UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28772
SLOAN ELECTRONICS, INC.
(Name of Small Business Issuer in its charter)
Delaware 35-1990559
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2527 Monterey St., Sarasota, Florida 34231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 925-2286
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 par value per share
(Title or class)
Indicate by check mark whether the Registrant (1) has filed all report
required to be filed by Section 13 or 15(d) of the securities Exchange
Act of 1934 during the preceding 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 [x] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
As of December 31, 1997, the Registrant has outstanding 9,187,389 shares
of Common Stock, $.001 par value.
Documents Incorporated by Reference
1. Form 8-K/A, filed with the Securities and Exchange Commission
on March 18, 1998.
THIS ANNUAL REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARDLOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS ANNUAL
REPORT AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT
EXPECTATIONS OF THE COMPANY, WITH RESPECT TO (I)THE COMPANY'S PRODUCT
DEVELOPMENT AND FINANCING PLANS, (II) TRENDS AFFECTING THE COMPANY'S
FINANCIAL CONDITION OR RESULTS OF OPERATIONS, (III) THE IMPACT OF
COMPETITION AND (IV) THE EXPANSION OF CERTAIN OPERATIONS. ANY SUCH
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT
OF VARIOUS FACTORS.
<PAGE>
1997 Form 10-KSB Annual Report
TABLE OF CONTENTS
Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . 3
Item 2. Description of Properties . . . . . . . . . . . . . . . . . . . 14
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . 14
Item 5. Market for Common Equity and Related Stockholder Matters . . . . 15
Item 6. Management's Discussion and Analysis of Results of Operations
and Financial Conditions . . . . . . . . . . . . . . . . . . . . 16
Item 7. Financial Statements and Supplementary Data . . . . . . . . . . 18
Item 8. Disagreements on Accounting and Financial Disclosure . . . . . . 30
Item 9. Directors, Executive Officers, Promoters and Control
Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 32
Item 11. Security Ownership of Certain Beneficial Owners and Management . 33
Item 12. Certain Relationships and Related Transactions . . . . . . . . . 35
Item 13. Exhibits, Financial Statement Schedules and Reports on Form
8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Sloan Electronics, Inc. (the "Company") designs, manufacturers and
markets electronic monitoring equipments primarily for the criminal
justice industry and the long-term health care industry. The Company
markets its house arrest monitoring equipments through its in-house
marketing department, and currently distributes its products
through national service providers. The Company's medical division
has distribution agreements with Response USA, a distributor of
personal emergency response systems and with King Alarm, a security
product distributor.
The Company's revenue consist primarily from product sales. Based
on a written agreement, the Company will receive recurring payments
from Response USA based on a percentage of their service revenue.
During fiscal 1997 the Company has not yet generated any revenue
from recurring payments.
MAS Acquisition I Corp. (the "Company"), was incorporated on
July 31, 1996 in the State of Delaware, to engage in any lawful
corporate undertaking, including, but not limited to, selected
mergers and acquisitions. On December 5, 1997, pursuant to the
terms of an Agreement of Merger (the "Agreement") between the
Company and Sloan Electronics, Inc. ("Sloan"), Sloan has merged
into the Company and the Company has changed its name to
Sloan Electronics, Inc. Pursuant to the terms of the merger
Agreement, 3,561,500 shares of Common Stock of Sloan was
converted into 8,227,070 shares of Common Stock of the Company
at the conversion rate of 2.31. In addition, the Company
has accepted the return of, and cancelled, 7,680,083 shares
of Common Stock issued to MAS Financial Corp. and issued
91,102 shares of Common Stock as finder's fee, which was
paid by MAS Financial Corp.
PRODUCTS
The Company offers a full range of electronic monitoring
equipments for the criminal justice system's house arrest corrections
programs and for the medical industry's long-term health care
providers. The Company strikes a balance between its ability
to provide solid, state-of-the-art, high-quality products and its
ability to retail these products at the lower end of the industry's
pricing spectrum.
<PAGE>
The concept behind the Company's product line is that each product is
able to stand alone, without after-market equipments such as door sensors
or additional custom wiring, yet each product is integratable with a
number of pre-existing computer software programs. This philosophy
of integration makes the Company's SEI Alert products and
Wander Watch products more attractive to institutional consumers.
The SEI Alert 24 Single Offender Based System. A tamper-proof
transmitter is custom-fitted and attached to an offender's ankle.
This anklet is waterproof and designed to be worn at all times.
A home-based receiver is placed in a central location within a
residence, and a range setting is selected. In the event that the
anklet is removed, or that the person wearing it strays outside
the predetermined range, the event is recorded, time and date
stamped, and sent to an outside monitoring station within 60
seconds' time. The current industry average time window is over
8 minutes.
The SEI Alert 24 Half-Way House Multi-Residence System. Each
person paroled to a half-way house is fitted with an anklet
transmitter. The receiver then monitors the movements of each
client within the pre-determined parameter of the half-way house
and records any and all violations. This system can work as a
stand-alone measure with the current data sent via a telephone
line to monitoring station, or can also work as an in-house
employee monitoring station. The system is designed to monitor
from 1 to 50 offenders.
The SEI Alert 24 Drive-By Transmitter Detector. This device is
designed for use by parole officers, probation officers or
security officers. This mobile surveillance system allows an
officer to check up on a house arrest client simply by driving
past this person's residence, work place or school. The system
detects and displays the ID of a particular offender by
interfacing with that person's anklet transmitter. The receiver
unit time an date stamps the information collected, and it can
also upload this information to a central computer.
The SEI Alert 24 Chain Gang / Work Release Departure Alert
System. Each inmate is fitted with an anklet transmitter.
A single guard mans the portable programmable receiver unit
which alerts the officer in the event that an offender, or
group of offenders, leaves the general area. A prototype of
this unit is currently in the circuit board layout house.
<PAGE>
The Wander Watch Single Patient System. A custom fitted,
tamper-proof anklet is attached to a patient's leg. It is
completely waterproof and designed to be worn at all times,
including bathing and swimming. The micro-transmitter in
the anklet sends a coded silent radio signal to the home
receiver, which in turn measures the strength of those signals
and calculates the distance the patient is from the base unit.
An alarm will sound when the patient travels beyond the
selected range or if the anklet is removed.
The Wander Watch Multi-Patient Wander Alert System.
A computer-based system specifically designed for placement
within a medical facility, the Multi-Patient Alert System
is able to notify a care giver in the event of a patient
departure from a long-term healthcare facility. It was
originally configured to monitor the movements of 1 to 25
patients. Unlike most wander alert systems installed in a
medical facility, the Wander Watch system stands alone and
does not require custom electrical wiring, installation of
door sensors or the use of door barrier detection equipment.
Fleet Watch Alert 24. This radio frequency reporting system
allows a company to passively keep tract of its fleet vehicle
traffic. Every time a fleet vehicle drives onto or off the
company property, the event is date and time stamped
automatically. This enables a company to keep track of
employee hours, vehicle use and vehicle status instantly.
The Fleet Watch computerized base unit is fully integratable
with other computer software, allowing the unit to generate
vehicle status reports on demand. No longer is it
necessary for a company to assign an employee the duty of
physically counting each vehicle on the lot.
Nurse Call Alert 24. A wireless nurse call system with a 500
resident capacity, which can be installed in less than 30 minutes.
This system utilizes fail-safe technology, provides coverage
of any sized facility, outputs usage reports and provides for
a complete audit trail. The system's advanced features include
an automatic signal check, low battery reporting and an optional
range extender. The system can function as a nurses' call
network or it can complement an optional paging system to
direct staff to medical emergencies in a more timely and
efficient manner. This system is currently undergoing field
trials with a prospective customer.
<PAGE>
The SEI Alert 24 Automated Check In System. A kiosk for the
criminal justice industry to facilitate the "day reporting"
of criminals on probation or parole. Client is verified using
hand print technology, listens to a specific message from the
parole officer and replies using a telephone handset and tone
pad. The system can collect restitution money and issues a
receipt to the offender showing check in details and payments.
The system interfaces with a computer that can generate various
reports. As a case management tool it assists a parole officer
in managing the growing number of inmates released into
supervision programs. It is currently in filed trial in
Washington state for the Department of Corrections. The
Company is pursuing license agreements with several prospective
customers.
INDUSTRY BACKGROUND
The Corrections Industry. The Justice Department's Bureau of
Justice Statistics confirmed in its midyear report that the
number of state and federal prison inmates grew by a record
89,707 during the previous 12 month period ending June 30,
1995. This is the largest annual increase in history and is
equivalent to adding 1,725 new beds to the nation's prison
system each week.
The United States currently locks up a greater share of its
residents than any other nation. As of June 30, 1995, there
were 1,004,608 state prison inmates, up 9.1%, and 99,466
federal inmates, up 6.1%. The annual average increase in the
prison population since 1980 has been 8.7% per year.
The Criminal Justice System regards house arrest as an
acceptable alternative to incarceration for its nonviolent
segment of the prison population, and as a better way to
monitor violent criminals once they are paroled to a half-way
house facility.
The Medical Industry. A patient's compulsive desire to
wander about is a symptom of dementia, which often
accompanies Alzheimer's Disease. Biologically, this is
caused by physical changes in the brain. Oftentimes the
patient acts out of routine, such as the repetitive action
of getting ready to leave for work every day. Sometimes
the patient just feels tense or trapped and wants to
escape his environment. Until recently, standard medical
practice was to heavily sedate these patients, or to
restrain a patient to a chair or bed to keep them from
wandering. Today, hospitals and institutions maintain
separate facilities to enable them to better deal with
patients who demonstrate a compulsive desire to wander
about.
<PAGE>
The Company believes that the long-term healthcare segment
of the medical industry is growing at an ever increasing
rate. The Company also believes that the home-care
segment of the healthcare market is growing at a steady
rate. The Wander Watch Alert 24 Single Patient System
is specifically designed to meet the needs of the more
than 3 million Alzheimer's patients and patients with
related medical disorders, who are cared for at home.
BUSINESS STRATEGY
The Company's business strategy is based on establishing
a market share within the criminal justice house arrest industry
and within the healthcare industry. By Incorporating
better, more cost-effective technology into its SEI Alert
24 product line and its Wander Watch products, the Company
believes that its products are among the best currently
available in these two industries.
Management has defined the Company's role as that of primarily
a research, development and manufacturing entity. Management
plans to continue to market directly to consumers within
the criminal justice industry, while relying on distributors
such as KingAlarm and Response USA to market its Wander
Watch healthcare product line.
High-Quality Image. The Company believes that within the house
arrest industry, the Company has built a reputation for developing
and manufacturing one of the best, cost-effective and user-friendly
systems on the market.
The Wander Watch products and the SEI Alert 24 products reflect
the Company's commitment to quality. The Company pursues the highest
standards in its design, component selection, assembly and
appearance of its products. The Company recognizes that product
dependability and reliability are highly significant to the Company's
continued success. Therefore, quality control plays an important
role in the Company's business strategy.
Focus on Private Residence. The Wander Watch product line and the
SEI Alert 24 product lines are both specifically designed to be
used in a private home, apartment or townhouse. Ease-of-use
and stand-alone features inherent to both products give the
Company a competitive advantage in these areas.
<PAGE>
The Wander Watch Single Patient System is both affordable and easy
to install. The receiver unit plugs into a standard outlet.
Unlike most competitive products, this is all that is required
to install and operate the products; doors do not need to be
wired with sensors. There are no wires or barriers associated
with the products. This stand-alone concept runs contrary to the
current industry thinking. Management believes that this concept
is one of the reasons that makes the Company's product line
more attractive to the consumers.
Customer Service and Support. Sloan Electronics believes that its
relationship with its dealers and its consumers has contributed
significantly to its past success and should continue to
enhance its future prospects. The Company's ability to upgrade its
equipment in the field not only gives the Company a competitive
advantage within the industry, but also allows it to focus on up-
selling and upgrading its product line.
PRODUCT DESIGN AND DEVELOPMENT
The Company is continuously engaging in electronic component
research, design, experimentation and development, all of which
are essential to maintaining a competitive advantage in the
market place. The overall product development is managed and
directed by Paul Sloan, President of the Company. In addition,
on project-by-project basis, a product development team is
assembled from personnel within the Company and may include
personnel outside the Company as well.
The Company's product development team is responsible for
developing working designs of all approved product concepts
using computer-aided design systems, and for coordinating
all modeling and initial prototyping. The in-house testing
department evaluates all prototypes. The Company then creates
the full documentation to build its products and designs all
of its circuitry artwork. Complete product specifications and
blue-printed product designs are then sent to KimchuK Inc.,
which prints the circuit-boards, assembles, tests, performs
quality control inspections to rigid standards, packages
and finally drop-ships the Company's products to its
distributors or directly to its customers.
