Ed
What are some of the uses for powdered rubber? Is crumb rubber a product of shredding tires?
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Some background on FASC
sec.gov
General
FIRST AMERICAN SCIENTIFIC CORP. (the "Company") was formed
under the laws of the State of Nevada on April 12, 1995. The
initial purpose of the Company was to use an exclusive license to
develop, market, distribute, manufacture and sell equipment,
technology, products and services worldwide, using the Kinetic
Disintegration System (KDS), a process using standing sound waves
and kinetic energy technology to disintegrate industrial materials
such as gypsum, phosphates, sulfates, nitrates, glass and sludge.
The Company also acquired the rights to develop, market and
distribute the KDS for micronizing any and all products.
In connection with the foregoing, the Company entered into
three licensing agreements for the micronizing process. The first
agreement was entered into June 1995 and, dealt with processing of
rubber and glass. The second agreement was entered into in
February 1996 and, covered gypsum and the third agreement was
entered into May 1996 and, covered any and all other applications.
In 1996, the Company constructed a facility in Bakersfield,
California for the purpose of processing various industrial
minerals and for "prescription-blend" mineral processing.
Prescription blend is the process of
of mixing a blend of industrial materials for use on a particular
agriculture crop.Business
The Company produces extremely fine powders (MICROFINE Tm)
comparable to talcum powder from a wide variety of recycled and raw
materials. The Kinetic Disintegrator System (KDS) is exclusively
licensed to the Company by Spectrasonic Corp. ("Spectrasonic") and
utilizes a highly refined process of standing sound waves and
kinetic energy technology for disintegrating materials. MICROFINE
Tm powders demand a higher market price because they can be used as
cost effective, high performance fillers and additives in a wide
variety of compounds and emulsions.
The initial objective of the Company was to produce fine
rubber powder. Because additional research was needed to enhance
the production, the Company decided to focus its efforts on
industrial minerals and delay production of fine rubber until the
other applications are generating profits and funds would then be
available for additional rubber research.
Accordingly, the Company identified the agricultural industry
and specifically the San Joaquin Valley, California as representing
a significant, viable current business opportunity.
The San Joaquin Valley (the "Valley") is one of the largest
agriculture areas in the United States. The Valley growers rely
heavily on water from the Sierra Mountains for irrigation. The
water has a high sodium content and along with the other minerals,
tends pack the soil and prevent water and other mineral nutrients
from permeating below the surface. As a result, it is becoming
more expensive to irrigate with Sierra Mountain water.
Accordingly, there is a market for solution grade soil amendment
minerals, e.g. gypsum, lime and sulphur magnesium, that can be
distributed through automated irrigation systems instead of being
disbursed manually. These soil amendments allow water to permeate
the soil more efficiently. This method conserves water, is more
effective in terms of application and is generally less expensiveoverall.
To take advantage of this method and implement soil amendment
programs, growers require that the minerals be available in a very
fine powder that will stay suspended in water, pass through the
irrigation systems and not clog sprinkler heads.
This is the market the Company is developing. As a result,
the Company leased a building in Bakersfield, California, for its
first milling operation. Construction commenced in July 1996, and
was completed in April 1997. Testing of the plant facility was
carried out in April and May 1997, and full production commenced in
late May 1997. The plant is designed to accommodate two (2) KDS
machines along with the necessary bulk feed system, hoppers,
conveyors and bagging systems. Total capital costs for this plant
are in excess of $2.4 million dollars. This was financed by
private placements of common stock and private loans.
During the month of June 1997, the plant produced processed
material at the rate of 10 tons per hour. Depending on the shift
lengths and number of days worked per month, production can vary
between 1,000 tons and 6,000 tons per month. Product processed in
June was gypsum. The product produced is a very fine mesh, of at
least minus 250 mesh. Mesh is a standard term for definition of
particle size. The higher the number, the smaller the particle.
The anticipated size of product described above of minus 250 mesh
is similar in size to talcum powder.
The Company's micronizing system can cost effectively process
any of the industrial minerals such as gypsum, limestone, sulphur,
dolomite, and various phosphates and nitrates into MICROFINE Tm
powders and has the capability of being able to "prescription-blend"
any combination of minerals for more optimal results.
Summary of Exclusive Agreements with Spectrasonic Corp.
