SONIC JET PERFORMANCE, 10KSB/A, 1999-04-30

SONIC JET PERFORMANCE
10KSB/A, 1999-04-30
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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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: 000-22273

SONIC JET PERFORMANCE, INC.
(Exact name of registrant as specified in its charter)

COLORADO
(State or other jurisdiction of
Incorporation or Organization)
84-1383888
(I.R.S. Employer
identification No.)
15662 COMMERCE LANE
HUNTINGTON BEACH, CA 92649
(Address of principal executive offices including zip code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 895-0944

(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, NO PAR VALUE PER SHARE

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 [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of 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. [ ]

The issuer's revenues for the fiscal year ended December 31, 1998, were
approximately $689,000.

As of April 12, 1999, the aggregate market value of the voting stock
held by non-affiliates of the issuer was approximately $28,910,0000 based upon
the average closing bid and asked price of such stock on such date.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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AMENDMENT NO. 1

The undersigned registrant hereby amends the following portion of its
annual Report on Form 10-KSB for the fiscal year ended December 31, 1998, as set
forth in the pages attached hereto.

PART III

Item 9. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 10. EXECUTIVE COMPENSATION

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

The information with respect to the above items is being included
herewith because no proxy statement containing the information required by these
items will be prepared within the required time period.

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.

SONIC JET PERFORMANCE, INC. (Registrant)

Dated: April 30, 1999 By: /s/ VATCHE KHEDESIAN
------------------------------------
Name: Vatche Khedesian
Title: Treasurer

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Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

The directors, executive officers and key employees of the Company and
their ages and positions held with the Company are as follows:

<TABLE>
<CAPTION>
Name Age Position(s) with Company
---- --- ------------------------
<S> <C> <C>
Directors and Executive Officers:

Alex Mardikian 27 President and Director
Hratch Khedesian 31 Chairman of the Board
Vatche Khedesian 25 Treasurer and Director
George Tfaye 42 Vice President, Production
Engineering and Director
Raymond Wedel Chief Operating Officer

Certain Key Employees:

Albert Mardikian 53 Design Director, Chairman/CEO
International Operations
</TABLE>

Alex Mardikian joined the Company as a Director in July 1998 and was
appointed Vice President in July 1998, and was appointed President in November
1998. He received an AS in Water Technology from Mount San Antonio College in
1993. From March 1991 to October 1994 he was employed by Laser Jet Performance
as a production manager. From 1993 to 1995 he was an Inventory Operations
Manager for Lynn Vick Products, a watercraft products supplier. From 1995 to
1997 he was a regional service manager in the Western Utility Division with
Schlumberger Industries. Alex Mardikian is the son of Albert Mardikian

Hratch Khedesian joined the Company as a director in July 1998. He
studied at UCLA and at Goldenwest College in finance and business. From 1987 to
the present he has worked for Mardikian Design and its successor, Laser Jet
Performance, in product design and production engineering. He has had on-the-job
training in production engineering, new product development, purchasing,
management and training, accounting, human resources, CAD-CAM Design, and
Computer Numeric Control Programming. Hratch Khedesian is the brother of Vatche
Khedesian.

Vatche Khedesian joined the Company as a director in July 1998 and was
appointed Treasurer in November 1998. He obtained a BA from the University of
California at Santa Barbara in 1997, with a major in Marketing and Finance. He
became employed by Sonic Jet Performance in January 1998 as a business
organization planner. He was operations manager for MB2 West from 1996 to 1998.
From 1993 to 1995 he was a warehouse manager for Akari Gemini. For six months in
1996 he worked as an aide in the Financial Marketing Department of Merrill
Lynch. Vatche Khedesian is the brother of Hratch Khedesian.

George Tfaye joined the Company as a director in July 1998. He obtained
an educational certificate at the Technical Institute of Aleppo Syria in 1976 in
machining, tooling, Production Engineering, and Mold Making. He has been Vice
President of Production Engineering and New Product Development at various
predecessors to Sonic Jet Performance, Inc., since 1987. He is Secretary and a
Director of Golden Empire Trading, Inc., since 1989. George Tfaye is the
brother-in-law of Albert Mardikian.

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Raymond Wedel joined the Company as Chief Operating Officer in January
1999. Prior thereto, from March 1992 to December 1998, Mr. Wedel was the
President of Torque Engineering Corporation. In addition, since January 1998,
Mr. Wedel has been the President of Oceanus Engineering Inc., International

CERTAIN KEY EMPLOYEES:

Albert Mardikian joined the Company as Design Director and Chairman/CEO
of International Operations in July 1998. Prior thereo, from 1997 to July 1998,
Mr. Mardikian was a member of Sonic Jet Performance, LLC, the predecessor to the
Company. In addition, since 1994, Mr. Mardikian has been a Director and/or
executive officer of various privately-held companies owned by him or his
family. Mr. Mardikian holds a degree from Northrop University in aircraft design
and engineering. Mr. Mardikian's patented personal watercraft designs have won
several awards, including the IMTEC 1995 Innovation Award. Mr. Mardikian is the
father of Alex Mardikian and the brother-in-law of George Tfaye.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of its Common Stock to file reports of ownership and
changes of ownership with the Securities and Exchange Commission and NASDAQ.
Such persons are also required to furnish the Company with copies of all Section
16(a) forms they file.

Based solely on the Company's review of the copies of those forms
received by the Company, or written representations from such persons that no
Forms 5 were required to be filed, it appears that all reports due were timely
filed, except that one officer did not file a Form 3 upon becoming an officer of
the Company.

Item 10. EXECUTIVE COMPENSATION

No executive officers of the Company received total compensation for
the fiscal years ended December 31, 1998, 1997 and 1996 that exceeded $100,000.

On June 19, 1998, the Company amended an employment agreement with
Albert Mardikian, Design Director and Chairman/Chief Executive Officer of
International Operations of the Company that originated with Sonic Jet
Performance, LLC, a predecessor company to the Company. The agreement calls for
Mr. Mardikian to be paid on a bimonthly basis the following annual salary:

<TABLE>
<CAPTION>
Year ending
December 31, Salary
------------ ------
<S> <C>
1999 $120,000
2000 $140,000
2001 $175,000
2002 $200,000
</TABLE>

Further, pursuant to the agreement, Mr. Mardikian is to be paid a base
salary of $100,000 for 1998 except that until June 19, 1998, the salary was
accrued and not paid (the "Accrued Salary") to Mr. Mardikian. Commencing June
19, 1998, Mr. Mardikian was paid an annualized salary of $100,000 on a bimonthly
basis. The Accrued Salary was a liability to the Company and is to be paid to
Mr. Mardikian, in addition to his then current salary, commencing January 1,
1999, in equal bimonthly amounts over calendar year 1999.

In addition to the basic salary, Mr. Mardikian is entitled to receive
incentive compensation equal to five percent (5%) of the Company's net profits
(but without regard to nonrecurring items of income or expense, including gain
or loss on disposition of capital assets or assets used in the Company's
business) and before

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deduction of any federal taxes. Moreover, during the employment term, the
Company shall reimburse Mr. Mardikian for reasonable out-of-pocket expenses
incurred in connection with the Company's business, including travel expenses,
food and lodging while away from home. Further, the Company is obligated to
furnish Mr. Mardikian with a Company-owned automobile.

Finally, during the term of the Employment Agreement, all designs,
processes, inventions, patents, copyrights, trademarks and other intangible
rights that may be conceived or developed by Mr. Mardikian will be his sole
property provided that Mr. Mardikian shall license any such items to the Company
at no additional cost than otherwise to be received by Mr. Mardikian pursuant to
his Royalty Agreements. See "Certain Relationships and Related Transactions."

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 15, 1999, by (i) each person
who is known to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers of the Company as a
group:

AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP CLASS
-------------------- -------------------- ----------
<S> <C> <C>
Sonic Jet Performance, LLC 10,000,000 79.24%
Alex Mardikian 0 0
Hratch Khedesian (2) 0 0
Vatche Khedesian 0 0
George T. Faye 0 0
Albert Mardikian (2) 10,000,000 79.24%
All current directors and officers as a group (5 persons) (3) 10,000,000 79.24%
</TABLE>

(1) Such persons have sole voting and investment power with respect to all
shares of Common Stock shown as being beneficially owned by them,
subject to community property laws, where applicable, and the
information contained in the footnotes to this table.

