent upon obtaining further financing, successful and sufficient market
acceptance of the automated photo products, the continuing successful
development of the photo booth operations, and, finally, achieving a profitable
level of operations. The issuance of additional equity securities by Spectre
Holdings' could result in a significant dilution in the equity interests of the
stockholders who will be receiving its shares in the spin off. Obtaining
commercial loans, assuming those loans would be available, will increase Spectre
Holdings' liabilities and future cash commitments.
There
are no assurances that Spectre Holdings will be able to obtain further funds
required for its continued operations. Spectre Holdings intends to pursue
various financing alternatives to meet its immediate and long-term financial
requirements, which it anticipates will consist of further private placements of
its equity securities or shareholder loans. There can be no assurance that
additional financing will be available to Spectre Holdings' when needed or, if
available, that it can be obtained on commercially reasonable terms. If Spectre
Holdings is not able to obtain the additional financing on a timely basis, it
will not be able to meet its obligations as they become due and Spectre Holdings
will be forced to scale down or perhaps even cease operations.
Application
of Critical Accounting Policies
Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Spectre Holdings' believes that understanding the basis and nature of
the estimates and assumptions involved with the following issues will be
critical to an understanding of its financial condition and results of
operations.
Revenue
Recognition
Spectre
Holdings will recognize revenue from its subsidiary, APK, when the services have
been provided and the money is collected from the photo machines.
Principles
of Consolidation
For
Spectre Holdings' foreign subsidiary, APK, the functional currency has been
determined to be the Euro. Accordingly, assets and liabilities are translated at
period end exchange rates prevailing during the period. The resultant cumulative
translation adjustments to the assets and liabilities are recorded as a separate
component of stockholders' equity. Exchange adjustments resulting from foreign
currency transactions are included in the determination of net income (loss).
In
accordance with Statement of Financial Accounting Standards No. 95, "Statements
of Cash Flows," cash flows from our foreign subsidiaries are calculated based
upon the local currencies. As a result, amounts related to assets and
liabilities reported on the statements of cash flows will not necessarily agree
with changes in the corresponding balances on the balance sheets.
Fixed
Assets
Fixed
assets will be recorded at cost. Major additions and improvements will be
capitalized. Minor replacements, maintenance and repairs that do not extend the
useful life of the assets will be expensed as incurred. Depreciation of property
and equipment is determined using the straight-line method over the useful
lives, primarily for 3 years, the photo kiosks have a useful life of 5
years.
Description
of Property
We
lease 1,000 square feet of office space at #6-260 East Esplanade, North
Vancouver, British Columbia. We lease our office space on a month to month basis
and our monthly rental is approximately $570. During the fiscal year ending
December 31, 2003, we paid $6,840 for rent.
Directors
and Executive Officers of Spectre Holdings, Inc.
All
directors of Spectre Holdings, Inc. hold office until the next annual meeting of
the stockholders or until their successors have been elected and qualified. The
officers of Spectre Holdings, Inc. are appointed by its Board of Directors and
hold office until their death, resignation or removal from office. The sole
director and executive officer, his age, positions held, and duration as such,
are as follows:
|
Name |
Position
Held with the Company |
Age |
Date
First
Elected
or Appointed |
|
Ian
S. Grant |
Director,
President and Secretary |
51 |
Director,
President and Secretary since December 12,
2003. |
Business
Experience
The
following is a brief account of the education and business experience during at
least the past five years of the director, executive officer and key employee of
Spectre Holdings, Inc., indicating the principal occupation during that period,
and the name and principal business of the organization in which such occupation
and employment were carried out.
Ian
S. Grant
Ian
S. Grant has been our President, Chief Executive Officer and a director since
January 1, 1999. Mr. Grant is also a director of Grant Brothers Sales. He is
also the President of I.S. Grant & Company, which provides management
services to us under the Consulting Agreement dated June 1, 1998. Prior to this,
from 1991 to 1995, Mr. Grant was President and CEO of Interactive Videosystems
Inc., a publicly traded company which designs, produces and distributes
interactive video and multimedia software products.
Executive
Compensation
The
following table summarizes the compensation awarded to, earned by, or paid to
the President of Spectre Holdings, Inc. and other officers and directors who
received annual compensation in excess of $100,000 during the fiscal year ended
December 31, 2003.
|
SUMMARY
COMPENSATION TABLE |
| |
|
Annual
Compensation |
Long
Term
Compensation(1) |
Pay-
outs |
|
|
Name
and Principal
Position |
Year |
Salary |
Bonus |
Other
Annual
Compen-
sation |
Securities
Under
Options/
SAR's
Granted |
Restricted
Shares
or
Restricted
Share
Units |
LTIP
Pay-
outs |
All
Other
Compen-
sation |
|
Ian
S. Grant
President
and Secretary |
2003 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
| |
|
|
|
|
|
|
|
|
Spectre
Holdings, Inc. has not entered into any employment agreement or consulting
agreement with its directors and executive officers. There are no arrangements
or plans in which Spectre Holdings, Inc. provide pension, retirement or similar
benefits for directors or executive officers. The directors and executive
officers of Spectre Holdings, Inc. may receive stock options at the discretion
of its board of directors in the future. Spectre Holdings, Inc. does not have
any material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to its directors or executive officers, except
that stock options may be granted at the discretion of its board of
directors.
