UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended - June 30, 1999
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
Salient Cybertech, 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)
1751 Stickney Pt,. Rd, Sarasota FL 34231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(941)349-6583
Sloan Electronics, Inc.
(Former name, former address and former fiscal year if changed since
last report)
Indicate by check mark whether the Registrant (1) has filed all
reports 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 [ ]
As of June 30, 1999, the Registrant has outstanding
11,647,749 shares of Common Stock, $.001 par value.
Documents Incorporated by Reference
Certain exhibits listed in Item 6 of Part II have been incorporated by
reference. An index to exhibits appears with Item 6.
<PAGE>
THIS QUARTERLY REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS
QUARTERLY 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.
Salient Cybertech, Inc.
Form 10-QSB
Quarterly Report, period ended June 30, 1999
INDEX page number
PART I Financial Information
Item 1. Financial Statements
Accountants' Compilation Report F1
Statements Of Financial Condition F2
Statements Of Operations F3
Statement Of Changes In Stockholders' Equity F4
Statements Of Cash Flows F5
Item 2. Management's discussion and analysis of
financial conditions and results of operations.
Part II. Other Information
<PAGE>
July 28, 1999
TO THE BOARD OF DIRECTORS
Salient Cybertech, Inc.
(formerly known as Sloan Electronics, Inc.)
Sarasota, Florida
ACCOUNTANTS' COMPILATION REPORT
We have compiled the accompanying statements of financial condition of Salient
Cybertech, Inc. (formerly known as Sloan Electronics, Inc.), as of June 30,
1999 and December 31, 1998, the related statements of changes in stockholders'
equity for the periods then ended, and the statements of operations for the
three and six month periods ended June 30, 1999 and 1998 and cash flows for
the six month periods ended June 30, 1999 and 1998, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required
by generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for
those who are not informed about such matters.
/s/ Bobbitt, Pittenger & Company, P.A.
Certified Public Accountants
<PAGE>
SALIENT CYBERTECH, INC.
(FORMERLY KNOWN AS SLOAN ELECTRONICS, INC.)
STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
1999 1998
ASSETS
Cash $ 906 $ 19,792
Accounts receivable - net 15,508 12,126
Inventory 21,108 27,171
Prepaid insurance 13,063 26,422
Prepaid legal fees 316,667
Prepaid consulting fees 316,667
Deferred syndication costs 100,000 100,000
-------- --------
TOTAL CURRENT ASSETS 783,919 185,511
EQUIPMENT - NET 1,444 1,892
-------- --------
$ 785,363 $ 187,403
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 88,137 $ 79,736
Accrued expenses 125,752 117,442
Accrued interest 9,775 8,650
Accrued interest - related party 60,459 41,189
Notes payable 25,094 41,718
Notes payable - related party 242,200 210,000
-------- --------
TOTAL CURRENT LIABILITIES 551,417 498,735
STOCKHOLDERS' EQUITY
Common stock - authorized 80,000,000
shares; par value $.001; issued and
outstanding, 11,647,749 and 10,635,249
shares at June 30,1999 and December
31, 1998, respectively 11,648 10,635
Additional paid-in capital 1,432,180 603,134
Due from officer (33,565) (33,565)
Accumulated deficit (1,176,317) (891,536)
------------ ----------
TOTAL STOCKHOLDERS' EQUITY 233,946 (311,332)
------------ ----------
$ 785,363 $ 187,403
============= ============
F2 See accountants' compilation report.
<PAGE>
SALIENT CYBERTECH, INC.
(FORMERLY KNOWN AS SLOAN ELECTRONICS, INC.)
STATEMENTS OF OPERATIONS
Six months Three months Six months Three months
ended ended ended ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
SALES $ 13,417 $ 8,589 $ 37,886 $ 24,032
COST OF SALES 8,621 4,122 19,924 15,078
---------- ----------- ----------- -----------
GROSS PROFIT 4,796 4,467 17,962 8,954
EXPENSES
Selling 38,970 12,607 970 903
General and
administrative 255,212 161,792 198,520 111,711
Interest 20,395 10,773
---------- --------- --------- ---------
314,577 185,172 199,490 112,614
----------- --------- --------- ---------
NET LOSS (309,781) (180,705) (181,528) (103,660)
OTHER INCCOME 25,000 25,000
---------- --------- --------- ---------
LOSS BEFORE
INCOME TAXES (284,781) (155,705) (181,528) (103,660)
INCOME TAXES
---------- ---------- ---------- ----------
NET LOSS $(284,781) $(155,705) $(181,528) $(103,660)
NET LOSS
PER SHARE $ (.025) $ (.025) $ (.019) $ (.010)
============== ============= ============= =============
F3 See accountants' compilation report.
<PAGE>
SALIENT CYBERTECH, INC.
(FORMERLY KNOWN AS SLOAN ELECTRONICS, INC.)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
Common Paid-in Due from Accumulated
Stock Capital Officer Deficit Total
BALANCE,
Jan. 1, 1998 $ 9,189 $ 376,497 $(33,565) $(591,407) $(239,286)
Sale of
common stock 225 64,775 65,000
Stock issued
for services 111 10,889 11,000
Stock issued in
private placement
offering 1,000 99,000 100,000
Note payable
converted to
common stock 110 51,973 52,083
Net loss (300,129) (300,129)
---------- ---------- --------- ---------- ---------
BALANCE,
Dec. 31, 1998 10,635 603,134 (33,565) (891,536) (311,332)
Sale of
common stock 13 9,987 10,000
Stock issued
for services 1,000 799,000 800,000
Stock issued as
compensation 20,059 20,059
Net loss (284,781) (284,781)
---------- ---------- --------- ---------- ---------
BALANCE,
June 30, 1999 $11,648 $1,432,180 $(33,565) $1,176,317 $ 233,946
========== ========== ========== ========== ==========
F4 See accountants' compilation report.
<PAGE>
SALIENT CYBERTECH, INC.
(FORMERLY KNOWN AS SLOAN ELECTRONICS, INC.)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
June 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(284,781) $(181,528)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 448 14,697
Forgiveness of accounts payable 800,000
Stock issued for services 20,059
Noncash disbursements 11,000
Decrease in operating assets:
Accounts receivable - net (3,382) 72,966
Inventory 6,063 (15,508)
Prepaid insurance 13,359
Prepaid legal fees (316,667)
Prepaid consulting fees (316,667)
Deferred syndication costs
Increase in operating liabilities:
Accounts payable 8,401 (31,773)
Accrued expenses 8,310
Accrued interest 20,395 13,600
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (44,462) (116,546)
--------- ---------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of equipment (903)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 35,200 40,000
Proceeds from sale of common stock 10,000 105,000
Repayments of loans (19,624)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 25,576 145,000
-------- --------
NET (DECREASE) INCREASE IN CASH (18,886) 27,551
CASH, at beginning of period 19,792 3,936
-------- --------
CASH, at end of period $ 906 $ 31,487
============= ===========
F5 See accountants' compilation report.
<PAGE>
June 30,
1999 1998
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ 562
Non cash financing activity - note payable
of $50,000 and accrued interest of $2,083
converted to 110,000 shares of common stock
in the year ended December 31, 1998
Non cash financing activity - stock issued for prepaid
legal fees 500,000 shares, valued at $400,000
Non cash financing activity - stock issued for prepaid
consulting fees 500,000 shares, valued at $400,000
Non cash financing activity - stock options
issued for compensation 30,000 shares,
compensation valued at $20,059
<PAGE>
Part I. Item 2. Description of business and management's discussion
Salient Cybertech, Inc. (the "Company") is the new name for Sloan Electronics,
Inc. authorized by the shareholders at the Annual Shareholders' Meeting on May
22, 1999 and approved by the Board of Directors on May 22, 1999. The company,
through the Sloan Electronics division will continue to design, manufacturer
and market electronic monitoring equipment for the criminal justice industry
and the long-term health care industry. It will market house arrest
monitoring equipment through its in-house marketing department and currently
distributes its products through national service providers. The Sloan
Electronics division has a distribution agreement with Response USA, a
distributor of personal emergency response systems. King Alarm, a
security product distributor, previously was an exclusive distributor of
Company products to the security industry, has been sold to ADI, a subsidiary
of Pitway Corp, and is no longer an active distributor.
Salient Cybertech, Inc. is actively seeking acquisition candidates with
interests in technology, internet, distance learning, and security industries.
During the second quarter 1999, acquisition discussions were held with several
companies.
The Company's revenues are currently primarily from product sales. Based on a
written agreement, the Company is to receive recurring payments from Response
USA based on a percentage of their service revenue. The Company received
recurring revenue from Response USA in the first quarter of 1999, and will
receive recurring revenue for the second quarter of 1999.
MAS Acquisition I Corp., 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 changed its name to Sloan Electronics, Inc., and
in May 1999 changed its name to Salient Cybertech, Inc.
Sloan Electronics Division Products
Information sheets and video clips of some of the company's products are
available from the company web site at salientcyber.com.
Criminal Justice:
The Sloan Electronics division offers a full range of electronic monitoring
equipment for the criminal justice house arrest corrections programs and for
the medical industry's long-term health care providers. We believe our
equipment strikes a balance between solid, state-of-the-art, high-quality
products and competitive price.