(2) Sonic Jet Performance, LLC, is owned as follows: 74% by MGS Grand
Sport, Inc. which is is owned 80% by Golden Mardikian LLC, 19% by Laser
Jet Performance, Inc. (which itself is owned 100% by Albert Mardikian)
and 1% by Hratch Khedesian, 22.7% by Sheik Mohammad Al Rashid and 3.6%
by Majed Al Rashid. Golden Mardikian LLC is owned 43.7% by MGS Grand
Sport, Inc., 0.6% by Albert Mardikian and 55.7% by Nellie Mardikian,
Albert Mardikian's wife.

(3) The address of each director and executive officer named is c/o the
Company, 15662 Commerce Lane, Huntington Beach, CA 92649.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has employment and other compensation agreements with
certain executive officers. See "Executive Compensation."

On August 3, 1998, the Company assumed a number of royalty agreements
with Albert Mardikian, its Design Director and Chairman/Chief Executive Officer
of International Operations that originated with a predecessor company. The
royalty is for a maximum amount of 2% of Company sales for a period of five

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years commencing November 18, 1998. Royalty amounts are to be paid on a
quarterly basis with a minimum royalty of $4,167 per month for the twelve-month
period commencing January 18, 1999, and increasing to $8,333 per month
thereafter.

Included in due from related parties in the Company's financial
statements are amounts due from the following related parties:

Sonic Jet Performance, Inc. - Florida $ 30,445
Sonic Marketing International, LLC 35,172
Sonic Jet International, Inc. 366,123
Majed Al Rashid 40,511
Vatche Khedesian 285
TOTAL 472,536

Sonic Jet Performance, Inc. - Florida ("SJPF") is 100% owned by the
Company. SJPF has not been consolidated because the amounts involved are not
material. Sonic Marketing International, LLC, is owned by a stockholder of the
Company. It used to market the Company's products and has since ceased doing
business. Sonic Jet International, Inc., is owned by a stockholder and markets
the Company's products exclusively. Subsequent to the balance sheet date, a
stockholder of Sonic Jet International, Inc., loaned the Company approximately
$400,000. The Company expects to collect on its receivable and pay off the loan
balance or settle the amount by set-off. Majed Al Rashid is indirectly a
stockholder of the Company, and Vatche Khedesian is an officer of the Company.

There is a note payable to Sheik Mohammad Al Rashid, an indirect
stockholder of the Company in the amount of $600,000. This note bears interest
at 10% per annum. Interest has accrued on such note since July 18, 1997, and
annual payments are to commence July 18, 2000. Pursuant to a separate letter
agreement an option has been granted to Sheik Mohammad Al Rashid to convert the
note to common stock at a price to be agreed upon by the Company and the note
holder. The Company may not pay any dividends until the loan is paid off. All
unpaid principal is due July 18, 2001. The note is secured by all of the assets
of the Company.

All transactions between the Company and its shareholders, officers or
directors or their affiliates will continue to be on terms no less favorable to
the Company than could be obtained from an unaffiliated third party and will be
approved by a majority of the disinterested directors of the Company. In the
future, no loans or advances will be made to any officer, director or five
percent (5%) or greater shareholder of the Company or any affiliate of any of
the foregoing except for bona fide business purposes.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.4 Contract for Sino-Foreign Contractual Joint Venture of Dalian
Sonic Jet Co., Ltd. (1)
10.5 Contract for Sino-Foreign Contractual Joint Venture of Nanning
Sonic Jet Co., Ltd. (1)
10.6 Employment Agreement with Albert Mardikian, as amended (1).
</TABLE>

- ---------------------------
(1) Filed herewith.

<PAGE> 1
EXHIBIT 10.4

SINO-FOREIGN CONTRACTUAL JOINT VENTURE

DALIAN SONIC JET CO., LTD.

CONTRACT

DALIAN EVERHARVEST INDUSTRIAL COMPANY
SONIC JET PERFORMANCE, LLC. U.S.A.
AMERINA INVESTMENT GROUP (U.S.A.)
May 15, 1998

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CONTRACT FOR SINO-FOREIGN CONTRACTUAL
JOINT VENTURE OF NALIAN SONIC JET CO., LTD

CHAPTER 1 General Provision

In accordance with the "law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" and other relevant Chinese laws,
and regulations, DALIAN EVERHARVEST INDUSTRIAL COMPANY, AMERINA INVESTMENT
GROUP, U.S.A., and SONIC JET PERFORMANCE, LLC, U.S.A., adhering to the principle
of equality and mutual benefit and through friendly consultation, agree to
jointly invest to set up a contractual joint venture enterprise in Dalian city,
Liaoning province, the People's Republic of China. The contract hereunder is
worked out.

CHAPTER 2 Parties of the Joint Venture

ARTICLE I

Parties of this contract are as follows:

DALIAN EVERHARVEST INDUSTRIAL COMPANY (hereinafter referred to as Party
A) registered with Dalian, Liaoning in China, and its legal address is No. 182
Youyi Street, Ganjingzi District, Dalian, China.

Legal representative: Name: Feng Kai
Position: President
Nationality: China

SONIC JET PERFORMANCE, LLC. U.S.A. (hereinafter referred to as Party B),
registered in America. Its legal address is 15662 Commerce Lane, Huntington
Beach, CA 92649, U.S.A.

Legal representative: Name: Albert Mardikian
Position: President
Nationality: U.S.A.

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CHAPTER 3 Establishment of the Contractive Joint Venture Company

ARTICLE 2

In accordance with the "law of the People's Republic of China on Joint
Venture Using Chinese and Foreign Investment", and other relevant Chinese laws,
and regulations, the three parties of the contractual joint venture agree to set
up a contractual limited liability company (hereinafter referred to as the
CJVC), in Dalian, Liaoning, China.

ARTICLE 3

The name of contractual joint venture company is Dalian Sonic Jet
Limited liability company.

The legal address of the CJVC is 182 Youyi Street, Ganjingzi
District, Dalian, China.

ARTICLE 4

All activities of the joint venture company shall be governed by the
laws, decrees and relevant rules and regulations of the People's Republic of
China.

ARTICLE 5

The organization form of the CJVC is a limited liability company.

ARTICLE 6

The benefits of CJVC shall be distributed on net profit as follows:

Party A will receive 45%

Party B will receive 45%

Party C will receive 10%

All Parties will also share all the risks and losses on a percentage
basis.

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CHAPTER 4 Purpose, Scope, Scale of Production and Business

ARTICLE 7

The purpose of the parties to CJVC is conformity with the wish of
enhancing the economic cooperation and technical exchanges, to use domestic
cheap raw material and labour resources, adopt advanced and appropriate
technology and scientific management method, produce and sell watercraft jet
products, so as to ensure satisfactory economic benefits for each investor.

ARTICLE 8

The scope of production and business of the CJVC is to produce series of
jet products.

ARTICLE 9

The production scale, the joint venture will make its best effort to
produce 2000 units or more of various products.

CHAPTER 5 Total Amount of Investment and the Registered Capital

ARTICLE 10

The total amount of investment of the CJVC is 2 million USD.

ARTICLE 11

The registered capital of the CJVC is 1 million USD.

ARTICLE 12

Two parties of the CJVC will provide the cooperation as follows:

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(1) Party A: To provide factory building, land and
supplementary facilities equivalent to 700,000 USD, and
base on production scale, will inject up to 2 million
USD [Initials added].

(2) Party B: To provide tooling, mould (2 set of each model)
and design of factory flow and initial training
expenses.

(3) Party C: To assist Party B to promote marketing and
guarantee to remit all sales occurred in oversea to
return to CJVC.

3 parties of CJVC should finish article 12 in 3 months since this
contract is signed.