The Company believes that investment in product development,
and its relationship with Kimchuk, enables it to reduce
prototype development time substantially. The Management
believes that this shortened lead time enhances the
Company's ability to place new products in distribution,
which strengthens its competitive position.
<PAGE>
SALES AND MARKETING
The Company's marketing strategy varies based upon each product
line. With regard to the criminal justice house arrest market,
the Company plans to continue aggressively markets its SEI
Alert 24 products to independent service providers and to
municipalities which monitor and administer their own house
arrest programs. The Company has licensed its Wander Watch
Alert 24 single patient departure alert system for exclusive
distribution to the long term health care industry to Response
USA, a major company in the PERS (Personal Emergency Response
System) industry. Response USA leases Wander Watch Alert 24
single patient systems on a monthly basis to individual users
and to home care agencies. The Company has turned over
distribution of the Wander Watch Alert24 single patient
departure alert systems for exclusive sales to the security
industry to KingAlarm, a major independent distributor of
security and related low voltage products. Marketing strategies
and distribution decisions concerning other products are
handled on a product-by-product basis.
SEI Alert 24 Products. The criminal justice house arrest market
is dominated by two manufacturers who, along with retailing
their products, are also contract service providers who compete
in the security industry. These manufacturers have developed
proprietary software which is not currently integratable with
standard, existing security company protocol. Their software
are not as effective or user-friendly as security industry
software. However, these manufacturers look upon this
proprietary software as a way to shut small security companies
out of a lucrative market.
Based on current trends, management believes that within 5
years, 80% of the municipalities who currently monitor their
own house arrest program will get out of the business.
Independent security contractors will be competing directly
against these two manufacturers for service contracts. The
Company is in the position to market its fully integratable
home incarceration system to these security providers, thus
leveling the playing field within the house arrest industry.
<PAGE>
The Wander Watch Products. The Company views its corporate
role as that of developer, designer and manufacturer. To
that end, the Company has negotiated and signed contracts
with Response USA and King Alarm to distribute its Wander
Alert detection equipments. Response USA leases the
systems to individuals and home care agencies and offers
central station monitoring of the Wander Watch Alert 24
units for an additional monthly fee. The company has a
recurring revenue sharing arrangement with Response USA.
To date, the Company has not received any income from
recurring monthly fees. Response USA has four regional
offices servicing all 50 states and markets to home care
agencies, hospitals, adult day care facilities, as well as
individuals. Response USA receives payment for the
Wander Watch system both from end users and various state
and local agencies. Currently reimbursements include
Milwaukee, Pennsylvania, Department of Aging waiver
program, Rhode Island Department of Aging, partial
reimbursement from local California programs and partial
reimbursement from New York local programs. Reimbursement
is pending in Massachusetts, and Response USA is seeking
other state and local agencies to approve the systems for
reimbursement. There is no assurance that other reimbursements
will be obtained or those in place will continue. Response
USA also receives referrals from the National Alzheimer
Association and participates in their Safe Return program.
King Alarm has name recognition throughout the security
industry, and is a major supplier for security experts and
consultants, with ten regional warehouse sales centers.
King Alarm sponsors over 200 New Horizons technical and sales
training seminars annually, and hosts the King Alarm Expo,
a two-day trade exposition annually.
Advertising. The Company advertises in trade publications
specific to the markets it manufacturers products for, and
in journals which test its products and publish company-
by-company product comparisons. The Company is constantly
seeking out innovative ways to build name recognition
within the industries in which it competes, as well as to
create public awareness for its product line.
COMPETITION
The Company competes in a number of niche markets, which
the Company believes that it will continue to grow at an
ever increasing rate.
<PAGE>
House Arrest Market. The Company's competitors within the
criminal justice market include BI Incorporated and Strategic
Technologies, Inc. Although all of the Company's manufacturing
house arrest products base their products on the same
principals, management believes that the Company has
competitive advantages over its competitors within this
industry.
1. the SEI Alert 24 product line uses a 900 MHz spread
spectrum radio frequency rather than the standard 300 MHz
frequency. This difference in technology is similar to the
technological differences which exist between cordless
phones. Phones using 900 MHz radio frequencies are far
superior to those less expensive models which experience
interference problems due to the fact that they operate
at 300 MHz frequency.
2. the SEI Alert 24 products have an exclusive low range
setting on the receiver unit, which ensures that house arrest
means house arrest and not neighborhood arrest. With other
systems, an offender could wander the neighborhood and
still not trip the distance setting on the base unit. The
industry standard low range setting is a 150 foot perimeter.
SEI's low range setting is between 40 and 60 feet.
3. With competitors' equipments, the "window" from the time
an offender steps outside the range setting until he is
detected as being outside the range setting varies from
6 to 30 minutes. With some systems, an offender is able
to leave his residence for that period of time and return
undetected. The SEI Alert 24 system greatly improves
performance and offers an exclusive 1 minute radio frequency
window.
4. The SEI Alert 24 anklet transmitter is tamper resistant.
No tamper system currently available is 100% tamper proof
or false alarm proof; however, the SEI Alert 24 system
is the most reliable on the market when it comes to
false alarms. A false alarm necessitates a physical
inspection of the anklet transmitter by a monitoring officer;
therefore, this fact is viewed as a major selling point
among security providers.
5. The SEI Alert 24 product line has been designed to
allow security companies access to one of the fastest growing
segments of the industry: electronic home incarceration.
The use of abusive pricing policies and proprietary software,
software which makes the security industries central station
equipment incompatible, have worked together to keep small
independent contractors out of the market. Using the Company's
products, these security companies are now able to compete with
BI Incorporated and Strategic Technologies for municipal
contracts on an even footing. Unlike other manufacturers, the
Company does not compete against its customers in the contract
monitoring business.
<PAGE>
Long-Term Healthcare Market. The Company's competition in this
market includes WanderGuard, Code Alert, Watchmate and
Secure Care Products. All of these companies utilize proximity
sensing technology, which requires that a patient wearing a
low powered transmitter which sends a weak signal. A receiver
is mounted at each door. When a patient approaches the door,
an alarm sounds and the door magnetically locks. The Company's
Wander Watch Alert 24 technology has a competitive advantage
over the industry's proximity-sensing systems since it
requires no additional wiring of door sensors and it provides
a higher level of patient security.
1. With competitive products, the transmitter attached to a
patient has no removal alert (an inherent part of the Wander
Watch systems). These transmitters are attached with a
hospital ID type band. Common behavior for an Alzheimer's
patient, or other patients suffering from dementia, is to
try to remove everything from their bodies. The Wander Watch
anklet, if removed, activates an alarm at the receiver unit.
2. Proximity-sensing technology requires the installation of
barriers, door sensors and magnetic locks. Prices per door
range from $2,500 to over $5,000, with the average facility
having anywhere between four and ten doors. Automatic door
locks also create problems with existing fire alarms and
fire regulations, for in the event of a fire, the proximity
technology needs to be deactivated.
3. The Wander Watch system utilize 900 MHz spread spectrum
radio frequency technology, a tamper-resistant anklet
transmitter with a tamper alarm, and sells its products
at a price below that charged by the competition.
The Fleet Watch Alert 24. The Fleet Watch system is another
unique product of the Company. The Company believes that
no other company offers a fully integratable passive
monitoring system for fleet vehicles. This system is able
to generate full vehicle status reports on demand, confirm
employee hours of vehicle operation and continuously
monitor the comings and goings of fleet vehicles. This
tamper resistant monitoring system installs in less than
30 minutes, ends unapproved vehicle use and provides a
complete audit trail and other necessary usage reports
for each vehicle in a company's fleet. This unit has
been successfully test on a fleet of concrete trucks.
<PAGE>
The Nurse Call Alert 24. A fully supervised 900 MHz spread
spectrum wireless nurse call system is yet another innovation
by the Company. The Company believes that this system is
among the best wireless security system available, with
unique features such as automatic signal check and low
battery reporting. With the systems optional range extenders,
any sized facility may be monitored. Another unique
integratable option is the paging system which assists in
quicker response times by staff.
MANUFACTURING AND ASSEMBLY
The Company manufacture all of its products in the U. S.
KimchuK Inc., the Company's primary contract manufacturer
has many years of experience as an electronics manufacturer
and designer. KimchuK manufacturers over 500 different
products at its four plants located through out the east coast.
The Company's relationship with KimchuK allows it to reduce
its production costs, to reduce its final testing costs and
to reduce its personnel costs. The Company designs all of
its products with automatic insertion and automatic testing
in mind. This attention to detail enables KimchuK to
manufacture and assemble the Company's products in the
most cost-efficient manner, while maintaining accuracy
in circuit board production and error-free transfer and
component connections.
Product Warranties. The Company supports its products with
a limited 1-year warranty which covers all defects in
materials or workmanship. the Company will repair or replace
defective units without charge to the consumers for labor
or materials. The Company's service department acts as
liaison between the customer and KimchuK and works aggressively
to resolve any and all problems a customer may have with
any of its products. The Company has not experienced a
material level of product warranty claims for breakage or
other defects.
FUTURE PRODUCTS
The Company continues to look for new ideas for development
of new products. The Company believes that new products
could represent a substantial new business for the Company.
<PAGE>
GOVERNMENT REGULATION
The Company's facilities are subject to numerous federal,
state and local laws and regulations designed to protect
the environment from waste emissions and hazardous
substances. The Company is also subject to the Federal
Occupational Safety and Health Act and other laws and
regulations effecting the safety and health of employees
in the administrative and manufacturing areas of its
facilities. The Company believes that is is in compliance
in all material aspects with all applicable environmental
and occupational safety regulations. The Company's radio
frequency anklet transmitter are subject to FCC (Federal
Communications Commission) regulations, as are all
radio frequency devices. The Company has obtained type
approval #HCQ3B6WWT for the anklet transmitter and its
products are in compliance with FCC rules Part 15.
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company's facilities consist of approximately 1,000 square
feet of office and work space, located at 2527 Monterey St., Sarasota,
FL 34231 and 200 square feet of office located at 116 Teatown Road,
Croton, NY 10520.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On November 8, 1997, the owner of a majority shareholders of MAS
Acquisition I Corp. approved the merger with Sloan Electronics, Inc.
A special shareholders ballot of Sloan Electronics, Inc. approved
the merger with MAS Acquisition I Corp. on November 20, 1997.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(a) Market Information.
There is not market for the Company's securities.
(b) Holders.
As of December 31, 1997, there were approximately 54 holders of
the Company's Common Stock.
(c) Dividends.
The Company has never paid a cash dividend on its Common Stock
and has no present intention to declare or pay cash dividends
on the Common Stock in the foreseeable future. The Company
intends to retain any earnings which it may realize in the
foreseeable future to finance its operations. Future
dividends, if any, will depend on earnings, financing
requirements and other factors.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS.
The following discussion should be read in conjunction with the
information contained in the financial statements of the Company
and the Notes thereto appearing elsewhere herein.
GENERAL
The Company's financial information for the two years ended December 31,
1996 and December 31, 1997, respectively, reflects the merger with Sloan
Electronics, Inc. on December 5, 1997, which affected the Company's business
and has a significant impact on the Company's results of operations and
financial conditions.
As result of an Agreement of Merger (the "Agreement") between the Company
and Sloan Electronics, Inc. ("Sloan"), Sloan has merged into the Company and
the Company has changed its name to Sloan Electronics, Inc. Pursuant to the
terms of the merger Agreement, 3,561,500 shares of Common Stock of Sloan
was converted into 8,227,070 shares of Common Stock of the Company at the
conversion rate of 2.31. In addition, the Company has accepted the return
of, and cancelled, 7,680,083 shares of Common Stock issued to MAS Financial
Corp. and issued 91,102 shares of Common Stock as finder's fee, which was
paid by MAS Financial Corp.
RESULTS OF OPERATIONS
A majority of the Company's revenues are derived from sales of electronic
monitoring devices to the long term health care and criminal justice industry.
Sales revenues are recognized when the products are shipped.
Operating revenues increased by $100,834 (43%) for the fiscal year ended
December 31, 1997 as compared to the fiscal year ended December 31, 1996.
Gross profit for fiscal 1997 was $71,265, which represents a decrease of
$16,666, or 19%, below the $87,931 gross profit recognized in fiscal 1996.
The decrease was due to the lowering in the unit price to a primary distributor
and the Company will receive recurring payments on a percentage basis of this
distributor's service revenue for a period of three years. The Company has not
yet generated any revenue from recurring payments during fiscal 1997. Gross
profit, as a percentage of operating revenue, decrease from 37.9% for fiscal
1996 to 21.4% for fiscal 1997. The decrease was due to the lowering in the
unit price to a primary distributor. The cost of product sales rose from 62.1%
for the year ended December 31, 1996 to 78.6% for the year ended December 31,
1997. The lowering in the unit price to a primary distributor and an increase
in competition caused a decline in the Gross Profit Margin.
