SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 24, 2004
-------------------------------
SPECTRE INDUSTRIES, INC.
--------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Nevada 0-30573 98-0226032
--------------------------------------------------------------------------------
(STATE OF OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
45 Parker, Suite A, Irvine, California 92618
--------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (949) 855-6688
----------------------------
#6 - 260 E. Esplanade, North Vancouver,
British Columbia CANADA V7L 1A3
--------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
as of March 13, 2004, by and among Spectre Industries, Inc. (the "Registrant" or
the "Company), Spectre Merger Sub, Inc., a California corporation and wholly
owned subsidiary of Spectre ("Merger Sub"), Ian S. Grant ("Shareholder") and
Advanced Custom Sensors, Inc., a California corporation (the "Advanced Custom"),
on May 24, 2004 (the "Closing Date"), Merger Sub merged with and into ACSI (the
"Merger"). As a result of the Merger, Advanced Custom became a subsidiary of the
Registrant. As consideration for the Merger, the Registrant issued 38,773,581
shares of common stock and warrants to purchase up to 79,535,549 shares of
common stock to the shareholders of ACSI. The terms of the Merger were
determined through arms length negotiations between the management of the
Registrant and management of ACSI.
Election of New Directors and Officers
On the Closing Date, Ian Grant resigned as President, Secretary Chief
Financial Officer of the Registrant. Effective May 24, 2004, Michael Young and
Hanlin Chen began serving their terms as members of the Board of Directors of
the Registrant. The newly elected directors appointed Michael Young as the Chief
Executive Officer, Secretary and Chief Financial Officer.
Biographies of New Directors
MICHAEL YOUNG founded and has served for seven years as CEO of ACSI.
Previously, his 20-year career includes MEMS design, fabrication, packaging and
applications development at Rosemount, Endevco, Hughes Aircraft and other firms.
He is responsible for leading ACSI given his technical expertise and a broad
range of business experiences with ACSI. He holds a Master of Science degree in
mechanical engineering from Stanford University.
HANLIN CHEN began serving as the Chairman and CEO of China Automotive
Systems in 2003. Prior to this appointment, Mr. Chen was the general manager of
Jiulong Power Steering Company Limited from 1992 to 1997. Mr. Chen holds a MBA
from Barrington University and serves as a board member of Political Consulting
Committee of Jingzhou city and vice president of Foreign Investors Association.
2
Share Ownership
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the common stock, immediately following
the closing of the Merger and assuming the exercise of the warrants (a) each
beneficial owner of more than five percent of the common stock; (b) each of the
Company's directors; and (c) all of the Company's directors and executive
officers as a group. Except as otherwise indicated, each person has sole voting
and investment power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable. Unless otherwise specified,
the address of each person set forth below is 45 Parker, Suite A, Irvine,
California 92618.
TOTAL NUMBER OF SHARES PERCENTAGE OWNERSHIP
TOTAL NUMBER ISSUABLE UPON EXERCISE OF ASSUMING EXERCISE OF
NAME/TITLE OF SHARES THE WARRANTS THE WARRANTS(1)
-----------------------------------------------------------------------------------------------------------------
ALL DIRECTORS AND OFFICERS (3 PERSONS):
Michael Young 8,172,354 16,763,803 18%
Hanlin Chen -0- -0- --
Matthew Markin -0- -0- --
Ian Grant 1,000,000 -0- *
5% Beneficial Owners:
Chih Chung Hung (2) 2,617,148 5,368,509 6%
---------------
* Less than 1%
(1) Based on 139,187,213 shares outstanding as of May 24, 2004 assuming
the exercise of all of the warrants.
(2) Mr Hungs address is No. 213-5 Tsan Si Rd. Tsantnen Jen. Nantou, Taiwan
542, ROC
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The information set forth above under "Item 1. Changes in Control of
Registrant" is incorporated herein by reference.
As a result of the Merger, through ACSI, the Registrant will be engaged in
the business of supplying thin-film and micromachined force and pressure sensors
to the medical, chemical, oil, and gas industries. Additionally, the Registrant
will offer services such as strain gauge installation, MEMS packaging, and
sensor module design and manufacturing.
