UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28772
SLOAN ELECTRONICS, INC.
(Name of Small Business Issuer in its charter)
Delaware 35-1990559
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
1715 Stickney Pt. Rd., Sarasota, Florida 34231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 349-6583
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 par value per share
Preferred stock,$.001 par value per share
(Title or class)
Indicate by check mark whether the Registrant (1) has filed all report
required to be filed by Section 13 or 15(D) of the securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [x] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
As of December 31, 1998 the revenues for the most recent fiscal year
is $84,659.
The aggregate market value of voting stock held by non affiliates at
December 31, 1998 is $16,362,342.
As of December 31, 1998, the Registrant has outstanding 10,635,249
shares of Common Stock, $.001 par value. No Preferred Shares have been issued.
Certain exhibits listed in Item 13 of Part IV have been incorporated by
reference. An index to exhibits appears with Item 13.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
THIS ANNUAL REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARDLOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS ANNUAL REPORT
AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS
OF THE COMPANY, WITH RESPECT TO (1) THE COMPANY'S PRODUCT DEVELOPMENT AND
FINANCING PLANS, (11) 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.
Sloan Electronics, Inc. (the "Company") designs, manufacturers and markets
electronic monitoring equipment primarily for the criminal justice industry
and the long-term health care industry. The Company markets its house arrest
monitoring equipment through its in-house marketing department and currently
distributes its products through national service providers. The Company's
medical division has distribution agreements with Response USA, a distributor
of personal emergency response systems and with King Alarm, a security
product distributor.
The Company's revenues are primarily from product sales. Based on a written
agreement, the Company will receive recurring payments from Response USA
based on a percentage of their service revenue. During fiscal 1998 the
Company has not yet generated any revenue from recurring payments. However,
the company will begin receiving recurring revenue from Response USA in the
first quarter of 1999.
MAS Acquisition I Corp. (the "Company"), was incorporated on July 31, 1996 in
the State of Delaware, to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. On December
5, 1997, pursuant to the terms of an Agreement of Merger (the "Agreement")
between the Company and Sloan Electronics, Inc. ("Sloan"), Sloan has merged
into the Company and the Company has changed its name to Sloan Electronics,
Inc.
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Products
Criminal Justice:
The Company offers a full range of electronic monitoring equipment for the
criminal justice system's house arrest corrections programs and for the
medical industry's long-term health care providers. The Company strikes a
balance between its ability to provide solid, state-of-the-art, high-quality
products and its ability to retail these products at the lower end of the
industry's pricing spectrum.
The concept behind the Company's product line is that each product is able to
stand alone, without after-market equipment such as door sensors or dditional
custom wiring, yet each product is integratable with a number of pre-existing
computer software programs. This philosophy of integration makes the
Company's SEI Alert products and Wander Watch products more attractive to
institutional consumers.
The SEI Alert 24 Single Offender Based System. A tamper-proof transmitter is
custom-fitted and attached to an offender's ankle. This anklet is waterproof
and designed to be worn at all times. A home-based receiver is placed in a
central location within a residence, and a range setting is selected. In the
event that the anklet is removed, or that the person wearing it strays
outside the predetermined range, the event is recorded, time and date
stamped, and sent to an outside monitoring station within 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
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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.
<PAGE>
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.
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 patients prone 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, the Company
believes that its products are among the best currently available in these
two industries.
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Until recently, Management has defined the Company's role as primarily a
research, development and manufacturing entity. Management plans to continue
to market products directly to the criminal justice industry, while relying
on distributors such as KingAlarm and 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 intends to
recommend to the shareholders a name change that will reflect their decision
to divide operations into multiple divisions with operations in the
technology, education and electronics industry sectors. One of the Company's
proposed new technology divisions will provide distance learning over the
internet. The Cyber Learning curricula will be available in several languages
worldwide and will allow students in foreign countries to obtain accredited
higher education degrees as well as training certificates over the internet.
The Company is presently evaluating a number of strategic relationships with
established businesses in the internet and computer technology industries as
well as the criminal justice industry with a view towards acquiring existing
profitable businesses as operating divisions.
High-Quality Image. The Company believes 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 the Company's commitment to quality. The Company pursues
the highest standards in its design, component selection, assembly and
appearance of its products. The Company recognizes that product dependability
and reliability are highly significant to the Company's continued success.
Therefore, quality control and customer satisfaction play an important role
in the Company's business strategy.
Focus on Private Residence. The Wander Watch product line and the SEI Alert
24 product lines are both specifically designed to be used in a private home,
apartment or townhouse. Ease-of-use and stand-alone features inherent to both
products give the Company a competitive advantage in these areas.
The Wander Watch Single Patient System is both affordable and easy to install.
The receiver unit plugs into a standard outlet. Unlike most competitive
products, this is all that is required to install and operate the products;
doors do not need to be wired with sensors. There are no wires or barriers
associated with the products. This stand-alone concept runs contrary
to the current industry thinking. Management believes that this concept is
one of the reasons that makes the Company's product line more attractive to
the consumers.
Customer Service and Support. Sloan Electronics believes that its
relationship with its dealers and its consumers has contributed significantly
to its past success and should continue to enhance its future prospects. The
Company's ability to upgrade its equipment in the field not only gives the
Company a competitive advantage within the industry, but also allows it to
focus on up-selling and upgrading its product line.
PRODUCT DESIGN AND DEVELOPMENT
The Company is continuously engaging in electronic component research,
design, experimentation and development, all of which are essential to
maintaining a competitive advantage in the market place. The overall product
development is managed and directed by Paul Sloan, President of the Company.
<PAGE>
In addition, on project-by-project basis, a product development team is
assembled from personnel within the Company and may include personnel outside
the Company as well.
The Company's product development team is responsible for developing working
designs of all approved product concepts using computer-aided design systems,
and for coordinating all modeling and initial prototyping. The in-house
testing department evaluates all prototypes. The Company then creates the
full documentation to build its products and designs all of its circuitry
artwork. Complete product specifications and blue-printed product designs are
then sent to Kimchuk Inc., which prints the circuit-boards, assembles, tests,
performs quality control inspections to rigid standards, packages and finally
drop-ships the Company's products to its distributors or directly to its
customers.
The Company believes that investment in product development, and its
relationship with Kimchuk, enables it to reduce prototype development time
substantially. The Management believes that this shortened lead time enhances
the Company's ability to place new products in distribution, which
strengthens its competitive position.