ARTICLE 14

In case any party to the joint venture intends to assign all or part of
his investment subscribed to a fourth party except the other two parties,
consent shall be obtained from the other parties to the joint venture, and
approval from the board of director of Dalian Sonic Jet LTD is required.

When one party to the joint venture assigns all or part of his
investment, the other two parties have the first right of refusal.

CHAPTER 6 Responsibilities of Each Party to the CJVC

ARTICLE 15

Party A and Party B and Party C shall be respectively responsible for
the following matters:

Responsibilities of Party A: Handling applications for approval,
registration, business license and other matters concerning the establishment of
the joint venture company from relevant department in charge in China.

Processing for applying the right to the use of site to the authority in
charge of the land. The CJVC only has the right to use the land and it can't own
the land. The CJVC shall not be paid any fee to Party A during the land using
period. In case if any relocation of the factory, party "A" has full
responsibility for the relocation.

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Providing the cooperation conditions in accordance with the stipulation
in Article 12 and Article 13.

Assisting Party B for processing import Customs declaration as
investment of moulds and toolings and arranging the transportation within the
Chinese territory, the fee of all the shipping of the moulds and tooling from
U.S.A. and Nanning.

Assisting the CJVC in purchase or leasing equipment, materials, raw
materials, articles for office use, means of transportation and communication
facilities., all charges shall be born by CJVC.

Assisting the CJVC in contracting and settling the fundamental
facilities such as water, electricity, transportation, all charges shall be born
by CJVC.

Assisting the CJVC in recruiting Chinese management personnel, technical
personnel, workers and other personnel needed, their wage shall be decided by
the directors of the board of the CJVC.

Responsible for handling other matters entrusted by the joint venture
company.

Responsibilities of Party B:

Providing the conditions in accordance with the stipulation in Article
13, and responsible for shipping capital goods such as machines and equipment,
etc., contributed as investment to a Chinese port. Handling the matters
entrusted by the CJVC, such as selecting and purchasing machinery and equipment
outside China, etc.

Providing needed technical personnel for installing, testing and trial
production of the equipment, as well as the technical personnel for production
and inspection products quality.

Training the technical personnel and workers of the CJVC, initial
training personnel who is sent by Party B will be born by Party B.

Responsible for other matters entrusted by the joint venture company.

Responsibilities of Party C:

As the same in Article 12

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CHAPTER 7 Selling of Products

ARTICLE 16

The products of the CJVC will be sold internationally including China.

2% of the sales profit for new design should be paid to the owner of
patent, Mr. Albert Mardikian [Initial inserted].

ARTICLE 17

Products may be sold on overseas markets through the following channels:

The CJVC will assign Party B and C to sell its products internationally
and the sale price shall be submitted by Party B and C to the board of the
directors of approval.

CHAPTER 8 Board of Directors

ARTICLE 18

The date of registration of the CJVC shall be the date of the establish
of the board of directors of the CJVC.

ARTICLE 19

The board of directors are composed of 5 directors, of which 2 shall be
appointed by Party A, 2 by Party B, and 1 by Party C. The chairman of the board
shall be appointed by Party B, and the vice chairman and the president by Party
A.

ARTICLE 20

The highest authority of the CJVC shall be its board of directors. It
shall decide all major issues. Concerning the joint venture company, majority
approval of the board of directors be required before any decisions are made
concerning major issues. As for other matters, approval by majority or a simple
majority shall be required.

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ARTICLE 21

The chairman of the board is the legal representative of the CJVC. The
chairman be unable to exercise his responsibilities for some reasons, he shall
authorize the vice chairman to represent the CJVC temporarily.

ARTICLE 22

The board of directors shall convene at least one meeting every year.
The meeting shall be called and presided over by the chairman of the board. The
chairman may convene an interim meeting based on a proposal made by more than
one third of the total number of directors. Minutes of the meetings shall be
filed.

CHAPTER 10 Business Management office

ARTICLE 23

The CJVC shall establish a management office under the board and the
president, responsible for its daily management, the term of the president is 3
years.

ARTICLE 24

The responsibility of the president is to carry out the decisions of the
board meeting, organize and conduct the daily management of the joint venture
company. The deputy general manager shall the general manager in his work.

Several department manager may be appointed by the management office,
and being responsible for the work in each department respectively, they shall
handle the matter handed over by the President.

ARTICLE 25

If the factory director dishonest while on duty, the board of directors
shall have the power to dismiss them at any time.

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CHAPTER 10 Purchase of Equipment and utilities

ARTICLE 26

In purchasing required materials, fuel, parts means of transportation
and articles for office use, etc. The joint venture company shall give priority
to purchasing in China where conditions are the same.

CHAPTER 11 Labor Management

ARTICLE 27

Labor contracts covering the recruitment, employment, dismissed and
resignation, wages, labor insurance, welfare, rewards, penalty and other
matters concerning the staff and workers of the joint venture company as a whole
or individually in accordance with the "Regulation of the People's Republic of
China on Labor Management in Joint Venture Using Chinese and Foreign Investment
and its Implementation Rules."

The labor contracts shall be filed with the labor management department,
after being signed.

ARTICLE 28

The appointment of high-ranking administrative personnel recommended by
three parties, their salaries, social insurance, welfare and the standard of
traveling expenses, etc.

ARTICLE 29

The CJVC shall pay taxes in accordance with the stipulations of Chinese
laws and other relevant regulation.

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ARTICLE 31

Allocations for reserve funds, expansion funds of the CJVC and welfare
funds, bonuses for staff and workers shall be set aside in accordance with the
stipulations in the "Law of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment". The annual proportion of allocations
shall be decided by the board of directors according to the business situation
of the CJVC.

ARTICLE 32

The fiscal year of the CJVC shall be from January 1 to December 31. All
vouchers, receipts, statistic statements and reports, account books shall be
written in Chinese and English.

ARTICLE 33

Financial checking and examination of the CJVC shall be conducted by an
auditor registered in China and reports shall be submitted to the board of
directors and the general manager.

If Party B considers it is necessary to employ a foreign auditor
registered in other country to undertake annual financial checking and
examination, Party A shall give its consent. All the expenses shall be born by
Party B.

ARTICLE 34

In the first three months of each fiscal year, the manager shall prepare
previous year's balance sheet, profit and loss statement and proposal regarding
the disposal of profits, and submit them to the board of directors for
examination and approval.

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CHAPTER 13 Duration of the Joint Venture

ARTICLE 35

The duration of the joint venture company is 50 years with additional of
50 years extension option approved by board of directors six months prior of
ending the lease. The establishment of the joint venture company shall start
from the date on which the business licenses of the CJVC is issued. In case any
change of legal representative for three parties, the contract shall still be
valid.

CHAPTER 14 The Disposal of Assets after the

Expiration of the Duration

ARTICLE 36

Upon the expiration of the duration or termination before the date of
expiration of the joint venture, liquidation shall be carried out according to
relevant laws. The liquidated assets shall be distributed in accordance with the
proportion of investment contributed by Party A and Party B and Party C.

CHAPTER 15 Insurance

ARTICLE 37

All-risks insurance policies of the CJVC shall be underwritten with The
People's Insurance Company of China. The type, value and duration of insurance
shall be decided by the board of directors in accordance with the stipulations
of the People's Insurance Company of China.

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ARTICLE 38

The amendment of the contract or other appendices shall come into force
only after the written agreement signed by Party A and Party B and C and
approved by the original examination and approval authority.

ARTICLE 39

In ease of inability to fulfill the contract or to continue operation
due to heavy losses in successive years as a result of force majeore, the
duration of the joint venture and the contract shall be terminated before the
time of expiration after unanimously agreed upon by the board of directors and
approved by the original examination and approval authority.

ARTICLE 40

Should the CJVC be unable to continue its operation or achieve the
business purpose stipulated in the contract due to the fact that one of the
contracting parties fails to fulfill the obligations prescribed by the contract
and articles of association, or seriously violate the stipulations of the
contract and articles of association, that party shall be deemed as unilaterally
terminates the contract. The other two parties apart from claiming damages,
shall have the right to terminate the contract by the original examination and
approval authority. If Party A and Party B and Party C of the joint venture
company agree to continue the operation, the party who fails to fulfill the
obligation shall liable for the economic losses thus caused to the joint venture
company.