<PAGE>
Selling, general and administrative expenses lowered to $273,537 in fiscal
1997, which represents a decrease of $1,061 or 0.4%, over selling, general
and administrative expenses for fiscal 1996. Selling, general and administrative
expenses, as a percentage of total operating revenues, declined from 118.4% to
82.2% for the fiscal year ended 1996 and 1997, respectively. Sales and marketing
expenses declined from $60,452 for the year ended December 31, 1996 to $31,921
for the year ended December 31, 1997, for a decrease of $28,531 or 47.2%. Sales
and marketing expenses declined due to the Company's strategy to grow by working
closely with major distributors. General and administrative expenses rose from
$214,146 in fiscal 1996 to $241,616 in fiscal 1997, representing an increase of
$27,470 or 12.8%. The increase in general and administrative expenses was caused
by increases in professional fees and contract services. The percentage increase
in general and administrative expenses of 12.8% was much lower than the 43.5%
increase in product revenues between the comparable periods, reflecting
efficiencies realized the the Company's corporate offices.
Amortization and depreciation expenses decreased by $14,150, from $29,156
to $15,006 for the fiscal year ended December 31, 1996 and 1997, respectively.
This decrease in amortization expenses is the result of under amortizing during
prior years.
Interest expense increased by $12,055 to $25,098 for the fiscal year ended
December 31,1997, from $13,043 for the fiscal year ended December 31, 1996. The
reason for the increase is due to increased borrowing from the shareholders of
the Company.
The net loss for the year was $227,370, or $0.02 per share based on
9,187,389 shares outstanding, as compared to a net loss of $208,210, or
$0.07 per share based on 3,200,000 shares outstanding. The net loss for
the period is primarily attributed to insufficient level of revenue
generated by the Company.
LIQUIDITY AND CAPITAL RESOURCES.
Net cash provided from financing activities was $94,000 for the year
ended December 31, 1997. Net proceeds of $44,000 was raised through private
placement of common stock and $50,000 from borrowing.
The Company has no material commitments for capital expenditures during
the next twelve months and believes that its current cash and working
capital position and future income from operations will be sufficient
to meet its cash and working capital needs for the twelve months.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
(1) Financial Statements Page
<S>
<C>
Report of Independent Auditors F-2
Balance Sheet at December 31, 1997 F-3-4
Income Statement for the
year ended December 31, 1997 F-5
Schedule 1 - Selling Expenses for the
year ended December 31, 1997 F-6
Schedule 2 - General and Administrative Expenses for the
year ended December 31, 1997 F-7
Statement of Cash Flows for the
year ended December 31, 1997 F-8
Statement of Stockholders' Equity for
year ended December 31, 1997 F-9
Notes to Financial Statements F-10-12
</TABLE>
<PAGE>
S. M. WARD CO.
ACCOUNTANTS AND AUDITORS
225 WEST 34TH STREET
NEW YORK, NEW YORK 10122
-----
(212) 967-6765
FAX (212) 967-6488
REPORT OF INDEPENDENT AUDITORS
Sloan Electronics, Inc.
Board of Directors
Sarasota, Florida
Chairman, Board of Directors,
We have audited the accompanying balance sheet of Sloan Electronics, Inc.
as of December 31, 1997, and the related Statements of Income, Cash
Flows, and Stockholders Equity. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as, evaluating the
overall balance sheet presentation. We believe that our audit of the
balance sheet provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Sloan
Electronics, Inc. as of December 31, 1997, in conformity with generally
accepted accounting principles.
S. M. Ward Co.
New York, NY
March 20, 1998
F-2
<PAGE>
SLOAN ELECTRONICS INC.
BALANCE SHEET
AS OF DECEMBER 31, 1997
ASSETS
Current Assets:
Cash in bank $3,936
Accounts Receivable - Note 3 89,732
Inventory (at cost) - Note 4 10,151
------
Total Current Assets 103,819
Fixed Assets:
Computer Equipment (net of Accumulated
Depreciation of $1,848)- Note 2 1,887
Other Assets:
Due from officer $33,565
Deferred Research and corporate
development costs(net of Accumulated
Amortization of $21,315)- Note 2 49,735
Deferred costs of stock offering (IPO)
and Prepaid Advertising(net of Accumulated
Amortization of $21,385)- Note 2 49,897
Total Other Assets ------ 133,197
-------
Total Assets $238,903
========
See accountant's report
F-3
<PAGE>
SLOAN ELECTRONICS INC.
BALANCE SHEET
AS OF DECEMBER 31, 1997
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable $124,586
Accrued Payroll Taxes Payable 6,900
Accrued Payroll 14,630
------
Total current liabilities 146,116
Other Liabilities:
Accrued Interest - Note 5 $36,384
Due to Stockholders - Note 5 160,000
Due - Other 15,000
------
Total Other Liabilities 211,384
-------
Total Liabilities 357,500
Stockholders Equity (deficit)
Common Stock - Note 6 $278,792
Paid-In-Capital 165,942
Accumulated Adjustments
Account(Deficit) ( 259,804 )
Retained Earnings (Deficit) ( 303,527 )
Total Stockholders Equity (Deficit) ( 118,597 )
-------
Total Liabilities and Stockholders Equity (Deficit) $238,903
========
See accountant's report
F-4
<PAGE>
SLOAN ELECTRONICS INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
Income:
Sales $332,677
Cost of goods sold:
Beginning Inventory 26,165
Purchases 241,873
Freight-in 3,525
Less: Ending Inventory ( 10,151 )
------
Cost of goods sold 261,412
-------
Gross Profit $71,265
Expenses:
Selling expenses (Schedule 1) $31,921
General and administrative
Expenses (Schedule 2) 241,616
Interest on Notes -Note 4 25,098
------
Total expenses: 298,635
Net Income/ (loss) ( $227,370 )
========
See accountant's report
F-5
<PAGE>
SUPPLEMENTAL INFORMATION
SLOAN ELECTRONICS, INC.
SCHEDULE 1 - SELLING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Advertising and Promotion $11,988
Sales Commissions 9,000
Other Selling Expenses 736
Trade Shows 10,197
------
Total Selling Expenses $31,921
=======
See accountant's report
F-6
<PAGE>
SUPPLEMENTAL INFORMATION
SLOAN ELECTRONICS, INC.
SCHEDULE 2 - GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Officer Salary $60,000
Payroll Taxes 4,821
Rent 13,104
Office Expenses 2,461
Telephone 5,794
Professional Fees 25,522
Other Contract Services 88,357
Facilities & Equipment Rental & Lease Costs 1,318
Travel, Transportation & Entertainment 7,743
Depreciation and amortization 15,006
Insurance 17,490
------
Total General and Administrative Expenses $241,616
========
See accountant's report
F-7
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
CASH FLOWS FROM OPERATION ACTIVITIES:
Net loss: ( $227,370 )
Add: Non cash items
Depreciation 773
Amortization 14,233
------
( 212,364 )
Adjustments to reconcile net loss to net
cash used in operating activities:
(Increase) in Accounts Receivable ( 79,321 )
Decrease in Inventory 16,014
Decrease in Deposits 1,700
Increase in Accounts Payable 117,144
Increase in Accrued Interest 23,598
(Decrease) in Customer Deposits ( 2,400 )
Increase in Accrued expenses 21,341
------
Total Adjustments 98,076
Net cash used in operations ( 114,288 )
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets ( 1,584 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Loan 50,000
Sale of Common Stock 44,000
------
Net cash provided from financing
activities 94,000
------
Net decrease in cash ( 21,872 )
Opening cash 25,808
------
Closing cash $3,936
======
See accountant's report
F-8
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
Common Stock
------------
Shares Amount
------ ------
Shares Issued At Inception
& Through December 31, 1995 3,000,000 $ 34,792
Shares Issued in 1996
@ $1 Par Value 200,000 200,000
Shares Issued in 1997
Until Merger date 361,500 36,000
------- ------
Total 3,561,500 $270,792
========= ========
After the merge, the 3,561,500 shares were converted into 2.31 shares of
the new company which became 8,227,070 shares. The original shareholders
of MAS Acquisiiton I Corp. (the merged company) retained 10% of the
shares outstanding at the merge date of 9,141,189 for a total of 914,119.
Shares Issued at
Merger Date 9,141,189 $270,792
Shares Issued after
Merger date through 12/31/97 46,200 8,000
------ -----
Total 9,187,389 $278,792
========= ========
See accountant's report
F-9
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
12/31/97
1. Organization:
Sloan Electronics was incorporated in the state of Florida in July, 1993.
The Corporation designs, manufactures and markets electronics monitoring
equipment primarily for the criminal justice industry and the long term
health care industry.
On November 18, 1997 an agreement of merger between MAS Acquisition I
Corp., a Delaware corporation, incorporated July, 1996, and Sloan
Electronics, Inc., a Florida corporation was made and entered into. The
two corporations merged into a single corporation, in which the Florida
corporation ceased to exist, however the name of Sloan Electronics, Inc.
will remain for the merge. The outstanding shares of the Florida
corporation were converted as follows:
One (1) share of Florida corporation into 2.31 shares of the
Delaware corporation.
2. Summary of Significant Accounting Policies:
Method of Accounting
The corporation uses the accrual method of accounting for both financial
statement and tax purposes.
Depreciation
All assets are recorded at cost. Depreciation is calculated using
straight-line and accelerated methods for both book and tax purposes
based on the estimated useful lives of the assets. The company expenses
maintenance and repairs as the costs are incurred.
Depreciation has been computed based on three year estimated lives.
Amortization
In November, 1995 the Corporation entered into a private placement
arrangement. The costs of the IPO were capitalized and are being
amortized over a five year period.
F-10
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
12/31/97
The Corporation capitalized research and development costs which are also
being amortized over a five year period.
Income Taxes
When Sloan Electronics was incorporated, it was formed as a subchapter
S Corporation; passing through all income or loss directly to the
shareholders. No provision for income taxes was needed. As of 7/1/96,
the Corporation's board of directors voted to rescind its S election
and is now a regular C Corporation. When the merge occured, the
Delaware Corporation remained, and therefore will be filing its tax
returns under the Federal ID number of the Delaware Corporation. For
1997, the Corporation incurred a loss, so no provision for income taxes
is required.
3. Accounts Receivable
These amounts are due from customers for products delivered. All
accounts are considered collectible and no allowance for doubtful
accounts has been recorded.
4. Inventory
Inventory is recorded at cost.
5. Due to stockholders and accrued interest.
This represents unsecured loans made by various stockholders. The
interest on the notes ranges from 10% simple interest to 18% simple
interest. Interest was accrued at December 31, 1997.
6. Common Stock
At the period ended 12/31/97, (after the merger), there was 100,000,000
shares of stock authorized; (80,000,000 common shares and 20,000,000
preferred shares.) Of these shares, there was 9,187,389 shares of common
stock and -0- shares of preferred stock issued and outstanding. The
common stock of the Sloan shareholders of 3,561,500 shares were converted
into 2.31 shares of the merged company for a total of 8,227,070 shares.
The original shareholders of MAS Acquisition I Corp. (the merged company)
retained 10% of the shares outstanding at the merge date of 9,141,189 for
a total of 914,119. Prior to the merger, MAS Acquisition I Corp. (the
merged company) gifted 100 shares each to 31 non-U.S. persons for a total
of 3,100 shares. MAS Financial Corp. transferred 45,551 shares to two
individuals for a total of 91,102 shares leaving MAS Financial Corp. with
a total of 819,917 shares. This transaction was done solely by MAS
Financial Corp. and does not affect Sloan Electronics, Inc. and is
provided solelly for information pruposes.
F-11
<PAGE>
7. Commitments and Contingencies
Lawsuits
There are no liens, judgments or claims against
the Corporation.
F-12
<PAGE>
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS.
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are the Directors and executive officers of the
Company:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position
- ---- --- --------
Larry Provost 49 Chairman of the Board of Directors, Secretary
and Chief Financial Officer.
Paul A. Sloan 39 President, Chief Executive Officer and Director.
Michael Solomon 53 Senior Vice President and Director.
Lester H. Cohen 52 Vice President - Marketing and Director.
James Vondra 57 Director.
</TABLE>
Mr. Larry Provost became Chairman, Secretary and Chief Financial Officer
of the Company since the merger on December 5, 1997. Mr. Provost is presently
President of Production Talent, Inc., a film and video production company.
Mr. Provost graduated with a B.A. degree in Psychology from New York
University in 1970. Mr. Provost has 25 years of experience in equipment
leasing.
Mr. Paul A. Sloan became President, Chief Executive Officer and a Director
of the Company since the merger on December 5, 1997. Mr. Sloan co-founded
Vorec Corporation in 1986 and served as design team leader for Vorec's
Voicenet and VISA RF products.