SALES AND MARKETING
The Company's marketing strategy varies based upon each product line. With
regard to the criminal justice house arrest market, the Company plans to
continue aggressively market its 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. The
Company has turned over distribution of the Wander Watch Alert24 single
patient departure alert systems for exclusive sales to the security industry
to KingAlarm, a major independent distributor of security and related low
voltage products. Marketing strategies and distribution decisions concerning
other products are handled on a product-by-product basis.
SEI Alert 24 Products. The criminal justice house arrest market is dominated
by 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.
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.
<PAGE>
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. The Company views its corporate role in the
medical monitoring industry as that of developer, designer and manufacturer.
To that end, the Company has negotiated and signed contracts with Response
USA and King Alarm to distribute its Wander Alert detection 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. The Company expects to begin receiving income
from recurring monthly fees in the first 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. King Alarm has name recognition
throughout the security industry, and is a major supplier for security
experts and consultants, with ten regional warehouse sales centers. King
Alarm sponsors over 200 New Horizons technical and sales training seminars
annually, and hosts the King Alarm Expo, an annual two-day trade exposition.
Advertising. The Company has advertised in trade publications specific to the
markets it manufacturers products for, and in journals which test its
products and publish company-by-company product comparisons. The Company is
constantly seeking out innovative ways to build name recognition within the
industries in which it competes, as well as to create public awareness for
its product line. The Company maintains a web site at www.seialert24.com .
COMPETITION
The Company competes in a number of niche markets, which the Company
0believes will continue to grow.
House Arrest Market. The Company's 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.
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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, the
Company currently does not directly compete against its customers in the
contract monitoring business. However, the company is seeking strategic
associations with other companies in the criminal justice monitoring industry
to maximize market share.
Long-Term Healthcare Market. The Company's competition in this market
includes WanderGuard, Code Alert, Watchmate and Secure Care Products. All of
these companies utilize proximity sensing technology, which requires that a
patient 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. The Company's 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.
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3. The Wander Watch system utilize 900 MHz spread spectrum radio frequency
technology, a tamper-resistant anklet transmitter with a tamper alarm, and
sells its products at a price below that charged by the competition.
The Fleet Watch Alert 24. The Fleet Watch system is another unique product of
the Company. The Company believes that no other company offers a fully
integratable passive monitoring system for fleet vehicles. This system is
able to generate full vehicle status reports on demand, confirm employee
hours of vehicle operation and continuously monitor the comings and goings of
fleet vehicles. This tamper resistant monitoring system installs in less than
30 minutes, ends unapproved vehicle use, and provides a complete audit trail
and other necessary usage reports for each vehicle in a company's fleet. This
unit has been successfully 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
The Company manufactures all of its products 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
The Company continues to look for new ideas for development of new products.
The Company believes that new products could represent substantial new
business for the Company.
GOVERNMENT REGULATION
The Company's facilities are subject to numerous federal, state and local
laws and regulations designed to protect the environment from waste emissions
and hazardous substances. The Company is also subject to the Federal
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Occupational Safety and Health Act and other laws and regulations effecting
the safety and health of employees in the administrative and manufacturing
areas of its facilities. The Company believes that is in compliance in all
material aspects with all applicable environmental and occupational safety
regulations. The Company's 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.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company's facilities consist of leased executive office facilities
at 1715 Stickney Point Road, Sarasota, FL 34231 and approximately 1,800
square feet of leased office and work space, located at 4266 Higel Ave.,
Sarasota, FL 34242 and 200 square feet of donated office space located at 116
Teatown Road, Croton, NY 10520.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information.
The Company's common stock is traded on the NASD over the counter Bulletin
Board, symbol SLEL. Trading began on June 18, 1998. The range for each
quarter quoted reflect inter-dealer prices and may not represent actual
transactions.
Second quarter 1998:
low $0.8750 high $3.0000
Third quarter 1998:
low $2.6875 high $5.0000
Forth quarter 1998:
low $2.2500 high $4.5000
(b) Holders.
As of December 31, 1998, there were approximately 83 Holders of Record of the
Company's Common Stock.
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(c) Dividends.
The Company has never paid a cash dividend on its Common Stock and has no
present intention to declare or pay cash dividends on the Common Stock in the
foreseeable future. The Company intends to retain any earnings that it may
realize in the foreseeable future to finance its operations. Future
dividends, if any, will depend on earnings, financing requirements and other
factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS.
The following discussion should be read in conjunction with the
information contained in the financial statements of the Company and the
Notes thereto appearing elsewhere herein.
General
The Company's financial information for the two years ended December 31,
1997, and December 31, 1998, respectively, reflects the merger on December 5,
1997, which affected the Company's business and has a significant impact on
the Company's results of operations and financial condition. As result of an
Agreement of Merger (the "Agreement") between the Company and Sloan
Electronics, Inc. ("Sloan"), Sloan has merged into the Company and the
Company has changed its name to Sloan Electronics, Inc. Pursuant to the terms
of the merger Agreement, 3,561,500 shares of Common Stock of Sloan was
converted into 8,227,070 shares of Common Stock of the Company at the
conversion rate of 2.31. In addition, the Company has accepted the return of,
and cancelled, 7,680,083 shares of Common Stock issued to MAS Financial Corp.
and issued 91,102 shares of Common Stock as finder's fee, which was paid by
MAS Financial Corp.
In the Financial Statement for year ended December 31, 1998 the
Company's audit firm of Bobbitt Pittenger & Company PA, as noted in Note I of
the financial statement, made certain prior period adjustments to more
accurately classify research and development costs, reclassify amortization
costs to stockholders equity, correct shares issued during the merger
agreement, and to write off prepaid advertising costs.
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 revenue are recognized when the products are shipped.
Operating revenues decreased by $248,018 (74.6%) for the fiscal year
ended December 31, 1998 as compared to the fiscal year ended December 31,
1997. A significant drop in sales is due in part to a major customer,
Response USA, deciding to delay full scale distribution of equipment already
purchased pending completion of field trials. They do not anticipate
commencing distribution prior to April 1999.
Gross profit for fiscal 1998 was $16,700, which represents a decrease of
$54,565, or 76.6%, below the gross profit recognized in fiscal 1997.
The decrease was due primarily to lower sales revenues. The Company is to
receive recurring payments on a percentage basis of Response USA's service
revenue. The Company did not yet generated any revenue from recurring
payments during fiscal 1998, but will begin to receive recurring revenue in
fiscal year 1999. Gross profit, as a percentage of operating revenue,
remained relatively stable in 1998 at 19.7% compared to 21.4% for fiscal
1997.