On June 22, 1995, the Company entered into an initial
Exclusive License Agreement with Spectrasonic Corp. The contract
is for a period of 99 years. Spectrasonic has developed and is the
sole proprietary owner of all of the proprietary rights to the KDS.
On July 2, 1997, the Company acquired a license to all patents
issued, to be issued, or pending, as well as all manufacturing
rights, drawings, blueprints, CAD drawings, for the total <PAGE> 5
consideration of 1,000,000 shares at US$0.15 per share of the
Company's Common Stock plus $500,000, payable on the basis of
$50,000 per machine sold, until the Company has sold 10 machines.
When this happens, the debt is considered to be paid in full. On
August 22, 1997, Spectrasonic advised the Company that a patent had
been issued. The Company has no documentation to support theforegoing.
Under the terms of the foregoing agreement, Spectrasonic
granted the Company the exclusive license to develop, market,
manufacture distribute and sell equipment, technology, products and
services worldwide using the KDS system as it relates to rubber and
glass disposal.
The total contract price for this license was US$550,000. The
Company issued 250,000 common shares to Spectrasonic at an
aggregate value of US$175,000. In addition, the Company paid a
total of US$375,000 in various payments bringing the total payoutto US$550,000.
On February 22, 1996, the Company executed a second License
Agreement with Spectrasonic for a period of 99 years, whereby the
Company acquired the exclusive rights to exploit, develop, use,
manufacture, market, distribute and sell KDS systems as they relate
to gypsum disintegration, disposal, recycling, remanufacturing or
manufacturing, using new or used raw materials.
The total consideration for this license was US$775,000,
consisting of 1,000,000 common shares at US$0.50 each, valued at
US$500,000 plus cash payments totaling US$275,000, which has been
fully paid. This license agreement is exclusive except for one
operator located in the state of Washington, who has one machine,
and has the rights to use this machine in four states. The
Washington operator will not have any significant impact on the
operation of the Company.
On May 17, 1996, the Company executed a third License
Agreement with Spectrasonic wherein it acquired the world wide
rights to all and any kinds of materials not covered in previous
agreements. This agreement covers both new and used materials, and
covers disintegration, disposal, recycling, remanufacturing or
manufacturing or any and all kinds of materials using the KDS
equipment and/or technology. One Canadian operator has a license
which covers feed and fertilizer, however, his license will not
have a significant impact on the operation of the Company.
The third license agreement is for a period of 99 years and
the total consideration for it was US$1,250,000 consisting of
1,000,000 shares of the Company's Common Stock at US$0.50 per share
for a total of US$500,000 plus a payment of $1,000,000 Canadian
funds (converts to US$740,000) by January 2, 1997. During the
fiscal year, payments totaling $174,250 were made to Spectrasonic,
leaving a balance at June 30, 1997 of $537,000. A supplementary
agreement dated October 24, 1996 provided for a revised payout
schedule for the balance owing on this Agreement. Market
The Company believes that its geographical market will be
initially limited to California. The total cropland in the state
of California is over eleven (11) million acres with 8.6 million
acres irrigated. The average agricultural usage is two tons of
gypsum per acre of irrigated cropland. The Central Valley of
California is the largest user of gypsum in the USA. Competition
The Company competes with other producers of gypsum and gypsum
powder who have superior financial and manufacturing capabilities.
Because the demand for gypsum in California is great, the Company
believes that superior competition will not effect the Company'soperations.
Western Gypsum and U.S. Gypsum are established companies in
the industry with greater financial resources than the Company.
Western Gypsum's mill is located in Nevada and its mine is located
in the northeastern corner of Arizona. It also incurs additional
shipping costs being over 300 miles from the San Joaquin Valley.
U.S. Gypsum is primarily in the wallboard and plaster market with
the agricultural industry as a tertiary market.Advantages/Disadvantages
The Company believes that the advantages of its operation
include: 1) The location of the Company's plant in relation to the
San Joaquin Valley; 2) the ability to produce fine ground gypsum
that can be disbursed through the irrigation system as opposed to
being manually mixed with the soil; 3) more favorable prices to
purchasers; and 4) the ability to procure other solution grade
minerals such as limestone, dolomite, and sulphur magnesium.
The Company believes that the disadvantages of its operations
include: 1) An unproven start-up corporation that has not generated
any revenues or sales of its products; 2) the need for additional
financing; and, 3) the Company has not entered into any agreements
with anyone to purchase its Amendments. |