Mr. Michael Solomon became Senior Vice President and a Director of the
Company since the merger on December 5, 1997. Mr. Solomon has worked at
the New York City Police Department for 15 years. Mr. Solomon founded
Pro-Tech Security Systems, a company which installs and services
residential and commercial security systems, after retirement from
the New York City Police Department. Mr. Solomon holds a Master's Degree
in Criminal Justice Administration from New York Institute of Technology.
<PAGE>
Mr. Lester H. Cohen became Vice President - Marketing and a Director of
the Company since the merger on December 5, 1997. Mr. Cohen served as
New York State Division of Probation Training Administrator, Chief of
Planning Policy and Program Development for the same department and as
a Line Probation Officer in the Steuben County Probation Department.
Mr. Cohen received a Master's Degree in Social Work from Adelphi
University, School of Social Work.
ITEM 10. EXECUTIVE COMPENSATION.
Name and Principle All Other
Position Year Salary Compensation
- ------------------ ---- ------ ------------
Larry Provost 1997 $18,000 196,350 (1)
Chairman, Secretary 1996 12,000
and Chief Financial
Officer
Paul Sloan 1997 $60,000 (2)
President, Chief 1996 53,500
Executive Officer
and Director
(1) Mr. Provost received an aggregate of 196,350 shares of common stock
as part of total compensation during fiscal year 1997.
(2) Mr. Sloan has received $40,000 as of December 31, 1997. The balance
of $20,000 is accrued and payable by the Company.
In addition, the Company may award stock options to key employees,
members of management, directors and consultants under stock option programs
not yet adopted as bonuses based on service and performance.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
Principle Stockholders
The following table sets forth certain information as of December 31, 1997
regarding the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock, (ii) by each Director and executive officer
of the Company and (iii) by all executive officer and Directors of the
Company as a group. Each of the persons named in the table has sole voting
and investment power with respect to Common Stock beneficially owned.
<TABLE>
<CAPTION>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent of Class
- ------------------- ------------------ ----------------
<S> <C> <C>
Larry Provost 1,293,492 14.08%
Chairman, Secretary
and Chief Financial Officer
116 Teatown Road
Croton, NY 10520
Paul Sloan 3,112,535 33.88%
President, Director
2527 Monterey St.
Sarasota, FL 34231
Lester Cohen (1) 588,763 6.41%
Director,
Vice President - Marketing
22317 Collington Dr.
Boca Raton, FL 33428
Margery Cohen Trust 588,763 6.41%
22317 Collington Dr.
Boca Raton, FL 33428
Michael Solomon 288,626 3.14%
Director,
Senior Vice President
3 Chippewa Ct.
Suffern, NY 10901
James Vondra 414,758 4.51%
Director
216 Overcrest Dr.
Benbrook, TX 76126
<PAGE>
Aaron Tsai (2) 819,917 8.92%
c/o MAS Financial Corp.
1710 E. Division St.
Evansville, IN 47711
MAS Financial Corp. 819,917 8.92%
1710 E. Division St.
Evansville, IN 47711
Gregory Tuai 693,234 7.55%
4809 52nd Ave. S.
Seattle, WA 98118
John Rothrock 693,234 7.55%
125 Dogwood Road
Peekskill, NY 10566
Walter Eckman 496,783 5.41%
412 West Cowan Dr.
Houston, TX 77007
All Directors & Officers 5,698,174 62.02%
as a group (5 persons)
</TABLE>
(1) Mr. Lester Cohen is the husband of Mrs. Margery Cohen.
(2) Aaron Tsai is the sole shareholder, President and a Director of
MAS Financial Corp.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant
to Item 404 of Regulation S-B.
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) Financial Statements are contained in Item 7.
(b) Reports on Form 8-K
The following Reports were filed on Form 8-K and are
incorporated by reference.
Amendment No. 2 to Form 8-K filed on March 18, 1998.
Amendment No. 1 to Form 8-K filed on January 5, 1998.
Form 8-K filed on December 19, 1997.
(c) Exhibits.
(2.0) Plan and Agreement of Merger between MAS Acquisition
I Corp. and Sloan Electronics, Inc. as filed with
the Form 8-K Amendment on March 18, 1998.
(2.1) Article of Amendment changing company name from
MAS Acquisition I Corp. to Sloan Electronics, Inc.
as filed with the Form 8-K Amendment on March 18, 1998.
(3.1) Articles of Incorporation as filed with the Form
10-SB Registration Statement on September 4, 1996.
(3.2) Bylaws of the Company as filed with the Form
10-SB Registration Statement on September 4, 1996.
(3.3) Bylaws of the Company adopted by the Company from
the Bylaws of Sloan Electronics, Inc.
(4) Specimen Stock Certificate as filed with the Form
10-SB Registration Statement on September 4, 1996.
(4.1) Specimen Stock Certificate replacing MAS Acquisition I
Corp. Stock Certificate.
(99.1) Form of Offshore Securities Subscription Agreement
as filed with the Form 8-K Amendment on March 18, 1998.
(99.2) Consulting Agreement
(99.3) Agreement with Response USA
(99.4) Agreement with KingAlarm
<PAGE>
BY - LAWS
OF
Sloan Electronics, Inc.
ARTICLE I
SHAREHOLDERS
1. SHARE CERTIFICATES. Certificates representing shares of the
corporation shall set forth thereon the statements prescribed by Sections
607.044, 607.067, and 607.107 of the Florida General Corporation Act
("General Corporation Act") and by any other applicable provision of law,
and which shall be signed by the President or a vice President and the
Secretary or an Assistant Secretary of the corporation and may be sealed
with the seal of the corporation or a facsimile thereof. The signatures of
the President or a Vice President and the Secretary or an Assistant
Secretary upon a certificate may be facsimiles if the certificate is
manually signed on behalf of a transfer agent or a registrar, other than
the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issuance.
No certificate shall be issued for any share until such share is fully
paid.
2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation may, when
necessary or desirable in order to effect share transfers, share
distributions or reclassifications, mergers, consolidations or
reorganizations, issue a fraction of a share, make arrangements or provide
reasonable opportunity for any person entitled to a fractional interest in
a share to sell such fractional interest or to purchase such additional
fractional interests as may be necessary to acquire a full share, pay in
cash the fair value of fractions of a share as of the time when those
<PAGE>
entitled to receive such fractions are determined, or issue scrip in
registered or bearer form, over the manual or facsimile signature of an
officer of the corporation or its agent, which shall entitle the holder to
receive a certificate for a full share upon the surrender of such scrip
aggregating a full share. A certificate for a fractional share shall,
but scrip shall not unless otherwise provided therein, entitle the holder
to exercise voting rights, to receive dividends thereon and to participate
in any of the assets of the corporation in the event of liquidation.
The Board of Directors may cause scrip to be issued subject to the
condition that it shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the
condition that the shares for which scrip is exchangeable may be sold by
the corporation and the proceeds thereof distributed to the holders of
scrip, or subject to any other conditions which the Board of Directors may
deem advisable. Such conditions shall be stated or fairly summarized on
the face of the certificate.
3. SHARE TRANSFERS. Upon compliance with any provisions restricting
the transferability of shares that may be set forth in the Articles of
Incorporation, these By-Laws, or any written agreement in respect thereof,
transfers of shares of the corporation shall be made only on the books of
the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the corporation, or with a transfer agent or a registrar and
on surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon, if any. Except as may be
otherwise provided by law, the person in whose name shares stand on the
books of the corporation shall be deemed the owner thereof for all purposes
as regards the corporation; provided that whenever any transfer of shares
shall be made for collateral security, and not absolutely, such fact, if
known to the Secretary of the corporation, shall be so expressed in the
entry of transfer.
4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any
other purpose, the Board of Directors of the corporation may provide that
the stock transfer books shall be closed for a stated period but not to
exceed, in any case, sixty days. If the stock transfer books shall be
<PAGE>
closed for the purpose of determining the shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for
at least ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date
as the record date for any such determination of shareholders, such date in
any case to be not more than sixty days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice or to vote
at a meeting of shareholders, or shareholders entitled to receive payment
of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for the
determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided
in this section, the determination shall apply to any adjournment thereof,
unless the Board of Directors fixes a new record date under this section
for the adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of shareholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of
a meeting, as the case may be, the term "share" or "shares" or
"shareholder" or "shareholders" refers to an outstanding share or shares
and to a holder or holders of record of outstanding shares when the
corporation is authorized to issue only one class of shares, and said
reference is also intended to include any outstanding share or shares and
any holder or holders of record of outstanding shares of any class upon
which or upon whom the Articles of Incorporation confer such rights where
there are two or more classes or series of shares or upon which or upon
whom the General Corporation Act confers such rights notwithstanding that
the Articles of Incorporation may provide for more than one class or series
of shares, one or more of which are limited or denied such rights
thereunder.
6. SHAREHOLDER MEETINGS.
- - TIME. The annual meeting shall be held on the date fixed from time to
time by the directors. A special meeting shall be head on the date fixed
from time to time by the directors except when the General Corporation Act
confers the right to call a special meeting upon the shareholders.
<PAGE>
- - PLACE. Annual meetings and special meetings
shall be held at Croton-on-Hudson, NYor at such place within or without
the State of Florida as shall be stated in the notice of any such meeting.
- - CALL. Annual meetings may be called by the directors or the President or
the Secretary or by any officer instructed by the directors or the
President to call the meeting. Special meetings may be called in like
manner or by the holders of at least one-tenth of the shares.
- - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days (or not less than any such other minimum
period of days as may be prescribed by the General Corporation Act) nor
more than sixty days before the date of the meeting, either personally or
by first class mail, by or at the direction of the President, the
Secretary, or the officer or persons calling the meeting to each
shareholder. The notice of any annual or special meeting shall also
include, or be accompanied by, any additional statements, information, or
documents prescribed by the General Corporation Act. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid. When a
meeting is adjourned to another time or place, it shall not be necessary to
give any notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment
is taken, and at the adjourned meeting any business may be transacted that
might have been transacted on the original date of the meeting. If,
however, the Board of Directors shall fix a new record date for the
adjourned meeting, notice of the adjourned meeting shall be given each
shareholder of record on the new record date. Whenever any notice is
required to be given to any shareholder, a waiver thereof in writing signed
by him, whether before or after the time stated therein, shall be the
equivalent to the giving of such notice. Attendance of a shareholder at a
meeting shall constitute a waiver of notice of the meeting, except where
the shareholder attends the meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
<PAGE>
- - VOTING LIST. The officer or agent having charge of the stock transfer
books for shares of the corporation shall make, at least ten days before
each meeting of shareholders, a complete list of the shareholders entitled
to vote at such meeting or any adjournment thereof, with the address of and
the number and class and series, if any, of shares held by, each. Such
list, f or a period of ten days prior to such meeting, shall be kept on
file at the registered office of the corporation in the State of Florida,
at the principal place of business of the corporation or at the office of
the transfer agent or registrar of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder at any
time during the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such list
or transfer books or to vote at any meeting of shareholders.
- - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over
by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice Chairman of the
Board ' if any, the President, a Vice President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen
by the shareholders. The Secretary of the corporation, or in his absence,
an Assistant Secretary, shall act as secretary of every meeting, but, if
neither the Secretary nor an Assistant Secretary is present, the Chairman
of the meeting shall appoint a secretary of the meeting.
- - PROXY REPRESENTATION. Every shareholder or his duly authorized attorney-
in-fact may authorize another person or persons to act for him by proxy in
all matters in which a shareholder is entitled to participate, whether for
the purposes of determining his presence at a meeting, or whether by
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting, or otherwise. Every proxy
shall be signed by the shareholder or by. his duly authorized attorney-in-
fact, and filed with the Secretary of the corporation. No proxy shall be
valid after eleven months from the date thereof, unless otherwise provided
in the proxy. Except as may otherwise be provided by the General
corporation Act, any proxy may be revoked.
<PAGE>
- - QUORUM. A majority of the shares shall constitute a quorum.
- - VOTING. Except as the General Corporation Act, the Articles of
Incorporation, or these By-Laws shall otherwise provide, the affirmative
vote of the majority of the shares represented at the meeting, a quorum
being present, shall be the act of the shareholders. After a quorum has
been established at a shareholders I meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shareholders at the meeting
below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
7. WRITTEN ACTION. Any action required to be taken or which may be
taken at a meeting of the shareholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders and
shall be filed with the Secretary of the corporation. Less than all
shareholders may act in like manner upon compliance with the provisions of
Section 607.394 of the General Corporation Act.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS GENERALLY - COMPENSATION. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its Board of Directors.
The Board may fix the compensation of directors.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person
of full age. A director need not be a shareholder, a citizen of the United
States, or a resident of the State of Florida. The initial Board of
Directors shall consist of one {amended to five 9/95) persons, which is the
number of directors fixed in the Articles of Incorporation, and which shall
be the fixed number of directors until changed. The number of directors may
be increased or decreased by an amendment of these By-Laws or by the
directors or shareholders, but no decrease in the number of directors shall
have the effect of shortening the term of any incumbent director. The
number of directors shall never be less than one. The full Board of
Directors shall consist of the number of directors fixed herein.