<PAGE>
Combined selling, general and administrative expenses increased $35,663
(11.8%) in 1998. Selling, general and administrative expenses, as a
percentage of total operating revenues, increased to 399.8% from 91% for the
fiscal year ended 1998 and 1997, respectively. Sales and marketing expenses
declined from $31,921 for the year ended December 31, 1997 to $1,277 for the
year ended December 31, 1998, for a decrease of $30,644 or 96%. The cost of
product sales declined dramatically in 1998 because most sales costs for the
Home Healthcare market are the responsibility of the exclusive distributors
Response USA and King Alarm in their respective markets. The Company has
hired a VP of Sales and expects selling expenses to rise in fiscal year 1999.
General and administrative expenses rose from $270.912 in fiscal 1997 to
$337,219 in fiscal 1998, representing an increase of $66,307 or 24.4%. The
increase in general and administrative expenses was partly due to increases
in costs associated with professional fees, contract services and insurance.
Interest expense increased by $4,642 to $28,518 for the fiscal year
ended December 31,1998. The reason for the increase is due to the increase in
notes payable to cover operating expenses.
The net loss for the year 1998 after taking into account an
extraordinary gain of $50,185 due to partial forgiveness of outstanding
payable by one of the Company's vendors was $300,129, or $0.030 per share net
loss based on 10,007,898 average shares outstanding, as compared to an
adjusted net loss of $255,444, or $0.032 per share net loss based on
8,034,688 average shares outstanding in 1997. 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 $291,718 for the year
ended December 31, 1998, compared to $94,000 for the year ended December 31,
1997. Net proceeds of $165,000 was raised through private placement of common
stock and $126,718 from borrowing in 1998 compared to net proceeds of $44,000
raised through private placement of common stock and $50,000 from borrowing
in 1997. The Company had expected a loan in the amount of $250,000 from MAS
Financial and has been requested by MAS Financial to issue it 450,000 shares
of common stock. Through December 31, 1998 the Company has received $50,000
from the MAS Financial transactions and is of the position that shares will
be issued on a pro rata basis.
The Company has no material commitments for capital expenditures during
the next twelve months and believes that its current cash and working capital
position and future income from operations indicate that sufficient
additional funds will be required to meet its cash and working capital needs
for the twelve months.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
SLOAN ELECTRONICS, INC.
<TABLE>
<CAPTION>
CONTENTS PAGE
<C> <S>
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F1
STATEMENTS OF FINANCIAL CONDITION F2
STATEMENTS OF OPERATIONS F3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY F4
STATEMENTS OF CASH FLOWS F5
NOTES TO FINANCIAL STATEMENTS F6
</TABLE>
<PAGE>
February 24, 1999
BOARD OF DIRECTORS
Sloan Electronics, Inc.
Sarasota, Florida
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited the accompanying statement of financial condition of Sloan
Electronics, Inc., as of December 31, 1998, and the related statements of
operations, changes in stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Sloan
Electronics, Inc. as of December 31, 1997, were audited by other auditors
whose report dated March 20, 1998, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the
Corporation will continue as a going concern. As discussed in Note O to the
financial statements, the Corporation has suffered recurring losses from
operations and has a net capital deficiency that raises substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note O. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Bobbitt, Pittenger & Company, P.A.
Certified Public Accountants
F1
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
1998 1997
ASSETS
<C> <S> <S>
Cash $ 19,792 $ 3,936
Accounts receivable - net 12,126 89,732
Inventory 27,171 10,151
Prepaid insurance 26,422
Deferred syndication costs 100,000
-------- --------
TOTAL CURRENT ASSETS 185,511 103,819
EQUIPMENT - NET 1,892 1,887
--------- ---------
187,403 105,706
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 79,736 $ 124,586
Accrued expenses 117,442 21,530
Accrued interest 8,650 5,950
Accrued interest - related party 41,189 17,926
Notes payable 41,718 15,000
Notes payable to related parties 210,000 160,000
------- -------
TOTAL CURRENT LIABILITIES 498,735 344,992
STOCKHOLDERS' EQUITY
Common stock-authorized 80,000,000 shares;
par value $.001; issued and outstanding,
10,635,249 and 9,189,699 shares in 1998
and 1997, respectively 10,635 9,189
Additional paid-in capital 603,134 376,497
Due from officer (33,565) (33,565)
Accumulated deficit (891,536) (591,407)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (311,332) (239,286)
--------- ---------
$ 187,403 $ 105,706
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F2
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
<C> <S> <S>
SALES $ 84,659 $ 332,677
COST OF SALES 67,959 261,412
------- -------
GROSS PROFIT 16,700 71,265
EXPENSES
Selling 1,277 31,921
General and administrative 337,219 270,912
Interest 28,518 23,876
------- -------
367,014 326,709
------- -------
OPERATING LOSS BEFORE INCOME
TAXES AND EXTRAORDINARY GAIN (350,314) (255,444)
INCOME TAXES
LOSS BEFORE EXTRAORDINARY GAIN (350,314) (255,444)
EXTRAORDINARY GAIN 50,185
NET LOSS $(300,129) $(255,444)
========== ==========
NET LOSS PER SHARE $ (0.030) (0.032)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F3
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-in Due from Accumulated
Stock Capital Officer Deficit Total
<C> <S> <S> <S> <S> <S>
BALANCE,
January 1, 1997 $234,792 $165,942 $ $(335,961) $ 64,773
Issuance of
common stock 44,000 44,000
Due from officer (33,565) (33,565)
Net loss (227,370) (227,370)
-------- -------- -------- --------- ----------
BALANCE,
December 31, 1997 278,792 165,942 (33,565) (563,331) (152,162)
Prior period
adjustments (269,603) 210,555 (28,076) (87,124)
RESTATED BALANCE,
December 31, 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,
December 31, 1998 $ 10,635 $603,134 $(33,565) $(891,536) $(311,332)
======== ======== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F4
<PAGE>
SLOAN ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<C> <S> <S>
Net loss $(300,129) $(255,444)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 898 747
Forgiveness of accounts payable (50,185)
Stock issued for services 11,000
Stock issued for accrued interest 2,083
(Increase) decrease in operating assets:
Accounts receivable- net 77,606 (79,321)
Inventory (17,020) 16,014
Deposits 1,700
Other assets 54,841
Prepaid insurance (26,422)
Deferred syndication costs (100,000)
Increase (decrease) in operating liabilities:
Accounts payable 5,335 117,144
Accrued expenses 95,912 21,341
Accrued interest- related parties 25,963 11,090
Customer deposits (2,400)
------- --------
NET CASH USED IN OPERATING ACTIVITIES (274,959) (114,288)
------- --------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of equipment (903) (1,584)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 126,718 50,000
Proceeds from sale of common stock 165,000 44,000
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 291,718 94,000
------- -------
NET INCREASE (DECREASE) IN CASH 15,856 (21,872)
CASH, at beginning of year 3,936 25,808
------- ------
CASH, at end of year $ 19,792 $ 3,936
========== ==========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 1,545 $ 4,522
=========== ==========
Non cash financing activity - note payable
of $50,000 and accrued interest of
$2,083 converted to 110,000 shares of
common stock
</TABLE>
F5 The accompanying notes are an integral part of these financial statements
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Sloan Electronics, Inc. (the "Company") was incorporated in the state of
Florida in July, 1993. The Company designs, manufactures and markets
electronics monitoring equipment primarily for the criminal justice industry
and the long-term health care industry.