The concept behind the product line is that each product is able to stand
alone, without additional equipment such as door sensors or custom wiring,
yet each product is integratable with a number of pre-existing computer
software programs. This philosophy of integration makes the SEI Alert
products and Wander Watch products more attractive to institutional
consumers.
<PAGE>
The SEI Alert 24 Single Offender Based System. A tamper-proof transmitter is
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 by modem to an outside monitoring station within 4 minutes.
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
predetermined 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 on a house arrest
client simply by driving past the offender'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 monitors the portable
programmable receiver unit which alerts the officer in the event that an
offender, or group of offenders, leaves the general area.
The SEI Alert 24 Automated Check In System. A kiosk for the criminal
justice industry to facilitate the "day reporting" of offenders 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 improves a parole officer's efficiency in
managing the growing number of inmates released into supervision programs.
It is currently in field trial in Washington state for the Department of
Corrections. The Company is pursuing license agreements with prospective
customers.
Medical Monitoring:
The Wander Watch Single Patient System. An adjustable, tamper-proof anklet is
fitted 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 determines the proximity of the patient to the base
unit. An alarm will sound when the patient travels beyond the selected
range or if the anklet is removed. This alarm can be transmitted by
telephone to a central station using industry standard alarm protocols.
Dispatchers at the central station can then take the appropriate responses,
such as calling the caregiver, notifying a neighbor, or calling emergency
services.
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 caregiver 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.
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 available for field trials.
Other products:
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. This system is available for field
trials.
INDUSTRY BACKGROUND
The Corrections Industry. The United States currently locks up a greater
share of its residents than any other nation. According to the US
Department of Justice there were 3.5 million people on probation or parole at
year end 1995, and the estimated 5.5 million total in the correctional
population equals 2.8% of US adults and is growing at 4.5% per year. 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 the nonviolent segment of the prison
population, and as a better way to monitor criminals once they are paroled to
a half-way house facility. The public's insistence on increased law
enforcement along with their reluctance to fund additional prisons also
makes house arrest using electronic assisted monitoring systems an
increasingly attractive alternative to incarceration.
<PAGE>
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, a common
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. However, the
huge costs associated with institutionalized care, along with its
impersonal nature, make at-home care an important option for many families. Of
the 4 million currently diagnosed with Alzheimer's, 3 million live at home,
cared for by family, visiting aides, and nurses supplied by the estimated
18,000 at-home care agencies which are projected to grow 30% every two
years. The Sloan electronic Wander Watch Alert 24 systems are designed to
help at-home caregivers and institutions safeguard patientsprone to
wandering.
The US Administration on Aging projects as many as 14.3 million Alzheimer's
cases by 2040. The Company believes that the long-term healthcare segment of
the medical industry is growing at an increasing rate. The Sloan
Electronics Wander Watch Alert 24 Multi-Patient system is designed for long
term care facilities. 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. These systems not only help protect the
patient, but they also give the at-home caregiver peace of mind that their
loved one will not wander off at night or when the caregiver is momentarily
distracted.
BUSINESS STRATEGY
The Company's electronics 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, we
believe that our products are among the best currently available in
these two industries.
Until recently, Management has defined the Company's role as primarily a
manufacturer who markets products directly to the criminal justice
industry, while relying on distributors such as Response USA to market its
Wander Watch healthcare product line. However, Management recognizes that
there are many business opportunities for the Company in addition to
its electronic monitoring business. Consequently, the Board of Directors
recommended to the shareholders a name change to reflect their decision
to divide operations into multiple divisions with operations in the
technology, internet distance learning and electronics industry sectors.
Shareholders' approval was obtained at the Annual Meeting of Shareholders on
May 22, 1999. One of the proposed new technology divisions will provide
distance learning over the internet. During the second quarter, we have been
negotiating with Gemini Learning Systems, Inc., a Canadian company that has
<PAGE>
developed and markets a "Cyber Learning" engine which allows existing
curricula to be quickly and easily adapted to internet and new media
distribution and therefore be available worldwide. In addition, we are
presently evaluating a number of other strategic relationships with
established businesses in the internet, electronics and technology industries
as well as the criminal justice industry with a view towards acquiring
existing profitable businesses, along with management teams, as operating
divisions. These acquisitions, if realized, will provide both horizontal and
vertical integration for the Company.
To further the Company's goals and improve shareholder value through
acquisitions, management has taken steps to promote the company to
investors in order to improve share price. A strong price with good daily
volume will allow the company to raise the additional capital needed to grow
the core business, and to fuel expansion into other businesses through
acquisitions for stock. To these ends, the Company has hired David
Feingold,Esq. of Feingold & Kam. As corporate attorney specializing in
corporate issues that affect emerging companies, Mr. Feingold is working
with management to position the Company as a holding company with interests in
the Internet and technology sectors. The company has also hired Baxter Banks
and Smith to act as investment bankers and to assist in fund raising and
various acquisition projects. The company also retained Dayton Scott
Associates, Inc. to act as consultants under a one year agreement to improve
shareholder value by promoting the company. Dayton Scott Associates received
500,000 shares as compensation in the second quarter of 1999, however,
management concluded that their course of conduct was detrimental to the
company and its shareholders and is seeking a return of the compensation.
High-Quality Image. We believe that within the house arrest and medical
monitoring industries, the Company has built a reputation for developing
and manufacturing some of the best, cost-effective and user-friendly
systems on the market. The Wander Watch products and the SEI Alert 24
products reflect our commitment to quality; the highest standards in
design, assembly and appearance of products. We recognize that product
dependability and reliability are highly significant to success.
Therefore, quality control and customer satisfaction play an important role
in our 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 them a competitive advantage in these areas.
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 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 ability to upgrade its equipment in the field not
only gives a competitive advantage within the industry, but also
allows us to focus on up-selling and upgrading its product line.
PRODUCT DESIGN AND DEVELOPMENT
The Sloan Electronics division 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. 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 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. We then create full
documentation and design all circuitry artwork. Complete product
specifications and 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 products to
distributors or directly to customers.
SALES AND MARKETING
The marketing strategy varies based upon each product line. With regard to
the criminal justice house arrest market, we plan to continue to market SEI
Alert 24 products to independent service providers and to municipalities
which monitor and administer their own house arrest programs. The Board of
Directors has created the position of Vice President of Sales and named
Donald Grimes to the post. Mr. Grimes has extensive experience in the
criminal justice monitoring industry. In addition, the company is seeking
strategic associations with other companies to develop and market enhanced
products for the criminal justice industry. 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. We also sell
directly to independent security companies who distribute to end users.
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 several 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 is 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.
<PAGE>
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 other equipment 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.
The Wander Watch Products. We view our role in the medical monitoring
industry as that of developer, designer and manufacturer. To that end, we
have negotiated and signed contracts with Response USA to distribute
wander alert detection equipment. 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, and began
receiving income from recurring monthly fees in the first quarter of 1999,
and will receive payments for the second quarter of 1999. 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.
Advertising. The Company has advertised in trade publications specific to
the markets it manufacturers products for, and in journals which publish
company-by-company product comparisons. We are constantly seeking out
innovative ways to build name recognition within the industries in which we
compete, as well as to create public awareness for its product line. The
Company maintains a web site at www.salientcyber.com .
COMPETITION
The Company competes in a number of niche markets, which management
believes will continue to grow.
House Arrest Market. Competitors within the criminal justice market include
BI Incorporated, Strategic Technologies, Inc., and Elmo-Tech Ltd. Although
all of the companies 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 that exist between
cordless phones. Phones using 900 MHz radio frequencies are far superior to
those less expensive models that experience interference problems due to
the fact that they operate at a lower frequency.
<PAGE>
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' equipment, 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 4 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 competitors' use of abusive pricing
policies and proprietary software which is incompatible with standard
central station equipment have worked together to keep independent
contractors out of the market. Using the Company's products, these security
companies are now able to compete with BI Incorporated, Strategic
Technologies, and Elmo-Tech for municipal contracts on an even footing.
Unlike other manufacturers, we do not directly compete against our customers
in the contract monitoring business. However, we are seeking strategic
associations with other companies in the criminal justice monitoring
industry to vertically integrate business and maximize market share.
Long-Term Healthcare Market. 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 wear a low powered transmitter that 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. Our Wander Watch Alert 24
technology has a competitive advantage over proximity-sensing systems since
it requires no additional wiring of door sensors and 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 and magnetic
door locks need to be deactivated.
<PAGE>
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 able to monitor vehicles
and generate 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 tested on a fleet of concrete trucks.
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
All of our electronic products are currently made in the USA. 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, surface
mount technology, 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
We continue to look for new ideas for development of new products, and
believe that new products could represent 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. We are 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 facilities. We believe that we are in compliance in all material
aspects with all applicable environmental and occupational safety
regulations. Our radio frequency anklet transmitter is 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.
YEAR 2000
The Company's products and operations are year 2000 compliant.
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, and in conjunction with the
Balance Sheet at December 31, 1998 and Income Statement for the year ended
December 31, 1998 contained in the Company's Annual Report 10-KSB and in
conjunction with the quarterly 10-QSB reports for the periods ended March
31, 1998 and June 30, 1998, September 30, 1998, and March 31, 1999
incorporated herein by reference, and is qualified in its entirety by
reference to such financial statements and reports.