CHAPTER 17 Liabilities for Breach of Contract

ARTICLE 41

Should all or part of the contract and its appendices be unable to be
fulfilled owing to the fault of one party, the breaching party shall bear the
responsibilities thus

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caused. Should it be the fault of three parties, they shall bear their
respective responsibilities according to actual situations.

ARTICLE 42

In order to guarantee the performance of the contract and its
appendices, both Party A and Party B and Party C are obligated the guaranteer
the performance of this contract.

CHAPTER 19 Force Majeure

ARTICLE 43

Should either of the parties to the contract be prevented from executing
contract by force majeure, such as earthquake, typhoon, flood, fire and war and
other unpreventable and unavoidable, the prevented party shall notify the other
party by cable without any delay, and within 15 days thereafter provide the
detailed information of the events and a valid document for evidence issued by
the relevant public notary organization for explaining the reason of its
inability to execute or delay the execution of all or part of the contract. Both
parties shall, through consultation, decide whether to terminate the contract or
to exempt the part of obligations for implementation of the contract or whether
to delay the execution of the contract according to the effect of the events on
the performance of the contract.

CHAPTER 19 Application Law

ARTICLE 44

The formation of this contract, its validity, interpretation, execution
and settlement of the disputes shall are governed by related laws of the
People's Republic of China.

13
<PAGE> 14

CHAPTER 20 Settlement of Disputes

ARTICLE 45

Any disputes arising from the execution of or in connection with the
contract shall be settled through friendly consultation between three parties.
In case no settlement can be reached through consultations, the disputes shall
be submitted to China council for the promotion of International Trade Foreign
Economic & Trade Arbitration Committee in Beijing for arbitration in accordance
with its rules of procedure. The arbitration award is final and binding upon
both parties.

ARTICLE 46

During the arbitration, the contract shall be executed continuously by
three parties except for matters in disputes.

ARTICLE 47

The contract shall be written in Chinese and English.

CHAPTER 22 Effectiveness of the Contract and Miscellaneous

ARTICLE 49

The appendices drawn up in accordance with the principles of the
contract are integral part of this contract, including: the project agreement,
the technology transfer agreement, the sales agreement.

ARTICLE 50

The contract and its appendices shall come into force beginning from the
date of approval of the Ministry of Foreign Economic Relations and Trade of the
People's Republic of China (or its entrusted examination and approval
authority).

14
<PAGE> 15

ARTICLE 51

Should notices in connection with any party's rights and obligations be
sent by either Party A or Party B by teleg, telex or fax etc, the written letter
notice shall be also required afterwards. The legal addresses of Party A and
Party B and Party C listed in this contract shall be the posting addresses.

ARTICLE 52

The contract is signed in Dalian Liaoning., China by the authorized
representative of three parties on May 15, 1998.

This contract is English Translation on the base of the Chinese
contract.

For Party A For Party B For Party C
(signature) (signature) (signature)

Sign
------------------------------------ ------------------------------------
Print
------------------------------------ ------------------------------------
Title:
------------------------------------ ------------------------------------

Date 98-5-15 5/15/98 98-5-15
----------------------------------------------------------------------------

<PAGE> 1
EXHIBIT 10.5

CONTRACT FOR SINO-FOREIGN CONTRACTUAL
JOINT VENTURE OF NANNING SONIC JET CO., LTD.

In accordance with the "law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" and other relevant Chinese laws,
and regulations, introduced by AMERINA INVESTMENT GROUP, U.S.A., China Guangxi
Nanning shipyard and SONIC JET PERFORMANCE, LLC, U.S.A., adhering to the
principle of equality and mutual benefit and through friendly consultation,
agree to jointly invest to set up a contractual joint venture enterprise in
Nanning city, Guangxi province, the People's Republic of China. The contract
hereunder is worked out.

CHAPTER 2 Parties of the Joint Venture

ARTICLE 1
Parties of this contract are as follows :
China Guangxi Nanning Shipyard (hereinafter referred to as Party A)
registered with Nanning, Guangxi in China, and its legal address is at No. 10
Baisha Ave., Nanning, Guangxi, China.
Legal representative: Name Zhou Min
Position: Director
Nationality: Chinese

SONIC JET PERFORMANCE, LLC, U.S.A. (hereinafter referred to as Party B),
registered in America. Its legal address is at 15662 Commerce Lane, Los Angeles,
Huntington Beach, CA 92649, U.S.A.
Legal representative: Name Majed Alrashid
Position: President
Nationality: Kingdom of Saudi Arabia

Page 1 of 13
<PAGE> 2

CHAPTER 3 Establishment of the Contractive Joint Venture Company

ARTICLE 2

In accordance with the "law of the People's Republic of China on Joint
Venture Using Chinese and Foreign Investment", and other relevant Chinese laws,
and regulations, both parties of the contractual joint venture agree to set up a
contractual limited liability company (hereinafter referred to as the CJVC) in
Nanning, Guangxi, China.

ARTICLE 3

The name of the contractual joint venture company is Nanning Sonic a
limited liability company.

The legal address of the CJVC is at No. 10 Baisha Ave. Nanning,
Guangxi, China.

ARTICLE 4

All activities of the joint venture company shall be governed by the
laws, decrees and relevant rules and regulations of the People's Republic of
China.

ARTICLE 5

The benefits of CJVC shall be distributed as follows:

For Party A: After deducting 2% of patent fee and certain proportion for
the ensurance fee, 15% of the whole price as the benefits shall be distributed
to Party A.

For Party B: Except 15% of benefit from wholesale amount distributed to
Party A, all rest profits shall belong to Party B. 15% of risks and losses for
the CJVC shall be shared by Party A, and of which 85% by Party B. The CJVC will
implement centralized management and operation, and independent accounting.

CHAPTER 4 Purpose, Scope, Scale of Production and Business

ARTICLE 7

The purpose of the parties to CJVC is conformity with the wish of
enhancing the economic cooperation and technic exchanges, to use domestic cheap
raw material and labor resources, adopt advanced and appropriate technology and
scientific management method, produce and sell watercraftjet products, so as to
ensure satisfactory economic benefits for each investor.

Page 2 of 13
<PAGE> 3

ARTICLE 8

The scope of production and business of the CJVC is to produce a series
of jet products.

ARTICLE 9

1. The production scale of the joint venture is to produce 1,200
watercraft jets and accessories per year.

CHAPTER 5 Total Amount of Investment and the Registered Capital.

ARTICLE 10

The total amount of investment of the CJVC is 2 million USD.

ARTICLE 11

The registered capital of the CJVC is 2 million USD.

ARTICLE 12

Two parties of the CJVC will provide the cooperation as follows:

(1) Party A : To provide factory building, land and supplementary
facilities equivalent to Yen 500,000 USD.

(2) Party B: To provide tooling, mould and production line of 30,000.00
USD and $1,470,000.00 USD circulating funds in cash. The total investment amount
of Party B will be $1.5 million USD. CJVC will pay Saudi Mohamed Al Rashi
Company Yen500,000 (USD) toward marketing of the products.

ARTICLE 13

The following cooperation conditions shall be finished by two parties.
The production equipment provided by Party B shall be shipped from factory
Huntington Beach, California, within 20 days starting from the date on which the
business license is issued.

ARTICLE 14

In case any party to the joint venture intends to assign all or part of
his investment subscribed to a third party except SJP LLC to Amerina, consent
shall be obtained from the other party to the joint venture, and approval from
the board of directors of Sonic Jet of Nanning is required.

When one party to the joint venture assigns all or part of his
investment, the other party has the first right of refusal.

Page 3 of 13
<PAGE> 4

CHAPTER 6 Responsibilities of Each Party to the CJVC.

ARTICLE 15

Party A and Party B shall be respectively responsible for the following
matters:

Processing for applying the right to the use of a site to the authority
in charge of the land. The CJVC only has the right to use the land and it can't
own the land. The CJVC shall not be paid any fee to Party A during the
land-using period.