On November 18, 1997, an agreement of merger between MAS Acquisition I Corp.,
a Delaware corporation, incorporated July, 1996, and Sloan Electronics, Inc.,
a Florida corporation, was made and entered into. The two corporations
merged into a single corporation, in which the Florida corporation ceased to
exist, however the name of Sloan Electronics, Inc. remains.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Equipment
Equipment is recorded at cost. The equipment is depreciated over its
estimated useful life, using the straight-line method of accounting.
Earnings per Share
Basic earnings per share (EPS) is computed by dividing income available to
common shareholder by the weighted-average number of common shares
outstanding for the year. Diluted EPS reflects the potential dilution that
could occur if dilutive securities and other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.
Statements of Cash Flows
For purposes of reporting cash flows, the Company considers cash and cash
equivalents as those amounts which are not subject to restrictions or
penalties and have an original maturity of three months or less.
Reclassifications
Certain reclassifications have been made to the 1997 financial statements to
conform with the 1998 financial statement presentation
Deferred Syndication Costs
Deferred syndication costs represent legal and professional fees related to
the registration of a new issue of common stock, when the common stock is
issued these costs will affect the proceeds received in stockholders' equity.
F6
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE B - ACCOUNTS RECEIVABLE - NET
Accounts receivable at December 31, is as follows:
<TABLE>
<C> <S> <S>
1998 1997
Accounts receivable $18,706 $89,732
Less: allowance (6,580)
-------- --------
$12,126 $89,732
======== ========
</TABLE>
NOTE C - EQUIPMENT - NET
A summary of equipment follows at December 31:
<TABLE>
<CAPTION>
1998 1997
<C> <S> <S>
Equipment $ 4,638 $ 3,735
Less accumulated depreciation (2,746) (1,848)
------- --------
$ 1,892 $ 1,887
</TABLE>
NOTE D - NOTES PAYABLE AND NOTES PAYABLE
TO RELATED PARTIES
<TABLE>
<CAPTION>
December 31
1998 1997
<C> <S> <S>
Note payable to an insurance company with 8% $26,718 $
annual interest rate, 10 monthly payments of
$2,770.76 beginning January 22, 1999.
Note payable to an individual, 15% annual interest 15,000 15,000
rate, payable on demand. ------ ------
NOTES PAYABLE 41,718 15,000
===== =====
Note payable to a stockholder, 20% annual interest
rate, maturity date of March 1, 1996. 10,000 10,000
Note payable to a stockholder, 18% compounded
interest rate, payable on demand. 100,000 100.000
Note payable to a stockholder, 5% annual rate,
maturity date of February 16, 199 50,000
Note payable to a stockholder, 5% annual interest
rate, maturity date of December 16, 1998. 40.000
Note payable to a stockholder, 10% annual interest
rate, maturity date of October 22, 1999. 20,000
Note payable to a stockholder, 10% annual 30,000
interest rate, maturity date December 7, 1999.
Note payable to the Company President, 10%
annual interest rate, maturity date of
October 7, 1999. 10,000
-------- --------
NOTES PAYABLE TO RELATED PARTIES $210,000 $160,000
======= =======
</TABLE>
<PAGE>
The Company has not repaid loans whose maturity dates have passed since no
funds were available. Interest continues to accrue under the same terms. In
January 1999, the Company borrowed an additional $20,000 at 10% interest with
a maturity date of January 2000 from a stockholder.
NOTE E - INCOME TAXES
At December 31, 1998, the Company has a net operating loss carryforward of
approximately $554,000 that will be available to offset future taxable income
through 2013. Based on historical operations, management has elected to
record a valuation allowance equal to the deferred tax asset of $204,910,
calculated using an effective income tax rate of 37% for the Company. The
Company has no significant differences between book and taxable income.
NOTE F - NET LOSS PER SHARE
The following sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
1998 1997
<C> <S> <S>
Numerator
Operating loss $ (350,314) $ (255,444)
Extraordinary gain from forgiveness of
account payable 50,185
-------
Net loss $ (300,129) $ (255,444)
============== ============
Dennominator
Denominator for basic earnings per share -
weighted average shares 10,007,908 8,034,688
Net loss per share - basic
Operating loss $ (.035) $ (.032)
============== ============
Extraordinary gain from forgiveness of
account payable $ .005 $
===============
Net loss - per common share - basic $ (.030) $ (.032)
=============== ============
</TABLE>
NOTE G - STOCK-BASED COMPENSATION
In 1998, the Company established a stock option plan ("the Plan") to provide
a means whereby selected employees, officers, directors, agents, consultants
and independent contractors of the Company may be granted incentive stock
options and/or non-qualified stock options to purchase common stock of the
Company.
<PAGE>
The Plan requires the exercise price shall not be less than the fair market
value per share of the common stock at the time the option is granted with
respect to incentive stock options and not less than 85% of the fair market
value per share of the common stock at the time the option is granted with
respect to non-qualified stock options. Incentive stock options to employees
who own more than 10% of the total combined voting power of all classes of
stock require that the exercise price shall not be less than 110% of the fair
market value of the common stock at the time the incentive stock option is
granted.
The term of each incentive and non-qualified stock option is established by
the plan administrator but may not exceed ten years. Incentive stock options
to employees who own more than 10% of the total combined voting power of all
classes of stock of the Company may not exceed five years.