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 decreased by $24,469 (65%) for the six months
ended June 30, 1999 as compared to the six months ended June 30, 1998
Gross profit for the first half of 1999 decreased to $4,796 compared
to $17,962 for the six months ended June 30, 1998. The decrease is due in
part to lower sales.
General and administrative expenses were $255,212 in the six months
ended June 30, 1999, compared to $198,520 for the first half of 1998. This
represents an increase of 29% over general and administrative expenses for
the first half of 1998. The increase is in part due to increased insurance
costs, professional fees, and contract services and expenses. Sales and
marketing expenses increased to $38,970 for six months ended June 30, 1999.
Sales and marketing expenses increased due to the management fees of VP Sales,
Don Grimes. Management is concerned with the sales performance and
attributes poor results as partially due to lack of funding for inventory.
The commitment to hire a full time sales representative was made to maintain
industry contacts in anticipation of obtaining funds to build inventory.
Interest expenses increased, and are expected to continue to increase as
interest accrues and future debt is incurred.
<PAGE>
The net loss for the six months ended June 30, 1999 was $284,781 or
$0.025 per share based on 11,647,749 shares outstanding, as compared to a
net loss for the first half of 1998 of $181,528, or $0.019 per share. 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 $25,576 for the six
months ended June 30, 1999, raised through private placement of common
stock and borrowing.
The Company has entered into an agreement to acquire Gemini Learning
Systems Inc. for stock and cash during the next half and believes that its
current cash and working capital position and future income from operations
will require sufficient additional capital to meet its cash and working
capital needs.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
The Shareholders', as an anti-takeover provision, at the Shareholders Meeting
on May 22, 1999 approved an amendment to the Articles of Incorporation to
allow for 20 shares of Preferred Stock with no par value convertible at the
will of the holder into 1,500,000 Common Shares.
Item 3. Defaults.
None
Item 4. Submission Of Matters To A Vote Of Security Holders.
(a) At the Annual Shareholders' Meeting held on May 22, 1999 the shareholders
approved items more fully discussed in the DEF14A Proxy Statement filed with
the SEC on April 6, 1999 and incorporated herein by reference.
(b) The following were elected to the Board of Directors,
approved with 6,194,753 "FOR" , 0 "AGAINST" and 0 "WITHELD":
Class I: Jim Marquis, Richard Brooks
Class II: Jim Vondra, Paul Sloan
Class III: Larry Provost
On May 26, 1999 Richard Brooks notified the company that he resigned from the
Board to pursue other business interests. His seat remains vacant.
(c) The following was voted upon at the meeting:
1. The ratification of an anti-takeover amendment to the Company's
Articles to classify the Company's Board of Directors into three classes and
to provide for removal of directors only for cause. 6,194,753 "FOR" , 0
"AGAINST" and 0 "ABSTAIN".
2. The ratification of an anti-takeover amendment to the Company's
Articles to issue previously approved Preferred Stock, which the Company
intends to issue to Larry Provost and Paul Sloan. 6,194,753 "FOR" , 0
"AGAINST" and 0 "ABSTAIN".
<PAGE>
3. The election of two Class I directors to serve until the 2000
Annual Meeting of Stockholders and until their respective successors are
elected and qualified, the election of two Class II directors to serve until
the 2001 Annual Meeting of Stockholders and until their respective successors
are elected and qualified, and The election of one Class III director to serve
until the 2002 Annual Meeting of Stockholders and until his respective
successor is elected and qualified. (See (b) above.)
4. The ratification of the re-appointment of Bobbitt Pittenger and
Company PA, to audit the company's financial statements. 6,194,753 "FOR" , 0
"AGAINST" and 0 "ABSTAIN".
5. The approval by the shareholders of options issued to officers,
directors and consultants of the company under the 1998 Stock Option Plan.
6,194,753 "FOR" , 0 "AGAINST" and 0 "ABSTAIN".
6. Approval for the Board of Directors to change the Company name to
better reflect management's business plan. 6,194,753 "FOR" , 0 "AGAINST" and 0
"ABSTAIN".
7. The transaction of such other business as may properly come before
the meeting or any adjournment thereof: A motion was made that the
shareholders clarify the powers of the Board of Directors, and it was RESOLVED
that The Board of Directors is authorized to take any actions necessary to
further the capital requirements of the Company, including, but not limited
to, requirements of broker/dealers and investment bankers, the re-
capitalization of the company, issuance of new classes of stock, effecting
stock splits or reverse splits, declaring dividends, and issuing warrants.
6,194,753 "FOR" , 0 "AGAINST" and 0 "ABSTAIN".
(d) None
Item 5. Other Information
The Company is discussing the possible acquisition of several companies in
the criminal justice security industry, but has not as of yet signed letters
of intent. These acquisitions, if realized, will allow for vertical
integration of our equipment manufacturing and management capabilities with
municipal contract service providers and client central monitoring facilities.
The Company has discussed possible acquisition with an internet service
provider (ISP) in the North East, but such acquisition is considered unlikely.
Subsequent to the filing period of this report, we have signed a letter of
intent to acquire Gemini Learning Systems, Inc., a Canadian company that has
developed and markets a "Cyber Learning" engine which allows existing
curricula to be quickly and easily adapted to internet and new media
distribution, thereby making it available worldwide. Gemini products are
unique in that their adaptive testing features provide a permanent record of
employees' or students' results. Unlike many other distance learning models,
the Gemini learning paradigm does not require the downloading of courseware,
thereby minimizing pirating and security concerns. Information concerning
Gemini Learning Systems is available at the www.gemini.com website. We believe
that Gemini's existing corporate client base and its growth potential will
represent an important acquisition for Salient Cybertech, and will add
significant shareholder value. A copy of the letter of intent is attached as
an exhibit to this report and provides more specific information concerning
the acquisition. We hope to close on this acquisition as early as the end of
August, 1999 pending completion of due diligence review.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2.0) Plan and Agreement of Merger between MAS Acquisition 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) Articles of Incorporation as filed with the Form 10-SB
Registration Statement on September 4, 1996.
(3.1) Certificate of Amendment to the Certificate of Incorporation as filed
with the Delaware Department of State May 28, 1999.
(3.2) Bylaws of the Company as amended.
(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, filed with form 10-KSB/A April 7, 1998.
(4.2) Specimen Stock Certificate replacing Sloan Electronics, Inc. Stock
Certificate
(4.3) Stock Option Plan approved by shareholders May 16,1998 as filed with
form DEF-14A April 10, 1998.
(10) Material Contracts as filed with the form 10-KSB/A April 7, 1998
(13) Quarterly reports for 1998 filed as 10-QSB on May 14, 1998, 10-QSB/A
on August 20, 1998 and 10-QSB on November 13, 1998. Annual Report
10K-SB for the period ended December 31, 1998 as filed on March 30,
1999. Quarterly report 10QSB for the period ended March 31, 1999 as
filed on May 14, 1999.
(22) Published reports regarding matters submitted to vote as filed with
DEF-14A on April 10, 1998 and DEF-14A as filed on April 6, 1999.
(27) Financial data schedule for electronic filing.
(99.1) Consulting Agreement with Dayton Scott Associates. Inc.
(99.2) Agreement with Baxter Banks & Smith
(99.3) Letter of Intent with Gemini Learning Systems, Inc.
<PAGE>
(b) Reports on Form 8-K
1. Form 8K filed with the Securities and Exchange Commission on May
27,1999 regarding the name change to Salient Cybertech, Inc.
2. Form 8K filed with the Securities and Exchange Commission on June
3,1999 regarding the resignation of a Director.
3. Form 8K/A filed with the Securities and Exchange Commission on May
19,1999 regarding the termination of a letter of intent.
Signatures
In accordance with the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SLOAN ELECTRONICS, INC.
Dated August 13, 1999
By: /s/ Paul Sloan
Paul Sloan
President and CEO
Dated August 13, 1999 By: /s/ Larry Provost
Larry Provost
Chairman and CFO
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
FIRST: That at a meeting of the Board of Directors of SLOAN ELECTRONICS, INC.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said for
considerations thereof. The resolution setting forth the proposed amendment
is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered "FIRST" so that, as amended, said
Article shall be and read as follows:
"The name of the corporation is SALIENT CYBERTECH, INC."
And, by changing the Article thereof numbered "FOURTH" so that, as amended,
said Article shall be and read as follows:
"The total number of shares of stock which the corporation shall have
authority to issue is eighty million and twenty (80,000,020), of which eighty
million (80,000,000) shall be Common shares, the par value of each such share
shall be $.001; and of which twenty (20) shall be Preferred shares, each of
such shares shall be without par value. Each share of Preferred Stock shall
be convertible to one million five hundred thousand share of Common Stock at
the will of the holder of the Preferred Stock."
SECOND: That thereafter, pursuant to resolution of Its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware at which meeting the necessary number of shares
as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said SLOAN ELECTRONICS, INC. has caused this certificate
to be signed by:
Paul Sloan, its President
and Larry Provost, its Secretary,
this 25 th day of May, A.D.1999
/s/ Paul Sloan
/s/ Larry Provost
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/28/1999
991216694 - 2648725
<PAGE>
BY - LAWS
OF
Salient Cybertech, Inc
ARTICLE I
1. SHARE CERTIFICATES. Certificates in such form as may be determined by the
Board of Directors shall be delivered, representing all shares to which
Shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. Each
certificate shall state on the face thereof that the Corporation is organized
under the laws of the State of Delaware, the holder's name, the number and
class of shares, the par value of such shares or a statement that such shares
are without par value, and such other matters as may be required by law.
