<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 5, 1999
AirTrax, Inc.
(Exact name of Registrant as specified in charter)
New Jersey 0-25791 22-3506376
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1616 Pennsylvania Avenue, #122, Vineland, NJ 08361
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (856) 327-8112
MAS Acquisition IX Corp.
1710 E. Division St.
Evansville, Indiana 47711
(Former name or former address, if changed, since last report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a) Pursuant to an Agreement and Plan of Merger ("Merger Agreement")
dated November 5, 1999 between MAS Acquisition IX Corp. ("MAS"), an
Indiana corporation, and AirTrax, Inc., a New Jersey corporation
("AirTrax" or "Company"), all of the issued and outstanding shares of
capital stock of MAS were exchanged for 114,867 shares of AirTrax.
AirTrax became the surviving company in the merger. The effective
date of the merger was November 19, 1999.
The Merger Agreement was adopted by the unanimous consent of the Board
of Directors of MAS and approved by the majority of shareholders of MAS
on November 5, 1999. The Merger Agreement was adopted by the unanimous
consent of the Board of Directors of AirTrax and by consent of a
majority of shareholders of AirTrax on November 5, 1999.
Prior to the merger, MAS had 8,519,800 shares of common stock issued
and outstanding that were exchanged for 114,867 shares of common stock of
AirTrax. Pursuant to the merger, AirTrax acquired all of the issued
and outstanding shares of capital stock of MAS.
Prior to the merger, AirTrax had 4,543,048 shares of common stock
issued and outstanding, and 275,000 shares of a series of preferred stock
("Preferred Stock") issued and outstanding, no par value. Each share
of Preferred Stock is entitled to 10 voting rights on all matters on
which shareholders are entitled to vote. The Preferred Stock has a stated
value per share of $5.00 and an annual dividend per share equal to 5%
of the stated value. Dividends are cumulative and the holder has a right
to waive any cash dividend and receive the dividend in the form of common
stock at a price per share equal to 30% of the last offering or
trading price of the common stock during an applicable calendar quarter. The
Preferred Stock has a preference over common stockholders upon
liquidation equal to the stated value per share. The Preferred Stock
is not convertible to common stock.
Upon effectiveness of the merger, AirTrax had 4,657,915 shares of
common stock and 275,000 shares of preferred stock outstanding.
The officers of AirTrax will continue as the officers of the successor
issuer (see "Management" below). The officers, directors, by-laws and
certificate of incorporation, as amended, of AirTrax will continue
without change as the officers, directors, by-laws and certificate of
incorporation, as amended, of the successor issuer.
A copy of Merger Agreement is incorporated herein by reference as an
exhibit to the Form 8-K filed by the Company with the Securities and
Exchange Commission on November 19, 1999 and such exhibit modifies the
foregoing description.
(b) The following table contains information regarding the
shareholders of AirTrax, its current directors and executive officers and
those persons or entities who beneficially own more than 5% of its common
stock and Preferred Stock:
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<TABLE>
<CAPTION>
Percentage of Percentage of
Common Stock Preferred Preferred Stock Common Stock
Beneficially Voting Stock Beneficially Beneficially
Name Owned(1) Rights(2) Owned(2) Owned(1)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Amico
President and
Chairman 1,695,737(3)(4) 2,750,000(3)(5) 37.33% 100%
D. Barney Harris 62,500(6)(7) -0- 1.38% -0-
Vice President
and Director
Frank Basile 103,031(7) -0- 2.27% -0-
Director
James Hudson 71,000(8) -0- 1.56% -0-
Director
John Watt Jr. 103,000(7) -0- 2.27% -0-
Secretary and
Director
All directors 2,035,268 2,750,000 44.80% 100%
and executive
officers as a
group (5 persons)
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</TABLE>
(1). Based on 4,543,048 outstanding shares of common stock (prior to
the effectiveness of the merger).
(2). Based upon 275,000 outstanding shares of Preferred Stock after
giving effect to the 10 for 1 voting rights.
(3). Represents shares held by Arcon Corp., a corporation wholly owned
by Mr. Amico.
(4). Excludes annual stock options in the amount of 50,000 shares held
by Mr. Amico pursuant to his employment agreement with the Company.
(5). Represents 275,000 shares of Preferred Stock
(6). Excludes annual stock options in the amount of 25,000 shares held
by Mr. Harris pursuant to his employment agreement with the Company.
(7). Excludes stock options held by each party to acquire 5,000 shares
of common stock of the Company as a director of the Company (see
"Executive Compensation").
(8). Includes 44,500 shares held by Mid-Ford Corporation, a corporation
wholly owned by Mr. Hudson.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Merger Agreement was
negotiated in an arms length transaction between the parties. In
evaluating AirTrax as a candidate for the merger, MAS considered the
omni-directional technology of AirTrax and the products to be
introduced by AirTrax. Both parties determined the considerations reasonable.
(b). The plan of operations of AirTrax provides for the further
development and commercial sale of the omni-directional wheel
technology (see "Business" below).
<PAGE>
BUSINESS
Background
AirTrax is a development stage company that has developed an omni-
directional wheel technology for various applications. AirTrax was
incorporated in the State of New Jersey on April 17, 1997. On May 19,
1997, the Company entered into a merger agreement with a predecessor
company and became the surviving company in the merger.
An early stage omni-directional wheel was patented by a Swedish
inventor and was purchased by the United States Navy and the
technology was advanced at the Naval Surface Warfare Center. The Navy
held the patent until its expiration in 1990. In January 1996, the
Company's predecessor entered into a Cooperative Research and
Development Agreement ("CRADA") with the United States Navy to
transfer the omni-directional wheel technology to the predecessor.
Since CRADA, the Company has advanced the development of the
technology for its various applications including use on forklifts and
other material handling equipment.
Although the original patent for the omni-directional wheel expired,
the Company has filed a patent with the United States Patent and
Trademark Office encompassing certain other aspects of the technology.
Description of Technology.
An omni-directional vehicle employing the Company's patent pending
technology is capable of traveling in any direction. On a four-wheel
omni-directional vehicle, each omni-directional wheel has its own
independent electric or hydraulic motor and the motion of the vehicle
is controlled by coordinating all four wheels through a microprocessor
that receives imput from an operator-controlled joystick. Unlike most
vehicles, there is no conventional drive train, axle, or steering
rack.
The basis of the Company's omni-directional technology consists
primarily of a mobile platform with four omni-directional wheels. Each
wheel has its own electric or hydraulic motor that turns a wheel hub.
However, the wheel hub is not covered by a conventional rubber tire.
Rather, each wheel hub is encircled with multiple elliptical (keg-
shaped) rollers that are offset 45 degrees. The elliptical rollers,
fabricated from urethane, are extremely durable. By independently
controlling the rotation of each wheel, the vehicle has the capability
of traveling in any direction. The joystick controls the direction of
the vehicle. The technology allows the vehicle to move forward,
laterally, diagonally, or completely rotate within its own footprint,
thereby allowing it to move into confined spaces without difficulty.
The navigational options of an omni-directional vehicle are virtually
limitless. The omni-directional wheel can be manufactured in almost
any size, depending upon the application. For instance, the wheel can be
used on miniature vehicles or massive load-carrying vehicles. Omni-
directional technology has been incorporated into prototype vehicles
that perform the following functions: carrying hazardous materials,
remote fire fighting, weapons loading, and general forklift uses. The
technology can be employed in any type of vehicle that requires
superior navigational capabilities.
<PAGE>
Current Operations.
The Company has completed the development of a commercial omni-
directional forklift. The forklift has been extensively tested
internally by the Company and is awaiting further testing by
Underwriters Laboratory and to meet the standards of the American
National Standards Institute. Following this testing period which is
anticipated to be completed during the first quarter of 2000, the
Company will commence the commercial production and sale of this
product (see "Risk Factors").
The forklift will be available in the ATX, ATX-E and ATX-ER series
with 3000 through 6000 pound capacities. Each series is briefly described
below.
ATX Series. This series will feature the revolutionary omni-directional
technology. This forklift will deliver unequaled maneuverability
providing significantly improved operating efficiencies in the materials
handling industry. This model is expected to retail at prices
competitive with existing forklifts.
ATX-E Series. In addition to the omni-directional technology, this
series permits the upper section of the forklift to extend and retract.
This feature effectively reduces the overall dimensions of the machine
while carrying a load to approximately 6 feet 6 inches enabling it to
traverse a seven-foot aisle sideways.
ATX-ER Series. In addition to the omni-directional technology and the
extend/retract feature, the upper section of this series can rotate
allowing loads to be transferred from one side to the other while the
forklift remains stationary.
The Company intends to develop other applications of its omni-
directional technology. These applications include an omni-directional
wheel chair and an omni-directional device for military equipment
handling (see "Risk Factors").
Recently, the Company was awarded a Phase I research contract under the
Department of Defense's Small Business Innovation Research Program to
develop an omni directional Multiple Purpose Mobility Platform (MP2).
The Phase I contract studied the application of an omni-directional
material handling device proposed to be developed by the Company for
the installation of jet engines and munitions on military aircrafts
and was supervised by the Naval Air Warfare Center Aircraft Division
(NAWC) in Lakehurst, New Jersey. The Company recently completed the
Phase I contract, and subsequently has been granted a Phase I continuation
contract from NAWC to further define the uses of the MP2. The Company
also was advised that NAWC has recommended it for a Phase II research
contract. The total amount of the Phase II contract, if awarded, is
anticipated not to exceed $750,000. The Phase II contract will further
study the feasibility of the MP2 for military purposes, and likely
will include the construction of a proto-type device. Although
management believes the underlying omni directional technology for the
proposed MP2 has significant potential for both commercial and
military applications, no assurances can be given.