Non-qualified stock options granted under the Plan in 1998 include 50,000
shares, with an exercise price of $.25 and an expiration date of May 8, 2008
and 40,000 shares with an exercise price of $.32 and an expiration date of
May 15, 2003.
The Company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," under which no compensation cost for stock
options is recognized for stock option awards granted at or above fair market
value. Had compensation expense for the Company's stock-based compensation
plan been determined based upon fair values at the grant date for awards
under those plans in accordance with SFAS No. 123, "Accounting for Stock-
Based Compensation," the Company's net earnings and earnings per share would
have been reduced to the pro forma amounts indicated below. Additional stock
option awards are anticipated in future years.
F9
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE G - STOCK-BASED COMPENSATION (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
<C> <S> <S>
Net earnings $ $
As reported (300,129) (255,444)
Pro forma (317,187)
Earnings per share
As reported (.030) (.032)
Pro forma (.032)
</TABLE>
The minimum fair value of options granted during 1998 estimated on the date
of grant was $0.19 per share. The fair value of options granted is estimated
on the date of grant using the following assumptions: risk-free interest
rate of 5.5% and an expected life of 5 and 10 years.
NOTE H - RELATED PARTY TRANSACTIONS
The Company rents space from the President under a month to month lease, for
$1,000 per month. Rent expense related to this lease which began in June
1998 is $7,000. The Company paid $18,000 during the year ended December 31,
1998 to an officer as an office stipend. (See Notes D, J, and L)
NOTE I - PRIOR PERIOD ADJUSTMENTS
Certain errors, resulting in the understatement of the reported net loss in
the Company's previously issued 1997 financial statements, have been
corrected in the current year. This resulted in the following changes to
retained earnings as of December 31, 1997 and the related 1997 statement of
operations:
<TABLE>
<CAPTION>
Accumulated
Deficit Net Loss
<C> <S> <S>
As previously reported, December 31, 1997 $(563,331) $(227,370)
Adjustments:
Writeoff research and development costs in
accordance with Financial Accounting
Standards Board Standard No. 2, "Accounting for
Research and Development Costs" (49,735) (49,735)
Correction of accrued interest 12,508 12,508
Reverse amortization expense on initial public
offering costs, reclassed to stockholders equity 17,715 17,715
Correction for shares not issued during merger (2) (2)
Writeoff of prepaid advertising costs not related
to current products (8,562) (8,562)
-------- ----------
$(591,407) $(255,446)
========== ==========
</TABLE>
F10
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - PRIOR PERIOD ADJUSTMENTS (CONTINUED)
Other errors, not resulting in any changes to the reported net loss in the
Company's previously issued 1997 financial statements resulted in a reclass
of $269,063, out of common stock and into additional paid-in capital, to
adjust common stock to the par value of the outstanding shares.
NOTE J - EXTRAORDINARY GAIN
In December 1998, one of the Company's vendors, who also is a shareholder,
agreed to forgive one-half of the outstanding payable to the vendor. The
total payable was $100,370, the balance forgiven was $50,185. In accordance
with Statement of Financial Accounting Standards No. 4, "Reporting Gains and
Losses from Extinguishment of Debt" this material debt extinguishment gain
has been reported as an extraordinary item
NOTE K - FAIR VALUE OF FINANCIAL INSTRUMENTS IN ACCORDANCE WITH THE
REQUIREMENTS OF SFAS NO. 107
The Company's financial instruments consist of all of its assets and
liabilities. The Company's management has determined that the fair value of
all of its financial instruments is equivalent to the carrying cost.
NOTE L - COMMON STOCK TRANSACTIONS
In 1997, the Company issued 361,500 shares for $36,000 prior to the merger
with MAS Acquisition I Corp. These shares were converted at the merger date
at a rate of 2.31 to 1, resulting in 835,065 shares. After the merger an
additional 46,200 shares were issued for $8,000.
In February 1998, the Company sold 225,000 shares to an investor for $65,000.
In May 1998, the Company issued 110,000 shares for services. These services
were valued at $11,000. The proceeds were raised by an investment firm and
were used to pay the investment firm and their related entities for
investment banking services and expenses associated with a pending stock
registration statement and for on going investment banking services.
In June 1998, the Company issued 110,000 shares in the conversion of a note
payable of $50,000 plus accrued interest of $2,083 to common stock.
During the year 1,000,000 shares were sold through a private placement at
$0.10 per share, for a total of $100,000. The proceeds were raised by an
investment firm and were used to pay the investment firm and their related
entities for investment banking services and expenses associated with a
pending stock registration statement and for on going investment banking
services.
NOTE M - COMMITMENTS AND CONTINGENCIES
The Company provides a limited warranty on its products. The warranty covers
all defects in materials or workmanship in the product for one year from the
date of purchase. The Company will repair or replace units covered by this
warranty without change to the consumer for labor or materials. No amounts
have been accrued in the financial statements as the company does not believe
that any warranty claims would be material.
F11
<PAGE>
SLOAN ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has a general liability insurance policy that provides coverage
for liability claims arising out of the products it sells. The Company has
not been the subject of any material product claim. The sale of the
Company's products entails the risk of product liability claims. In
addition, many of the companies with which the Company does or may do
business may require financial assurances of product reliability. The
Company has product liability insurance, but may be required to pay higher
premiums associated with new product development. Product liability
insurance is expensive and there can be no issuance that additional insurance
will be available on acceptable terms, if at all, or that it will provide
adequate coverage against potential liabilities.
The Company has retained an independent contractor as Vice President of
sales. The agreement calls for a one time signing bonus of 50,000 shares of
common stock of the Company, contingent upon satisfactory completion of at
least one year of service. The stock will be subject to Securities and
Exchange Commission "Rule 144" restrictions.
NOTE N - DEPENDENCE ON THIRD PARTY CONTRACT MANUFACTURER
The Company subcontracts the manufacturing of all its products to one
contractor. The Company has an understanding but no agreement with the
contractor to manufacture its products. Although to date the contractor has
been able to manufacturer the Company's products on timely basis, there is no
assurance that future manufacturing by the contractor will not be delayed or
interrupted due to shortage in components or manufacturing capacity. The
Company believes that there are alternative contract manufacturers that could
produce the Company's products, but is not pursuing agreements or
understandings with alternative sources. The inability of the Company to
develop alternative manufacturers, if required in the future, could have a
material adverse effect on the Company's results of operations.