After receiving the B/L for the production equipment and mould, the
factory building shall be completed within 20 days.

Providing the cooperation conditions in accordance with the stipulation
in Article 11 and Article 12.

Assisting Party B for processing import Customs declaration as
investment and arranging the transportation within the Chinese territory, the
fee will be borne by Party B.

Assisting the CJVC in purchase or leasing equipment, materials, raw
materials, articles for office use, means of transportation and communication
facilities, etc., all charges shall be borne by CJVC.

Assisting the CJVC in contracting and settling the fundamental
facilities such as water, electricity, transportation, etc., all charges shall
be borne by Party B.

Assisting the CJVC in recruiting Chinese management personnel, technical
personnel, workers and other personnel needed, their wage shall be decided by
the directors of the board of the CJVC.

Responsible for handling other matters entrusted by the joint venture
company.

Responsibilities of Party B:

Providing the conditions in accordance with the stipulation in
Article 11, 12, and responsible for shipping capital goods such as machines and
equipment, etc, contributed as

Page 4 of 13
<PAGE> 5

investment to a Chinese port. Handling the matters entrusted by the CJVC,such as
selecting and purchasing machinery and equipment outside China, etc;

Providing needed technical personnel for installing, testing and trial
production of the equipment, as well as the technical personnel for production
and inspection products quality.

Training the technical personnel and workers of the CJVC.

Responsible for other matters entrusted by the joint venture company.

CHAPTER 7 Selling of Products.

ARTICLE 16

The products of CJVC will be sold international including China.

ARTICLE 17

Products may be sold on overseas markets through the following channels:

The CJVC may entrust Party B to sell its products and its sale price
shall be decided by the board of directors.

CHAPTER 8 The Board of Directors.

ARTICLE 18

The date of registration of the CJVC shall be the date of the establish
the board of directors of the CJVC.

ARTICLE 19

The board of directors are composed of 5 directors, of which 1 shall be
appointed by Party A, 4 by Party B. The chairman of the board shall be
appointed by Party B,and general manager by Party A. The term of office for the
directors, chairman is 3 year, whose term of office may be renewed if
continuously appointed by the relevant party.

ARTICLE 20

The highest authority of the CJVC shall be its board of directors. It
shall decide all major issues. Concerning the joint venture company majority
approval of the board of directors be required before any decisions are made
concerning major issues. As for other matters, approval by majority or a simple
majority shall be require.

Page 5 of 13
<PAGE> 6

ARTICLE 21

The chairman of the board is the legal representative of the CJVC. The
chairman be unable to exercise his responsibilities for some reasons, he shall
authorize the general manager or any other directors to represent the CJVC
temporarily.

ARTICLE 22

CHAPTER 10 Business, Management Office

ARTICLE 23

The CJVC shall establish a management office which shall be responsible
for its daily management. The management office shall have a general manager,
recommended by Party A. The general manager shall be invited by the board of
directors, whose terms of office is 3 years.

ARTICLE 24

The responsibility of the president (board will elect) is to carry out
the decisions of the board meeting, organize and conduct the daily management of
the joint-venture company. The deputy general manager shall [assist] the general
manager in his work.

Several department managers may be appointed by the management office,
and being responsible for the work in each department respectively, they shall
handle the matter handed over by the general managers and deputy general manager
and shall be responsible to them.

ARTICLE 25

If the factory director dishonest while on duty, the board of directors
shall have the power to dismiss them at any time.

Page 6 of 13
<PAGE> 7

CHAPTER 10 Purchase of Equipment and Utilities

ARTICLE 26

In purchasing required materials, fuel, parts, means of transportation
and articles for office use, etc. the joint venture company shall give priority
to purchasing in China where conditions are the same.

CHAPTER 11 Labor Management

ARTICLE 27

Labor contracts covering the recruitment, employment, dismissal and
resignation, wages, labour insurance, welfare, rewards, penalty and other
matters concerning the staff and workers of the joint venture company as a whole
or individually [sic] in accordance with the "Regulation of the People's
Republic of China on Labor Management in Joint Venture Using Chinese and Foreign
Investment and its Implementation Rules."

The labor contracts shall be filed with the labor management department,
after being signed.

ARTICLE 28

The appointment of high-ranking administrative personnel recommended
[sic] by both parties, their salaries, social insurance, welfare and the
standard of travelling expenses etc.

ARTICLE 29

The CJVC shall pay taxes in accordance with the stipulations of Chinese
laws and other relevant regulation.

ARTICLE 30.

Staff members and workers of the CJVC shall pay individual income tax
according to the"Individual Income Tax Law of the People's Republic of China"

ARTICLE 31

Page 7 of 13
<PAGE> 8

annual proportion of allocations shall be decided by the board of directors
according to the business situation of the CJVC.

ARTICLE 32

The fiscal year of the CJVC shall be CJVC [sic] from January 1 to
December 31. All vouchers, receipts, statistic statements and reports, account
books shall be written in Chinese and English.

ARTICLE 33

Financial checking and examination of the CJVC shall be conducted by an
auditor registered in China and reports shall be submitted to the board of
directors and the general manager.

ARTICLE 34

CHAPTER 13 Duration of the Joint Venture

ARTICLE 35

The duration of the joint venture company is 50 years with additional 50
years extension option approved by board of directors six months prior of ending
the lease. The establishment of the joint venture company shall start from the
date on which the business license of the CJVC is issued. In case any change of
legal representative for two parties, the contract shall still be valid.

CHAPTER 14 The Disposal of Assets after the Expiration of the Duration

Page 8 of 13
<PAGE> 9

ARTICLE 36

CHAPTER 15 Insurance

ARTICLE 37

CHAPTER 16 The Amendment, Alteration and Discharge of the Contract

ARTICLE 38

The amendment of the contract or other apperices shall come into force
only after the written agreement signed by Party A and Party B and approved by
the original examination and approval authority.

ARTICLE 39

In case of inability to fulfil the contract or to continue operation due
to heavy losses in successive years as a result of force majeure, the duration
of the joint venture and the contract shall be terminated before the time of
expiration after unanimously agreed upon by the board of directors and approved
by the original examination and approval authority.

ARTICLE 40

Should the CJVC be unable to continue its operation or achieve the
business purpose stipulated in the contract due to the fact that one of the
contracting parties fails to fulfil the obligations prescribed by the contract
and articles of association, or seriously violates the stipulations of the
contract and articles of association, that party shall be deemed as unilaterally
terminates the contract. The other party, apart from claiming damages, shall
have the right to terminate the contract in accordance with the provisions of
the contract after it is

Page 9 of 13
<PAGE> 10
approved by the original examination and approval authority. If Party A and
Party B of the joint venture company agree to continue the operation, the party
who fails to fulfil the obligation shall be liable for the economic losses thus
caused to the joint venture company.

CHAPTER 17 Liabilities for Breach of Contract

ARTICLE 41

Should either Party A or Party B fail to pay the contributions as
scheduled in accordance with the provisions defined in Chapter 5 of this
contract, the breaching party shall pay to the other Party 5% of the
contribution starting from the first month after exceeding the time limit.
Should the breaching party fail to pay after 3 months, it shall pay 10% of the
contribution to the other party, who shall have the right to terminate the
contract and to claim damages to the breaching party.

ARTICLE 42

Should all or part of the contract and its appendices be unable to be
fulfilled owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of both parties, they shall
bear their respective responsibilities according to actual situations.

ARTICLE 43

In order to guarantee the performance of the contract and its
appendices, both Party A and Party B are obligated to guarantee the performance
of this contract.

Chapter 18 Force Majeure

ARTICLE 44

Should either of the parties to the contract be prevented from executing
the contract by force majeure, such as earthquake, typhoon, flood, fire and war
and other unforeseen events, and their happening and consequences are
unpreventable and unavoidable, the prevented party shall notify the other party
by cable without any delay, and within 15 days thereafter provide the detailed
information of the events and a valid document for evidence issued by the
relevant public notary organization for explaining the reason of its inability
to execute or delay the

Page 10 of 13
<PAGE> 11

execution of all or part of the contract. Both parties shall, through
consultation, decide whether to terminate the contract or to exempt the part of
obligations for implementation of the contract or whether to delay the execution
of the contract according to the effect of the events on the performance of the
contract.