<PAGE>
The Company has conducted a preliminary design of an omni-directional
wheel for wheelchair applications. It will require additional funds to
complete a structural and ergonomic design of a proto-type wheelchair,
as well as the construction of the proto-type for test purposes.
Although management recognizes the potential utilitarian benefit and
corresponding market size of an omni-directional wheelchair, no
assurances can be given that the product can be developed by the
Company.
In addition, since 1995, the Company and its predecessor have
manufactured and sold on a limited basis a helicopter ground handling
device.
Suppliers.
The Company has entered into an arrangement with a manufacturer to
produce the forklift and other omni-directional products. However, the
Company may establish its own manufacturing facility in the future if
economically advantageous. The components of the Company's forklifts
consist of over the counter products and products that have been
specially designed and manufactured by various suppliers in
collaboration with the Company. The Company considers these specially
designed and manufactured products proprietary and has entered into
exclusive contractual agreements with such suppliers. In addition,
while the Company maintains single sources for the over the counter
components, it believes that other sources are available if necessary.
Marketing.
The Company will establish an exclusive dealer network nationally and
internationally for its forklift product line. Each dealer likely will
be an existing equipment distributor, and will be granted an exclusive
territory. In addition, each dealer will be required to purchase a
number of forklifts commensurate with the size of its territory. To
date, the Company has conducted limited dealer solicitation. The
Company will initiate its dealer solicitation following the successful
testing of its forklift. In addition, the Company is in negotiations
with a lending source to provide a financing alternative for
distributors (see "Risk Factors").
Markets.
The Company believes the commercial version of the omni-directional
forklift will revolutionize the materials handling and warehousing
industries creating sales markets globally (see "Risk Factors"). The
market for the ATX series is anticipated to be significant based on the
sale and use of forklifts worldwide. In the United States alone, it is
estimated that 1,000,000 forklifts are in commercial use today, and in
1998 over 174,000 were sold domestically. The US market represents
approximately 35% of the worldwide market. In addition, the Company
believes the United States military represents a significant market
for omni-directional forklifts and other materials handling equipment.
<PAGE>
Competition.
Although the Company will not confront direct competition for its
omni-directional technology, it anticipates that it may face competition
from competing technologies in the future. In the immediate future,
however, the Company will confront competition from conventional
products in the materials handling and warehousing industry (ie. other
forklift companies). Many of these companies are subsidiaries of major
national and international equipment companies, and have significantly
greater financial, engineering, marketing and other resources than the
Company. In addition, the patent on omni-directional technology
expired in 1990. Although the Company has sought patent protection for
certain other aspects of its technology, no assurances can be given
that such patent protection will effectively thwart competition.
Patents and Proprietary Rights.
In December 1997, the Company received a patent for a omni-directional
helicopter ground-handling device. In March 1998, the Company filed a
patent encompassing certain aspects of the technology applicable
to the omni-directional forklift (see "Risk Factors").
The Company also seeks to protect its proprietary technology through
exclusive supply contracts with manufacturers for specially designed
and manufactured components.
PROPERTY
The Company maintains its administrative offices at 1616 Pennsylvania
Avenue, #122, Vineland, New Jersey 08361 on premises owned by the
president of the Company. As of December 31, 1999, the arrangement
between the parties has been rent-free.
MARKET FOR AIRTRAX'S SECURITIES
Prior to the merger, the Company has been a non-reporting company with
certain of its securities exempt from registration under Regulation D
promulgated under the Securities Act of 1993, as amended. The Company's
common stock has traded on the National Quotation Bureau's "Pink
Sheets". There is an absence of an established trading market for the
Company's common stock, as the market is limited, sporadic and highly
volatile.
As a result of the merger, the Company has elected to become a
successor issuer and successor reporting company to MAS and intends to
immediately file for listing of its common stock on the NASDAQ OTC
Bulletin Board.
<PAGE>
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS
Name Age Title
- -------------------- --- ---------------------------
<S> <C> <C>
Peter Amico 56 President and Chairman
D. Barney Harris 37 Vice President and Director
John Watt Jr. 62 Secretary and Director
Frank Basile, Esq. 63 Director
James Hudson 55 Director
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</TABLE>
Peter Amico - Mr. Amico is the founder of the Company and has been
President and Chairman of the Company and its predecessor since its
inception in April 1995. Prior to 1995, Mr. Amico was president and
majority shareholder of Titan Aviation and Helicopter Services, Inc.
("Titan"). He has an extensive background in sales and in structural
design. His career in sales has spanned over thirty years and he has
held sales positions at Firestone Tire & Rubber and Union Steel
Products, Inc. In 1996 and in connection with operations of Titan, Mr.
Amico filed for bankruptcy protection.
D. Barney Harris - Mr. Harris has been a Director of the Company since
December 1998 and a Vice President since July 1999. From 1997 to July
1999, Mr. Harris was employed by UTD, Inc. Prior to 1997, Mr. Harris
was employed by EG&G as a Senior Engineer and Manager of the Ocean
Systems Department where he was responsible for the activities of 45
scientists, engineers and technicians. During this period while
performing contract services for the US Navy, he was principally
responsible for the design of the omni-directional wheel presently
used by the Company. Mr. Harris received his B.S.M.E. from the United
States Merchants Marine Academy in 1982, and is presently completing
his M.S.M.E. from the University of Maryland.
Mr. John Watt Jr. - Mr. Watt has been Secretary and a Director of the
Company since August 1998. From 1990 to the present, he has been the
President of Watt-Bollard Associates, Inc., a manufacturers'
representative sales agency located in Fort Washington, Pennsylvania.
From 1970 to 1990, he served as President of John C. Watt Associates,
Inc.
Mr. James Hudson - Mr. Hudson has been a Director of the Company since
May 1998. From 1980 to present, he has been President of Grammer,
Dempsy & Hudson, Inc., a steel service center headquartered in Newark,
New Jersey.
Frank A. Basile, Esq. - Mr. Basile has been a Director of the Company
since April 1999. Mr. Basile has been a practicing attorney since 1963
and is president of the law firm Basile & Testa located in Vineland,
New Jersey. The firm was one of seven law firms selected by the State
of New Jersey to represent the State in a class action lawsuit against
the tobacco industry.
<PAGE>
EXECUTIVE COMPENSATION
The Company and Peter Amico, as President, have entered into a written
employment agreement for a period from April 1997 to June 2000.
Pursuant to the agreement, Mr. Amico receives a salary of $75,000 per
year for fiscal 1999 through June 2000. In addition, the agreement
provides Mr. Amico with stock options not to exceed 50,000 shares of
common stock per year, of which 10,000 shares are exercisable at
$1.00, 25,000 are exercisable at 30% of the lowest price paid in the
proceeding 30 day period, and 15,000 is exercisable at 50% of the
lowest price paid for the common stock in the preceding 30 day period.
Arcon Corp. ("Arcon"), a corporation wholly owned by Mr. Amico,
receives an annual dividend on 275,000 shares of Preferred Stock held
by Arcon. The annual dividend equals $68,750, however, the holder may
elect to be paid in the form of common stock at a discount to the
market price (see the description of the Preferred Stock in Item 1.
Changes in Control of Registrant). For the period from May 1997 to
December 31, 1998, Arcon received 305,737 shares of common stock as a
dividend on the Preferred Stock. For the period ended September 30,
1999, $51,563 in cash dividends was accrued, of which $40,498 was paid
in cash and the balance remains outstanding.
The Company and D. Barney Harris, as Vice President, have entered into
a written employment agreement for period of five years. Pursuant to
the agreement, Mr. Harris receives an annual salary of $75,000,
subject to annual review by the Company. In addition, Mr. Harris will
be entitled to receive stock grants and stock options not exceeding
25,000 shares of common stock per annum at share prices discounted to
the market.
The Board of Directors generally hold office until a successor is
elected. Each board member receives $250 for each meeting attended,
plus reasonable travel expenses. For 1998, each board member was
granted stock options for not more than 5,000 shares of common stock
at price of $0.50 per share.
RISK FACTORS.
LACK OF COMMERCIAL PRODUCT. The Company has developed the commercial
version of its unique, omni-directional forklift. The commercial
introduction of the product is subject, however, to additional testing
for rating purposes by independent third parties (see "Business"). Due
to the unique performance attributes of the forklift, the forklift will
undergo a series of unprecedented tests relating to these attributes.
Although management is confident in the performance capabilities of the
forklift, management has not performed these tests separately. If the
forklift cannot perform these tests successfully, many of the
competitive advantages of the forklift may be lessened and the Company
may have to redesign certain aspects of the forklift. Such event may
have a negative impact upon the operations of the Company.
LIMITED OPERATING HISTORY. The Company is a development stage company,
and, together with its predecessor, has been in operation since 1995.
However, since 1995, the Company's operations have been limited to the
development of its omni-directional products, and limited revenue has
been generated during this period. Consequently, its business may be
subject to the many risks and pitfalls commonly experienced by
development stage companies. There can be no assurances that future
operations will be profitable.