NOTE O - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred a net
loss of $300,129 during the year ended December 31, 1998, and as of that
date, the Company's current liabilities exceeded its current assets by
approximately $311,000. The ability of the Company to continue as a going
concern is dependent on obtaining additional capital and financing and
operating at a profitable level. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
F12
<PAGE>
ITEM 8: Changes in Accountants
The firm of S. M. Ward and Company ("Ward") audited the financial
statements of the Company for the fiscal years ended Dec. 31, 1995 through
Dec. 31, 1997. On April 6, 1998 the Board of Directors of the Company
determined not to appoint Ward to audit the financial statements of the
Company for the fiscal year ended Dec. 31, 1998. On April 6, 1998, pursuant
to a vote of the Board of Directors, the firm of Bobbitt, Pittenger and
Company PA was selected to audit the financial statements of the Company for
the year ended Dec. 31, 1998.
The report of Ward on the Company's financial statements for the
previous years did not contain an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the entire period of the engagement of Ward,
through Dec. 31, 1997, there had been no disagreement on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement, if not resolved to Ward's
satisfaction, would have caused Ward to make reference in connection with its
reports to the subject matter of the disagreement.
During the two most recent fiscal years and any subsequent interim
period through the date of such resignation, declination to stand for
reelection or dismissal there have been no disagreements or "reportable
events" with S. M. Ward Company.
The Company filed a form 8-K/A on April 21, 1998 which is incorporated
herein by reference.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
The following persons are the Directors and executive officers of the
Company:
<S> <C> <C>
Name Age Position
- ----- --- --------
Larry Provost 50 Chairman of the Board of Directors,
Secretary,Treasurer and Chief Financial
Officer.
Paul A. Sloan 40 President, Chief Executive Officer and
Director
Michael Solomon 54 Senior Vice President and Director.Lester H. Cohen 53 Vice President - Marketing and Director.
Donald Grimes 53 Vice President - Sales
James Vondra 58 Director
</TABLE>
Mr. Larry Provost became Chairman, Secretary and Chief Financial Officer of
the Company since the merger on December 5, 1997. Mr. Provost is presently
President of Production Talent, Inc., a film and video production company,
and President of Vidco, Inc., an equipment leasing company. Mr. Provost
graduated with a B.A. degree in Psychology from New York University in 1970.
Mr. Provost has 25 years of experience in equipment leasing.
Mr. Paul A. Sloan became President, Chief Executive Officer and a Director of
the Company since the merger on December 5, 1997. Mr. Sloan co-founded Vorec
Corporation in 1986 and served as design team leader.
Mr. Michael Solomon became Senior Vice President and a Director of the
Company since the merger on December 5, 1997. Mr. Solomon has worked at the
New York City Police Department for 15 years. Mr. Solomon founded Pro-Tech
Security Systems, a company which installs and services residential and
commercial security systems, after retirement from the New York City Police
Department. Mr. Solomon holds a Master's Degree in Criminal Justice
Administration from New York Institute of Technology.
Mr. Donald Grimes became Vice President of Sales in November of 1998. He
brings to the Company twelve years of experience in marketing electronic
supervision equipment to the corrections industry. He sits on the advisory
board of the Journal for Offender Monitoring.
Mr. Lester H. Cohen became Vice President - Marketing and a Director of the
Company since the merger on December 5, 1997. Mr. Cohen served as New York
State Division of Probation Training Administrator, Chief of Planning Policy
and Program Development for the same department and as a Line Probation
Officer in the Steuben County Probation Department.Mr. Cohen received a
Master's Degree in Social Work from Adelphi University, School of Social
Work.
Mr. James Vondra became a Director of the Company since the merger on
December 5, 1997. He received a BA in Business Administration in 1963 from
North Texas State University. He has 29 years experience in data processing
and system programming, specializing in on-line transaction processing
systems. He has experience within the aerospace, manufacturing, financial,
and oil and gas business sectors.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
Name and Principle All Other
Position Year Salary Compensation
- ------------------- ---- ------ ------------
<C> <S> <S> <S>
Larry Provost 1998 $52,000(3) $18,000(1) 20,000(4)
Chairman, Secretary 1997 $18,000 196,350 (2)
Treasurer and Chief 1996 $12,000
Financial Officer
Paul Sloan 1998 $60,000(5) 20,000(4)
President, Chief 1997 $60,000(6)
Executive Officer 1996 $53,500
and Director
Lester Cohen 1998 10,000(4)
VP Marketing,
Director
Michael Solomon 1998 10,000(4)
Senior VP
Director
Donald Grimes 1998 $6,153 (7) 50,000(8)
VP Sales
Jim Vondra 1998 10,000(4)
Director
</TABLE>
(1) Mr. Provost received a $18,000 stipend to cover the costs of
maintaining an office.
(2) Mr. Provost received an aggregate of 196,350 shares as part of
total compensation during fiscal year 1997.
(3) Mr. Provost received $0 as of December 31, 1998. This amount is
accrued and payable by the Company
(4) Shares in stock option plan (unexercised)
(5) Mr. Sloan has received $25,000 as of December 31, 1998. The balance
of $35,000 is accrued and payable by the Company.
(6) Mr. Sloan has received $40,000 as of December 31, 1997. The balance
of $20,000 is accrued and payable by the Company.
(7) This represents one month's salary.
(8) Mr. Grimes will receive 50,000 shares as a signing bonus contingent
upon one year's service.
In addition, the Company may award stock options to key employees,
members of management, directors and consultants under stock option programs
as bonuses based on service and performance.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Principle Stockholders
The following table sets forth certain information as of December 31, 1998
regarding the beneficial ownership of the Company's Common Stock by (i)each
stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) by each Director and executive officer of
the Company and (iii) by all executive officer and Directors of the Company
as a group. Each of the persons named in the table has sole voting and
investment power with respect to Common Stock beneficially owned.
<TABLE>
<CAPTION>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent of Class
- -------------------- ------------------ ----------------
<C> <S> <S>
Larry Provost 1,300,992(2) 12.14%
Chairman, Secretary
and Chief Financial Officer
Paul Sloan 3,132,535(2) 29.23%
President, Director
Lester Cohen (1) 598,763(3) 5.58%
Director,
Vice President - Marketing
Margery Cohen Trust 588,763 5.49%
Michael Solomon 298,626(3) 2.78%
Director,
Senior Vice President
James Vondra 424,758(3) 3.96%
Director
Donald Grimes 0(4) 0.00%
VP Sales
Gregory Tuai 703,234(3) 6.56%
John Rothrock 693,234 6.46%
Walter & Marie Eckman Trust 609,093 5.68%
All Directors & Officers 5,755,674 53.71%
as a group (5 persons)
</TABLE>
(1) Mr. Lester Cohen is the husband of Mrs. Margery Cohen.