They shall be signed by the President or a vice-president and
either the Secretary or Assistant Secretary or such other Officer or Officers
as the Board of Directors designates, and may be sealed with the Seal of the
Corporation or a facsimile thereof. If any certificate is countersigned by a
transfer agent, or an assistant transfer agent, or registered by a registrar
(either of which is other than the Corporation or an employee of the
Corporation), the signature of any such Officer may be a facsimile thereof.
Shares both treasury and authorized but unissued may be issued for
such consideration (not less than par value) and to such persons as the Board
of Directors determines from time to time. Shares may not be issued until the
full amount of the consideration, fixed as provided by law, has been paid. In
addition, Shares shall not be issued or transferred until such additional
conditions and documentation as the Corporation (or its transfer agent, as the
case may be) shall reasonably require, including without limitation, the
delivery with the surrender of such stock certificate or certificates of
proper evidence of succession, assignment or other authority to obtain
transfer thereof, as the circumstances may require, and such legal opinions
with reference to the requested transfer as shall be required by the
Corporation (or its transfer agent) pursuant to the provisions of these Bylaws
and applicable law, shall have been satisfied.
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 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.
<PAGE>
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. The corporation
shall refuse to register any transfer of securities unless made in accordance
with the registration or exemptive provisions of the Securities Act, or in
accordance with Regulation S.
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 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.
<PAGE>
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.
- PLACE. Annual meetings and special meetings shall be held at
Croton-on-Hudson, NY or 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, for 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.
- - QUORUM. A majority of the shares shall constitute a quorum.
<PAGE>
- - 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 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. DIRECTORS - ELECTION, TERM AND REMOVAL
The management of all the affairs, property and interests of the
corporation shall be vested in a Board of Directors consisting of not less
than three members, the exact number to be fixed by resolution of the Board of
Directors. Each director shall be a natural person of full age. The Board
shall fix the compensation of directors. The Board of Directors shall be
divided into three classes, respectively designated Class I, II and III, each
class to consist of as close to one-third of the total number of authorized
Directors as possible. The terms of the Directors in Class I shall expire at
the annual shareholders meeting held in 2000, the terms of the Directors in
Class II shall expire at the annual shareholders meeting held in 2001, and the
terms of the Directors in Class III shall expire at the annual shareholders
meeting held in 2002. At annual meetings thereafter, the number of Directors
equal to the number of Directors in the class whose term expires at the time
of such meeting shall be elected to serve until the third ensuing meeting of
shareholders; provided, however, that, if necessary to maintain relative
equality among the classes of Directors created due to vacancies or removals
of Directors, Directors may be elected to a class whose term expires prior to
such third ensuing annual meeting of shareholders. Newly created directorships
resulting from any increase in the number of Directors or any vacancies on the
Board of Directors resulting from death, resignation, removal or other cause
shall be filled by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of the Board of
Directors. Any Director elected to fill a vacancy in accordance with the
preceding sentence shall be of the same class as the Directors he or she
succeeds and shall hold office for the remainder of the full term of such
class, unless, by reason of any previous changes in the authorized number of
Directors, the Board shall designate the vacant directorship as a directorship
of another class in order to achieve more equality in the number of Directors
among the classes. Notwithstanding any of the foregoing provisions of this
Articles, Directors shall serve until their successors are elected and
qualified or until their earlier death, resignation or removal from office, or
until there is a decrease in the number of authorized Directors.
<PAGE>
At any meeting of shareholders called expressly for that purpose, the
entire Board of Directors, or any member thereof, may be removed from office
at any time, but only (i) for Cause and (2) by the affirmative vote of the
holders of not less than two-thirds of the shares entitled to elect the
Director or Directors whose removal is sought. For purposes of this Article
II, "Cause" shall be construed to exist only if the Director whose removal is
proposed (i) has been convicted of a felony by a court of competent
jurisdiction or (ii) has been adjudged by a court of competent jurisdiction to
be liable for engaging in an act involving willful malfeasance which had a
material adverse effect on the corporation. Where a question of the removal of
a Director for Cause is to be presented for shareholder consideration, an
opportunity must be provided such Director to present his or her defense to
the shareholders by a statement which must accompany or precede the notice of
the meeting at which removal of such Director for Cause shall be considered.
Under such circumstances, the Director involved shall be served with notice of
the meeting at which such action is proposed to be taken together with a
statement of the specific charges and shall be given an opportunity to be
present and to be heard at the meeting at which his or her removal is
considered.
The qualifications, manner of election, time and place of meetings, and
powers and duties of the Directors of the corporation shall be as set forth in
the bylaws of the corporation.
2. 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 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.
<PAGE>
- - 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.
3. 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.
4. 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.
5. INDEMNIFICATION.
(a) The Corporation shall have the right to indemnify, to purchase
indemnity insurance for, and to pay and advance expenses to, Directors,
Officers and other persons who are eligible for, or entitled to, such
indemnification, payments or advances, in accordance with and subject to the
provisions of Delaware law, to the extent such indemnification, payments or
advances are either expressly required by such provisions or are expressly
authorized by the Board of Directors within the scope of such provisions. The
right of the Corporation to indemnify such persons shall include, but not be
limited to, the authority of the Corporation to enter into written agreements
for indemnification with such persons.
<PAGE>
(b) Subject to the provisions of the General Corporation Law of Delaware
and any amendments thereto, a Director of the Corporation shall not be liable
to the Corporation or its shareholders for monetary damages for an act or
omission in the Director's capacity as a Director, except that this provision
does not eliminate or limit the liability of a Director to the extent the
Director is found liable for:
(1) a breach of the Director's duty of loyalty to the Corporation or its
shareholders;
(2) an act or omission not in good faith that constitutes a breach of duty of
the Director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which the Director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of
the Directors office; or
(4) an act or omission for which the liability of a Director is expressly
provided by an applicable statute.
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 of the 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 Corporation;
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 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 amend, alter, add to, repeal, rescind or change in
any way the Bylaws of the Corporation.
<PAGE>
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the
By-Laws of Salient Cybertech, Inc., a corporation of the State of Delaware, as
in effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: 05/25/99
Larry Provost
Secretary
(SEAL)
NUMBER SHARES
SALIENT CYBERTECH, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
PAR VALUE $0.001 CUSIP NO. 79471N 10 3
COMMON STOCK
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE
OF $0.001 EACH OF
SALIENT CYVERTECH, 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.
CONSULTING AGREEMENT
This consulting agreement, entered into this 10th day of March, 1999 by and
between Sloan Electronics, Inc., ("Sloan") and Dayton Scott Associates, Inc.,
a Corporation organized under the laws of the State of New York ("Dayton
Scott").
RECITALS
A. Dayton Scott is engaged in the business of consulting with and promoting
public and private companies, to assist them with mergers, acquisitions,
public and private financings, and business development and public relations
services of all types, including, but not limited to; shareholder relations,
market maker relations, stock price support issues, news releases and press
releases.
B. Sloan wishes to engage Dayton Scott as its authorized agent to provide
public relations and other services to Sloan. Dayton Scott shall make all
filings and disclosures required by the Securities and Exchange Commission of
public relations firms concerning this agreement and the carrying out of its
duties and obligations hereunder.
NOW, THEREFORE, the parties agree as follows:
1. TERM. Sloan hereby agrees to utilize the services of Dayton Scott to
provide public relations services to Sloan for a term commencing on the date
hereof and continuing for a period of one year. The term as defined herein
shall be known as the "Initial Term".
2. AUTOMATIC ANNUAL RENEWAL. If this agreement is still in full force and
effect at the end of the Initial Term, it shall be automatically renewed for
successive one year periods thereafter (the "Renewal Term") unless terminated
by Sloan or Dayton Scott upon written notice submitted at lease 10 days prior
to the end of the initial Term or Renewal Term then in effect, and unless
terminated pursuant to the Section entitled "Termination" below.
3. DUTIES. Dayton Scott shall provide public relations services and other
services to Sloan as deemed appropriate in the sole discretion of Dayton
Scott.
4. COMPENSATION. Dayton Scott shall be compensated by Sloan with free trading
common capital shares of Sloan and an option to purchase additional common
shares of Sloan as follows:
A. Free Trading Shares, Sloan shall transfer to Dayton Scott or its designees,
37,500 free trading shares upon execution of this agreement, and 37,500
additional free trading shares thirty days after the execution of this
agreement.
<PAGE>
B. Option Agreement. Sloan hereby grants to Dayton Scott the option to
purchase 250,000 common capital shares of Sloan from Sloan at the purchase
price of $0.01 per share one year from the date of execution of this
agreement.
5. BEST EFFORTS. It is understood that all of the efforts of Dayton Scott
will be on a "best efforts" basis only, and Dayton Scott makes no
representations or warranties whatsoever, particularly with respect to that
the share price or trading volume of the Sloan shares will reach ant
particular level during the term of this agreement.