About ACSI
ACSI was founded by an engineering management team with over 50 years of
Micro-electro-mechanical-systems or "MEMS" transducer experience. Its objective
is to provide high quality sensors and transducers at an economical price by
employing innovative designs and creative manufacturing methods. ACSI offers a
variety of Digital Pressure Gauges, Pressure Transducers, Pressure Sensors,
Force Beams, Load Cells, Strain Gauges and Sensor Kits.
3
ACSI commenced operations as a private company in September of 1996. ACSI
is headquartered in Irvine, California where ACSI occupies a 25,000 square foot
facility fully equipped with fabrication capability. ACSI has fifteen (15)
employees in the United States, and utilizes a network of independent
contractors and consultants throughout the United States and Asia. ACSI produces
or supplies a family of nearly thirty (30) distinctive products. ACSI set up a
volume production line with an ISO 9000 partner in Taiwan in 2002. This allows
ACSI to penetrate high-volume consumer markets that are very price sensitive.
ACSI's MEMS sensor technology is the result of a technology development
work done at Rosemount and Endevco. ACSI believes that its technology will
enable it to become a global supplier of advanced MEMS/Microelectronic products
in a myriad of developing markets. ACSI's strategic plan is to focus on
developing custom MEMS pressure sensor devices and forming strategic
partnerships where its strategic partners dominate the sales channels in
industries accepting MEMS sensor applications.
In addition to its core operational assets dedicated to the MEMS sensor
markets, ACSI owns approximately 12% of TransOptiX, Inc., ("TransOptiX"), a
business dedicated to the development and production of high performance optical
switches. TransOptiX intends to make significant progress in 2004 and 2005 in
the optical switch segment by offering its switches at prices up to 40%
below its competition and with better performance.
OUR GOALS
ACSI develops, designs and markets MEMS-microelectronic devices and
components. ACSI is a major supplier of thin-film and micromachined force and
pressure sensors to the medical, chemical, oil, and gas industries.
Additionally, ACSI offers several services, such as strain gauge installation,
MEMS packaging, and sensor module design and manufacturing.
ACSI has operated in the MEMS pressure sensor business for the past seven
(7) years, providing MEMS packaging services for nearly half of its operational
life. We intend to raise sufficient funds necessary to develop a new series of
customized MEMS pressure sensors; develop expand the internal manufacturing
capabilities to provide our customers with sensing modules that incorporate
embedded controller, LCD display, signal conditioning circuit, and/or actuators;
and support our plan for merger and acquisition of other small MEMS companies
complimentary to ours.
To accomplish our goals, ACSI plans to integrate proprietary techniques
and processes developed by ACSI that serve as the foundation to develop ACSI's
MEMS business. These MEMS core competences include MEMS front-end wafer design
and processing, volume assembly and testing, application-specific environmental
protection, and cost modeling. Combined with ACSI's expansion plans to increase
marketing and sales efforts, these technologies present ACSI with opportunities
to further grow the business in international markets such as China. ACSI has
also partnered on or about November 2001 with an established production partner,
Powertip Technology Corporate, in Taiwan to address production requirements.
ACSI also has MEMS wafer fabrication partners in China and Taiwan, allowing ACSI
to maintain sensor wafer supplies as well continue MEMS device research.
4
THE ADVANCED CUSTOM SENSORS CORE STRATEGY - PRODUCTS AND TECHNOLOGIES
ACSI's future technology strategy is to develop and/or acquire core
intellectual property that will place it in a leadership position to manufacture
and market MEMS sensors. ACSI has filed two (2) provisional patents with the
United States Patent and Trademark Office ("USPTO") and TransOptiX has made nine
(9) provisional patent filings with the USPTO to date. In addition, each company
has developed many proprietary techniques/processes. These serve as the
foundation to further develop our MEMS business.
ACSI produces or supplies a family of nearly thirty (30) distinctive
products. These products employ or utilize the latest state-of-the-art
technologies. The products are primarily electro-mechanical sensing devices and
are identified under the following categories: Pressure Transducers, Pressure
Transmitters, Pressure Switches, Force Sensors, Load Cells, Strain Gages, and
MEMS Sensors.