<PAGE>
3. ELECTION AND TERM. The initial Board of Directors shall consist of
the directors named in the Articles of Incorporation, each of whom shall
hold office until the first annual meeting of shareholders and until his
successor has been elected and qualified or until his earlier resignation,
removal from office or death. Thereafter, each director who is elected at
an annual meeting of shareholders, and any director who is elected in the
interim to fill a vacancy or a newly created directorship, shall hold
office until the next succeeding annual meeting of shareholders and until
his successor has been elected and qualified or until his earlier
resignation, removal from office or death. In the interim between annual
meetings of shareholders or of special meetings of shareholders called for
the election of directors, any vacancies in the Board of Directors,
including vacancies created by reason of an increase in the number of
directors, and including vacancies resulting from the removal of directors
by the shareholders which have not been filled by said shareholders" may be
filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum exists.
4. MEETINGS.
- - TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after
its election as the directors may conveniently assemble.
- - PLACE. Meetings shall be held at such place within or without the State
of Florida as shall be fixed by the Board.
- - CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by the Chairman
of the Board, if any,, the Vice Chairman of the Board, if any, or the
President, or by any two directors.
- - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice or waiver of notice of any meeting need not
specify the business to be transacted or the purpose of the meeting. Any
<PAGE>
requirement of furnishing a notice shall be waived by any director who
signs a waiver of notice before or after the meeting. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting
and a waiver of any and all objections to the place of the meeting, the
time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not
lawfully called or convened.
- - QUORUM AND ACTION. A majority of the full Board of Directors shall
constitute a quorum except as may be otherwise provided in the Articles of
Incorporation. Except as herein otherwise provided, and except as may be
otherwise provided by the General Corporation Act or the Articles of
Incorporation, the act of the Board shall be the act of a majority of the
directors present at a meeting at which a quorum is present.
Members of the Board of Directors may participate in a meeting of said
Board by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other at the same time, and participation by such means shall be
deemed to constitute presence in person at a meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and
place of the adjourned meeting are announced at the time of the
adjournment, to the other directors.
- - CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be
presided over by the following directors in the order of seniority and if
present and acting the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President, or any other director chosen by the
Board.
5. REMOVAL OF DIRECTORS. At a meeting of shareholders called
expressly for that purpose, the entire Board of Directors or any individual
director may be removed from office with or without cause by the vote of
the shareholders holding at least a majority of the shares. In case the
entire Board or any one or more directors be so removed, new directors may
be elected at the same meeting.
<PAGE>
6. COMMITTEES. Whenever the number of directors shall consist of
three or more, the Board of Directors, may, by resolution adopted by a
majority of the full Board, designate from among its members an Executive
Committee and one or more other committees, each of which, to the extent
provided in the resolution, shall have and may exercise all of the
authority of the Board of Directors except such authority as may not be
delegated under the General Corporation Act.
7. WRITTEN ACTION. Any action required to be taken at a meeting of
directors, or any action which may be taken at a meeting of directors or of
a committee thereof, if any, may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all of
the directors or all of the members of the committee, as the case may be.
ARTICLE III
OFFICERS
The corporation shall have a President, a Secretary, and a Treasurer, each
of whom shall be elected by the directors from time to time, and may have
one or more Vice Presidents and such other officers and assistant officers
and agents as may be deemed necessary, each or any of whom may be elected
or appointed by the directors or may be chosen in such manner as the
directors shall determine. Any two or more offices may be held by the same
person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of shareholders and until his successor
has been elected and qualified.
The officers and agents of the corporation shall have the authority and
perform the duties in the management of the corporation as determined by
the resolution electing or appointing them, as the case may be.
The Board of Directors may remove any officer or agent whenever in its
judgment the best interests of the corporation will be served thereby.
<PAGE>
ARTICLE IV
REGISTERED OFFICE AND AGENT - SHAREHOLDERS RECORD
The address of the initial registered office of the corporation and the
name of the initial registered agent of the corporation, whose address is
the same as that of the registered office is set forth in the original
articles of incorporation.
The corporation shall keep at its registered office in the State of Florida
or at its principal place of business, or at the office of its transfer
agent or registrar, a record of its shareholders, giving the names and
addresses of all shareholders and the number, class and series, if any, of
the shares held by each shareholder and shall keep on file at said
registered office the voting list of shareholders for a period of at least
ten days prior to any meeting of shareholders.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the corporation
and shall be in such form and contain such other words and/or figures as
the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The Board of Directors shall have power to adopt, alter, amend or repeal
the By-Laws. Any provisions for the classification of directors for
staggered terms shall be authorized by the Articles of Incorporation or by
specific provisions of a By-Law adopted by the shareholders. By-Laws
adopted by the Board of Directors or by the shareholders may be repealed or
changed and new By-Laws may be adopted by the shareholders. The
shareholders may prescribe in any By-Law made by them that such By-Law
shall not be altered, amended or repealed by the Board of Directors.
<PAGE>
I HEREBY CERTIFY that the foregoing is a full,true and correct copy
of the By-Laws of Sloan Electronics Inc., a corporation of the State
of Florida, as in effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: 7/19/93
/s/ Larry Provost
- -----------------
Secretary of
(SEAL)
[SEAL]
<PAGE>
Sloan Electronics, Inc.
Amendment to
ARTICLE I
SHAREHOLDERS
8. PREEMPTIVE RIGHTS
Each shareholder shall have the right to purchase, in proportion to his/her
existing holdings, any additional shares of stock in the event that more
stock of the same class is issued by the corporation so that each
shareholder's percentage of ownership of the corporation shall be
maintained.
Dated 7/19/93
/s/ Larry Provost
<PAGE>
SHAREHOLDERS' RESOLUTION TO AMMEND BYLAWS
Sloan Electronics, Inc.
RESOLVED: The Bylaws of of Sloan Electronics, Inc. known as Article
II be amended to allow for 5 members to the Board of Directors.
The undersigned, Larry Provost, certifies that I am the duly appointed
Secretary of Sloan Electronics, Inc. Corporation and that the above is a
true and correct copy of a resolution duly adopted at a Meeting of the
shareholders thereof, convened and held in accordance with law and the
Bylaws of said Corporation on Dec. 9, 1995, and that such resolution is
now in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary
of Sloan Electronics, Inc. Corporation and have attached the
seal of Sloan Electronics, Inc. Corporation to this resolution.
Dated:Dec. 9, 1995
/s/ Larry Provost
- -----------------
Secretary
(SEAL)
<PAGE>
SHAREHOLDERS' RESOLUTION
ON BOARD OF DIRECTORS' AUTHORITY TO AMEND BYLAWS
Sloan Electronics, Inc.
RESOLVED, that the Board of Directors of Sloan Electronics, Inc.
Corporation is hereby granted the authority to amend, alter, add to,
repeal, rescind or change in any other way any and all of the Bylaws of
this Corporation as the Board of Directors shall deem fit and proper, and
such authority shall not require either any action or consent by of from
the shareholders of the Sloan Electronics, Inc. Corporation; and it is
FURTHER RESOLVED, that the shareholders are to retain the right to revoke
the above grant of authority to the directors. Such revocation shall be
made by a resolution adopted by the holders of a majority of the Sloan
Electronics, Inc. Corporation's stock entitled to vote at a duly convened
meeting of shareholders. Unless and until such revocation action is taken
by the shareholders, the shareholders shall not exercise their power, under
Article VII of the Bylaws to amend, alter, add to, repeal, rescind or
change in any way the Bylaws of the Sloan Electronics, Inc. Corporation.
The undersigned, Larry Provost, certifies that I am the duly appointed
Secretary of Sloan Electronics, Inc. Corporation and that the above is a
true and correct copy of a resolution duly adopted at a Meeting of the
shareholders thereof, convened and held in accordance with law and the
Bylaws of said Corporation on Dec. 9, 1995, and that such resolution is now
in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary
of Sloan Electronics, Inc. Corporation and have attached the
seal of Sloan Electronics, Inc. Corporation to this resolution.
Dated:Dec. 9, 1995
/s/Larry Provost
- ----------------
Secretary
(SEAL)
NUMBER SHARES
SLOAN ELECTRONICS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
PAR VALUE $0.001 CUSIP NO. 831501 10 1
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE
OF $0.001 EACH OF
SLOAN ELECTRONICS, INC.
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned by the Transfer Agent
and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED:
/s/ Paul Sloan
PRESIDENT Countersigned and Registered:
/s/ Larry Provost SIGNATURE STOCK TRANSFER, INC.
SECRETARY/TREASURER/CHAIRMAN (Dallas, Texas) Transfer Agent
By
Authorized Signature
[SEAL]
<PAGE>
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-___Custodian___
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN(J/T)-as joint tenants with right of under Uniform Gifts to
survivorship and not as tenants Minors Act ___________
in common (State)
Additional abbreviations may also be used though not in the above list
For Value Received ______________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
________________________________________________________________________
________________________________________________________________________
_________________________________________________________________ Shares
of the Capital Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint _____________________ Attorney
to transfer the said Stock on the books of the written-named Corporation
with full power of substitution in the premises.
Dated _________ X_________________________________________
________________________ _________________________________________
SIGNATURE GUARANTEE NOTICE:THE SIGNATURE TO THIS AGREEMENT
(BY BANK, BROKER, MUST CORRESPOND WITH THE NAME AS WRITTEN
CORPORATE OFFICER) UPON THE FACE OF THE CERTIFICATE, IN
EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
MAS Financial Corp.
1922 North Bedford Ave. Tel: (812) 468-8250
Evansville, IN 47711 Fax: (812) 468-8251
- ----------------------------------------------------------------
Consulting Agreement
This agreement is entered into on this 28th day of October, 1997
by and between MAS Financial Corp. (hereinafter referred to as
"MAS"), and Sloan Electronics, Inc., their heirs, designees or
assignees, (hereinafter referred to as "Client"), and is made
with reference to the following recitations:
Whereas, MAS has skills and expertise in the fields of business
consulting, due diligence, mergers and acquisitions, and public
and private offering structuring and transactions, and,
Whereas, for the purpose of advancing the business plans of
Client, Client wishes to contract for the control stock of an
acquisition company from MAS, and,
Whereas MAS owns or controls the control stock of MAS
Acquisition I Corp. (hereinafter referred to as "Acquisition"
company, a corporation organized under the laws of the State
of Delaware, having those classes and numbers of shares as
more fully set forth on the company information sheet
attached hereto and made a part hereof by reference.
MAS has control of Acquisition company and is prepared to
transfer the control block. Now, therefore, the parties
hereto hereby agree and covenant as follows:
(1) MAS agrees to take certain actions, and undertake
certain obligations for the orderly transfer of the
control block of stock of Acquisition company.
(comprised of 7,652,790 common capital shares of the
total of 8,503,100 common capital shares), to Client.
MAS agrees as well to do all of the following acts:
* Name Change and New Stock Certificates
* Unaudited financial statements brought forward
to most recent period.
* Change of officers and directors and resignation
of present board
* 15C211 prepared and filed with NASD.
* Deliver control block shares.
* Obtain CUSIP number.
* Obtain a stock symbol for trading on the NASDAQ
Bulletin Board
* Furnish Market Maker.
* Any other document or act needed to make an
orderly transfer of control.
All expenses incurred by the Acquisition company, after
the transfer of control by MAS to the Client, shall be
the responsibility of the Acquisition company.
(2) At closing, which shall take place at a time and
place mutually agreeable to the parties hereto, MAS
shall deliver to Client or its designee the following:
(a) Certificates representing the shares being sold
hereunder; containing the following legend:
"The securities represented by this Certificate have
not been registered under the Securities Act of 1933
(the "Act") and are "Restricted Securities" as the term
is defined in Rule 144 under the Act. The Common
Shares may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration
statement under the Act or exemption, the availability
of which is to be established to the satisfaction of
the Corporation."
(b) Necessary consents, if any, from the state of
domicile of the Acquisition company;
(c) All corporate books, records, and documents,
stock books, ledgers, minute books, articles
and by-laws of the Acquisition company;
<PAGE>
(d) Shareholder list of the Acquisition company;
(e) Resignations of all present officers and directors,
effective as of the closing date;
(f) Copy of audited 1996 and unaudited 1997
financial statements;
(3) MAS represents and warrants the following:
(a) that the Acquisition company is a corporation duly
organized and existing under the laws of the State of
Delaware, unless otherwise noted;
(b) that the Acquisition company will use its best
efforts to preserve its business organization intact.
(c) that the Acquisition company will not enter into
any contract, commitment or transaction, or declare,
set aside or pay any dividend, or make any distribution
in respect of its capital stock, or waive any
obligation or liability, or compromise any claim, or
cancel any note, loan or other obligation owed to it,
without the consent of Client.