6. TERMINATION
A. WITH CAUSE. Sloan or Dayton Scott may terminate this agreement for cause at
any time. Cause shall mean (1) a party has committed a crime in the carrying
out of this agreement; (2) a party engages in any act during the term of this
agreement which constitutes fraud or an act of serious moral turpitude; (3) a
party misappropriates a business opportunity, engages in gross negligence or
willful misconduct materially injurious to the other party.
B. WITHOUT CAUSE. Sloan or Dayton Scott may terminate this agreement by mutual
consent, or according to the terms of the Section entitled "Automatic Annual
Renewal" above.
7. CONTRACTING AUTHORITY. Dayton Scott shall have no right to enter into any
agreement on behalf of or in the name of Sloan without the prior approval of
Sloan.
8. NON-CIRCUMVENTION. The parties agree that neither party will make any
contract, contact, or otherwise be involved in any transaction with any entity
introduced by the other party hereto without the permission of the introducing
party.
9. CONFIDENTIALITY. The parties hereto hereby agree to keep confidential all
knowledge, techniques, and information of any related kind and agree not to
reveal any information to anyone concerning knowledge which either party has
delivered from its relationship with the other party.
10. INDEMNIFICATION. Each party agrees to indemnify the other from and against
all liabilities, losses, damages, claims, costs and expenses arising out of or
due to any gross negligence, willful misconduct or breach of this or any other
contract.
11. SURVIVAL. Section 9 of this agreement, entitled Confidentiality, shall
survive the termination of this agreement.
12. INDEPENDENT CONTRACTOR. Dayton Scott will act as an independent contractor
in the performance of its obligations under this agreement.
<PAGE>
13. DISPUTES. In the event that a dispute arises concerning this agreement,
such dispute shall be submitted to binding arbitration before a one-arbitrator
panel of the American Arbitration Association sitting on Long Island, New
York. The decision of the Arbitrator shall be enforceable in the Courts of the
State of New York, and the several states of the United Stated.
14. GOVERNING LAW. This agreement shall be governed by the laws of the State
of New York. No term or condition of this agreement shall be waived except in
writing signed by the party to be changed with the waiver.
15. NOTICES. Any notice required or permitted to be given under this agreement
shall be effective upon delivery in person or mailing by certified mail,
return receipt requested, to the parties at the addresses below.
To Dayton Scott Associates, Inc.
165 European American Bank Plaza, Sixth Floor
Uniondale, New York, 11556
To Sloan Electronics, Inc.
C/o Feingold & Kam
Suite 410
3300 PGA Boulevard
Palm Beach Gardens, FL 33410
16. ASSIGNMENT. Nothing in this agreement prohibits Dayton Scott from
assigning any portion of its obligations to Sloan to other public relations of
related firms, where appropriate. Nothing in this agreement prohibits Dayton
Scott from assigning the option granted to it in Section 4B above.
17. SEVERABILITY. In the event any one or more of the provisions of this
agreement shall for any reason be held invalid, illegal, or unenforceable, the
remaining provisions of this agreement shall be unimpaired.
18. ENTIRE AGREEMENT. This document contains the entire agreement between the
parties. No oral or other representation or warranty has been given to Sloan
by Dayton Scott. This agreement may only be modified in a writing signed by
the party to be charged.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
each executed and delivered this agreement as of the day and year first above
written.
Sloan Electronics, Inc.
Authorized Signature
/s/ Paul Sloan 3/11/99
by:
President
Dayton Scott Associates, Inc.
Authorized Signature
3/10/99 /s/Carl Sampogna as president of Dayton Scott
by: Carl Sampogna
President
<PAGE>
ADDENDUM TO CONSULTING AGREEMENT
This addendum ("Addendum") to the Consulting Agreement dated March 10, 1999
(the "Agreement") between Dayton Scott Associates, Inc ("Dayton Scott") and
Sloan Electronics Inc. ("Sloan") is made this 16 th day of April 1999 by and
between Dayton Scott and Sloan.
Recitals:
WHEREAS, pursuant to the Agreement, Dayton Scott has previously agreed to
provide specified consulting services to Sloan:
WHEREAS, at the time the Agreement was entered into, Dayton Scott And Sloan
shared certain assumptions regarding the amount of work by Dayton Scott which
would be necessary to accomplish the goals of the Agreement:
WHEREAS, the parties now understand that the original goals of the Agreement
cannot be accomplished without a commitment of work and time by Dayton Scott
which would substantially exceed the original assumptions of the parties:
WHEREAS, in addition to the original goals of the Agreement, Sloan now desires
for Dayton Scott to undertake an internet-based marketing and public relations
campaign for Sloan and DNA Progeny, Inc., a new task which is beyond the scope
of the original Agreement; and
WHEREAS, the parties desire to amend and supplement the Agreement to set forth
certain binding commitments relating to the foregoing premises;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements set forth in this
Addendum, Dayton Scott and Sloan hereby agree as follows:
1. Dayton Scott hereby agrees that, in addition to its other obligations under
the agreement, Dayton Scott shall use its best efforts to provide internet-
based public relations services and other internet-based services to Sloan and
DNA Progeny, Inc. as deemed appropriate in the sole discretion of Dayton
Scott. It is understood and agreed by Dayton Scott and Sloan that all of the
best efforts of Dayton Scott pursuant to this paragraph 1 will be on a "best
efforts" basis only, that Dayton Scott makes no representations or warranties
that the share price or trading volume of the Sloan shares will reach any
particular level during the term of this agreement.
2. In consideration of Dayton Scott's agreement contained in paragraph 1 of
this Addendum, Sloan hereby agrees to transfer, or to cause to be transferred,
to Dayton Scott 500,000 shares of common stock of Sloan. Sloan hereby
represents and warrants to Dayton Scott that these shares shall be free
trading stock, and that the certificates representing these shares shall not
contain any restrictive legends. The term "free trading stock" or "free
trading shares" as used in the Agreement and this Addendum, means duly
authorized, validly issued and fully paid shares of common stock of Sloan,
which are freely transferable in the hands of Sloan without registration
pursuant to the Securities Act of 1933, as amended (the "1933 Act"), or the
securities laws of any State, and without limitation on the methods, amounts
and timing of such transfers pursuant to Rule 144, Rule 502(d) or Rule 701(c)
promulgated under the 1933 Act, or pursuant to any other law, rule or
<PAGE>
regulation. The compensation to be paid to Dayton Scott pursuant to this
paragraph 2 shall be in addition to, and not in lieu of, the compensation to
be paid to Dayton Scott pursuant to the Agreement. Any costs or expenses
incurred by Dayton Scott in the performance of its obligations under this
Addendum shall be the sole responsibility of Dayton Scott, and Dayton Scott
shall not be entitled to any reimbursement by Sloan of any such costs or
expenses.
3. The parties acknowledge and agree that Dayton Scott may subcontract or
assign all or any portion of its obligations under this addendum to other
companies, entities, contractors, subcontractors, employees, agents and other
persons (collectively, "third party providers") as deemed appropriate in the
sole discretion of Dayton Scott; provided, however, that Dayton Scott shall be
solely responsible for paying the costs, fees and expenses of these third-
party providers and shall indemnify and hold harmless Sloan against any and
all claims of third-party providers for unpaid costs, fees and expenses.
4. The parties acknowledge and agree that Sloan is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and that the 1933 Act, the 1934 Act, the rules and regulations
promulgated thereunder and the various securities laws (collectively,
"Securities Laws") impose significant burdens and limitations on the
dissemination of certain information about Sloan by Sloan and by persons
acting for or on behalf of Sloan. Each of the parties agree to comply with all
applicable Securities Laws in carrying out its obligations under the Agreement
and this Addendum, and without limiting the generality of the foregoing. Sloan
hereby agrees that (i) all information about Sloan provided to Dayton Scott by
or on behalf of Sloan which may be disseminated to the public by Dayton Scott
in providing any public relations or other services pursuant to the Agreement
or this Addendum shall not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made, in
light of the circumstances in which they were made, not misleading. (ii) Sloan
shall promptly notify Dayton Scott if Sloan becomes aware that Dayton Scott
has publicly made any untrue statement of a material fact regarding Sloan or
has omitted to state any material fact necessary to make the public statements
made by Dayton Scott about Sloan, in light of the circumstances in which they
were made, not misleading, and (iii) Sloan shall promptly notify Dayton Scott
of any "quiet period" or "blackout period" or other similar period during
public statements by or on behalf of Sloan are restricted by any Securities
Law. Each party (an "indemnifying party") hereby agrees, to the full extent
permitted by applicable law, to indemnify and hold harmless the other party
(the "indemnified party") for any damages caused to the indemnified party by
the indemnifying party's breach or violation of a Securities Law, except to
the extent that the indemnifying party's breach or violation of a Securities
Law is caused by the indemnified party's breach or violation of the Agreement,
this Addendum, or any Securities Law.
5. Except as specifically amended by this Addendum, the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Addendum on the day and
year first above written.
SLOAN ELECTRONICS, INC.
By: /s/ Larry Provost
Chairman
DAYTON SCOTT ASSOCIATES, INC.
