SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ACCIDENT PREVENTION PLUS, INC.
(Name of Small Business Issuer in its charter)
State of Nevada
(State or other jurisdiction of incorporation or organization)
11-3461611
(I.R.S. Employer Identification No.)
145 Oser Avenue, Suite 100
Hauppauge, New York 11788
(Address of Principal Executive Offices)
(516) 360-0600
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$.001 PAR VALUE
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TABLE OF CONTENTS
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PART I
Item 1. Description of Business.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Item 3. Description of Property.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Item 6. Executive Compensation.
Item 7. Certain Relationships and Related Transactions.
Item 8. Description of Securities.
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity and Other
Shareholder Matters.
Item 2. Legal Proceedings.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Item 4. Recent Sales of Unregistered Securities.
Item 5. Indemnification of Directors and Officers.
PART III
Item 1. Index to Exhibits.
Item 2. Description of Exhibits.
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PART I
As used in this Registration Statement, the term "Company" refers to
Accident Prevention Plus, Inc. The term "IPS" refers to International Purchasing
Services, Inc., a New York corporation and a wholly-owned subsidiary of the
Company. The term "KMR" refers to KMR Telecom, Ltd, a corporation organized
under the laws of India and a wholly-owned subsidiary of the Company.
Item 1. Description of Business.
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Overview
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Accident Prevention Plus, Inc. was formed in 1993 as a standard corporation
under the laws of the State of New York. In 1996, the Company converted to a
limited liability company under the laws of the State of New York. In October
1998, the Company converted to a corporation organized under the laws of the
State of Nevada.
The Company's principal executive offices are located at 145 Oser Avenue,
Suite 100, Hauppauge, New York 11788. Its telephone number is (516) 360-0600,
its facsimile number is (516) 265-3351, and its e-mail address is [email protected].
The Company has a research facility located at 2900 72nd Street North, St.
Petersburg, Florida 33733, with a telephone number of (727) 344-5454. The
Company also has an international office located at Rue d'Alsace-Lorraine #44,
Brussels, Belguim 1050, with a telephone number of 32.2.503.2657 and an
international office located at Flat #3, 3-43-165 West Marredpally,
Secunderabad, India.
The Company designs, develops, manufactures and distributes a comprehensive
line of onboard computer recording systems and fuel monitoring systems for
commercial and fleet vehicles. The Company has completed the development of
three different onboard recording systems (hereinafter, called the AP+SeriesTM),
which were designed to (i) promote safe and efficient driving practices, (ii)
provide security for unauthorized operational use of a vehicle; (iii)
automatically monitor and record vehicle operational data for accident
prevention, driving training, driver evaluation and maintenance purposes; and
(iv) reduce the overall costs of maintaining and operating fleet vehicles. Each
of the AP+SeriesTM onboard recording systems are fully programmable data
recorder systems that include a data recorder for each fleet vehicle, a
Smart-card for each driver, a central card-reader with management computer
software which is compatible with Microsoft Windows.
The Company is currently in the process of developing a fourth onboard
recording system for the AP+SeriesTM, which is designed to include features and
options such as global positioning systems for vehicular tracking, mapping and
communications, in-vehicle alcohol sensor/breathalyzer units, fatigue sensor to
monitor and record driver alertness, and a fingerprint recognition system on the
Smart-card for various applications.
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The Company has designed and developed a fuel monitoring system called the
Fuel Intake Monitoring System (hereinafter, called the "FIMS"), which was
designed to streamline the fueling process for any type of vehicle by automatic
components, such as fueling, vehicle identification and credit authorization. As
of the date of this Registration Statement, the Company has not begun to market
the FIMS pending completion of its patent research
The Company has also designed and developed a dual axis accelerometer,
which was designed to measure the sway of a vehicle.
The Company has planned new product development to meet the needs of a
consumer related low-cost system to sell to the major automobile manufacturers.