(4) MAS represents and warrants the following prior
to closing:
(a) That MAS will not cause any amendment to be made
in the Articles of Incorporation or By-Laws of the
Acquisition company, nor issue or cause to be issued
any additional shares of capital stock; nor issue or
cause to be issued any warrants, obligations,
subscriptions, options, convertible securities, or
other commitments under which any additional shares
of its capital stock may be directly or indirectly
authorized, issued or transferred nor will either
agree to do any of the acts listed above.
(b) That MAS will not do, or agree to do, any of the
following acts: (i) make any change in compensation
payable or to become payable to them, to any officer,
employee, sales agent or representative, (ii) make
any change in benefits payable to any officer,
employees, sales agent, or representative under any
bonus or pension plan or other contract or commitment,
or (iii) modify any collective bargaining agreement
to which the Acquisition company is a party or by
which it may be bound.
(5) Client represents and warrants the following
prior to closing:
(a) That Client is solely responsibly for the
decision to by acquired by the Acquisition company,
(b) That the Client firm to be acquired by the
Acquisition company which is the subject of this agreement
shall be suitable in all respects for such merger,
(6) The parties shall at all times keep each other's
information, sources, trade secrets, processes, and
confidential information strictly confidential.
(7) MAS is not rendering legal advise to Client. Each
party is responsible for all of it's own professional,
legal, accounting, Broker-Dealer, and consulting fees
as they may apply to each party.
(8) Should Client terminate this transaction for any
reason other than the malfeasance or nonperformance of
MAS prior to the acquisition of the Acquisition company,
all monies paid to MAS up until that point shall be
retained by MAS as liquidated damages. The parties agree
to the reasonableness of these liquidated damages.
All documents and work product prepared for or on
behalf of Client by MAS up until that point shall
become the property of Client.
(9) MAS warrants that the Acquisition company being
transferred shall be transferred with no liabilities
and little or no assets, and shall defend and hold
Client and the Acquisition company harmless against
any action by any third party against either of them
arising out of, or as a consequence of, any act or
omission of MAS or the Acquisition company prior to,
or during the closing contemplated by this contract
of sale. MAS reserves the right, if necessary, to
substitute another Acquisition company acceptable
to Client of like worth.
<PAGE>
(10) All of the representations and warranties contained
within this contract of sale, whether made by Client,
MAS, or MAS on behalf of the Acquisition company, will
be true and correct on the closing date as if made
on that date.
(11) At any time prior to the closing, Client and their
counsel, accountants and other agents shall have full
access during normal business hours to all properties,
books, accounts, records, contracts and documents
relating to the Acquisition company.
(12) This agreement shall be governed by the laws of
the State of Indiana, except insofar as the laws of the
State of Delaware shall apply in keeping with conflict
of laws and rules, in any dispute. The parties agree to
the jurisdiction of the Courts of the State of Indiana
and the United States District Court for the Southern
District of Indiana as the forums for the resolution of
any legal disputes between the parties. Client agrees
to pay court costs, attorney fees in a reasonable amount,
and interest on any unpaid balances at the judgment rate
then in effect in the State of Indiana should it become
necessary for MAS to engage in legal action to recover
any portion of the purchase price or any other fees
from Client.
(13) If any bona fide action or proceeding shall be pending
against any party on the closing date that could result
in an unfavorable judgment, decree or order that would
prevent or make unlawful the performance of this agreement,
or if any agency of the federal or of any state government
shall have objected to it on or before the closing date to
this transaction, or if any prospectus contemplated with
respect to the issuance and sale of shares by Buyers shall
have been disapproved by any federal or state regulatory
agency, either party may cancel and terminate this agreement
without liability to the other. All representations and
warranties of the parties shall expire and terminate and
be extinguished by the closing, and consummation of the
closing shall be conclusive proof that each party is fully
satisfied with the facts constituting the basis of the
representations and warranties of the other party and
with the performance of their obligations hereunder.
This paragraph shall not affect any obligation of any
party under this contract that is permitted to be
performed in whole or in part after the closing.
(14) Neither party may assign this agreement without the
prior written consent of the other party, which consent
shall not be unreasonably withheld. However, MAS may
requires up to 180 days to perform due diligence on
any assignee of Client, and may reject any assignee
not qualified by MAS.
(15) This documents contains the entire agreement between
the parties hereto. No oral or other representation or
warranty has been given to Client by MAS, and this
agreement controls over any and all oral representations
made by any party to this transaction. This agreement
may only be modified by a writing, signed by the parties.
(16) Each party agrees to execute all of the documents
and do all of the things necessary to effectuate the
purpose of this agreement, without delay or limitations.
Accepted and Agreed: Accepted and Agreed:
/s/ Aaron Tsai /s/ Paul Sloan
_____________________________ _______________________
MAS Financial Corp. Sloan Electronics, Inc.
By: Mr. Aaron Tsai, President By: Mr. Paul Sloan
Mailing Address:
MAS Financial Corp. Sloan Electronics, Inc.
1922 North Bedford Ave. P.O. Box 35287
Evansville, IN 47711 Sarasota, FL 34242
Agreement
Agreement made as of the 22 day of November, 1996, by and between Sloan
Electronics, Incorporated, a Florida corporation, maintaining its
principal business offices at 4860 Featherbed Lane, Sarasota, FL 34242
(Hereinafter referred to as "Manufacturer") and Response USA, Inc., a
Delaware corporation, maintaining its principal business offices at 11-H
Princess Road, Lawrenceville, NJ 08648 (Hereinafter referred to, together
with its affiliates, as "Distributor").
WITNESSETH:
WHEREAS, Manufacturer manufactures Wander Watch SPS-100 and the MPSC50
multi-resident system and desire to market said products.
WHEREAS, the distributor has proven to Manufacturer that it is capable
of providing the marketing efforts desired by Manufacturer.
WHEREAS, the Manufacturer has proven it can design and produce the
quality and quantity of products required by the Distributor.
NOW, THEREFORE, by reason of these premises and in consideration of the
mutual covenants herein set forth, the parties hereto agree as follows.
1. Definitions.
For the purpose of this Agreement, the following items shall be defined
as indicated below:
1.1 SPS-100 Product" shall mean Manufacturer's items designated as
"Wander Watch SPS-100' and any additions, revisions and/or
modifications thereto.
1,2 "MPS-C50 Product" shall mean Manufacturer's item designated as
"Wander Watch MPS-C50 multi-resident system" and any additions,
revisions and/or modifications thereto.
1.3 "Products' shall mean the SPS-100 Product and the MPS-C50 Product.
1.4 "Customer" shall mean the initial purchaser from the Distributor
(which is generally a Healthcare Institution).
1.5 "End-User" shall mean the person who purchases a Product for
use, and not for resale (generally the customer of the Customer),
<PAGE>
1.6 "Healthcare Industry" shall mean that segment of the economy
engaged in the provision and/or delivery of medical and healthcare
services to individuals.
1.7 "Healthcare Institutions" shall mean the businesses and
governmental agencies engaged in the Healthcare Industry, including but
not limited to hospitals, pharmacies, nursing associations, home health
care delivery organizations, and municipal, state and federal agencies
providing for the delivery of and/or reimbursement for home healthcare
services,
1.8 "Distributor's Healthcare Distribution Network" shall mean the
Distributor's existing and future network of Healthcare Institutions and
persons that Distributor now or in the future may market its Personal
Emergency Response Systems ("PERS") to, including but not limited to
dealers and franchisees of Distributor and end-users of Distributor's
PERS.
Appointment of Distributor.
2.1 During the term of this Agreement, manufacturer hereby
designates, the Products. The Distributor shall have the exclusive
worldwide Healthcare Industry rights to the SPS-100 Product which shall
entitle the Distributor to have the exclusive right to sell the SPS-100
Product worldwide to Healthcare Institutions and to individuals through
Distributor's Healthcare Distribution Network. The Distributor shall
have non-exclusive worldwide rights to the MPS-CSO Product which shall
entitle the Distributor to have non-exclusive right to sell the MPS-CSO
Product worldwide, Other than KingAlarm Distributors, Inc., of New Jersey
("KingAlarm"), the Manufacturer agrees to refrain from appointing other
distributors of the SPS-100 Product and from selling the SPS-100 Product
itself at the retail or wholesale level (including sales to Healthcare
Institutions, dealers and End-Users) and that any orders submitted to
the Manufacturer for the SPS-100 Product from the Healthcare Industry
shall be directed to the Distributor.
2.2 Manufacturer hereby grants the Distributor a license to use the
trademarks and service marks of the Products and the trade name "SEI" to
identify the manufacturer of the Products.
<PAGE>
2.3 In the event that. (a) with respect to calendar year 1997,
Distributor fails to use reasonable efforts to fully and effectively
promote the We of the SPS-100 Product to the Healthcare Industry, (b)
with respect to calendar year 1998, Distributor's not sales of the SPS-100
Product for such year are not at least 20% greater than its net sales of
the SPS-100 Product for 1997 (and such shortfall is not due to any
breach of this Agreement by the Manufacturer), of (c) with respect to any
calendar year after 1998, Distributor's net sales of the SPS-100 Product
for such year are not at least 20% greater than its net sales of the
SPS-100 Product for the preceding year (and such shortfall is not due to
any breach by the Manufacturer) and during each such year Distributor
fails to use reasonable efforts to fully and effectively promote the sale
of the SPS-100 Product to the Healthcare Industry, then in any such case
Manufacturer shall have the right, by written notice given to Distributor
within 90 days after the end of the relevant calendar year, to cause
Distributor's rights to distribute the SPS-100 Product hereunder to the
Healthcare Industry to become non-exclusive, effective 90 days after the
date such notice is given. If Distributor's right to distribute the SPS-100
Product to the Healthcare Industry becomes non-exclusive, then
Manufacturer shall have the right to market and sell the SPS-100 Product
itself and/or to appoint other distributors of the SPS-100 Product to the
Healthcare Industry.
3. Distributor's Rights and Obligations.
During the term of this Agreement, the Distributor shall:
3.1 The Distributor shall provide Manufacturer with data regarding the
location of all products identified by a serial number from Manufacturer,
provided that Manufacturer agrees to keep all such data (including the
identities of Customers and End-Users) confidential and not to disclose
it to any third party or use it for any purpose other than in connection
with recalls of Products or as otherwise required by law.
3.2 The Distributor shall have the right to use any and all of the
Manufacturer's marketing tools, resources, Healthcare Industry customer
lists and Healthcare Industry customer inquiries, and any related
information or supplies related to the Products and market as may be
appropriate, in connection with the marketing and sale of the SPS-100
Product.
3.3 The Distributor, upon receipt of a written release and consent
in satisfactory form from KingAlarm as described in Section 4.6 below,
shall pay to Manufacturer a licensing fee 'in the amount of $35, 000.
Such fee will include the development of the Communications Package
described in Section 4.7 below.
3.4 Distributor shall not produce any product(s) which could be
considered directly competitive with the product line currently known
as Wander Watch SPS-100.
<PAGE>
4. Manufacturer's Rights and Obligations.
4.1 Manufacturer shall manufacture quality Products ready for resale
at mutually agreed upon time frames using quality components and good
manufacturing procedures. Manufacturer shall deliver Products within a
reasonable time after receipt of Distributor's orders.
4.2 Manufacturer shall allocate such time and financial resources as
it deems necessary and appropriate for research and development to improve
the Products in accordance with changes in the industry, advancements in
technology, recommendations from the Distributor and its agents in
comparison with competition, knowledge gained by Manufacturer, and related
enterprises.
4.3 Manufacturer shall not produce any product(s) which could be
considered directly competitive with the product line currently known as
Wander Watch SPS-100.
4.4 Manufacturer shall continue its best efforts to enhance and
expand Products to help Distributor meet its twenty percent (20%) sales
increase requirements in order to maintain exclusivity under Section 2.3.
4.5 Manufacturer will not use the Distributor's name or logo in any
advertising or promotional materials without the prior written approval
of such materials by the Distributor.
4.6 Manufacturer shall, as a condition to the effectiveness of this
Agreement and payment of the fee described in Section 3.3 above, obtain
a release and consent from KingAlarm Distributors, Inc. of New Jersey,
permitting Manufacturer to enter into this Agreement with Distributor.
4.7 Manufacturer shall develop a digital communicator for the
Products to communicate to standard receivers used at Distributor's central
station (the "Communications Package'). Manufacturer shall use its
best efforts to complete its research and development of the
Communications Package in order that the Products may be manufactured
with the Communications Package fully installed, and available for
distribution on or before 60 days following the execution of this Agreement.
5. Training and Related Expenses.
5.1 Each of the parties hereto shall bear its own expenses for
travel and training. In the event that Distributor desires to have
individuals under its control attend meetings with Manufacturer, it
will contact Manufacturer so that a mutually agreeable time and place
can be established for the meetings.