By: Carl Sampogna
President
INVESTMENT BANKING AGREEMENT
This Investment Banking Agreement ("Agreement") is made this 25th
day of June, 1999 by and between Baxter Banks & Smith, Inc., an entity which
provides investment banking consultation services (hereinafter "Banker") and
Salient Cybertech, Inc. f/k/a Sloan Electronics, Inc. (hereinafter "Company").
RECITALS:
Whereas, Company desires to engage the Banker through this Agreement
to provide services which will assist the Company in raising money, providing
consulting on expansion of the Company and providing advice on merger and
acquisition candidates and services attendant thereto; and
Whereas, Banker has the ability to provide each of the services
enumerated above and shall provide said services to the Company based on the
terms and conditions set forth herein; and
Whereas, the parties hereto desire to memorialize the terms upon
which services shall be provided and compensated for and therefore have agreed
to enter into this Agreement.
NOW, THEREFORE, for and in consideration of valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree to the following:
1. SERVICES. Banker shall provide the services to the Company that have
been listed in the recitals in this Agreement and defined hereinafter as the
"Services". The Company and Banker acknowledge that there may be other
service providers who also assist in providing the Services and it shall be
the obligation of the Company and Banker to ascertain the most effective
service provider for each of the Services if the Services cannot be rendered
solely by Banker.
2. DURATION OF THE AGREEMENT. This Agreement shall be in effect from the
date of execution of this Agreement until such time as either party desires to
terminate this Agreement. Notification of a desire to terminate this
Agreement shall be provided by one party to the other via Certified Mail,
Return Receipt. Thereafter, thirty days after the receipt of said letter of
termination, this Agreement shall be terminated. The purpose of this clause
is to permit each party to be continuously satisfied with the conduct of the
other and thereby maintain this Agreement so long as each party satisfies the
other. The parties acknowledge that prior to the actually executed effective
date of this Agreement, the Banker has already provided Services to the
Company and that this Agreement is now being executed to more formally
memorialize an agreement for services which have already been rendered in the
past and which are anticipated to be rendered in the future.
3. REPRESENTATIONS OF THE COMPANY. The Company Represents and Warrants
that it is in compliance with all securities laws that which it is subject to
and that no adverse action has been taken in the past against the Company or
any of its officers and/or directors by and state or federal regulatory or law
enforcement agency. The Company further represents that it has consulted with
an attorney with regards to the drafting of this Agreement. The Banker has
had the opportunity to hire its own attorney to review this Agreement.
4. COMPENSATION. The Company agrees to pay Banker the following compensation
(the "Compensation") for the Services:
(A) For past services rendered the sums of $70,000 for fees and $30,000 for
non allocable expenses have already been paid. An additional 100,000 shares
in the Company shall be made payable for services rendered over the last
approximately two years, representing the payment of 50,000 shares per year.
The shares referenced in this paragraph shall be registered in a registration
statement to be filed by the Company and which is contemporaneously being
prepared.
<PAGE>
(B) For services presently being provided with regards to raising funds and
acquisitions and the acknowledgment that based on the present acquisition
intentions of the Company, the amount of banking services will be greatly
increased, the sum of 250,000 discount priced shares shall be payable for
services for this year upon the Company receiving $500,000 from a registration
statement which shall be filed and for which the Banker shall act as lead fund
raiser in raising monies for the Company. The discount price for the shares
shall be determined by the Board of Directors of the Company and the
Consultant and shall be priced in the registration statement to be filed by
the Company.
(C) The Company agrees to register an additional 300,000 discount priced
shares of stock outside of the shares referenced in paragraphs 4(A) and 4(B)
to be held by Company to pay the Banker on a monthly basis for all costs and
services provided outside of those services referenced in this Agreement.
Said shares shall be registered in a registration statement and shall only be
paid to Banker and priced upon the approval of the board of directors of the
Company after the Banker has provided in writing and explanation as to the
costs and/or additional services provided.
5. HIRING OF ASSISTANTS The Banker shall have authority to hire assistants
to assist in providing the Services, however, all compensation due to the
assistants shall be paid by the Banker out of its Compensation. The
assistants may be individuals or entities that Banker deems will assist the
Banker in advancing the success of the Company. The Banker has in the past
and will in the future be entitled to learn about information which may be
considered inside information as defined under Federal Securities Laws and it
shall be Banker's obligation to make sure that Banker and any assistant hired
by Banker abide by all appropriate securities laws.
6. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of Florida and venue shall only be appropriate in Palm Beach County, Florida.
7. WARRANTIES. Each party warrants to the other that they are not the
subject of nor have they ever been the subject of any Securities and Exchange
Commission or National Association of Securities Dealers investigations or
administrative proceedings and furthermore that neither party has ever been
arrested nor convicted of any crime. Banker specifically acknowledges that
not only has it in the past and will it in the future provide investment
banking services to Company but that it has retail brokers and clients that
presently own stock in the Company and all appropriate actions will be taken
to protect the confidentiality of and respect the laws regarding the
acquisitions and transactions of the Company.
8. ISSUANCE OF SECURITIES Each share of stock issued to Banker shall be paid
in a manner that is most beneficial to the financial statements of the Company
as agreed with the mutual consent of Banker and Company.
9. SEPARATE AGREEMENTS This Agreement shall constitute several separate
agreements for each of the Services and this Agreement may be re-drafted into
separate agreements as requested by the Company so as to more accurately
reflect the cost of the Services and each particular Service if the creation
of separate agreements is desired by the chief financial officer of the
Company to assist in preparation of accounting statements and assigning cost
basis to various services. Such separation into separate agreements shall be
at the Company's discretion but shall not in any way change the terms of this
Agreement. Therefore, although this Agreement is binding, it is agreed that
it may be amended at a future date as requested by the Company to accurately
reflect the multiple services being provided if so necessary to clarify
particular costs of services.
<PAGE>
10. STOCK SPLIT As a condition to the involvement of Banker in the
transaction contemplated in this Agreement, the Company shall undertake a
reverse split of its stock in a multiple determined by the Company's Board of
Directors. The split shall result in a stock price of Company's common stock
whereby the stock shall have a bid price of at least five dollars per share.
Each party has read this Agreement and agrees to abide by the terms hereof:
/s/ Mike Grammatica, Pres
Authorized signature for and on behalf of
Baxter Banks & Smith, Inc.
6/25/99 Date
/s/ Paul Sloan, President
Authorized signature for and on behalf of
Salient Cybertech, Inc. a Delaware Corporation
6/25/99 Date
Agreement for the Purchase and Sale of Capital Stock
by and Between
Gemini Learning Systems, Inc.
as Sellers
and
Salient Cybertech, Inc.
as Purchaser
This Agreement for the Purchase and Sale of Capital Stock (the
"Agreement") made between Gemini Learning Systems, Inc. ("Seller") and
Salient Cybertech, Inc. ("Purchaser") is made this 6th day of August, 1999.
PRELIMINARY STATEMENT
Purchaser intends to purchase from Seller, and Seller intends to sell to
Purchaser, all of their respective right, title and interest in, to and under
the capital stock of Seller, a Canadian corporation (hereinafter referred to
as the "Business"), collectively comprising all shares of the Business
strictly in accordance with the terms and provisions of this Agreement.
Purchaser is a company which is publicly traded via the over the counter
bulletin board market and Seller is a private company which has no publicly
traded stock.
This Agreement shall be treated as a letter of intent and shall not be binding
until an actual closing takes place and all closing documents have been
executed and all of the Purchase Compensation referenced hereafter has been
paid at the closing.
NOW THEREFORE, in consideration of the foregoing Preliminary Statement, which
is incorporated by reference with the same force and effect as if fully set
forth herein, and in consideration of the mutual promises and covenants
contained in this Agreement, Purchaser and Seller collectively agree as
follows:
1. Sale of the Stock. In consideration of the Purchase Compensation, as
herein defined, and the covenants, conditions, restrictions and agreements
stipulated to be paid and performed by Purchaser and Seller and upon the terms
and provisions of this Agreement, Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, all of the outstanding and issued
stock of the Business owned by Seller, which collectively is equal to one
hundred percent of the stock in the Business.
2. Purchase Compensation. The Purchase Compensation (collectively herein
called the Purchase Compensation) for the purchase and sale of the Seller's
share of the stock of the Business shall be the consideration set forth in
Exhibit "A" attached hereto and incorporated herein by reference.
<PAGE>
The Purchase Compensation shall be paid in either stock or lawful money of the
United States of America by cash, cashier's check, treasurer's check, bank
check, certified check, wire transfer or other immediately available funds of
the United States or any combination thereof as specified in Exhibit "A"
attached hereto.
3. Creditors of Business; Indemnification. Seller agrees to and with
Purchaser that all existing creditors of Business who are owed $1,000.00 or
more by the Business as of this date, if any, are set forth on Exhibit "B" of
this Agreement, together with a description of the amounts due and owing and
the names of such creditors.
Seller expressly agrees to defend all actions against Purchaser and/or
the Business with respect to and shall pay, protect, indemnify and save
harmless Purchaser and/or the Business from and against any and all
liabilities, losses, damages, costs, expenses (including reasonable attorney's
fees and expenses), causes of action, suits, claims, demands or judgments of
any nature to which Purchaser and/or the Business, or any of them is subject
to because of actions by the Seller on behalf of the Business prior to the
closing.