LACK OF INDICATIONS OF PRODUCT ACCEPTABILITY. The success of the Company
will be dependent upon its ability to sell omni-directional products
in quantities sufficient to yield profitable results. To date, the Company
has received limited indications of the commercial acceptability of
certain of its omni-directional products. Accordingly, no assurances can
be given that the Company's omni-directional products can be marketed
and sold in a commercial manner.
<PAGE>
LACK OF ESTABLISHED DISTRIBUTION CHANNELS. The Company does not have an
established channel of distribution for its forklift product line. It
intends on establishing a network of exclusive dealers throughout the
United States. Although the Company has received indications of interest
from a number of equipment distributors, to date, the Company has
conducted limited dealer solicitation and has not finalized arrangements
with any dealer. No assurances can be given that the Company will be
successful in establishing its intended dealer network.
NEED FOR ADDITIONAL CAPITAL. The Company will require additional
capital in the immediate future to meet its operating needs. The Company
intends on raising the capital through a private or public financing of debt
or equity. Presently, the Company has no commitment for any such funding.
No assurances can be given that the Company will be successful in
obtaining such financing on terms acceptable to the Company. The
Company's inability to obtain such financing could have a material
adverse affect on the Company. In addition to its present need for
capital, in the future the Company may require additional capital to
develop additional products or to meet its operating needs. No
assurances can be given that such capital will be available in the
future at terms acceptable to the Company or at all.
FEATURES OF PREFERRED STOCK. The Company has 275,000 shares of preferred
stock outstanding that are held by an affiliate of the President. The
stock carries a 10 for 1 voting right and a stated value of $5.00 per
share. The preferred stock carries a liquidation preference equal to
the stated value and an annual, cumulative dividend preference of five
percent, all to the detriment of common shareholders. In addition, the
holder may elect to receive the dividend in the form of common stock at
a discount to the market price (see the description of the Preferred
Stock in Item 1. Changes in Control of Registrant).
MANAGEMENT. The ability of the Company to successfully conduct its
business affairs will be dependent upon the capabilities and business
acumen of current management including Peter Amico, the Company's
President. Accordingly, shareholders must be willing to entrust all
aspects of the business affairs of the Company to its current
management. Further, the loss of any one of the Company's management
team could have a material adverse impact on its continued operation.
CONTROL EXERCISED BY MANAGEMENT. The existing officers and directors
will control approximately 70% of the shareholder votes. This control by
management is in the form of common stock and preferred stock that has
10 for 1 voting rights. Consequently, management will control the vote
on all matters brought before shareholders, and holders of common
stock may have no power in corporate decisions usually brought before
shareholders.
<PAGE>
NATURE OF BUSINESS/INSURANCE. The manufacture, sale and use of omni-
directional forklifts and other material handling equipment is generally
considered to be an industry of a high risk with a high incidence of
serious personal injury or property loss. Although the Company intends
to maintain sufficient liability insurance for the manufacture and use
of its products, one or more incidents of personal injury or property
loss resulting from the operation of its products could have a
material adverse impact on the business of the Company.
COMPETITION. Although management believes its product will have
significant competitive advantages to conventional forklifts, the
Company will be competing in an industry populated by some of the
foremost equipment and vehicle manufacturers in the world. Substantially
all of these companies have greater financial, engineering and other
resources than the Company. No assurances can be given that any
advances or development made by such companies will not supersede the
competitive advantages of the Company's omni-directional forklift. In
addition, many of the Company's competitors have long-standing arrangements
with equipment distributors and carry one or more of the competitor's
products in addition to forklifts. These distributors are prospective
dealers for the Company. Consequently, these distributors may be loath
to enter into any relationship with the Company for fear of jeopardizing
their existing relationship with the competitors.
PENNY STOCK REGULATION. The Company's common stock may be deemed a
"penny stock" under federal securities laws. The Securities and
Exchange Commission has adopted regulations that define a "penny stock"
generally to be any equity security that has a market price of less than
$5.00 per share, subject to certain exceptions. These regulations impose
additional sales practice requirements on any broker/dealer who sell
such securities to other than established investors and accredited
investors. For transactions covered by this rule, the broker/dealer
must make certain suitability determinations and must receive the
purchaser's written consent prior to purchase. Additionally, any
transaction may require the delivery prior to sale of a disclosure schedule
prescribed by the Commission. Disclosure also is required to be made of
commissions payable to the broker/dealer and the registered representative,
as well as current quotations for the securities. Finally, monthly
statements are required to be sent disclosing recent price information for
the penny stock held in the account of the customers and information on
the limited market in penny stocks. These requirements generally are
considered restrictive to the purchase of such stocks, and may limit
the market liquidity for such securities.
<PAGE>
FORWARD LOOKING STATEMENTS.
Certain of the statements contained in this Form 8-K/A includes "forward
looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended ("Exchange Act"). All statements other
than statements of historical facts included in this Form 8-K/A
regarding the Company's financial position, business strategy, and
plans and objectives of management for future operations and capital
expenditures, and other matters, are forward looking statements. These
forward looking statements are based upon management's expectations of
future events. Although the Company believes the expectations
reflected in such forward looking statements are reasonable, there can
be no assurances that such expectations will prove to be correct.
Additional statements concerning important factors that could cause
actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed in the Risk Factor section
above and elsewhere in this Form 8-K/A. All written and oral forward
looking statements attributable to the Company or persons acting on
behalf of the Company subsequent to the date of this Form 8-K/A are
expressly qualified in their entirety by the Cautionary Statements.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the
Securities Exchange Commission, AirTrax elects to be the successor
issuer to MAS Acquisition IX Corp. for purposes under the Securities
Exchange Act of 1934 ("Exchange Act") and elected to report under the
Exchange Act effective November 5, 1999.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following are (i) the financial statements of the Company for the
periods indicated therein, and (ii) the proforma financial statements
of the Company for the periods indicated therein to reflect the
acquisition of MAS.
<PAGE>
AIRTRAX, INC.
Financial Statements
December 31, 1998
<PAGE>
AIRTRAX, INC.
FINANCIAL STATEMENTS
December 31, 1998
CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
Accountant's Audit Report 1
Balance Sheet 2
Statements of Income 3
Statements of Changes in Stockholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
Board of Directors
AirTrax, Inc.
I have audited the accompanying balance sheet of AirTrax, Inc. as of
December 31, 1998, and the related statements of income, changes in
stockholders' equity, and cash flows for the years ended December 31, 1998
and 1997. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted the audit in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AirTrax, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for
the years ended December 31, 1998 and 1997 in conformity with generally
accepted accounting principles.
/s/ Robert G. Jeffrey
Robert G. Jeffrey
June 22, 1999
<PAGE>
AIRTRAX, INC.
BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
ASSETS
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<S> <C>
Current Assets
Cash $ 5,081
Accounts receivable 3,182
Inventory 22,972
Prepaid expenses 9,438
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Total Current Assets $ 40,673
Fixed Assets
Office furniture and equipment 29,338
Automotive equipment 5,000
Shop equipment 28,959
Casts and tooling 27,609
--------
90,906
Less, accumulated depreciation 39,041
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Net Fixed Assets 51,865
Other Assets
Patents - net 49,664
Utility deposits 214
--------
Total Other Assets 49,878
--------
TOTAL ASSETS $142,416
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $111,678
Accrued liabilities 8,771
--------
Total Current Liabilities $120,449
Stockholders' Equity
Common stock - authorized, 5,000,000
shares without par value;
3,610,095 issued and outstanding 36,101
Preferred stock - authorized, 500,000
shares without par value; 275,000
issued and outstanding 12,950
Additional paid-in-capital 812,200
Retained deficit (839,284)
--------
Total Stockholders' Equity 21,967
--------
TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY $142,416
========
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statements.
-2-
<PAGE>
AIRTRAX, INC.
STATEMENTS OF INCOME
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
SALES $ 19,585 $ 47,484
COST OF GOODS SOLD 7,637 38,338
--------- ---------
Gross Profit 11,948 9,146
OPERATING AND ADMINISTRATIVE EXPENSES:
Cost of prototype development 341,125 36,141
Auto expense 858 522
Health insurance 6,538 2,543
Utilities 1,828 2,720
Telephone 5,012 2,653
Shipping, postage and
office supplies 15,840 13,540
Rent 14,898 16,139
Professional fees 10,790 2,084
Engineering services 1,709 -
Travel and entertainment 9,648 1,352
Business taxes 501 677
Advertising and promotion 2,797 2,577
Interest expense 2,854 5,483
Operating supplies 5,302 1,270
Depreciation and amortization 18,269 12,961
Insurance 1,754 120
Equipment repairs 1,317 -
Equipment rental 150 -
Commissions 1,555 -
Payroll 56,226 35,000
Payroll taxes 4,678 2,677
--------- ---------
Total General and
Administrative Expenses 503,649 138,459
--------- ---------
NET LOSS BEFORE OTHER INCOME (491,701) (129,313)
Other income 1,687 -
--------- ---------
NET LOSS $(490,014) $(129,313)
========= =========
NET LOSS PER SHARE $ (.17) $ (.04)
========= =========
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statements.