Spectre
Holdings, Inc. reimburses its directors for expenses incurred in connection with
attending board meetings but did not pay director's fees or other cash
compensation for services rendered as a director in the fiscal year ended
December 31, 2003. Spectre Holdings, Inc. does not have a formal plan for
compensating its directors for their service in their capacity as directors.
Spectre Holdings, Inc. may grant to its directors in the future options to
purchase shares of common stock as determined by its board of directors or a
compensation committee which may be established in the future. Directors of
Spectre Holdings, Inc. are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings
of its board of directors. The board of directors may award special remuneration
to any director undertaking any special services on behalf of Spectre Holdings,
Inc. other than services ordinarily required of a director.
Description
of Securities
The
authorized capital stock of Spectre Holdings, Inc. consists of 25,000,000 shares
of common stock, having a par value of $0.001 per share. As of September 30,
2004, there were issued and outstanding one share of common stock and one holder
of record. All outstanding shares of common stock are fully paid and
non-assessable. Holders of the common stock are entitled to one vote per share
on each matter submitted to vote at any meeting of shareholders. Holders of a
majority of the outstanding shares of common stock will be able to elect the
entire Board of Directors, if they choose to do so, in which event the holders
of the remaining shares will be unable to elect directors. There is currently
one (1) member on the Board of Directors. The By-Laws of Spectre Holdings, Inc.
provide that the number of directors shall be not less than one (1) and no more
than three (3). The common stock has no preemptive or other subscription rights,
has no conversion, redemption or retraction rights. Holders of shares of the
common stock of Spectre Holdings, Inc. are also entitled to dividends in such
amounts as may be determined in the absolute discretion of its Board of
Directors from time to time. Holders of shares of Spectre Holdings, Inc.'s
common stock are also entitled to receive pro rata its net assets in the event
of liquidation, dissolution or winding-up or other distribution of assets among
its stockholders.
Legal
Proceedings
Spectre
Holdings, Inc. is not aware of any legal proceedings against it. Spectre
Holdings, Inc. may be involved, from time to time, in various legal proceedings
and claims incident to the normal conduct of its business.
Indemnification
of Directors and Officers
Spectre
Holdings, Inc. is required to indemnify its officers, directors, employees and
agents against liability to the company in any proceeding in which such person
wholly prevails on the merits. Generally, Spectre Holdings, Inc. may indemnify
its officers and directors against such liability if the officer or director
acted in good faith believing his or her actions to be in the best interests of
the company. The Articles of Incorporation of Spectre Holdings, Inc. provide
that a director or officer has no liability for monetary damages for breach of
fiduciary duty unless such person committed fraud or engaged in intentional
misconduct. These provisions may limit the recovery for any claims against
Spectre Holdings, Inc.'s officers and directors.
PRINCIPAL
SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
As
of the date that we obtained approval of the Consenting Stockholders, we had a
total of 3,976,868 shares of Common Stock with a par value of $0.001 per share
issued and outstanding. The following table sets forth, as of he Shareholder
Approval Date, certain information as to shares of the Common Stock owned by (i)
each person known by management to beneficially own more than 5% of the
outstanding common stock, (ii) each of our directors, and (iii) all executive
officers and directors of our corporation as a group:
|
Name/Title |
Total
Number
of
Shares |
Percentage
Ownership |
|
All
Directors and Officers (4 persons): |
|
Michael
Young |
544,824 |
14% |
|
Hanlin
Chen |
-0- |
- |
|
Matthew
Markin |
-0- |
- |
|
Ian
S. Grant |
66,668 |
1.7% |
|
5%
Beneficial Owners: |
|
|
| |
|
|
DISSENTERS
RIGHTS
Under
Nevada law, holders of our Common Stock are not entitled to dissenter's rights
of appraisal with respect to the Actions.
FINANCIAL
AND OTHER INFORMATION
For
more detailed information on our corporation, including financial statements,
you may refer to our Form 10-KSB and Form 10-QSB, filed with the SEC. Copies of
these documents were mailed to all stockholders of our corporation. Additional
copies are available on the SEC's EDGAR database at www.sec.gov or by calling
our office at (949) 855-6688.
Signature
BY
ORDER OF THE BOARD OF DIRECTORS
Michael
Young
Chairman,
President
17