The aforementioned indemnifications shall not be applied in favor of an
indemnitee as to actions of an indemnitor if such indemnitee had specific
knowledge of and did not object to, or concurred in, such actions at or prior
to the time the indemnitor took such actions.
4. Stock Power; Restrictive Covenant, Operation of the Business. Stock
Powers shall be delivered to Purchaser upon the payment of the Purchase
Compensation, together with all stock certificates representing the one
hundred percent of the stock in the Business.
A. Seller's Covenant Not to Compete. In order to induce the Purchaser to
purchase the shares of the Business, the Seller hereby agrees that until the
second anniversary of the closing under this Agreement, he will not,
individually or together with any one or more other persons or entities,
directly or indirectly, engage in or have any ownership interest in any
person, firm, corporation, partnership, association, agency or business
(whether as principal, agent, holder of any equity security or other
instrument convertible into an equity security, employee, consultant or
otherwise) that engages in a business similar to or competitive with the
business currently conducted by the Business and which is located or operated
within the same state as any current location of the Business. The Sellers
agree that the period provided for and the area encompassed in this Section
are necessary and reasonable in order to protect the Purchaser and the
Business in the conduct of the Business' operation and are also as
consideration for the Purchaser's agreements in Section B. For the period set
forth in this Section, the Sellers, and each of them, hereby further agree not
to divulge, communicate, or use to the detriment of the Business or the
Purchaser, in any way, any confidential information or trade secrets of the
Business, including, without limitation, personnel information, secret
processes, know-how, customer lists, costs information and technical data.
<PAGE>
The Sellers acknowledge that the restrictions contained herein are reasonable
and necessary to protect the business and interest which the Purchaser is
acquiring pursuant to this Agreement and are also as consideration for the
Purchaser's agreements in Section B, and that any violation of these
restrictions will cause substantial irreparable injury to the Business and the
Purchaser. The Sellers therefore hereby agree that the Business, the
Purchaser, or any one or more of them, are entitled, in addition to any and
all other remedies, to preliminary and permanent injunctive relief to prevent
a breach or contemplated breach of this Section. The existence or any claim
or cause of action against the Business or the Purchaser, whether predicated
upon this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Business or the Buyer of the restrictions contained in this
Section.
B. Purchaser's Covenant Not to Compete. In order to induce the Sellers
to sell the shares of the Business, and in consideration of the Sellers'
agreements in Section A, the Purchaser hereby agree that until the second
anniversary of the closing under this Agreement, they will not, individually
or acting together or with one or more other persons or entities, directly or
indirectly, engage in or have any ownership interest in any person, firm,
corporation, partnership, association, agency or business (whether as
principal, agent, holder of any equity security or other instrument
convertible into an equity security, employee, consultant or otherwise) that
engages in a business similar to that currently engaged in by the Business.
The Buyer agrees that the period provided for, and the areas encompassed, in
this Section are necessary and reasonable in order to induce the Sellers to
sell the shares of and to protect the Sellers' interest following the sale and
are also as consideration for the Sellers' agreements in Section A. For the
period of the covenant set forth in this Section, the Purchaser hereby further
agrees not to divulge, communicate, or use to the detriment of the Sellers in
any way, any confidential information or trade secrets, including, without
limitation, personnel information, secret processes, know-how, customer lists,
cost information and technical data.
The Purchaser acknowledges that the restrictions contained herein are
reasonable and necessary to protect the business and interest of the Sellers
following the sale of the Business' shares to the Purchaser pursuant to this
Agreement and are also as consideration for the Sellers' agreements in Section
A, and that any violation of these restrictions will cause substantial
irreparable injury to the Sellers. The Purchaser therefore hereby agrees that
the Sellers or any one or more of them, are entitled, in addition to any and
all other remedies, to preliminary and permanent injunctive relief to prevent
a breach or contemplated breach of this Section. The existence of any claim
or cause of action against the Sellers, whether predicated upon this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Sellers
of the restrictions contained in this Section.
C. Operation of the Business. The Purchaser and Seller agree that after the
closing of the transaction referenced in this Agreement, Seller, shall
maintain all daily operations of the Business which shall include but not be
limited to the following: (1) hiring and firing decisions regarding the
Business (2) payment of all bills regarding the Business (3) determining the
acquisition candidates for the Business (4) determining the salaries of
employees of the Business (5) determining all employment contracts for the
Business. In the event that Seller determines that there is an acquisition
<PAGE>
candidate for the Business to acquire, the decision with regards to the
appropriate acquisition targets of the Business shall be in the discretion of
Seller provided all lawful board approval is obtained.
D. The Seller shall be responsible for paying to the Purchaser fifty
thousand dollars (the "First Fiscal Expenses") within thirty days of the
expiration of September 30, 2000 to represent Seller's portion of the expenses
of Purchaser for the first fiscal year of the Business being owned by
Purchaser. Seller shall be responsible for paying to the Purchaser seventy
five thousand dollars (the "Second Fiscal Expenses")within thirty days of the
expiration of September 30, 2001 to represent Seller's portion of the expenses
of Purchaser for the second fiscal year of the Business being owned by
Purchaser. In the event the gross revenues of the Business exceed three
million five hundred thousand dollars during the time period of September 30,
1999 to September 30, 2000 then the Second Fiscal Expenses shall be increased
from seventy five thousand dollars to one hundred and twenty five thousand
dollars.
5. Representations and Warranties. The Seller represents and Warrants
that they are the only owners of the Business and that the Business is duly
organized under the laws of Canada.. The Seller further represents and
warrants that the financial statements attached as Exhibit "C" hereto are
correct and accurately reflect the financial condition of the Seller as of the
date of this Agreement. The Seller further represents that it has full
authority to enter into the transaction contemplated in this Agreement and
that there are no lawsuits, liens, threatened or pending claims, either
administrative, civil, criminal or otherwise against the Business or the
Seller except as disclosed in Exhibit "D" attached hereto. The Seller further
represents that it and the Business have been in compliance with all laws and
regulations applicable to it. It is further represented that any contracts,
agreements, assessments or obligations which the Business is subject to have
been disclosed in Exhibit "E" attached hereto. In addition, Seller represents
that the condition of the Business will not materially change between the date
of this Agreement and the date of the closing.
6. Buy Back Rights and Stock Dividend Rights. Purchaser is a publicly
traded company and as of the date of this Agreement, the Seller is not a
public company. For a period of two years from the closing, the Seller shall
have the right to buy back the Business from the Purchaser for the return of
the Purchase Compensation, all working capital and funding provided to
Business and all hard costs incurred by Purchaser for this transaction. The
hard costs shall be insurance bills, filing fees and accounting fees. In the
alternative, if the Business obtains a five times growth in calendar year
annual revenues within a period of two calendar years from the date of closing
then, the Seller shall have the right to present a resolution to the Board of
Directors of Purchasers to vote for the approval of the Business being spun
out as a separately traded public company and the Seller shall receive eighty
five percent (85%) of the new entity and Purchaser shall receive fifteen
percent (15%), which cannot ever be diluted without the express written
consent of Purchaser, of the newly spun out entity and the right to appoint
two board of directors to the newly spun out entity as consideration for this
transaction. If the Business fails to obtain one million two hundred thousand
dollars in calendar year annual revenues within a period of two calendar years
from the date of closing, then Purchaser shall have the right to the return of
all of the Purchase Compensation provided to Business and eighty percent of
<PAGE>
all capital stock of the Business shall be returned to Seller from Purchaser.
The rights granted to the Purchaser and Seller in this paragraph number six
shall only be valid for a period of two calendar years from the date of
closing.
7. 7he Closing. The closing (the Closing) for the matters contemplated
in connection with this Agreement shall occur on August 31, 1999 (the Closing
Date), at the offices of Purchaser's Counsel or at such other place and at
such other time as shall be collectively agreed upon as the Closing Date by
Purchaser and Seller. The parties agree that this closing may take place by
documents being executed in counterparts and facsimile copies having the same
effect as originals.
8. Notices. Any notice, demand or request shall be given in writing and
shall be deemed to have been duly given or made five (5) business days after
the date it is mailed by certified or registered mail addressed to the parties
to this Agreement. A copy of all notices, requests and demands shall be sent
on behalf of Seller to Kim Adolphe, Gemini Learning Systems, Inc. at 839 5th
Avenue SW, Calgary, AB, T2P3C8.
and a copy of all notices, requests and demands on behalf of Purchaser to
Paul Sloan, Salient Cybertech , Inc. at 1715 Stickney Point Road, Sarasota,
Florida 34231.
9. Modification and Amendment. This Agreement may be modified, amended
or otherwise changed only by an agreement in writing which is executed and
delivered by the parties hereto.
10. Further Acts, Instruments and Assurances. Purchaser and Seller hereby
covenant and shall do, execute, acknowledge and deliver any and all further
acts, instruments and assurances necessary for carrying out the intention and
facilitating the performance of this Agreement and the transactions
contemplated hereunder.
11. Waiver of Remedies. No remedy herein conferred or conferred by law is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to and not in exclusion of any
other remedy given hereunder or by law or now or hereafter existing at law or
in equity. No delay, act or omission by Purchaser or Seller to exercise any
right or power accruing in connection with this Agreement or the transactions
contemplated hereunder shall impair any such right or power or shall be
construed as a waiver thereof or an acquiescence therein; and every power and
remedy conferred herein or conferred by law may be exercised from time to time
and as often as may be deemed expedient.