-3-
<PAGE>
AIRTRAX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
COMMON PREFERRED ADDITIONAL
STOCK STOCK PAID-IN TREASURY RETAINED
Shares Amount Shares Amount CAPITAL STOCK EARNINGS TOTAL
------ ------ ------ ------ ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares issued to incorporators 177,547 $ 1,630 $ 1,630
Subsequent sale to incorporators 275,000 $ 2,750 2,750
Redemption of preferred stock 88,340 - (275,000) $(20,000) (20,000)
Sales of stock under Rule
504, Regulation D, offering 16,875 169 26,941 27,110
Shares issued in connection
with merger 3,127,500 32,604 182,164 $(206,952) 7,816
Sales of stock under Rule
504, Regulation D, offering 66,338 663 121,211 121,874
Shares issued for services 30,000 -
Exchange of common stock
for preferred (1,500,000) (15,000) 275,000 10,200 (15,200) 20,000
Net loss for the year (129,313) (129,313)
--------- ------- ------- ------ ------- ------- ------- -------
Balance
December 31, 1997 2,006,600 20,066 275,000 12,950 315,116 - (336,265) 11,867
Sales of stock under Rule
504, Regulation D,
offerings 471,962 4,720 488,399 493,119
Stock issued pursuant to
stock split 1,021,825 10,218 (10,218) -
Stock issued to redeem
note payable 30,000 300 19,700 20,000
Stock issued for services 79,708 797 (797) -
Net loss for the year (490,014) (490,014)
Dividends paid on preferred stock (13,005) (13,005)
--------- ------- ------- ------ ------- ------- ------- ------
Balance,
December 31, 1998 3,610,095 $ 36,101 275,000 $12,950 $812,200 $ - $(839,284) $ 21,967
========= ======= ======= ====== ======= ======= ======== =======
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statements.
-4-
<PAGE>
AIRTRAX, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(490,014) $(129,313)
Adjustments to reconcile net income to
net cash consumed by operating activities:
Depreciation and amortization 18,269 12,961
Changes in current assets and liabilities:
Increase (decrease) in accounts payable
and accrued liabilities 58,543 (10,814)
Increase in prepaid expenses (9,438) -
Increase in accounts receivable (3,182) -
Decrease (increase) in inventory (10,902) 8,560
--------- ---------
Net Cash Consumed By
Operating Activities (436,724) (118,606)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (44,490) (6,532)
Acquisition of patents - (15,015)
Decrease (increase) in utility deposits 800 (1,014)
--------- ---------
Net Cash Consumed By
Investing Activities (43,690) (22,561)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales 493,119 148,984
Proceeds of borrowing - 20,000
Proceeds of preferred stock sales - 2,750
Preferred stock dividend (13,005) -
Repayment of borrowing - (20,000)
Acquisition of preferred stock for Treasury (20,000)
--------- ---------
Net Cash Provided By
Financing Activities 480,114 131,734
--------- ---------
Net Decrease In Cash (300) (9,433)
Balance at beginning of year 5,381 14,814
--------- ---------
Balance at end of year $ 5,081 $ 5,381
========= =========
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statement.
-5-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization Of Company
The Company was formed April 17, 1997. On May 19, 1997, the Company entered
into a merger agreement with another corporation, with the Company being the
survivor.
Business
The Company has designed a forklift vehicle using an omni-directional
technology obtained under a contract with the United States Navy Surface
Warfare Center in Panama City, Florida. The right to exploit this
technology grew out of a Cooperative Research and Development Agreement with
the Navy. Significant resources have been devoted during the past two years
to the construction of a prototype of this omni-directional forklift
vehicle. It is expected to be in full commercial production during the
first quarter of 2000. At that time, it will be offered to industrial
users.
The Company has also developed a traditional helicopter ground handling
machine which has been marketed by the Company on limited basis.
Cash
For purposes of the statements of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less
to be cash equivalents.
Inventory
Inventory consists principally of spare parts and supplies used in the
development of prototype machines. Inventories are stated at the lower of
cost (determined on a first in-first-out basis) or market.
Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed by use of the
Modified Accelerated Cost Recovery System (MACRS), as permitted by Internal
Revenue Service Regulations, using lives of seven years for furniture and
shop equipment and five years for computers and automobiles.
Intangible Assets
Patents
The Company incurred costs to acquire and protect certain patent
rights. These costs were capitalized and are being amortized over a period
of fifteen (15) years on a straight-line basis.
-6-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. continued
Prototype Equipment
The cost of developing and constructing the prototype omni-directional
helicopter handling vehicle and the omni-directional forklift vehicle is
expensed as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimated.
2. RELATED PARTY TRANSACTIONS
During 1997, 1.5 million shares of common stock of the Company, owned by the
majority shareholder, were exchanged for 275,000 shares of Company preferred
stock (see Note 5 for description of the preferred stock). This majority
shareholder is a corporation wholly owned by the president of the Company.
3. PRIVATE PLACEMENT OFFERINGS
The Company conducted two private placement offerings during 1997, 1998 and
1999. These offerings were exempt under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder. Common stock
sold under these offerings during 1997 and 1998 is presented below.
<TABLE>
<CAPTION>
1997 1998
-------------------- --------------------
Shares Net Proceeds Shares Net Proceeds
------ ------------ ------ ------------
<S> <C> <C> <C> <C>
First Offering 66,338 $121,874 439,550 $450,821
Second Offering - - 32,412 42,298
</TABLE>
Each of the shares issued under the first offering included a warrant
allowing shareholders to purchase one additional share at prices between
$1.50 and $2.50.
The predecessor corporation also conducted a private placement offering
during 1996 and 1997, prior to the merger. This offering also was exempt
under federal securities law. A total of 19,375 shares were sold during
this offering, yielding net proceeds of $33,713. Each of these shares also
included a warrant to purchase one additional share at a price of $2.50 per
share.
-7-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
3. continued
Additional shares of common stock were issued during 1999
under the second offering. These shares totaled 103,640, yielding net
proceeds of $136,984 during 1999. Warrants which accompanied the first
offering were exercised during 1999. As result of the warrant exercises
through June 1999, a total of 477,269 shares of common stock were issued,
yielding net proceeds of $814,094. All warrants have either been exercised
or have expired.
4. STOCK-SPLIT
During 1998, the common stock was split. One additional share was issued
for every two shares held. This split resulted in 1,021,825 additional
common shares being issued.
5. PREFERRED STOCK
The Company is authorized to issue 500,000 shares of preferred stock,
without par value. During 1997, 275,000 shares of such stock were exchanged
for 1.5 million shares of the common stock of the Company. Each of these
shares entitles the holder to a 5% cumulative dividend based on a $5 per
share stated value. Shareholders may elect to receive these dividends in
cash or in common stock. If stock is elected, it is to be valued at a price
calculated at thirty percent of the last price offered or traded during an
applicable quarter period. This issue of preferred stock also provides a
voting right of 10 votes for each share.
Dividends totaling $104,726 had accrued through December 31, 1998 on this
issue of preferred stock. Of this total, $13,005 had been paid in cash. In
1999, the preferred shareholder elected to receive the remaining $91,721 in
common stock, and 305,737 shares were then issued.
The characteristics of the remaining 225,000 preferred shares authorized
have not been specified.
-8-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
6. Earnings Per Share
<TABLE>
<CAPTION>
YEAR 1998
---------
Income Average Shares Per Share
(Loss) Outstanding Amount
------ -------------- ---------
<C> <C> <C> <C>
Net loss $(490,014)
Adjustment for
preferred stock
dividends (68,750)
-------
Income (loss) available
to common shareholders $(558,764) 3,320,662 $(.17)
======= ========= ===
YEAR 1997
---------
Net loss $(129,313)
Adjustment for
preferred stock
dividends (35,976)
-------
Income (loss) available
to common shareholders $(165,289) 3,789,032 $(.04)
======= ========= ===
</TABLE>
Warrants to purchase common stock were outstanding at the end of 1998 but
were not included in the computation of earnings per share because such
inclusion would have an antidilutive effect. These warrants are described
in Note 3.
7. INCOME TAXES
The Company has experienced losses each year since its inception. As a
result, it has incurred no Federal income tax. The Internal Revenue Code
allows net operating losses (NOL's) to be carried forward and applied
against future profits for a period of twenty years. A New Jersey
corporation business tax liability of $200 accrued during each of the years
1998 and 1997, that being the minimum annual tax imposed on all New Jersey
corporations. New Jersey tax law allows the carry forward of NOL's for
seven years. The Company had NOL carry forwards of $324,000 as of December
31, 1998. The potential tax benefit of these NOL's has not been recorded on
the books of the Company.
-9-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
8. RENTALS UNDER OPERATING LEASES
The Company conducts its operations from facilities rented on a month to
month basis. Office equipment is leased under an operating lease that
expires June 2003. The following is a schedule of future minimum rental
payments required under the operating lease:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ------
<S> <C>
1999 $ 6,857
2000 6,857
2001 6,857
2002 6,857
2003 2,857
--------
$ 30,285
========
</TABLE>
Rent expense amounted to $17,755 in 1998 and $16,140 in 1997.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest and income taxes is presented below:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Interest $2,904 $5,483
Income taxes 200 200
</TABLE>
There were no noncash investing activities during either 1997 or 1998. The
following noncash financing activities occurred:
a. A $20,000 note payable was redeemed in 1998 for 30,000 shares of
common stock.
b. Shares of common stock were issued for services during 1997 and 1998,
totalling 30,000 and 79,708, respectively.
-10-
<PAGE>
AIRTRAX, INC.
Financial Statements
September 30, 1999 and 1998
<PAGE>
AIRTRAX, INC.
FINANCIAL STATEMENTS
September 30, 1999 and 1998
<TABLE>
<CAPTION>
CONTENTS
--------
Page
----
<S> <C>
Accountant's Audit Report 1
Balance Sheet 2
Statement of Income 3
Statement of Changes in Stockholder's Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
To the Board of Directors
AirTrax, Inc.