CHAPTER 19 Application Law

ARTICLE 45

The formation of this contract, its validity, interpretation, execution
and settlement of the disputes shall be governed by related laws of the People's
Republic of China.

CHAPTER Settlement of Disputes

ARTICLE 46

Any disputes arising from the execution of or in connection with the
contract shall be settled through friendly consultation between both parties. In
case no settlement can be reached through consultations, the disputes shall be
submitted to Chian Council for the promotion of International trade Foreign
Economic & Trade Arbitration Committee in Beijing for arbitration in accordance
with its rule of procedure. The arbitration award is final and binding upon both
parties.

ARTICLE 47

During the arbitration, the contract shall be executed continuously by
both parties except for matters in disputes.

CHAPTER 21 Language

ARTICLE 48

The contract shall be written in Chinese and English.

Page 11 of 13
<PAGE> 12

CHAPTER 22 Effectiveness of the Contract and Miscellaneous

ARTICLE 49

The appendices drawn up in accordance with the principles of this
contract are an integral part of this contract, including: the project
agreement, the technology transfer agreement, the sales agreement.

ARTICLE 50

The contract and its appendices shall come into force beginning from the
date of approval of the Ministry of Foreign Economic Relations and trace of the
People's Republic of China. (or its entrusted examination and approval
authority.)

ARTICLE 51.

Should notices in connection with any party's rights and obligations be
sent by either Party A or Party B by teleg, telex or fax etc, the written letter
notice shall also be required afterwards. The legal addresses of Party A and
Party B listed in this contract shall be the posting addresses.

ARTICLE 52

The contract is signed in Nanning, Guangxi, China by the authorized
representative of both parties on August 8, 1997.

Page 12 of 13
<PAGE> 13

This contract is true English translation of the Chinese contract.
<TABLE>

FOR PARTY A FOR PARTY B
(SIGNATURE) (SIGNATURE)
<S> <C>

SIGN /s/ /s/
----------------------------------------- -----------------------------------------
Majed Alrashid
PRINT 8/8/97
----------------------------------------- -----------------------------------------

TITLE: 97.8 President
----------------------------------------- -----------------------------------------

DATE 97.8.8 8/8/97
----------------------------------------- -----------------------------------------
</TABLE>

Page 13 of 13

<PAGE> 1
EXHIBIT 10.6

EMPLOYMENT AGREEMENT

This employment agreement is entered into and is effective as of July
18, 1997 between Sonic Jet Performance, LLC, a California Limited Liability
Company ("Employer") and Albert Mardikian ("Executive") with respect to the
following facts:

A. Executive is and has been employed by Employer or its predecessors
for a total of more than ten years in various capacities. Through such
experience, he has acquired outstanding and special skills and abilities and an
extensive background in and knowledge of Employer's business and the industry in
which it is engaged.

B. Employer desires assurance of the continued association and services
of Executive in order to retain his experience, skills, abilities, background,
and knowledge, and is therefore willing to engage his services on the terms and
conditions set forth below.

C. Executive desires to continue in the employ of Employer and is
willing to do so on those terms and conditions.

NOW, THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this agreement, it is agreed as follows:

1. Employment. Employer shall employ Executive as its Chief Designer in
charge of new product development and research and development and/or in such
other position or in such other capacity or capacities as Employer's board of
directors may from time to time prescribe. Until such time as the Managers of
Employer appoint a full time chief executive officer, Executive shall be the
president, general manager, and chief executive officer of Employer, with full
power and authority to hire and fire all employees of Employer, other than the
officers, and to manage and conduct all the business of Employer subject to
expenditure policies set by the Managers. During his employment, Executive shall
devote his full energies, interest, abilities, and productive time to the
performance of this agreement and shall not, without Employer's prior written
consent, render to others services of any kind for compensation, or engage in
any other business activity that would materially interfere with the performance
of his duties under this agreement; provided, however, that Executive may
continue to serve as manager, officer, or director, and to receive compensation
for that service from any family controlled business entity.

2. Non-Competition and Non-Disclosure. Executive agrees that he will not
during the employment term directly or indirectly engage in, or have any
interest in any person, firm, corporation, or business (whether as an employee,
officer, director, agent, security holder, creditor, consultant, or otherwise)
that engages in, any activity, which activity is the same as, or competitive
with Employer's business designing, manufacturing and selling personal water
craft, boats and trailers. Executive understands and agrees that direct
competition means design, development, production, promotion, or sale of
products or services competitive with those of employer. Indirect competition
means employment by any competitor or third party providing products competing
with Employer's products, for whom Executive will perform the

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<PAGE> 2

same or similar function as he performs for Employer. In the course of his
employment, Executive may have access to confidential information and trade
secrets relating to Employer's business. Except as required in the course of his
employment by Employer, Executive will not, without Employer's prior consent,
during his employment by Employer, directly or indirectly disclose to any third
person any such confidential information or trade secrets.

3. Executive as Advisor and Consultant. If, during the term of this
agreement, Executive shall not be vested by employer with the responsibilities
of acting as its Chief Designer, or chief executive officer, Executive shall be
employed as an advisor and consultant to Employer so that employer may benefit
from Executive's experience. It is expressly agreed that Executive's services as
an advisor and consultant will be required at such times and places as will
result in the least inconvenience to Executive, having in mind his other
business commitments during that period which may obligate him to perform his
services under such other commitments before performing the advisory services
under this agreement. While Executive is employed as an advisor and consultant
by Employer, Employer shall pay Executive all compensation benefits provided for
in this agreement. During the course of his employment as an advisor and
consultant, Executive shall not compete, directly or indirectly, with Employer
in the field of design and manufacture of personal water craft.

4. Term, Rate of Compensation and Payment. Subject to earlier
termination as provided in this agreement, Executive shall be employed for a
term beginning July 18, 1997, and ending July 18, 2002. Unless the parties agree
otherwise in writing, during the employment term Executive shall perform the
services he is required to perform under this agreement at Employer's offices,
located in Huntington Beach, California; provided, however, that Employer may
from time to time require Executive to travel temporarily to other locations on
Employer's business. Employer shall pay a base salary to Executive at the rate
of $100,000 per year (the "Basic Salary"), payable bi-monthly. Until January 18,
1999 Executive's Basic Salary shall accrue, but not be paid. The accrued, but
unpaid, salary ("Accrued Salary") shall be a liability of Employer and be paid
to Executive, in addition to his then current salary, commencing January 18,
1999 in equal bi-monthly amounts over the 18 month period beginning January 18,
1999 and ending July 18, 2000. During the employment term, Executive shall be
entitled to receive all other benefits of employment generally available to
Employer's other executive and managerial employees when and as he becomes
eligible for them, including group health and life insurance benefits and an
annual vacation.

5. Incentive Compensation Bonus. In addition to the basic salary
provided for above, Employer shall pay to Executive as incentive compensation
for each fiscal year of Employer, promptly after the determination thereof, a
sum equal to five percent (5%) of Employer's net profits as shown in Employer's
year-end statement of income, as such income is determined in the sole judgment
of Employer's chief financial officer, but without regard to nonrecurring items
of income or expense (including gain or loss on disposition of capital assets or
assets used in Employer's business) appearing separately on Employer's financial
statements and before deduction of any federal taxes on or measured by income
("Incentive Bonus"). The Incentive Bonus payable to Executive under this
Paragraph 5.b. shall be prorated for any partial fiscal year that occurs during
the employment term. The Incentive bonus shall be prorated by multiplying the
total net profits for the fiscal year within which such

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<PAGE> 3

partial fiscal year occurs by (a) the decimal equivalent of the above-mentioned
percentage and b (b) a number equal to the number of months during any such
partial fiscal year in which Executive is employed by Employer within the
meaning of this agreement, divided by twelve.