ACSI uses sputtered thin film, bonded foil, semi-conductor gages and
piezoresistive strain gage technologies primarily in the design, development and
manufacture of its general sensor products, although other technology options
are also available. All of ACSI's products employ proven technologies with
little, or no risk involved with their manufacture. What sets ACSI' apart from
their competitors is their ability to optimize the performance of their products
by efficient application of their diverse technologies into unique design
concepts and utilizing sophisticated materials in construction and packaging
techniques.
BACKGROUND ON MEMS
MICRO-ELECTRO-MECHANICAL SYSTEMS
Micro-Electro-Mechanical Systems, or MEMS, is the integration of
mechanical elements, sensors, actuators, and electronics on a common silicon
substrate through the utilization of microfabrication technology. MEMS is an
enabling technology, allowing the development of smart products by augmenting
the computational ability of microelectronics with the perception and control
capabilities of microsensors and microactuators. MEMS is also an extremely
diverse and fertile technology, both with regard to applications, and the
methodology of how electronic devices are designed and manufactured.
Microelectronic integrated circuits ("IC's") can be thought of as the
"brains" of systems and MEMS augments this decision-making capability with
"eyes" and "arms", to allow microsystems to sense and control the environment.
In its most basic form, the sensors gather information from the environment
through measuring mechanical, thermal, biological, chemical, optical, and
magnetic phenomena; the electronics process the information derived from the
sensors and through some decision making capability direct the actuators to
respond by moving, positioning, regulating, pumping, and filtering, thereby,
controlling the environment for some desired outcome or purpose. Since MEMS
devices are manufactured using batch fabrication techniques, similar to ICs,
unprecedented levels of functionality, reliability, and sophistication can be
placed on a small silicon chip at a relatively low cost.
5
MARKET SIZE AND VIABILITY
The total MEMS market size is about $2.7 billion USD with following
distribution in 1991, according to an MIRC market study report. MEMS pressure
sensor, currently the focus of ACSI's operations, owns the largest market share
of $6 billion USD in 2000. According to MIRC, MEMS Silicon Pressure Sensors will
grow to about 80% of the total market and become the main stream of this
industry. The applications of MEMS Pressure Sensors can be separated into five
categories: Automotive, Process Control, Medical, Consumer /Appliances and
Aerospace. Currently, the market in Consumer Electronics is enjoying the fast
growth. Due to its versatility, MEMS is taking the lead in the various
fast-growing electronic applications in addition to its excellent performance
and price ratio. The total MEMS sensor market was $800 millions USD in 1990 with
an annual growth rate of 20%. It is expected to grow to $1 billion USD by 2005.
OUR IMPLEMENTATION STRATEGY
ACSI's Implementation Strategy is as follows:
1. Sales
a. ACSI's employs a direct sales staff, complemented by
independent technical field sales representatives and
distributors. Sales of ACSI's products are not limited to
specific geographical areas and are offered to a broad base of
customers both domestically and internationally. ACSI has
contracted with seven (7) sales representatives and has
selected companies to represent the firm in China, Taiwan,
Israel and South-East Asia. Advertising and promotion of
ACSI's products will be accomplished through Internet sites,
press releases, market specific trade events and occasional
trade publication advertisements. ACSI's website is now linked
to Thomas Register and Global Specs, where average customer
contacts have been ten per week.
2. Marketing
a. Grow through acquisition. ACSI intends to acquire companies
that possess a market presence with certified or qualified
products, with an established pedigree, and/or products with
established market share. ACSI intends to exploit these
acquisitions through the introduction of existing or other
ACSI's product offerings in order to further expand the
business through vertical and horizontal integration; these
could also lead to establishing certification or qualification
status for ACSI's own previously developed commercial
products.
6
b. Introduce new products. ACSI intends to explore new markets
for new and unique products. Introduce new products to address
developing needs within the markets, such as digital sensors,
multi-function sensors (combined temperature and pressure),
internet-enabled sensors and sensors elements that can be
integrated into measurement monitoring and control systems.