I have compiled the accompanying balance sheet of AirTrax, Inc. as of
September 30, 1999, the related statement of changes in stockholders'
equity for the nine month period then ended, and the related statements of
income, and cash flows, for the nine month periods ended September 30, 1999
and 1998, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
/s/ Robert G. Jeffrey
Robert G. Jeffrey
November 9, 1999
<PAGE>
AIRTRAX, INC.
BALANCE SHEET
September 30, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current Assets
Cash $ 181,422
Accounts receivable 46,955
Inventory 53,947
Prepaid expenses 6,938
--------
Total Current Assets $ 289,262
Fixed Assets
Office furniture and equipment 32,953
Automotive equipment 16,675
Shop equipment 20,660
Casts and tooling 64,437
--------
134,725
Less, accumulated depreciation 49,302
--------
Net Fixed Assets 85,423
Other Assets
Patents - net 51,405
Utility deposits 65
--------
Total Other Assets 51,470
--------
TOTAL ASSETS $ 426,155
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 24,093
Accrued liabilities 4,769
--------
Total Current Liabilities $ 28,862
Stockholders' Equity
Common stock - authorized, 5,000,000
shares without par value;
4,543,048 issued and outstanding 45,084
Preferred stock - authorized, 500,000
shares without par value; 275,000
issued and outstanding 12,950
Additional paid-in-capital 1,779,676
Retained deficit (1,440,417)
----------
Total Stockholders' Equity 397,293
--------
TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY $ 426,155
========
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statements.
-2-
<PAGE>
AIRTRAX, INC.
STATEMENT OF INCOME
For the Nine Month Period Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
SALES $ 55,305 $ 16,932
COST OF GOODS SOLD 7,383 8,087
-------- --------
Gross Profit 47,922 8,845
OPERATING AND ADMINISTRATIVE EXPENSES:
Cost of prototype development 177,936 236,496
Auto expense 74 858
Health insurance 7,382 4,448
Utilities 1,576 1,342
Telephone 7,647 3,663
Shipping, postage and
office supplies 22,076 11,768
Rent 7,353 11,174
Legal and accounting fees 22,819 7,450
Transfer agent fees 3,370 1,528
Engineering services 23,223 1,709
Travel and entertainment 7,618 7,688
Business taxes 824 156
Advertising and promotion 68,730 2,547
Interest and finance charges 3,982 2,287
Operating supplies 507 3,330
Depreciation and amortization 23,504 13,702
Insurance 4,047 1,976
Equipment rental 4,571 150
Payroll and payroll taxes 139,272 44,678
Total General and ------- -------
Administrative Expenses 526,511 356,950
------- -------
NET LOSS BEFORE OTHER INCOME (478,589) (348,105)
Other income 9,675 1,687
------- -------
NET LOSS $(468,914) $(346,418)
======= =======
NET LOSS PER SHARE $ (.12) $ (.12)
======= =======
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statements.
-3-
<PAGE>
AIRTRAX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Month Period Ended September 30, 1999
<TABLE>
<CAPTION>
COMMON PREFERRED ADDITIONAL
STOCK STOCK PAID-IN RETAINED
Shares Amount Shares Amount CAPITAL EARNINGS TOTAL
------ ------ ------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 3,610,095 $ 36,101 275,000 $ 12,950 $ 812,200 $ (839,284) $ 21,967
Sales of stock under Rule
504, Regulation D, offerings 614,552 5,799 958,190 963,989
Common Stock issued as divided
on preferred 305,737 3,057 (3,057) -
Stock issued for services 12,664 127 12,343 12,470
Net loss for the nine month period (468,914) (468,914)
Dividends paid on preferred stock (132,219) (132,219)
--------- ------- ------- ------- --------- ---------- -------
Balance, September 30, 1999 4,543,048 $ 45,084 275,000 $ 12,950 $1,779,676 $(1,440,417) $397,293
========= ======= ======= ======= ========= ========== =======
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these finanical statements.
-4-
<PAGE>
AIRTRAX, INC.
STATEMENT OF CASH FLOWS
For the Nine Month Period Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(468,914) $(346,418)
Adjustments to reconcile net income to
net cash consumed by operating activities:
Depreciation and amortization 23,504 13,702
Value of common stock issued for services 9,970 797
Changes in current assets and liabilities:
Decrease in prepaid expenses 2,500 -
Increase (decrease) in accounts payable
and accrued liabilities (91,627) 34,751
Increase in accounts receivable (43,773) (29)
Increase in inventory (30,975) (4,448)
-------- --------
Net Cash Consumed By
Operating Activities (599,315) (301,645)
CASH FLOWS FROM INVESTING ACTIVITIES
Disposition of shop equipment 3,067 -
Decrease in utility deposits 149 800
Acquisitions of equipment (56,887) (36,198)
Acquisition of patents (4,981) -
-------- --------
Net Cash Consumed By
Investing Activities (58,652) (35,398)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales 874,806 347,501
Preferred stock dividend (40,498) (13,005)
-------- --------
Net Cash Provided By
Financing Activities 834,308 334,496
-------- --------
Net Increase (Decrease) In Cash 176,341 (2,547)
Cash balance at beginning of period 5,081 5,381
-------- --------
Cash balance at end of period $ 181,422 $ 2,834
======= =======
</TABLE>
The accompanying notes and accountant's compilation report are an integral
part of these financial statement.
-5-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization Of Company
The Company was formed April 17, 1997. On May 19, 1997, the Company entered
into a merger agreement with another corporation, with the Company being the
survivor.
Business
The Company has designed a forklift vehicle using an omni-directional
technology obtained under a contract with the United States Navy Surface
Warfare Center in Panama City, Florida. The right to exploit this
technology grew out of a Cooperative Research and Development Agreement with
the Navy. Significant resources have been devoted during the past two years
to the construction of a prototype of this omni-directional forklift vehicle.
It is expected to be in full commercial production during the first quarter
of 2000. At that time, it will be offered to industrial users.
The Company has also developed a traditional helicopter ground handling
machine, which has been marketed by the Company on as limited basis.
Cash
For purposes of the statements of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less
to be cash equivalents.
Inventory
Inventory consists principally of spare parts and supplies used in the
development of prototype machines. Inventories are stated at the lower of
cost (determined on a first-in first-out basis) or market.
Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed by use of the
Modified Accelerated Cost Recovery System (MACRS), as permitted by Internal
Revenue Service Regulations, using lives of seven years for furniture and
shop equipment and five years for computers and automobiles.
Intangible Assets
Patents
The Company incurred costs to acquire and protect certain patent
rights. These costs were capitalized and are being amortized over a period
of fifteen (15) years on a straight-line basis.
-6-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
1. continued
Prototype Equipment
The cost of developing and constructing the prototype omni-
directional helicopter handling vehicle and the omni-directional forklift
vehicle is expensed as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
2. RELATED PARTY TRANSACTIONS
During 1999, 305,737 shares of common stock of the Company were issued as a
dividend on the preferred stock. The preferred stock is owned by the
majority shareholder of the Company. This majority shareholder is a
corporation controlled by the president of the Company.
3. PRIVATE PLACEMENT OFFERINGS
The Company conducted private placement offerings during 1999. The
offerings were exempt under the Securities Act of 1933, as amended, and the
rules and regulations promulgated therunder. A total of 579,909 shares of
common stock was sold under the offerings resulting in net proceeds of
$963,989.
4. PREFERRED STOCK
The Company is authorized to issue 500,000 shares of preferred stock,
without par value. During 1997, 275,000 shares of such stock were exchanged
for 1.5 million shares of the common stock of the Company. Each of these
shares entitles the holder to a 5% cumulative dividend based on a $5 per
share stated value. Shareholders may elect to receive these dividends in
cash or in common stock. If stock is elected, it is valued at a price
calculated at thirty percent of the last price offered or traded during an
applicable quarter eriod. This issue of preferred stock also provides a
voting right of 10 votes for each share.
-7-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
4. continued
Dividends totaling $104,726 had accrued through December 31, 1998 on this
issue of preferred stock. Of this total, $13,005 had been paid in cash. In
1999, the preferred shareholder elected to receive the remaining $91,721 in
common stock, and 305,737 shares were then issued. Additional cash
dividends of 51,563 accrued during the first nine months of 1999; of this,
$40,498 was paid in cash and $11,065 remains unpaid.
The characteristics of the remaining 225,000 preferred shares authorized
have not been specified.
5. Earnings Per Share
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
------------------
Amount Average Shares Per Share
(Loss) Outstanding Amount
------ ----------- ------
<S> <C> <C> <C>
Net loss $ (468,914)
Adjustment for
preferred stock
dividends (51,563)
-------
Income (loss) available
to common shareholders $ (520,477) 4,209,170 $(.12)
======= ========= ===
NINE MONTHS ENDED
SEPTEMBER 30, 1998
------------------
Amount Average Shares Per Share
(Loss) Outstanding Amount
------ ----------- ------
Net loss $ (346,418)
Adjustment for
preferred stock
dividends (51,563)
------
Income (loss) available
to common shareholders $ (397,981) 3,314,020 $(.12)
======= ========= ===
</TABLE>
-8-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
6. INCOME TAXES
The Company has experienced losses each year since its inception. As a
result, it has incurred no Federal income tax. The Internal Revenue Code
allows net operating losses (NOL's) to be carried forward and applied
against future profits for a period of twenty years. A New Jersey
corporation business tax liability of $200 accrued during each of the years
1998 and 1997, that being the minimum annual tax imposed on all New Jersey
corporations. New Jersey tax law allows the carry forward of NOL's for
seven years. The Company had NOL carry forwards of $324,000 as of December
31, 1998. The potential tax benefit of these NOL's has not been recorded on
the books of the Company.