6. Executive's Expenses, Automobile. During the employment term,
Employer shall reimburse Executive for reasonable out-of-pocket expenses
incurred in connection with Employer's business, including travel expenses,
food, and lodging while away from home, subject to such policies as Employer may
from time to time reasonably establish for its employees. During the employment
term, Employer shall furnish to Executive an automobile owned by Employer. The
terms and conditions of Executive's use of such automobile and the extent to
which Employer shall defray the costs of its operation shall be the same as
those pertaining to automobiles presently being furnished to other executive and
managerial personnel of Employer. If any part of the salary or other
compensation paid by employer to Executive, or of any amount paid by Employer
for travel or entertainment expenses incurred by Executive, is finally
determined not to be allowable as a federal or state income tax deduction to
Employer, the part disallowed shall be repaid to Employer by Executive.

7. Inventions, Patents, etc.

a. Definitions. For purposes of this Paragraph 7, the following
definitions shall be used:

(i) "Royalty Agreement Patent and Design Rights" shall
mean those certain patents and design rights licensed to Employer by Executive
pursuant to (a) that certain Royalty Agreement with Executive as Patent Owner
and Employer as Licensee of even date hereof, and (b) that certain Assignment of
royalty Agreements with Executive as Assignor and Employer as Assignee of even
date hereof.

(ii) "Related Royalty Agreement Patent and Design
Rights" shall mean any patents, design rights, development rights and other
intangible rights developed by Executive during the course of his employment
with Employer, either alone or with others that are related to, or improvements
to the Royalty Agreement Patent and Design rights.

(iii) "New Design and Patent Rights" shall mean any
completely new and different patents and design rights, and other intangible
rights developed by Executive during the course of his employment with Employer,
either alone or with others that are un-related to, and qualitatively different
from, the Royalty Agreement Patent and Design Rights and Related royalty
Agreement Patent and Design Rights.

(iv) "Royalty Agreements" shall mean the two (2) Royalty
Agreements first referred to in Paragraph 7.a.(i), above.

b. Period From July 18, 1998 to January 18, 1999. From July 18,
1998 to January 18, 1999, that is from the commencement of this Agreement and
during the time

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<PAGE> 4

period during which Executive is not paid, all designs, processes, inventions,
patents, copyrights, trademarks, and other intangible rights that may be
conceived or developed by Executive, either alone or with others, during the
term of Executive's employment, whether or not conceived or developed during
Executive's working hours, and with respect to which the equipment, supplies,
facilities, or trade secret information of Employer was used, or that relate at
the time of conception or reduction to practice of the invention to the business
of the Employer or to Employer's actual or demonstrably anticipated research and
development, or that result from any work performed by Executive for Employer,
whether classified as Related Royalty Agreement Patent and Design Rights or New
Design and Patent Rights, shall be the sole property of Executive, provided,
however, that Executive shall license any Related Royalty Agreement Patent and
Design Rights to Employer under the same terms and conditions as Executive
licenses the Royalty Agreement Patent and Design Rights to Employer for no
additional consideration, other than that which is provided for in the Royalty
Agreements.

c. From and After January 18, 1999. From and after January 18,
1998 all designs, processes, inventions, patents, copyrights, trademarks, and
other intangible rights that may be conceived or developed by Executive, either
alone or with others, during the term of Executive's employment, whether or not
conceived or developed during Executive's working hours, and with respect to
which the equipment, supplies, facilities, or trade secret information of
Employer was used, or that relate at the time of conception or reduction to
practice of the invention to the business of the Employer or to Employer's
actual or demonstrably anticipated research and development, or that result from
any work performed by Executive for Employer resulting in New Design and Patent
Rights shall be the sole property of Employer, except that such work classified
as Related Royalty Agreement Patent and Design Rights shall be the sole property
of Executive provided, however, that Executive shall license any Related Royalty
Agreement Patent and Design Rights to Employer under the same terms and
conditions as Executive licenses the Royalty Agreement Patent and Design Rights
to Employer for no additional consideration, other than that which is provided
for in the Royalty Agreements.

d. Failure to Pay Executive's Compensation. Should any part of
Executive's compensation not be paid within thirty (3) days of its due date
("Delinquency Date"), as determined under Paragraphs 4 and 5, above, subsequent
to January 18, 1999, then any work of Executive resulting in New Design and
Patent Rights from and after the Delinquency Date, and for the term of this
Agreement, shall be the sole property of Executive.

e. Disclosure, Execution of Documents. Executive shall disclose
to Employer all inventions conceived during the term of employment, whether or
not the property of Employer under the terms of the preceding, provided that
such disclosure shall be received by Employer in confidence. Executive and
Employer shall execute all documents, including patent applications and
assignments, required by Employer or Executive, as the case may be, to establish
Employer's or Executive's rights under this Paragraph 7.

8. Indemnification. Employer shall, to the maximum extent permitted by
law, indemnify and hold Executive harmless against expenses, including
reasonable attorney's fees

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<PAGE> 5

judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Executive's
employment by Employer. Employer shall advance to Executive any expense incurred
in defending any such proceeding to the maximum extent permitted by law.
Employer shall purchase and maintain indemnity insurance, if available, on
behalf of Executive in the amount of $5,000,000 against any liability asserted
against or incurred by Executive arising out of his employment by Employer.

9. Termination of Agreement. This Agreement may be terminated as
follows:

a. Business Combination or Dissolution. In the event of a merger
in which employer is not the surviving legal entity, or of a sale of all or
substantially all of Employer's assets, Employer may, at its sole option (1)
assign this Agreement and all rights and obligations under it to any business
entity that succeeds to all or substantially all of the Employer's business
through that merger or sale of assets, or (2) on at least sixty (60) days' prior
written notice to Executive, terminate this agreement effective on the date of
the merger or sale of assets. Should Employer assign this Agreement to a
successor business entity, Executive, at any time during the ninety (90) day
period following the effective date of the merger or sale give written notice to
the successor business entity of termination of this Agreement to be effective
sixty (60) days from the date of notice.

b. Material Breach by Employer. In the event of any material
breach of this agreement on the part of Employer, Executive at his sole option,
may terminate his employment under this agreement and, at his sole option, shall
be entitled to receive as liquidated damages, at Executive's option, either of
the amounts set forth in the following subsections (i) and (ii). The liquidated
damages so received by Executive shall not be limited or reduced by amounts that
Executive might otherwise earn or be able to earn during the period between
termination of his employment under this agreement and payment of those
liquidated damages. The provisions of this Paragraph shall be in addition to any
and all rights Executive may have in equity or at law to require Employer to
comply with or to prevent the breach of this agreement.

(i) The present value on the payment date (as defined in
this Paragraph) of the full amount of his, Basic Salary as provided for in this
agreement for ten (10) years following the payment date, discounted to the
payment date at a rate (for quarterly periods) based on the prime interest rate
charged by Bank of America in Los Angeles, California for short term commercial
loans on the payment date. The amount payable to Executive under this subsection
shall be due and payable in full on the date of notification of Employer by
Executive of the exercise of his option to terminate his employment under this
agreement (the "payment date") and shall accrue interest at the rate of ten
percent (10%) per annum until paid.

(ii) The full amount of the Basic Salary provided for in
Paragraphs 4 and 5, above for seven (7) years following Executive's exercise of
his option to terminate his employment under this agreement. The amounts payable
to Executive under this subsection shall be payable in annual installments on
the first day of January of each year.