(2) Includes stock options (unexercised) for 20,000 common shares.
(3) Includes stock options (unexercised) for 10,000 common shares
(4) Mr. Grimes will receive 50,000 common shares as a bonus after one
year service to the company (Dec 1999).
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a)
Mr. Greg Tuai, a 5% or greater shareholder, provided outside services to the
company as a design engineer, product developer and consultant through his
company Discovery Consulting. In 1998 Discovery Consulting invoiced $75,000
for services and received payment of $18,750 for services. The balance due
Discovery Consulting was $100,370 in December of 1998. In December of 1998
Discovery Consulting agreed to forgive $50,185 of this amount.
Mr. Sloan provided office and work space to the Company in owned properties
at 2527 Montery St, Sarasota FL and 4266 Higel Avenue, Sarasota FL during
1998. The total amount paid was $11, 513.
(d)
The company engaged two consultants in 1998. MAS Financial Corp. received
100,000 shares of common stock plus a fee of $42,500 to be paid upon
completion of a stock offering as of yet not completed. Market Surveys
International, Inc. received 15,000 shares of common stock in 1998 for
consulting and placing advertisements in Market Pulse Journal. The agreement
with Market Pulse was subsequently cancelled. The consulting agreements are
included as Exhibits EX-99.1 and EX-99.2.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements are contained in Item 7.
(b) Reports on Form 8-K
The following Reports were filed on Form 8-K and are
incorporated by reference.
Form 8-K/A filed on January 5, 1998.
Form 8-K/A filed on March 19, 1998.
Form 8-K/A filed on April 21, 1998
Form 8-K filed on December 23, 1998.
(c) Exhibits.
(2.0) Plan and Agreement of Merger between MAS Acquisition
I Corp. and Sloan Electronics, Inc. as filed with the
Form 8-K Amendment on March 18, 1998.
(2.1) Article of Amendment changing company name from
MAS Acquisition I Corp. to Sloan Electronics, Inc.
as filed with the Form 8-K Amendment on March 18, 1998.
(3)(i) Articles of Incorporation as filed with the Form
10-SB Registration Statement on September 4, 1996.
<PAGE>
(3)(ii) Bylaws of the Company adopted by the Company from
the Bylaws of Sloan Electronics, Inc. as amended, filed
with the form 10-QSB on November 12, 1998
(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) 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
(16) Letter on change in certifying accountant as filed with the
form 8-K/A April 21, 1998
(22) Published report regarding matters submitted to vote as
filed with DEF-14A on April 10, 1998
(23) Consent letter of Bobbitt Pittenger & Co. PA, auditors.
(27) Financial data schedule for electronic filing.
(99.1) Consulting Agreement with MAS Financial Corp.
(99.2) Consulting Agreement with Market Surveys
International, Inc.
SUBSEQUENT SIGNIFICANT EVENTS
Subsequent to the year end, the Company signed a letter of intent to acquire
an internet distance learning company and agreed to alter its business and to
focus a division on expansion into the online education industry. The
Company hopes this division will provide a major source of corporate revenues
provided all intended acquisitions close. However, management cautions that
although it believes the Company's internet based business strategy has a
promising future, there can be a negative effect on short-term profits along
with the increased risk of volatile stock price fluctuations.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Sloan Electronics, Inc.
By: /s/ Paul Sloan
----------------------------------
Paul Sloan
President, Chief Executive Officer
and Director
Date: March 19, 1999
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on
Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly
authorized.
By: /s/Larry Provost March 25, 1999
--------------------------------------
Chairman of the Board of Directors,
Secretary and Chief Financial Officer
By: /s/ Paul Sloan March 19, 1999
--------------------------------------
President, Chief Executive Officer
and Director.
By: /s/Mike Solomon March 19, 1999
--------------------------------------
Senior Vice President and Director.
By: /s/Lester Cohen March 21, 1999
--------------------------------------
Vice President - Marketing and
Director.
By: /s/James Vondra March 22, 1999
--------------------------------------
Director
<PAGE>
Bobbitt, Pittenger & Company, P.A.
Certified Public Accountants
March 22, 1999
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
BOARD OF DIRECTORS
Sloan Electronics, Inc.
We hereby consent to the use in this SEC filing of our report dated February
24, 1999 relating to the financial statements of Sloan Electronics, Inc. as
of and for the year ended December 31, 1998.
/s/ Bobbitt, Pittenger & Company, P.A.
Certified Public Accountants
<PAGE>
Consulting Agreement
This agreement is entered into on this 28 th day of April, 1998 by and
between MAS Financial Corp. (hereinafter referred to as "MAS"), and Sloan
Electronics, Inc., their heirs, designees or assignees, (hereinafter referred
to as "Client"), and is made with reference to the following recitations:
Whereas, MAS has skills and expertise in the fields of business consulting,
due diligence, mergers and acquisitions, and public and private offering
structuring and transactions, and
Whereas, Now, therefore, the parties hereto hereby agree and covenant as
follows:
(1) MAS agrees to assist Client prepare and file a registration documents for
a SB-2 registration with S.E.C. and with each State, where Client wishes to
register stock for public offering, and
(2) MAS agrees to provide Client consulting services from the date of this
agreement to December 31, 1998.
(3) MAS is not rendering legal advise to Client. Each party is responsible
for all of its own professional, legal, accounting, Broker-Dealer, and
consulting fees as they may apply to each party.
(4) Client agrees to pay MAS a total of $42,500 in cash and 100,000 common
shares of Sloan Electronics, Inc. valued at $10,000 or $0.1 per common share.
The 100,000 common shares of Sloan Electronics, Inc. shall be issued on the
date of this agreement. Of the $42,500, $5000 is payable when fund is
available and the balance is due when the Client is raised $125,000 or more
additional capital.
(5)The parties shall at all times keep each other's information, sources,
trade secrets, processes, and confidential information strictly confidential.