7. RENTALS UNDER OPERATING LEASES
Since June 1999, the Company has conducted its operations on premises owned
by the Company president which to date has been rent free. Office equipment
is leased under an operating lease that expires June 2003. The following is
a schedule of future minimum rental payments required under the operating
lease:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ------
<S> <C>
1999 (Remainder) $ 1,714
2000 6,857
2001 6,857
2002 6,857
2003 2,857
------
$ 25,142
=======
</TABLE>
Rent expense amounted to $11,924 in the first nine months of 1999.
-9-
<PAGE>
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest and income taxes during the nine months ended
September 30, 1999 was $3,904 and $200, respectively; during the nine months
ended September 30, 1998, these amounted to $2,218 and $200, respectively.
There were no noncash investing activities during the nine months ended
September 30, 1999. The following noncash financing activities occurred
during this period.
a. Common stock was issued for services, amounting to 7,664 shares the
nine month period of 1999 and 79,108 shares in the nine month period of
1998. Expense was charged $9,970 for these shares in 1999, and $797 in 1998.
b. Common stock was issued as a dividend on the preferred issue,
amounting to 305,737 shares, which were valued at $91,721.
c. A $20,000 note payable was redeemed in the 1998 period for 30,000
shares of common stock.
-10-
<PAGE>
AirTrax, Inc.
ProForma Balance Sheets
December 31, 1998
<TABLE>
<CAPTION>
MAS
Acquisition
ASSETS AirTrax, Inc. IX Corp. Adjustments Consolidated
- ------ ------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Current Assets $ 40,673 $ - $ - $ 40,673
Fixed Assets 90,906 - - 90,906
Less, accumulated depreciation 39,041 - - 39,041
------- ------- ------- -------
Net Fixed Assets 51,865 - - 51,865
Other Assets:
Intangibles-net of amortization 49,664 50 - 49,714
Deposits 214 - - 214
------- ------- ------- -------
Total Other Assets 49,878 50 - 49,928
------- ------- ------- -------
Total Assets $ 142,416 $ 50 $ - $ 142,466
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
------
Current Liabilities $ 120,449 - - $ 120,449
Stockholders' Equity 21,967 50 - 22,017
------- ------- ------- -------
Total Liabilities and
Stockholders' Equity $ 142,416 $ 50 $ - $ 142,466
======= ======= ======= =======
</TABLE>
<PAGE>
AirTrax, Inc.
Proforma Balance Sheets
September 30, 1999
<TABLE>
<CAPTION>
MAS
Acquisition
ASSETS AirTrax, Inc. IX Corp. Adjustments Consolidated
- ------ ------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Current Assets $ 289,262 $ - $ - $ 289,262
Fixed Assets 134,725 - - 134,725
Less, accumulated depreciation 49,302 - - 49,302
------- ------- ------- -------
Net Fixed Assets 85,423 - - 85,423
Other Assets:
Intangibles - net of
amortization 51,405 36 - 51,441
Deposits 65 - - 65
------- ------- ------- -------
Total Other Assets 51,470 36 - 51,506
------- ------- ------- -------
Total Assets $ 426,155 $ 36 $ - $ 426,191
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS'
- -----------------------------
EQUITY
------
Current Liabilities $ 28,862 - - $ 28,862
Stockholders' Equity 397,293 36 - 397,329
------- ------- ------- -------
Total Liabilities and
Stockholders' Equity $ 426,155 $ 36 $ - $ 426,191
======= ======= ======= =======
</TABLE>
<PAGE>
AirTrax, Inc.
ProForma Statements of Income
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
MAS
AirTrax, Inc. Acquisition IX Corp. Adjustments Consolidated
------------- -------------------- ----------- ------------
1998 1997 1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sale $ 19,585 $ 47,484 $ - $ - $ - $ - $ 19,585 $ 47,484
Cost of Sales 7,637 38,338 - - - - 7,637 38,338
-------- -------- -------- -------- -------- -------- -------- --------
Gross Profit 11,948 9,146 - - - - 11,948 9,146
Operating and
Administrative
Expenses:
Cost of Prototype
Development 341,125 36,141 - - - - 341,125 36,141
Payroll and
Payroll Taxes 60,904 37,677 - - - - 60,904 37,677
Other Expenses 101,620 64,641 30 13 - - 101,650 64,654
-------- -------- -------- -------- -------- -------- -------- --------
Total Expenses 503,649 138,459 30 13 - - 503,679 138,472
-------- -------- -------- -------- -------- -------- -------- --------
Net Loss Before
Other Income (491,701) (129,313) (30) (13) - - (491,731) (129,326)
Other Income 1,687 - - - - - 1,687 -
-------- -------- -------- -------- -------- -------- -------- --------
Net Loss $(490,014) $(129,313) $ (30) $ (13) $ - $ - $(490,044) $(129,326)
======== ======== ======== ======== ======== ======== ======== ========
Net Loss
Per Share $ (.17) $ (.04) $ - $ - $ - $ - $ (.17) $ (.04)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
AirTrax, Inc.
ProForma Statements of Income
For the Nine Month Periods Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
MAS
AirTrax, Inc. Acquisition IX Corp. Adjustments Consolidated
------------- -------------------- ----------- ------------
1998 1997 1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 55,305 $ 16,932 $ - $ - $ - $ - $ 55,305 $ 16,932
Cost of Sales 7,383 8,087 - - - - 7,383 8,087
-------- -------- -------- -------- -------- -------- -------- --------
Gross Profit 47,922 8,845 - - - - 47,922 8,845
Operating and
Administrative
Expenses:
Cost of Prototype
Development 177,936 236,510 - - - - 177,936 236,510
Payroll and
Payroll Taxes 139,272 44,678 - - - - 139,272 44,678
Advertising and
Promotion 68,730 2,547 - - - - 68,730 2,547
Other Expenses 140,573 73,215 14 14 - - 140,587 73,229
-------- -------- -------- -------- -------- -------- -------- --------
Total Expenses 526,511 356,950 14 14 - - 526,525 356,964
-------- -------- -------- -------- -------- -------- -------- --------
Net Loss Before
Other Income (478,589) (348,105) (14) (14) - - (478,603) (348,119)
Other Income 9,675 1,687 - - - - 9,675 1,687
-------- -------- -------- -------- -------- -------- -------- --------
Net Loss $(468,914) $(346,418) $ (14) $ (14) $ - $ - $(468,928) $(346,432)
======== ======== ======== ======== ======== ======== ======== ========
Net Loss
Per Share $ (.12) $ (.12) $ - $ - $ - $ - $ (.12) $ (.12)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBITS.
3(i)a. Certificate of Incorporation of AirTrax, Inc. dated April 11, 1997.
(Incorporated by reference to the Company's Form 8-K filed with the Securities
and Exchange Commission on November 19, 1999).
3(i)b. Certificate of Amendment to Certificate of Incorporation of AirTrax,
Inc. dated November 11, 1999. (Incorporated by reference to the Company's Form
8-K filed with the Securities and Exchange Commission on November 19, 1999).
3(ii)(a). Amended and Restated By-Laws of the Company. (Incorporated by
reference to the Company's Form 8-K filed with the Securities and Exchange
Commission on November 19, 1999).
10(i) Agreement and Plan of Merger by and between MAS Acquisition IX Corp. and
AirTrax, Inc. dated November 5, 1999. (Incorporated by reference to the
Company's Form 8-K filed with the Securities and Exchange Commission on
November 19, 1999).
10(ii). Employment agreement dated April 1, 1997 by and between the Company
and Peter Amico.
10(iii). Employment agreement dated July 12, 1999, by and between the Company
and D. Barney Harris.
99(i) Consulting Agreement by and between MAS Financial Corp. and AirTrax,
Inc. dated October 26, 1999. (Incorporated by reference to the Company's Form
8-K filed with the Securities and Exchange Commission on November 19, 1999).
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR.
The successor issuer elects December 31 as its fiscal year end. The
Company will file transitional reports as required.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIRTRAX, INC.
Date: January 7, 2000 /s/ Peter Amico
- ----------------------- _________________
Peter Amico
President
<PAGE>
EXHIBIT 10(ii)
Air Tracks, Inc.
and
Peter L. Amico
EMPLOYMENT AGREEMENT
Employment Agreement, between (the "Company") and Peter L. Amico (the
"Employee").
1. For good consideration, the Company employs the Employee on the following
terms and conditions.
2. Term of Employment: Subject to the provisions for termination set forth
below this agreement will begin on April 1, 1997, through June 30, 2000
unless sooner terminated.
3. Salary: The Company shall pay Employee a salary of $35,000.00 annually
for fiscal 1997, $45,000.00 for fiscal 1998, $75,000.00 for fiscal 1999
continuing through June 30, 2000 for the services of the Employee, payable
each weekly payroll period.
a. The Company will include the employee in it's contributory health
insurance program beginning 4 months from date of employment.
b. Salary will be evaluated in January 2,000 for recommendation for the next
fiscal year beginning July 1, 2000 or the Board of Directors will evaluate
salary and options immediately after the Company begins producing product
and/or services that are income producing, whichever comes first.
c. The employee shall have the option to purchase up to 50,000 shares of
Common Stock of the Company per year. Options offered as a part of this
employment agreement have no relationship to and are completely separate from
any other options offered this employee or any affiliate of this employee, as
a result of services provided to the Company in any other capacity. Options
will be offered as follows:
1. Beginning the first year of production or FY 2000, whichever comes first,
the employee will receive up to Ten thousand (10,000) shares of Common Stock
for each year of service for the sum of one dollar ($1,00).