<PAGE>
6. Warranty, Maintenance and Repairs.
6.1 Manufacturer shall issue a limited warranty on the Products as
published in its current promotional materials, a copy of which is
attached hereto as Schedule "B". The limited warranty shall provide
for the right to return the Product for credit (in the full amount of
the purchase price) within 60 days of the date of purchase by the
Customer and for the repair or replacement of the Product at no charge
for parts or labor for two years (except transmitter batteries which
shall be for one year) from the date of purchase by the Customer, and
shall exclude any consequential damages the purchaser may suffer. The
Distributor shall be allowed to pass the Warranty to the Customer and
to the End-user.
6.2 The Manufacturer shall provide basic trouble-shooting to the
Distributor and to its Customers for any Product under warranty during
the Term of this Agreement and for two years following the term of this
Agreement.
6.3 If Manufacturer shall at its sole option decide to repair an
item under warranty, it shall make such repairs in a timely manner at the
expense of Manufacturer, and return the Product directly to the
Customer, the EndUser, or the Distributor when directed.
6.4 Products not under warranty shall be subject to the following
repair procedure. A reasonable repair cost estimate shall be made by
Manufacturer and reported immediately to the Distributor for information
and instruction as to whether to repair or not. If directed by the
Distributor to go ahead and repair, Manufacturer will repair items for
the reasonably stated estimate, upon written request by Distributor.
Distributor shall pay the costs for the repair within 30 days of
delivery of the repaired Product. Costs shall include, but not be limited
to, labor, shipping, and parts.
7. Purchase.
7.1 Distributor hereby places an initial pre-production purchase
order for 100 units of the SPS-100 Product with the Communications
Package.
7.2 Distributor shall pay for all Products delivered within
forty-five (45) days of receipt, except that the initial purchase
referred to in Section 7. 1 shall be paid for within thirty (30) days
of receipt.
<PAGE>
7.3 The Distributor shall purchase mutually agreed upon quantities
of the Products at the prices shown on "Schedule A" pricing from
Manufacturer attached hereto. Any price change must be reasonable and
in line with the electronics/computer industry (but in no event to
exceed 10 % per annum) = and shall not become effective until 60 days
after the Manufacturer notifies the Distributor of such change or, if
later, such effective date as may be specified by the Manufacturer.
A schedule of Products shall be published in January of each year.
Each order for Products shall be made by:
A. A Purchase Order signed by an authorized officer or employee of
the Distributor, and
B. Payment in the amount of one-half the order amount to the
Manufacturer's assembly firm (to be named upon receipt Of P.O.) to be
placed in escrow pending receipt of the Products by Distributor.
8. Assignment.
8.1 The parties shall not assign or otherwise transfer this
Agreement or any interest or rights herein without the prior written
consent of the other party. Any such purported assignment, transfer or
attempt to assign or transfer any interest or right herein, without
the prior written consent of the other party, shall be null and void,
and of no effect. Notwithstanding the foregoing, either party may
assign this Agreement without the consent of the other party in
connection with the sale of the business of such party, whether by
sale of assets, merger or otherwise, and Distributor may assign this
Agreement to any of its subsidiary companies.
9. Municipal Bids.
9.1 Manufacturer expressly waives the right to sell directly to any
government entities engaged in the Healthcare Industry.
10. Commercial Sales.
10.1 Manufacturer retains the right to market and sell the SPS-100
Product solely in connection with sales of the MPS-C50 Product by
Manufacturer. The SPS- 100 product is supplied in connection with the
MPS-C50 Product as a demonstrator only, and numbers supplied have been
limited. The provisions of this Section 10.1 shall not be construed as
restricting the Distributor or its Customers from selling the SPS-100
Product in connection with sales of the MPS-C50 Product.
<PAGE>
ii. Term of Agreement.
11.1 This Agreement shall become effective upon the date first
written (hereinafter the "effective date") and shall be for a term of two
(2) years commencing on the date that the Products containing the
Communications Package are available for purchase. The Agreement shall be
automatically renewed on a year-to-year basis thereafter unless either
of the parties fail to conform to the terms and conditions hereof.
The party alleging that the other party has failed to so conform
shall sixty (60) days prior to the expiration of the term notify
the other party as to the particulars of its allegation of
non-conformance and its desire to terminate this Agreement.
11.2 Either party may terminate this Agreement in the event that the
otherparty materially breaches this Agreement and fails to cure such
breach within 30 days after written demand therefor.
12. Indemnification and Insurance.
12.1 Distributor shall indemnify and hold harmless Manufacturer and
its directors, officers, employees and agents from and against any all
losses, liabilities, damages and expenses (including reasonable
attorney Is fees and expenses) which it may incur or be obligated
to pay in any action, claim of proceeding against it, for or by
reason of any negligence of misconduct by Distributor or any of its
agents or employees in connection with Distributor's performance of
this Agreement. The provisions of this Section and Distributor's
obligations hereunder shall survive any termination of this Agreement.
12.2 Except to the extent Manufacturer is entitled to be indemnified
by Distributor pursuant to Section 12.1 hereof, Manufacturer shall
indemnify and hold harmless Distributor and its directors, officers,
employees and agents from and against any and all losses, liabilities,
damages and expenses (including reasonable attorney's fees and expenses)
which it may incur or be obligated to pay in any action, claim or
proceeding against it arising out of or relating to the manufacture,
distribution, promotion, or use by Customers or End-Users of the
Products distributed by Distributor hereunder. The provisions of this
Section and Manufacturer's obligations hereunder shall survive any
termination of this Agreement.
<PAGE>
12.3 Manufacturer shall indemnify and hold harmless Distributor and
its directors, officers, employees and agents from and against any and
all such losses, liability, damages and expenses (including reasonable
attorney's fees and expenses) which any of them may incur or be
obligated to pay in any action, claim or proceeding against any of
them for infringement of any other persons patent rights, trademark
rights or other proprietary rights, but only where such action, claim
or proceeding results from the activities of Distributor contemplated
by the Agreement conducted in accordance with the terms of this
Agreement. Distributor shall give Manufacturer prompt written notice
of any such claim or action and thereupon Manufacturer shall
undertake and conduct the defense of any suit so brought.
Distributor shall have the right to participate in the defense of
any such claim of action at its expense through counsel of its
choosing. In the event appropriate action is not taken by Manufacturer
within 10 days of its receipt of notice from Distributor or
Manufacturer fails to diligently pursue the defense of such claim
thereafter, Distributor shall have the right to defend such claim
or action in its own name, but no settlement or compromise of any
such claim or action may be made without prior written approval
of Manufacturer (which approval shall not be unreasonably
withheld or delayed). In either case, Manufacturer and Distributor
shall keep each other fully advised of all developments and shall
cooperate with each other in all respects in connection with any
such defense as is made. The provisions of this Section and
Manufacturer's obligations hereunder shall survive any termination
of this Agreement.
12.4 Commencing on or before the date on which Manufacturer first
ships Products to Distributor hereunder, Manufacturer shall obtain and
maintain at least $2 million of products liability insurance coverage
with respect to the Products distributed by Distributor hereunder, with
a deductible per occurrence of no more than the customary deductible
for products liability insurance in the electronics/computer industry,
but in any event no more than $15,000, at Manufacturer's expense, and
shall cause Distributor to be named as an additional named insured on
the policy under which such insurance is provided. Manufacturer shall
maintain "tail" insurance coverage, of the same type, amount and
deductible as it is required to maintain during the term of this
Agreement, for a period of two years after termination of this
Agreement for any reason whatsoever.
13. Miscellaneous.
13.1 Neither party shall represent itself as the agent or legal
representative of the other party or shall have any right to create or
assume any obligation of any kind, express of implied, for or on behalf
of the other party in any way whatsoever. This Agreement and the
performance by any party under this Agreement shall not be deemed to
create a relationship other than as independent contractors.
13.2 This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and this Agreement may not be
amended or modified, except in a writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Sloan Electronics Response USA
By /s/ Paul A. Sloan By /s/ Richard M Brooks
Its President Its President and COED
<PAGE>
SCHEDULE A
Initial preproduction order of 100 units of SPS-100 Products $400.00 per
Unit*
Minimum Orders of:
0-100 units of SPS-100 Products $ per Unit*
101-500 units of SPS-100 Products $ per Unit*
Over 500 units of SPS-100 Products $ per Unit*
0-100 units of MPS-CSO Products $ per Unit*
101-500 units of MPS-C50 Products $ per Unit*
Over 500 units of MPS-C50 Products $ per Unit*
In addition to the above price, Distributor shall pay to Manufacturer a
portion of the monthly monitoring fee equal to (deleted) XX% of such fee or
$XX (whichever is lower) derived from central station monitoring
revenues actually received from Customers or End Users of the Products
during the Term of this Agreement.
*Including a built-in digital communicator. The prices are to be
mutually agreed upon between Manufacturer and Distributor following
receipt of the initial 100 preproduction order of SPS100 Products.
<PAGE>
AGREEMENT
Agreement made as of the 8th day of December, 1995, by and between Sloan
Electronics, Incorporated, a corporation, maintaining its principal
business offices at 4860 Featherbed Lane, Sarasota, FL 34242
(hereinafter referred to as "Manufacturer ") and KingAlarm Distributors,
Inc. of New Jersey, a New Jersey corporation., maintaining its principal
business offices at 35 Green Street, Hackensack, NJ 07601 (hereinafter
referred to, together with its affiliates, as "Distributor").
WITNESSETH:
WHEREAS, Manufacturer manufactures Wander Watch SPS-100 and the MPS-C50
multiresident system and desires to market said products.
WHEREAS, the Distributor has proven to Manufacturer that it is capable
of providing the Marketing efforts desired by Manufacturer.
WHEREAS, the Manufacturer has proven it can design and produce the
quality and quantity of products required by the Distributor.
NOW THEREFORE, by reason of these premises and in consideration of the
mutual covenants herein set forth, the parties hereto agree as follows:
1. Definitions For the purpose of this Agreement, the following
items shall be defined as indicated below:
1.1 "SPS-100 Product" shall mean Manufacturer's item designated as
"Wander Watch SPS-100" and any additions, revisions and/or modifications
thereto.
1.2 "MPS-C50 Product" shall mean Manufacturer's item designated as
"Wander Watch MPS-C50 multi-resident system" and any additions,
revisions and/or modifications thereto.
1.3 "Products" shall mean the SPS-100 Product and the MPS-C50
Product.
1.4 "Customer" shall mean the initial purchaser from the
distributor(which is generally a dealer).
1.5 "End-User" shall mean the person who purchases a Product for use
and not for resale (generally the customer of the Customer).
<PAGE>
2. Appointment of Distributor
2.1 During the term of this Agreement, manufacturer hereby
designates, constitutes, and appoints the Distributor to market
and solicit orders of the Products. The Distributor shall have
exclusive worldwide rights to the SPS-100 Product which shall
entitle the Distributor to have the exclusive right to sell
the SPS-100 Product worldwide. The Distributor shall have
non-exclusive worldwide rights to the MPS-C50 Product which shall
entitle the Distributor to have, the non-exclusive, right to sell
the MPS-C50 Product worldwide. The Manufacturer agrees to retrain
from appointing other distributors of the SPS-100 Product and from
selling the SPS-100 Product itself at the retail level (including
sales to dealers and End-User) and that any orders submitted to
the Manufacturer for the SPS-100 Product shall be directed to
the Distributor.
2.2 Manufacturer hereby grants the Distributor a license to use the
trademarks and service marks of the Products and the trade name, SEI, to
identify. the manufacturer of the Products.
2.3 In the event that (a) with respect to calendar year 1996,
Distributor fails to use reasonable efforts to fully and effectively
promote the sale of the SPS-100 Product in the geographic area
in which Distributor promotes the sale of other products it
distributes, (b) with respect to calendar year 1997, Distributor's
net sales of the SPS-100 Product for such year are not at least
20% greater than its net sales of the SPS-100 Product for 1996
(and such shortfall is not due to any breach of this Agreement
by the Manufacturer), or (c) with respect to any calendar
year after 1997, Distributor's net sales of the SPS-100 Product
for such year are not at least 20% greater than its net sales of
the SPS-100 Product for the preceding year (and such shortfall
is not due to any breach of this Agreement by the Manufacturer)
and during such year Distributor fails to use reasonable efforts
to fully and effectively promote the sale of the SPS-100 Product
in the geographic area in which Distributor promotes the
sale of other products it distributes, then in any such case
Manufacturer shall have the right, by written notice given to
Distributor within 90 days after the end of the relevant calendar
year, to cause Distributor's rights to distribute the SPS-100
Product hereunder to become non-exclusive, effective 90 days
after the date such notice is given. If Distributor's right
to distribute the SPS-100 Product becomes non-exclusive, then
Manufacturer shall have the right to market and sell the SPS-100
Product itself and/or to appoint other distributors of the SPS-100
Product.