12. Binding Effect. Each provision of this Agreement shall be a separate
and independent covenant. The breach of any provision shall not relieve
Purchaser or Seller, as the case may be, from their obligation to observe and
perform each and every other provision of this Agreement to be observed and
performed.
13. Separability. If any provision of this Agreement is held to be invalid,
illegal, non-binding and unenforceable, or any combination of the foregoing,
this Agreement shall be construed as if the offending provision has not been
herein contained.
<PAGE>
14. Counterparts. This Agreement may be executed and delivered in
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
15. Entire Agreement. This Agreement contains the entire agreement among
Purchaser and Seller; there are no promises, agreements, covenants or other
conditions than those set forth herein.
16. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Florida and venue shall
only be appropriate in Palm Beach County, Florida.
17. Successors and Assigns. This Agreement shall be binding upon Seller
and Purchaser and their respective successors and assigns.
18. Interpretation of this Agreement. Whenever used in this Agreement,
the singular shall include the plural; the plural shall include the singular;
the use of any gender shall include all genders; and person shall mean any
individual, partnership, corporation, trust, estate, joint venture, syndicate
or other entity or any combination of the foregoing.
The undersigned have executed the signature page hereinbelow to signify their
agreement to the terms and conditions set forth herein.
PURCHASER SELLER
/s/ Paul Sloan /s/ Kim Adolphe
Signature Signature
President, President
Title Title
8/06/99 08/06/99
Date Date
Exhibits to be attached:
A- Purchase Compensation B- Creditors C- Financial Statements D-
Lawsuits, liens, pending or threatened claims
E- Contracts, agreements, assessments, obligations F - Addendum to Letter of
Intent
Exhibit "A"
All Dollar amounts that reference Gemini projections shall be identical to
those in the attached projections and all calculations shall be adjected to
reflect those identical amounts. (see attachment F - Gemini Projections).
The Purchase Compensation for the Seller shall be 20,000,000 (twenty million)
shares of common stock in the Purchaser, to be paid at closing. An additional
50,000 shares of stock which shall not be subject to any stock split, shall be
made available for Kim Adolphe to reward key employees of the Business at her
sole and absolute discretion so long as said shares are issued in conformance
with Purchaser's existing non-qualified stock option plan.
<PAGE>
In the event the Business earns three million dollars (see attached
projections) in gross sales for the fiscal year ended September 30, 2000 then
Seller shall be entitled to an additional 9,230,000 (nine million two hundred
three thousand) shares of common stock ( hereinafter the "First Earn Out
Shares") in the Purchaser. If the Business has gross sales for the fiscal
year ended September 30, 2000 which are at least double the Business' gross
sales for the fiscal year ended September 30, 1999 but less than three million
dollars then the Seller shall be entitled to a percentage of the First Earn
Out Shares (hereinafter the "Percentage First Earn Out Shares"). The
Percentage First Earn Out Shares shall be calculated as follows:
1. Gross Sales for fiscal year ended 9/30/99 subtracted from the Gross
Sales for fiscal year ended 9/31/00 = "The Sales Difference"
2. The Sales Difference divided by three million (3,000,000) = "The Base Sales
Difference"
3. The Base Sales Difference shall be multiplied by 9,230,000 (nine million
two hundred three thousand) = Percentage First Earn Out Shares
In the event the Business earns ten million dollars (see attached
projections)in gross sales for the fiscal year ended September 30, 2001 then
Seller shall be entitled to an additional 30,730,000 (thirty million seven
hundred thirty thousand) shares of common stock ( hereinafter the "Second Earn
Out Shares") in the Purchaser. If the Business has gross sales for the
fiscal year ended September 30, 2001 which are at least double the Business'
gross sales for the fiscal year ended September 30, 2000 and at least
quadruple the Business' gross sales for the fiscal year ended September 30,
1999 but less than ten million dollars then the Seller shall be entitled to a
percentage of the Second Earn Out Shares (hereinafter the "Percentage Second
Earn Out Shares"). The Percentage Second Earn Out Shares shall be calculated
as follows:
1. Gross Sales for fiscal year ended 9/30/00 subtracted from the Gross
Sales for fiscal year ended 9/30/01 = "The Sales Difference"
4. The Sales Difference divided by ten million (10,000,000) = "The Base Sales
Difference"
5. The Base Sales Difference shall be multiplied by 30,730,000 (thirty million
seven hundred thirty thousand) = Percentage Second Earn Out Shares
Notwithstanding the preceding methods for the Seller to achieve the above
referenced earn outs, the Seller may, instead of the above mentioned formulas,
but not in addition to the above mentioned formulas, obtain earn outs as
follows:
1. If as of September 30, 2000 the prior five trading days average closing
price of the Purchaser's stock is greater than or equal to three dollars per
share (the "First Target Price"), which shall be correspondingly increased or
decreased with any stock split, and the gross revenue of the Business is at
least eighty percent of the total preceding calendar year revenues of
Purchaser, the Seller shall be entitled to the First Earn Out Shares.
However, if the First Target Price is achieved but the Business is less than
eighty percent of the total preceding calendar year revenues of Purchaser,
then earn out will be calculated by proration (the "Proration"). The
Proration shall be calculated by reducing the First Earn Out Shares by the
same percentage by which the Business failed to account for eighty percent of
the total preceding calendar year revenues of Purchaser.
2. If as of September 30, 2001 the prior five trading days average closing
price of the Purchaser's stock is greater than or equal to five dollars per
share (the "Second Target Price"), which shall be correspondingly increased or
decreased with any stock split, and the gross revenue of the Business is at
<PAGE>
least eighty percent of the total preceding calendar year revenues of
Purchaser, the Seller shall be entitled to the Second Earn Out Shares.
However, if the Second Target Price is achieved but the Business is less than
eighty percent of the total preceding calendar year revenues of Purchaser,
then earn out will be calculated by modified proration (the "Modified
Proration"). The Modified Proration shall be calculated by reducing the
Second Earn Out Shares by the same percentage by which the Business failed to
account for eighty percent of the total preceding calendar year revenues of
Purchaser.
As further consideration for the transaction contemplated herein, the Seller
shall be entitled to the appointment of two board of directors positions to
the board of directors of the Purchaser upon the closing of this transaction,
however, in the event the Seller is not able to obtain the President of
Netscape Canada to be a Board Member to fill one of the two board of director
positions which Seller may appoint, then Seller shall only be entitled to
appoint one board of director position to the board of directors of the
Purchaser upon the closing of this transaction.
All values herein are based on the United States Dollar.
Addendum to Letter of Intent
Should the Seller exceed the targeted projections the Seller will be entitled
to receive up to an additional 50% shares of the total value on a prorated
basis. The second year additional earn out is conditional to the company
showing a profit at the end of the second year unless otherwise agreed to by
both parties.
Should the average 5 day share trading price exceed the targeted share price
earn out value then the Seller will be entitled to receive up to an additional
50% of the total value on a prorated basis.
As further compensation for the purchase of Gemini, the Purchaser shall pay
$750,000.00 (seven hundred and fifty thousand dollars) to the Seller for the
purposes of funding the company's future growth.
These monies will be raised through a public offering (SB2). The fundraising
is based on the following assumptions: (1) that a letter of intent is signed
with Salient Cybertech in August of 1999 (2) that Gemini's financial
projections reflect a 50% (fifty per cent) return on invested capital (3) that
there is not an appreciable change in the marketability of internet stocks.
The monies will be paid to the Seller as per the following time table not to
exceed a a six month time frame:
Month 1 - $100,000.00
Month 2 - $150,000.00
Month 4 - $250,000.00
Month 6 - $250,000.00
Furthermore, these projections assume that there will be positive support from
the general marketplace regarding the Salient/Gemini transaction and that all
business matters regarding Gemini will be made public so that said information
may be used in contacting potential investors on a private placement basis.
<PAGE>
The Seller and Purchaser mutally agree that the ability to provide $750,000.00
for the purposes of working capital shall be a material condition of this
agreement as referenced in Exhibit G.
In the event that the Purchaser does not comply with the total financial
obligations within the timeframe outlined in this agreement then the agreement
shall be voidable by either party.
PURCHASER SELLER
/s/ Paul Sloan /s/ Kim Adolphe
Signature Signature
President President
Title Title
8/6/99 08/06/99
Date Date
<TABLE> <S> <C>
<PAGE>
<C> <S>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1999 and Income Statement for the period ended
June 30, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<C> <S>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 906
<SECURITIES> 0
<RECEIVABLES> 15,508
<ALLOWANCES> 0
<INVENTORY> 22,870
<CURRENT-ASSETS> 783,919
<PP&E> 1,444
<DEPRECIATION> 448
<TOTAL-ASSETS> 785,363
<CURRENT-LIABILITIES> 551,417
<BONDS> 0
0
0
<COMMON> 11,648
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 785,363
<SALES> 13,417
<TOTAL-REVENUES> 13,417
<CGS> 8,621
<TOTAL-COSTS> 314,577
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,395
<INCOME-PRETAX> (284,781)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (284,781)
<EPS-BASIC> (0.025)
<EPS-DILUTED> (0.025)
</TABLE>