(6) This agreement shall be governed by the laws of the State of Indiana. The
parties agree to the jurisdiction of the Courts of the State of Indiana and
the United States District Court for the Southern District of Indiana as the
forums for the resolution of any legal disputes between the parties. Client
agrees to pay court costs, attorney fees in a reasonable amount, and interest
on any unpaid balances at the judgement rate then in effect in the State of
Indiana should it become necessary for MAS to engage in legal action to
recover any portion of the fees agreed in this agreement or any other fees
from the Client.
(7) This document contains the entire agreement between the parties hereto.
No oral or other representation or warranty has been given to Client by MAS,
and this agreement controls over any and all oral representations made by any
party to this transaction. This agreement may only be modified by a writing
signed by the parties.
(8) Each party agrees to execute all of the documents and do all of the
things necessary to effectuate the purpose of this agreement, without delay
or limitations.
Accepted and Agreed:
/s/ Aaron Tsai
/s/Paul Sloan
MAS Financial Corp By: Mr. Aaron Tsai, President
Sloan Electronics, Inc. By: Mr Paul Sloan
<PAGE>
FINANCIAL CONSULTING AGREEMENT
This agreement is made by and between SLOAN ELECTRONICS, INC., a Delaware
based corporation having its principle office at 1715 Stickney Pt. Road,
Suite A, Sarasota, FL 34231 (The "Company") and MARKET SURVEYS INTERNATIONAL,
INC., a Delaware corporation having its principle office at 1100 University
Avenue, Suite 214, Rochester, NY 14607 (the "Consultant").
In consideration of the mutual promise contained herein and on the terms and
conditions hereinafter set forth, the Company and Consultant agree as follow:
1. Provision of services investor relations program for Sloan Electronics
Inc. for eight (8) months.
(A) Consultant shall, to the extent reasonably required in the conduct of the
business of the Company, place at the disposal of the Company its judgement
and experience and, to such extent and at the prior written request of the
President of the Company, provide business development and corporate finance
services to the Company, including without limitation the following:
(I) Assigned individual to work with our broker network and leads for eight
(8) months.
A)Complete faxing (great for press release)
B)Complete mailing (information on Company) - please provide us with 100
complete packages for distribution
C)Mailing of Company research report to all interested parties
D)Access to the Market Pulse 800#
(II) E-mail campaign: We will E mail to our database of 2800 investors two
(2) times
(III) Featured stock listing on Market Pulse Journal Web site for a period of
eight(8) months.
(IV) 2 page, 4 color profile in Winter 1998/99. Spring 1999, and Summer 1999
issues of Market Pulse Journal.
(V) Please courier research report and any current press releases to the
corporate office address: Market Pulse Journal, Production Department, 1100
University Avenue, Suite 214, Rochester, New York 14607.
(B) Consultant shall use its best efforts in the furnishings of advise and
recommendations, and for this purpose consultant at all times maintain or
keep and make available qualified persons or a network of qualified outside
professionals for the performance of its obligations under this agreement. To
the extent reasonably practical consultant shall use its own personnel rather
than outside professionals.
(C) Consultant shall at all times comply with all federal and state
securities laws in the performance of its duties hereunder.
2. Compensation
The total cost for eight (8) month program is 35,000 shares of free trading
stock in Sloan Electronics, Inc. Shares in Sloan Electronics, Inc. are to be
paid as follows:
1. November 25, 1998 15,000 shares free trading
2. February 1, 1999 10,000 shares free trading
3. May 1, 1999 10,000 shares free trading
Please issue stock certificate to Market Pulse Surveys International, Inc.
Tax id # 16-1482773
3. Liability; Indemnification
(A) The company shall indemnify, save harmless and defend consultant and its
officers, directors, employees and agents (including without limitation the
observer) from, against and in respect of any loss, damage, liability,
judgement, cost or expense whatsoever, including counsel fees, suffered or
incurred by it or him by reason of, or on account of, its status or
activities as a consultant to the company hereunder (and, in the case of the
observer, his participation in meetings of the board of directors of the
company) except for any loss, damage, liability, judgement, cost or expense
resulting from willful malfeasance, bad faith or gross negligence in the
performance of consultant's duties hereunder.
(B) Consultant shall indemnify, save harmless and defend the Company and its
officers, directors, employees and agents from, against and in respect of any
loss, damage, liability, judgement, cost or expense whatsoever, including
counsel fees, suffered or incurred by it or him by reason of, or on account
of, willful malfeasance, bad faith or gross negligence in the performance of
consultant's duties hereunder.
4. Status of Consultant
Consultant shall at all times be an independent contractor of the Company
and, except as expressly provided or authorized by this agreement, shall have
no authority to act for or represent the company.
5. Other activities of Consultant
The company recognizes that consultant now renders and may continue to
render management and other services to other companies which may or may not
have policies and conduct activities similar to those of the Company.
Consultant shall be free to render such advise and other services and the
Company hereby consents thereto. Consultant shall not be required to devote
its full time and attention to the performance of its duties under this
agreement, but shall devote only so much of its time and attention as it
deems reasonable or necessary for such purposes.
6. Term
Consulting agreement will become effective upon receipt of signed
contract and payment of 15,000 shares of free trading stock in Sloan
Electronics, Inc. The term will be for eight (8) months.
7. In general
This agreement sets forth the entire agreement and understanding between
the parties with respect to its subject matter and supersedes all prior
discussions, agreements and understandings of every and any nature between
them with respect thereto. This agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made to be performed entirely within such state.
In witness whereof, the parties have caused this agreement to be signed by
their respective officers or representatives duly authorized on the day and
year first above written.
Sloan Electronics, Inc.
/s/ Paul Sloan 11/24/98
Paul Sloan CEO date
Market Surveys International, Inc.
/s/Mark D. Behringer
Mark D, Beringer November 16, 1998
Vice President of Sales date
<TABLE> <S> <C>
<PAGE>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at December 31, 1998 and Income Statement for the year
ended December 31, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 19,792
<SECURITIES> 0
<RECEIVABLES> 18,706
<ALLOWANCES> 6,580
<INVENTORY> 27,171
<CURRENT-ASSETS> 185,511
<PP&E> 1,892
<DEPRECIATION> 0
<TOTAL-ASSETS> 187,403
<CURRENT-LIABILITIES> 498,735
<BONDS> 0
0
0
<COMMON> 10,635
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 187,403
<SALES> 84,659
<TOTAL-REVENUES> 84,659
<CGS> 67,959
<TOTAL-COSTS> 367,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,518
<INCOME-PRETAX> (350,314)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 50,185
<CHANGES> 0
<NET-INCOME> (300,129)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