3. Distribution
a. ACSImarkets and sells its products through independent sales
representative organizations, distributors and direct factory
sales. By utilizing existing, established sales organizations,
ACSI is able to amass a very large number of sales people and
outlets into all regions of the United States and some foreign
countries with very little up-front costs. Additionally, ACSI
benefits from the synergistic relationship of its products
with other lines and products as handled by the
representatives or distributors
4. Operations
a. ACSI seeks to expand its MEMS Sensor research and development
and prototype capacities in California by supplementing
engineering staff with market-specific expertise and
augmenting facilities. This will enable ACSI to provide
engineering support and initial prototype fabrication in
time-sensitive US markets.
b. ACSI utilizes a production partner to address its current
production requirements. Additionally, ACSI has signed a
letter of intent to form a joint venture for the purpose of
producing and distributing automotive sensor products in
China. ACSI also has established MEMS wafer fabrication
partners in Taiwan and China that allow ACSI to maintain
sensor wafer supply and continue MEMS device research.
ACSI'S PRODUCT ROADMAP AND INTELLECTUAL PROPERTY
ACSI currently produces a series of MEMS pressure sensors. These include
MEMS pressure sensors from 5 psi to 5000 psi; pressure transducers with 0-5 V or
4-20 ma output; digital pressure gage; and digital pressure switch. They are
currently in full production; notably, some our products are sold by major
catalog houses.
The innovative technologies and know-how developed through these products
will allow us to better serve our MEMS customers. We are able to provide them
with conditioning circuit assembly, microprocessors, LCD modules, LED modules,
and/or injection molded packaging. This added value will bring a much higher
return to ACSI.
7
PATENTS
ACSI has filed the following provisional patents with the US Patent and
Trademark Office
>> Signal conditioner for MEMS piezoresistive sensors.
>> Method for production of thin-film piezoresistive strain gages
TRANSOPTIX has filed the following provisional patents with the US Patent and
Trademark Office
>> 45 degree lens mount for 2D optical switch
>> 3D image feedback optical beam alignment
>> Double risley prism pairs for optical beam steering and
alignment
>> 2D four-sided optical switch with lens mount
>> 2D three-sided optical switch with lens mount
>> 2D two-sided optical switch with lens mount
>> 2D broadcast optical switch with lens mount
>> 2D 1XN Optical Switch with Lens Mount
>> Lens Mount for Optical Switch
PROPRIETARY TECHNIQUES/PROCESSES
ACSI
>> MEMS pressure sensor wafer fabrication design/process.
>> MEMS packaging schemes for volume production
>> MEMS vacuum packaging process: both wafer and device levels
>> Low-cost thin-film pressure sensor design and fabrication
>> Oil-filled process for media isolation of MEMS sensors
TRANSOPTIX
>> Fiber-to-fiber alignment technique
>> Mirror batch alignment process
OUR COMPETITIVE ADVANTAGE
Although the MEMS sensor business is largely dominated by larger, better
funded companies such as Endevco, MSI, Nova Sensors, IC Sensors, and Sensym.
ACSI is dedicated to the custom MEMS technology field and believes it maintains
competitive advantages in the custom market in its knowledge of customer base
and through price competition. ACSI is currently striving to increase its
technological capacity to expand its competitive edge.
ITEM 5. OTHER EVENTS.
The Registrant has moved its principal executive offices from #6 - 260 E.
Esplanade, North Vancouver, British Columbia CANADA V7L 1A3 to 45 Parker, Suite
A, Irvine, California 92618.
8
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
a) Pro Forma Financial Information.
b) Financial Statements of Businesses Acquired.
The financial statements required by (a) and (b) of this Item 7 will
be filed by an amendment to this Form 8-K.
(c) Exhibits.
2.1 Merger Agreement, dated as of March 13, 2004
9
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 hereunto duly authorized.
SPECTRE INDUSTRIES, INC.
Date: June 9, 2004 By: /S/ MICHAEL YOUNG
-----------------------------
Name: Michael Young
Title: Chief Executive Officer
10