2. After six (6) months continuous employment or by January 1, 1998 and each
year thereafter, the employee will be permitted to purchase up to Twenty Five
Thousand (25,000) shares of Common Stock at a rate equal to 30% of the
lowest rate paid for stock in the 30 days preceding the purchase of said
stock.
3. After three years of continuous employment and each year thereafter, the
Company will match the employee dollar for dollar for all purchases of Common
Stock over the aforesaid Thirty-Five Thousand Shares (35,000) up to and
including Fifteen thousand (15,000) shares of Common Stock.
4. All stock purchase shall be issued free of any Company imposed
restrictions but will be subject to all restrictions and/or legends imposed by
the Securities and Exchange Commission or any other federal or state statutes
governing such transactions.
d. Employee may earn a bonus(s) from time to time. Bonuses require Board of
Director approval.
e. Holidays: the Company will pay, at a minimum, the following holidays: New
year, Easter, Memorial Day, Independence Day, Labor Day, Thanksgiving,
Christmas.
4. Duties and Position: The Company employs the Employee in the capacity of
President and Chief Executive Officer.
a. Duties shall include general management of the Company including sales.
purchasing, design, marketing or any other duties necessary for the proper
functioning or management of the Company. The Employee's duties may be
reasonably modified at the Company's discretion from time to time.
b. The Company may use the employee's name in advertisements, press releases
or in any other manner that is beneficial to the Company providing all
information so published is truthful and not detrimental to the employee. The
employee is obligated to make known any reason the Company should not use the
employee's name prior to such use.
5. Employee agrees to Devote Full Time to Company: The Employee will devote
full time, attention, and energies to the business of the Company and during
this employment, will not engage in any other business activity, regardless of
whether such activity is pursued for profit, gain, or other pecuniary
advantage. Employee is not prohibited from making personal investments in any
other businesses provided those investments do not require active involvement
in the operation of said companies.
6. Confidentiality of Proprietary Information: Employee agrees, during or
after the term of this employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should Employee
reveal or threaten to reveal this information, the Company shall be entitled
to an injunction restraining the Employee from disclosing same, or from
rendering any services to any entity to whom said information has been or is
threatened to be disclosed. The right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it has against the
Employee for a breach or threatened breach of this condition, including the
recovery of damages from the Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable expenses
for furthering the Company's business, including expenses for entertainment,
travel, and similar items. The Company shall reimburse Employee for all
business expenses after the Employee presents an itemized account of
expenditures, pursuant to Company policy.
8. Vacation: The Employee shall be entitled to a yearly vacation of 2
weeks at full pay. Vacation time is earned (and accrued) based upon the rate
1 hour per 26 hours of work. Each week is considered 40 hours.
9. Disability: If Employee cannot perform the duties because of illness or
incapacity for a period of more than 8 weeks, the compensation otherwise due
during said illness or incapacity may be reduced by fifty percent (50)
percent. The Employee's full compensation will be reinstated upon return to
work. However, if the Employee is absent from work for any reason for a
continuous period of over 2 month, the Company may terminate the Employee's
payroll and/or employment, and the Company's obligations under this
agreement will/may cease on that date.
a. If the Employee, at anytime during the term of this Agreement, should be
unable because of personal injury, illness, or any other cause to perform
his duties under this contract the Employer may assign the Employee to other
duties and the compensation to be paid thereafter to the Employee shall be
determined by the Employer in its sole discretion.
b. If the Employee is unwilling to accept the modification in duties and
compensation made by the Employer, or if the Employee's inability to perform
is of such extent to make a modification of duties hereunder not feasible,
this contract shall terminate.
10. Termination of Agreement: Without cause, the Company may terminate this
agreement at any time upon 14 days' written notice to the Employee. If the
Company requests, the Employee will continue to perform his/her duties and be
paid his/her regular salary up to the date of termination. Severance pay will
not be earned nor payable by the Company until one (1) year of steady
employment has elapsed. After the one year of continuous employment, the
Company will pay the Employee on the date of termination a severance allowance
of 250,000 shares of Common Stock of the Company and $100,000.00 less taxes
and social security required to be withheld from wages only and does not
include any taxes (state or federal) whatsoever for the stock transaction.
Without cause, the Employee may terminate employment upon 30 days' written
notice to the Company.
Employee may be required to perform his/her duties and will be paid the
regular salary to date of termination and shall receive a severance allowance
subject to deductions as follows: 50% deduction for voluntary cessation of
employment during the second year: 25% deduction for voluntary cessation of
employment during the third year: no deductions for voluntary cessation of
employment during the final year.
Notwithstanding anything to the contrary contained in this agreement, the
Company may terminate the Employee's employment upon 14 days' notice to the
Employee should any of the following events occur:
a) The sale of substantially all of the Company's assets to a single
purchaser or group of associated purchasers; or
b) The sale, exchange, or other disposition, in one transaction of the
majority of the Company's outstanding corporate shares; or
c) The Company's decision to terminate its business and liquidate its assets;
d) The merger or consolidation of the Company with another company.
e) Bankruptcy or Chapter 11 Reorganization.
f) In the event of termination for any reason excepting fraud or criminal
violations the employee shall be permitted to exercise stock options due and
not previously exercised and the Company is bound to provide to the employee
Company obligations incurred under such options.
g) In the event of termination for any reason excepting fraud or criminal
violations the employee shall be entitled to severance allowances earned by
the employee. Such severance allowance shall be due and owing to the
employee and construed to be "wages", with all of the "legal" privileges
due therefrom, whether or not the Company is able to reimburse the Employee.
11. Death Benefit: Should Employee die during the term of employment, the
Company shall pay to Employee's estate any compensation due through the end
of the month in which death occurred.
12. Restriction on Post Employment Compensation: For a period of two
(2)years after the end of employment, the Employee shall not control, consult
to or be employed by any business similar to that conducted by the Company,
either by soliciting any of its accounts or by operating within Employer's
general trading area. In the event the Company seeks protection under the
Bankruptcy laws, this paragraph is null and void.
13. Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after employment.
14. Effect of Prior Agreements: This agreement supersedes any prior
agreement between the Company or any predecessor of the Company and the
Employee, except that this agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Employee of a kind elsewhere
provided and not expressly provided in this agreement.
15. Settlement by Arbitration: Any claim or controversy that arises out of
or relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court
with jurisdiction. The venue for legal process under the terms of this
agreement is the State of New Jersey or the state in which the Company
maintains it's primary offices, at the discretion of the Company.
16. Limited Effect of Waiver by Company. Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate or
be construed as a waiver of further breach by the Employee.
17. Severability: If, for any reason, any provision of this agreement is
held invalid, all other provisions of this agreement shall remain in effect.
If this agreement is held invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement between the Company (or any
predecessor thereof) and the Employee shall be deemed reinstated as if this
agreement had not been executed.
18. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the
benefit and be binding upon the Company's successors and assignees.
19. Oral Modifications Not Binding: This instrument is the entire agreement
of the Company and the Employee. Oral changes shall have no effect. It may be
altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
Signed this 1st day of April, 1997
AIR TRACKS, INC. Peter Amico
Employee
/s/ Peter Amico
/s/ Peter Amico
Peter Amico, President/CEO
Board of Directors
/s/ Peter Amico /s/ Samuel Malat, Esq.
- --------------- ------------------
Peter Amico Samuel Malat, Esq.
/s/ Jerome Stein
_________________ __________________
Thomas Carscadden Jerome Stein
<PAGE>
EXHIBIT X(iii)
AIRTRAX, Corporation
and
Donald "Barney" Harris
EMPLOYMENT AGREEMENT
Employment Agreement, between AIRTRAX, Corporation (the "Company") and Donald
"Barney" Harris (the "Employee").
1. For good consideration, the exchange and receipt of which consideration is
mutually acknowledged, the Company employs the Employee on the following terms
and conditions.
2. Term of Employment: Subject to the provisions for termination set forth
below this agreement will begin on 14 June 1999, and will continue for a
period of five (5) years, to and through 13 June 2004. At the sole option
and discretion of Company this employment contract may be renewed for an
additional period of five (5) years, from 14 June 2004 through 13 June 2009.
3. Salary: The Company shall pay Employee a salary of $75,000.00 per year,
for the services of the Employee, payable pro-rata in each weekly payroll
period.
a. The Company will include the employee in it's contributory health
insurance program beginning 4 months from date of employment.
b. Salary will be evaluated in the first six (6) months from the starting
date and thereafter, yearly, on the annual anniversary of the date of
employment. It is understood by the employee that salary increases are
subject to approval of the Board of Directors. However, no consideration will
be given to increases in salary until after the Company is producing and
selling products and/or services that are income producing.
c. The Company will provide the employee with. stock options not to exceed
25,000 Shares of Common Stock per year. Options offered as a part of this
employment agreement have no relationship to and are to be considered
completely separate from any other options offered this employee as a result
of services provided to the Company in any other capacity. Options will be
offered as follows:
1. At the sole discretion of the Company and on the annual anniversary of
the date of employ the employee will receive up to Two thousand Five Hundred
(2,500) shares of Common Stock for each year of service for the sole sum of
One Dollar ($1.00).