<PAGE>
3. Distributors Rights and Obligations
During the term of this Agreement, the Distributor shall:
3.1 The Distributor shall provide Manufacturer with data regarding
the location of all products identified by a serial number from
Manufacturer, provided that Manufacturer agrees to keep all such data
(including the identities of Customers and End-Users) confidential
and not to disclose it to any third party or use it for any purpose
other than in connection with recalls of Products or as otherwise
required by law.
3.2 The Distributor shall have the right to use any and all of the
Manufacturer's marketing tools, resources, customer lists and customer
inquiries, and any related information or supplies related to the
Products and market as may be appropriate, in connection with the
marketing and sale of the SPS-100 Product.
4. Manufacturers Rights and Obligations
4.1 Manufacturer shall manufacture quality Products ready for resale
at mutually agreed upon time frames using quality components and good
Manufacturing Procedures. Manufacturer shall deliver Products within a
reasonable time after receipt of Distributor's orders.
4.2 Manufacturer shall allocate such time and financial resources as
it deems necessary and appropriate for research and development to improve
the Products in accordance with changes in the industry, advancements in
technology, recommendations from the Distributor and its agents in
comparison with competition, knowledge gained by Manufacturer, and
related enterprises.
4.3 Manufacturer shall not produce any product(s) which could be
considered directly competitive with the product line currently known as
Wander Watch SPS-100.
4.4 Manufacturer shall continue its best efforts to enhance and
expand Products to help Distributor meet its twenty percent (20%) sales
increase requirements in order to maintain exclusivity under Section 2.3.
4.5 Manufacturer will not use the Distributor's name or logo in any
advertising or promotional materials without the prior written approval
of such materials by the Distributor.
5. Training and Related Expenses
5.1 Each of the parties hereto shall bear its own expenses for
travel and training. In the event that Distributor desires to have
individuals under its control attend meetings with Manufacturer,
it will contact Manufacturer so that a mutually agreeable time and
place can be established for the meetings.
<PAGE>
6. Warranty, Maintenance, and Repairs
6.1 Manufacturer shall issue a limited warranty on the Products as
published in its current promotional materials. The limited warranty
shall provide for the right to return the Product for credit (in the
full amount of the purchase price) within 60 days of the date of
purchase by the Customer and for the repair or replacement of the
Product at no charge for parts or labor for one year from the date
of purchase by the Customer, and shall exclude any consequential
damages the purchaser may suffer. The Distributor shall be allowed
to pass the Warranty to the Customer and to the End-User.
6.2 The Manufacturer shall provide basic troubleshooting to the
Distributor and to its Customers for any Product under warranty during
the Term of this Agreement.
6.3 If Manufacturer shall at its sole option decide to repair an
item under warranty, it shall -strive to make such repairs in a
timely manner at the expense of Manufacturer, and return the Product
directly to the Customer, or to the Distributor when directed.
6.4 Products not under warranty shall be subject to the following
repair procedure. A repair cost estimate shall be made by Manufacturer
and reported immediately to the Distributor for information and
instruction as to whether to repair or not. If directed by the
Distributor to go ahead and repair, Manufacturer will repair items
for the reasonably stated estimate, upon written request by Distributor.
Distributor shall pay the costs for the repair within 30 days of
delivery of the repaired Product. Costs shall include, but not be
limited to, labor, shipping, and parts.
7. Purchases
7.1 Distributor and Manufacturer hereby acknowledge that an initial
purchase will be agreed upon during December 1995.
7.2 Distributor shall pay for all Products delivered within
forty-five (45) days of receipt, except that the initial purchase
referred to in Section 7.1 shall be paid for within thirty (30)days
of receipt.
7.3 The Distributor shall purchase Mutually agreed upon quantities
of the Products at the prices shown on "Schedule A pricing from
Manufacturer attached hereto. Any price change must be reasonable
and in line with the electronics/computer industry and shall not
become effective until 60 days after the Manufacturer notifies the
Distributor of such change or, if later, such effective date as may
be specified by the Manufacturer. A schedule of Products shall be
published in January of each year.
<PAGE>
8. Assignment
8.1 The parties shall not assign or otherwise transfer this
Agreement or any interest or rights herein without the prior
written consent of the other party. Any such purported assignment,
transfer or attempt to assign or transfer any interest or right
herein, without the prior written consent of the other party,
shall be null void, and of no effect. Notwithstanding the
foregoing, either party may assign this Agreement without the
consent of the other party in connection with the sale of the
business of such party, whether by sale of assets, merger or otherwise.
9. Municipal Bids
9.1 Manufacturer retains the right to sell directly to all
government entities through their Invitations to Bid, except
government entities in states in which the Distributor has a branch
(as of the time of the Invitation to Bid); provided that the
foregoing shall not be construed to restrict the Distributor or
its Customers from selling to government entities through
Invitations to Bid, in competition with the Manufacturer
or otherwise.
10. Commercial Sales
10.1 Manufacturer retains the right to market and sell the SPS-100
Product solely in connection with sales of the MPS-C50 Product by
Manufacturer. The SPS-100 product is supplied in connection with the
MPS-C50 Product as a demonstrator only, and numbers supplied hive
been limited. The provisions of this Section 10.1 shall not be
construed as restricting the Distributor or its Customers from
selling the SPS-100 Product in connection with sales of the
MPS-C50 Product.
11. Term of Agreement
11.1 This Agreement shall become effective upon the date above first
written (hereinafter the "effective date") and shall be for a term of
three (3) years. The Agreement shall be automatically renewed on a
year-to-year basis thereafter unless either of the parties fail to
conform to the terms and conditions hereof. The party alleging that
the other party has failed to so conform shall sixty (60) days prior
to the expiration of the term notify the other party as to the
particulars of its allegation of nonconformance and its desire to
terminate this Agreement.
11.2 Either party may terminate this Agreement in the event that the
other party materially breaches this Agreement and fails to cure such
breach within 30 days after written demand therefor.
<PAGE>
12. Indemnification and Insurance
12.1 Distributor shall indemnify and hold harmless Manufacturer from
and against any and all losses, liabilities, damages and expenses
(including reasonable attorney's fees and expenses) which it may incur
or be obligated to pay in any action, claim or proceeding against it,
for or by reason of any negligence or misconduct by Distributor or any
of its agents or employees in connection with Distributor's performance
of this Agreement. The provisions of this Section and Distributor's
obligations hereunder shall survive any termination of this Agreement.
12.2 Except to the extent Manufacturer is entitled to be indemnified
by Distributor pursuant to Section 12.1 hereof, Manufacturer shall
indemnify and hold harmless Distributor from and against any and
all losses, liabilities, damages and expenses (including reasonable
attorney's fees and expenses) which it may incur or be obligated to
pay in any action, claim or proceeding against it arising out of or
relating to the manufacture, distribution, promotion, sale or use by
End-Users of the Products distributed by Distributor hereunder. The
provisions of this Section and Manufacturer's obligations hereunder
shall survive any termination of this Agreement.
12.3 Manufacturer shall indemnify and hold harmless Distributor and
its directors, officers, employees and agents from and against any
and all losses, liability, damages and expenses (including reasonable
attorney's fees and expenses) which any of them may incur or be
obligated to pay in any action, claim Or proceeding against any of
them for infringement of any other person's patent rights, trademark
rights or other proprietary rights, but only where such action, claim
or proceeding results from the activities of Distributor contemplated
by this Agreement conducted in accordance with the terms of this
Agreement. Distributor shall give Manufacturer prompt written
notice of any such claim or action and thereupon Manufacturer
shall undertake and conduct the defense of any suit so brought.
Distributor shall have the right to participate in the defense of
any such claim or action at its expense through counsel of its
choosing. In the event appropriate action is not taken by
Manufacturer within 10 days of its receipt of notice from Distributor
or Manufacturer fails to diligently pursue the defense of such
claim thereafter, Distributor shall have the right to defend such
claim or action in such claim thereafter of any such claim or
action may be its own name, but no settlement or compromise
made without prior written approval of Manufacturer (which approval
shall not be unreasonably withheld or delayed). In either case,
Manufacturer and Distributor shall keep each other fully advised
of all developments and shall cooperate with each other in all
respects in connection with any such defense as is made. The
provisions of this Section and Manufacturer's obligations hereunder
shall survive any termination of this Agreement.
<PAGE>
12.4 Commencing on or before the date on which Manufacturer first
ships Products to Distributor hereunder, Manufacturer shall obtain and
maintain at least $2 million of products liability insurance
coverage with respect to the Products distributed by Distributor
hereunder, with a deductible per occurrence of no more than the
customary deductible for products liability insurance in the electronics/
computer industry, but in any event no more than $15,000, at
Manufacturer's expense, and shall cause Distributor to be named as an
additional named insured on the policy under which such insurance
is provided. Manufacturer shall maintain "tail" insurance coverage,
of the same type, amount and deductible as it is required to
maintain during the term of this Agreement, for a period of two years
after termination of this Agreement for any reason whatsoever.
13. Miscellaneous
13.l Neither party shall represent itself as the agent or legal
representative of the other party or shall have any right to create or
assume any obligation of any kind, express or implied, for or on behalf
of the other party in any way whatsoever. This Agreement and the
performance by any party under this Agreement shall not be deemed to
create a relationship other than as independent contractors.
13.2 This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and this Agreement may not be
amended or modified, except in a writing signed by both parties hereto.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Sloan Electronics KingAlarm Distributors, Inc.
of New Jersey
By: /s/ Michael Solomon By: /s/ Allen D Sagat
Its: Vice President Its: Senior VP
<PAGE>
ADDENDUM
Addendum to Agreement of December 8, 1995 (the "Agreement"), made as of
the 18" day of November, 1996, by and between Sloan Electronics, Inc.
("Manufacturer") and KingAlarm Distributors, Inc. of New Jersey
("Distributor"):
Manufacturer and Distributor hereby agree as follows:
1. The following Sections 1.6 and 1.7 are hereby added to Section 1
of the Agreement:
1.6 "Health Care Products Dealer" shall mean a person or entity that
is engaged primarily in the business of selling products to Health Care
Providers.
1.7 "Health Care Provider" shall mean a person or entity that is
engaged primarily in the business of providing health care.
2. Section 2.1 of the Agreement is hereby amended by adding the
following language at the end of the second sentence:
:provided, however, that the Distributor shall have no right to sell the
SPS-100 Product to any Customer that is a Health Care Products Dealer or
a Health Care Provider. The foregoing shall not prohibit any Customer of
the Distributor that is not a Health Care Products Dealer from selling
the SPS-100 Product to Health Care Providers.
3. Section 2.1 of the Agreement is hereby further amended by adding
the following language at the end of the last sentence:
:provided, however, that (a) the Manufacturer may grant to other
distributors the right to sell the SPS-100 Product to Health Care
Products Dealers and/or Health Care Provides, (b) the Manufacturer
itself may sell the SPS-100 Product to Health Care Products Dealers
and/or Health Care Providers, and (c) the Manufacturer is not obligated
to direct to the Distributor any orders for the SPS-100 Product
submitted to the Manufacturer by Health Care Providers or Health Care
Products Dealers.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the day and year written above.
SLOAN ELECTRONICS, INC. KINGALARM DISTRIBUTORS, INC.
OF NEW JERSEY
By: /s/ Paul A Sloan By: /s/ Allen D Sagat
Its: President Its: President
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Sloan Electronics, Inc.
By: /s/ Paul Sloan
----------------------------------
Paul Sloan
President, Chief Executive Officer
and Director
Date: March 31, 1998
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual
Report on Form 10-KSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
By: /s/ Larry Provost April 2, 1998
--------------------------------------
Chairman of the Board of Directors,
Secretary and Chief Financial Officer.
By: /s/ Paul A. Sloan March 31, 1998
--------------------------------------
President, Chief Executive Officer
and Director.
By: /s/ Michael Soloman April 2, 1998
--------------------------------------
Senior Vice President and Director.
By: /s/ Lester H. Cohen April 2, 1998
--------------------------------------
Vice President - Marketing and
Director.
By: /s/ James Vondra April 2, 1998
--------------------------------------
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at December 31, 1997 and Income Statement for the year
ended December 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,936
<SECURITIES> 0
<RECEIVABLES> 89,732
<ALLOWANCES> 0
<INVENTORY> 10,151
<CURRENT-ASSETS> 103,819
<PP&E> 1,887
<DEPRECIATION> 773
<TOTAL-ASSETS> 238,903
<CURRENT-LIABILITIES> 146,116
<BONDS> 0
0
0
<COMMON> 278,792
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 238,903
<SALES> 332,677
<TOTAL-REVENUES> 332,677
<CGS> 261,412
<TOTAL-COSTS> 298,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,098
<INCOME-PRETAX> (227,370)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227,370)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