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<PAGE> 6

c. Definition of Material Breach. A material breach of this
Agreement includes, but is not limited to, (i) the failure of Employer to pay,
within thirty (30) days of its due date, any amounts due Executive for Basic
Salary, Accrued Salary and Incentive Bonus under Paragraphs 4 and 5, above, and
(ii) termination of this Agreement by Employer in the absence of the commission
by Executive of any material act of dishonesty, disclosure of confidential
information, gross carelessness or misconduct, or unjustifiable neglecting of
his duties under this agreement, or commission of an act that has a direct,
substantial, and adverse effect on Employer's reputation.

d. Resignation of Executive. Executive may terminate this
agreement by giving Employer six months' prior written notice of resignation.

e. Employer's Termination of Executive. Employer may terminate
this agreement, subject to the provisions of Paragraph 9.b., above, concerning
compensation in event of separation without cause, on the last day of any month
on twelve (12) months' prior written notice.

f. Termination For Cause. Employer may terminate this agreement
at any time without notice if Executive commits any material act of dishonesty,
discloses confidential information, is guilty of gross carelessness or
misconduct, or unjustifiably neglects his duties under this agreement, or acts
in any way that has a direct, substantial, and adverse effect on Employer's
reputation.

g. Disability. If, at the end of any calendar month during the
initial term or any renewal term of this agreement, Executive is and has been
for the four consecutive full calendar months then ending, or for 80% or more of
the normal working days during the six (6) consecutive full calendar months then
ending, unable due to mental or physical illness or injury to perform his duties
under this agreement in his normal and regular manner, this agreement shall be
then terminated.

h. Relief of Executive's Duties. If Executive gives notice of
termination of this agreement or if it becomes known that this agreement will
otherwise terminate in accordance with its provisions, Employer may, in its sole
discretion and subject to its other obligations under this agreement, relief
Executive of his duties under this agreement and assign Executive other
reasonable duties and responsibilities to be performed until the termination
becomes effective.

10. General Provisions.

a. Injunctive Relief. Executive is obligated under this
agreement to render services of a special, unique, unusual, extraordinary, and
intellectual character, which give this agreement peculiar value. The loss of
these services cannot be reasonably or adequately compensated in damages in an
action at law. Accordingly, in addition to other remedies provided by law or
this agreement, Employer shall have the right during the term or any

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<PAGE> 7

renewal term of this agreement to obtain injunctive relief against the breach of
this contract by Executive or the performance of services elsewhere by
Executive, or both.

b. Entire Agreement. This agreement contains the entire agreement
between the parties and supersedes all prior oral and written agreements,
understandings, commitments, and practices between the parties, including all
prior employment agreements, whether or not fully performed by Executive before
the date of this agreement. No amendments to this agreement may be made except
by a writing signed by both parties.

c. Applicable Law. The formation, construction, and performance
of this agreement shall be construed in accordance with the laws of California.

d. Notices. Any notice to Employer required or permitted under
this agreement shall be given in writing to Employer, either by personal service
or by registered or certified mail, postage prepaid, addressed to Manager of
Employer at its then principal place of business. Any such notice to Executive
shall be given in a like manner and, if mailed, shall be addressed to Executive
at his home address then shown in Employer's files. For the purpose of
determining compliance with any time limit in this agreement, a notice shall be
deemed to have been duly given (a) on the date of service, if served personally
on the party to whom notice is to be given, or (b) on the second business day
after mailing, if mailed to the party to whom the notice is to be given in the
manner provided in this section.

e. Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Second Amendment, binding
on all of the parties hereto, notwithstanding that all of the parties are not
signatories to the original or the same counterpart.

f. Successors and Assigns. Subject to the restrictions on
transferability contained in this Agreement, all its provisions shall be binding
on and inure to the benefit of the successors and assigns of the parties hereto.

g. Void Provisions. In the event any sentence, or section of this
Agreement is declared by a court of competent jurisdiction to be void, such
sentence, or section shall be deemed severed from the remainder of the Agreement
and the balance of the Agreement shall remain in effect.

h. Titles or Captions. Paragraph or section titles or captions
contained in this Agreement are inserted only as a matter of convenience and for
reference. Such titles and captions in no way define, limit, extend or describe
the scope of this Agreement nor the intent of any provision hereof.

i. Gender, Plurals. Whenever required by the context hereof, the
singular shall include the plural, and vice-versa; the masculine gender shall
include the feminine and neuter genders, and vice-versa.

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<PAGE> 8

j. Attorneys' Fees. In any dispute between the parties hereto
arising out of this Agreement, whether or not resulting in litigation, the
party substantially prevailing shall be entitled to recover from the other party
all reasonable costs, including, without limitation, reasonable attorneys' fees.

k. Cross-References. All cross-references in the Second
Amendment, unless specifically directed to another document, refer to provisions
within the Agreement and shall not be considered to be references to the overall
transaction or to any other document.

l. Construction. Every covenant, term, and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party hereto.

m. No Waiver by Failure To Enforce Strictly. A parties failure to
insist on the strict performance of any covenant or duty required by this
Agreement, or to pursue any remedy under this Agreement, shall not constitute a
waiver of the breach or the remedy.

n. Cumulative Remedies. The remedies of the parties hereto under
the Agreement are cumulative and shall not exclude any other remedies to which
the parties may be lawfully entitled.

IN WITNESS hereof the parties hereto execute this Agreement on the day
and year first above written.

"EMPLOYER"

Sonic Jet Performance, LLC
a California Limited Liability Company

By: /s/ Albert Mardikian
------------------------------
Albert Mardikian, Manager

"EXECUTIVE"

/s/ Albert Mardikian
- ----------------------------------------
Albert Mardikian

-8-

<PAGE> 9

FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT

This First Amendment to Employment Agreement ("Agreement") is entered
into this 19th day of June 1998 by and between Albert Mardikian ("Executive")
and Boulder Capital Opportunities III, Inc., a Colorado Corporation ("Employer")
with respect to the following facts:

A. Executive entered into that certain Employment Agreement with Sonic
Jet Performance, LLC, a California Limited Liability Company ("Sonic LLC") on
July 18, 1997.

B. On June 18, 1998 Sonic LLC completed a business reorganization
wherein Sonic LLC transferred all its assets to Employer and Employer assumed
all of Sonic LLC's liabilities and other obligations solely in exchange for
common stock in Employer. From June 18, 1998 Sonic LLC ceased to do business and
became a shareholder only in Employer.

C. Pursuant to Paragraph 9 of the Employment Agreement, upon a sale of
all the assets of Sonic LLC and the assignment of the Employment Agreement to
Sonic LLC's successor, Employer herein, Executive may, upon proper notice,
terminate the Employment Agreement.

D. Executive desires to continue his employment with Sonic LLC's
successor, Employer herein, and not terminate the Employment Agreement, provided
his Basic Salary, as defined in the Employment Agreement is increased over the
term of the Employment Agreement as provided herein.

E. Employer desires to retain the services of Executive under the terms
of the Employment Agreement as modified herein.

NOW THEREFORE in consideration of the above recitals and of the mutual
promises and conditions in this agreement, it is agreed as follows:

1. Amount of Basic Salary. Executive's Basic Salary under Paragraph 4 of
the Employment Agreement is changed to provide the following Basic Salary for
the periods indicated:
<TABLE>
<CAPTION>

Period Basic Salary (annual)
------ ---------------------
<S> <C>
Jan. 1, 1999 - Dec. 31, 1999 $ 120,000
Jan. 1, 2000 - Dec. 31, 2000 $ 140,000
Jan. 1, 2001 - Dec. 31, 2001 $ 175,000
Jan. 1, 2002 - Jul. 18, 2002 $ 200,000
</TABLE>

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<PAGE> 10

2. Payment of Basic and Accrued Salary. Provisions for
payment of Basic and Accrued Salary under Paragraph 4 of the
Employment Agreement are changed to read as follows: Until June 19,
1998 Executive's Basic Salary shall accrue, but not be paid.
Commencing June 19, 1998 Executive shall be paid his Basic Salary on
a bi-monthly basis on the 15th and the last day of each month, with
any partial pay period prorated. The accrued, but unpaid, salary
("Accrued Salary") shall be a liability of Employer and be paid to
Executive, in addition to his then current salary, commencing
January 1, 1999 in equal bi-monthly amounts over calendar year 1999.

All other terms and conditions of the Employment Agreement are
hereby confirmed by the parties hereto.

"EMPLOYER"

Boulder Capital Opportunities III, Inc.,
a Colorado Corporation

By: /s/ Alex G. Mardikian
----------------------------------------
Alex G. Mardikian, Vice-President

"EXECUTIVE"

/s/ Albert Mardikian
- ------------------------------------------
Albert Mardikian

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