2. After six (6) months continuous employment and on the annual anniversary
of the date of employment, in each year thereafter, the employee will be
permitted to purchase up to Ten Thousand (10,000) shares of Common Stock at a
rate equal to 35% of the lowest rate paid for stock in the 30 days preceding
the purchase of said stock. This right-of-option does not cumulate. Any
right-of-option which remains unexercised for a period of 30 calendar days
following its offer becomes void.
3. After six (6) months continuous employment and on the annual anniversary
of the date of employment, in each year thereafter, the Company will match
the employee dollar for dollar for all purchases of Common Stock over the
twelve thousand and five hundred (12,500) shares referenced in Paragraphs 1
and 2 above, up to and capped at a cumulative annual total of twenty-five
thousand (25,000) shares of Common Stock per year, such year to be calculated
based upon the annual anniversary of the date of employment.
4. All stock purchase shall be issued free of any Company imposed
restrictions but will be subject to all restrictions and/or legends imposed
by the Securities and Exchange Commission or any other federal or state
statutes governing such transactions.
d. Employee may earn a bonus(s) from time to time.
e. Holidays: the Company will pay, at a minimum, the following holidays: New
Year, Easter, Memorial Day, Independence Day, Labor Day, Thanksgiving,
Christmas.
4. Duties and Position: The Company hires the Employee in the capacity of
Vice President and Chief Engineer.
a. Primary responsibility will be to work with and assist the president of the
Company as directed by the same, and ultimately assume the duties as president
of the Company. Duties shall include securing, bidding and working on all
contracts with the government such as SBIRs, BAAs, etc., supervision,
structural and mechanical design, stress analysis, hydraulic systems, cost
reduction, testing and customer service. The Employee's duties may be
reasonably modified at the Company's discretion from time to time.
b. The Company may use the employee's name in advertisements, press releases
or in any other manner that is beneficial to the Company providing all
information so published is truthful and not detrimental to the employee. The
employee is obligated to make known any reason the Company should not use the
employee's name prior to such use.
c. The Company relies upon the prior resume submitted by the employee and
incorporates the same into this agreement as Schedule A.
5. Employee agrees to Devote Full Time to Company: The Employee will devote
full time, attention, and energies to the business of the Company and during
this employment, will not engage in any other business activity, regardless of
whether such activity is pursued for profit, gain, or other pecuniary
advantage. Employee is not prohibited from making personal investments in any
other businesses provided those investments do not require active involvement
in the operation of said companies. It is understood by the Company that the
employee, in leaving his position with UTD, Inc. may be leaving certain jobs
that could require the attention and or services of this employee to take
them to a successful conclusion. In that event this employee is permitted to
complete any job or function he deems necessary to fulfill his obligations
to his former employer. The Company expects all such services to be fulfilled
and/or completed within 30 days. The employee will charge the Company only for
time used in the performance of duties for the Company during the transition
period.
* * * NOTE * * * It is understood that the employee continues to be listed as
an employee of EG&G, a past employer and will remain so until certain stock
options are fully vested, after which said employment with EG&G may cease. A
continuing benefit to Airtrax is that this employee maintains a security
clearance through EG&G - which will permit access to certain areas with ease.
* * * NOTE * * * It is understood by the Company that this employee is a part
owner in a limited liability corporation called HAPCO Marine, whose intention
is to support sailboat racing in the United States and Washington DC area in
particular. This employee does not receive a salary with HAPCO, and the time
contributed is discretionary and typically on weekends and after the close of
the business day. It is noted that neither of these positions will have any
affect on work agreed to be performed with Airtrax.
6. Confidentiality of Proprietary Information: Employee agrees, during or
after the term of this employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should Employee
reveal or threaten to reveal this information, the Company shall be entitled
to an injunction restraining the Employee from disclosing same, or from
rendering any services to any entity to whom said information has been or is
threatened to be disclosed. The right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it has against the
Employee for a breach or threatened breach of this condition, including the
recovery of damages from the Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable expenses for
furthering the Company's business, including expenses for entertainment,
travel, and similar items-The Company shall reimburse Employee for all
business expenses after the Employee presents an itemized account of
expenditures, pursuant to Company policy.
8. Vacation: The Employee shall be entitled to a yearly vacation of 2 weeks
at full pay. Vacation time is earned (and accrued) based upon the rate of one
hour per 26 hours of work. Each week is considered 40 hours. The calculation
of annual paid vacation, at the ratio and by the formula herein shall be
capped at a maximum of 2,080 hours per year.
9. Disability: If Employee cannot perform the duties because of illness or
incapacity for a period of more than 2 weeks, the compensation otherwise due
during said illness or incapacity may, at the sole discretion of the Company,
be reduced by fifty percent (50) percent. The Employee's full compensation
will be reinstated upon return to work. However, if the Employee is absent
from work for any reason for a continuous period of over one calendar month,
the Company may terminate the Employee's payroll and/or employment, and the
Company's obligations under this agreement will/may cease on that date.
a. If the Employee, at anytime during the term of this Agreement, should be
unable because of personal injury, illness, or any other cause to perform his
duties under this contract the Employer may assign the Employee to other
duties and the compensation to be paid thereafter to the Employee shall be
determined by the Employer in its sole discretion.
b. If the Employee is unwilling to accept the modification in duties and
compensation made by the Employer, or if the Employee's inability to perform
is of such extent to make a modification of duties hereunder not feasible,
this contract shall terminate.
10. Termination of Agreement: Without cause, the Company may terminate this
agreement at any time upon 14 days' written notice to the Employee. If the
Company requests, the Employee will continue to perform his/her duties and be
paid his/her regular salary up to the date of termination. In addition, the
Company will pay the Employee on the date of termination a severance
allowance of $ 1000.00 less taxes and social security required to be withheld.
Severance pay will not be earned nor payable by the Company until one (1)
year of steady employment has elapsed. Without cause, the Employee may
terminate employment upon 30 days' written notice to the Company. Employee
may be required to perform his/her duties and will be paid the regular salary
to date of termination but shall not receive a severance allowance.
Notwithstanding anything to the contrary contained in this agreement, the
Company may terminate the Employee's employment upon 14 days' notice to the
Employee should any of the following events occur:
a) The sale of substantially all of the Company's assets to a single
purchaser or group of associated purchasers; or
b) The sale, exchange, or other disposition, in one transaction of the
majority of the Company's outstanding corporate shares; or
c) The Company's decision to terminate its business and liquidate its assets;
d) The merger or consolidation of the Company with another company;
e) Bankruptcy or Chapter 11 Reorganization;
f) In the event of termination for any reason excepting fraud or criminal
violations the employee shall be permitted to exercise any stock options due
and not previously exercised and available within the terms, conditions and
limitations of Paragraph 3 above. The Company is bound to honor all Company
obligations to the employee incurred under such options.
11. Death Benefit: Should Employee die during the term of employment, the
Company shall pay to Employee's estate any compensation due through the end
of the month in which death occurred.
12. Restriction on Post Employment Compensation: For a period of two (2) years
after the end of employment, the Employee shall not control, consult to or be
employed by any business similar to that conducted by the Company, and shall
further be prohibited from soliciting any Company accounts or operating within
Employer's trading area.
13. Assistance in Litigation: Employee shall upon reasonable notice, furnish
such information and proper assistance to the Company as it may reasonably
require in connection with any litigation in which it is, or may become, a
party either during or after employment.
14. Effect of Prior Agreements: This agreement supersedes any prior agreement
between the Company or any predecessor of the Company and the Employee,
except that this agreement shall not affect or operate to reduce any benefit
or compensation inuring to the Employee of a kind elsewhere provided and not
expressly provided in this agreement.
15. Settlement by Arbitration: Any claim or controversy that arises out of or
relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court
with jurisdiction. The venue for legal process under the terms of this
agreement is the State of New Jersey or the state in which the Company
maintains it's primary offices, at the discretion of the Company.
16. Limited Effect of Waiver by Company: Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate or
be construed as a waiver of further breach by the Employee.
17. Severability: If, for any reason, any provision of this agreement is held
invalid, all other provisions of this agreement shall remain in effect. If
this agreement is held invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or any predecessor
thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.
18. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the
benefit and be binding upon the Company's successors and assignees.
19. Oral Modifications Not Binding: This instrument is the entire agreement
of the Company and the Employee. Oral changes shall have no effect. It may be
altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
20. Other Issues: It is agreed until other arrangements are deemed in the
Company interest that:
a. the employee will work in an office outfitted in the employee's residence
for the foreseeable future;
b. A phone and data line (for e-mail and internet service) will be provided
into the employees office at Company expense.
c. The Company will provide a high end computer, printer, scanner, and copier
to write and publish reports and proposals as well as necessary office
furniture to complete the proposed assignments.
Signed this 12th day of July, 1999.
AIRTRAX Corporation
/s/ Peter Amico /s/ Donald Harris
________________________ ___________________________
Peter Amico, President/CEO Donald "Barney" Harris
Board of Directors
/s/ Peter Amico /s/ Frank G. Basile
___________________ _____________________
Peter Amico Frank G. Basile, Esquire
/s/ John Watt, Jr. /s/ James Hudson /s/ Donald B. Harris
___________________ _____________________ __________________
John Watt, Jr James Hudson Donald B. Harris