Additionally, the Company has developed a proprietary exhaust reading technology
to incorporate into the AP+SeriesTM. Management intends to conduct patent
research on this new technology which is designed to meet the new Environmental
Protection Agency ("EPA") rules and regulations which are scheduled to take
effect in late 1999.
Manufacture of the AP+SeriesTM and the FIMS is currently subcontracted to
Lockheed Martin Corporation, Inc., Nexus Custom Electronics, Inc., Asteria
Electronics SDN BHD and Island Designers, Inc.
The Company has two wholly-owned subsidiaries: International Purchasing
Services, Inc., a New York corporation ("IPS") and KMR Telecom Ltd., a
corporation organized under the laws of India("KMR"). See "Description of
Business - Products -OnBoard Computers" and " -Other Products/Services".
Since its inception, the Company has primarily been engaged in the design,
development and testing of the AP+SeriesTM, the FIMS and ancillary technologies.
As of the date of this Registration Statement, the Company has generated limited
revenue from sales of its products.
Business Strategy
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Industry Overview. The transportation industry has shown constant and
steady growth in terms of interstate commerce and the number of vehicles on the
highways. This growth has included all modes of transportation on the highways
including, but not limited to, trucks, buses, cars and vans. It also includes
other modes of transportation, such as railways, maritime vessels and private
aircraft. Based on estimates of industry manufacturers in the United States and
Canada, the transportation industry overall has grown an average of 15% during
the last four years. It is expected, based on economic forecasts, that this
growth will continue for the foreseeable future.
Based on government figures for commercial vehicle registration, over
49,000,000 commercial vehicles are registered in the United States (with close
to 3 billion miles traveled annually), over 3,836,000 commercial vehicles are
registered in the United Kingdom, over 5,000,000 in France, over 500,000 in
Belgium, over 3,800,000 in Canada, over 3,000,000 in Germany, over 2,800,000 in
Italy, over 3,800,000 in Mexico, over 380,000 In Egypt, and 1,100,000 in Saudi
Arabia. This industry and these countries, including other countries globally,
represent a substantial marketplace in which the Company is able to market its
products.
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Moreover, during the past eight years, fleet managers of trucking companies
have concentrated their efforts at becoming better educated in the performance
and evaluation of the costs associated with operating and maintaining their
fleets. The trend has been to use monitoring devices, which include tachographs
(use is currently mandatory in Europe), onboard recording devices, fuel
management and monitoring systems, and global position systems ("GPS"). Fleet
managers of major trucking companies have realized that through proper driver
training, fleet management and safety management, they are able to control and
reduce costs, thus becoming more profitable.
Moreover, the importance of driver training and accident prevention systems
has reached governmental bodies and is being considered for possible legislation
in Europe. Some states in the United States have enacted legislation requiring
the use of breathalyzers for individuals who have been convicted of driving
while intoxicated or driving under the influence.
The AP+SeriesTM and FIMS are monitoring systems using proven, reliable
technologies to promote safety on highways, prevent theft, reduce fuel
consumption, and reduce the overall costs of maintenance and operation for any
type of vehicle, whether private or commercial. They were developed to measure
and record specific information and data which the Company believes will be
useful in a number of industries throughout the world. Moreover, the Company
believes that the technological superiority coupled with the unique abilities of
the AP+SeriesTM and FIMS to monitor a wide range of critical information will
give the Company a technological advantage worldwide in a fast growing and
extremely important industry.
Sources of Revenue. Over the past five years, the principals of the Company
have invested personal funds, arranged for lines of credit and/or loans from
banks, and secured grants in the approximate amount of $2,000,000 to support the
Company's extensive research and development efforts in the creation,
development and testing of the AP+SeriesTM and FIMS. Prior to marketing and
selling the AP+SeriesTM, the Company has generated stable net revenues from the
sale of its other products of approximately $337,058in fiscal year ended
December 31, 1996, approximately $495,855in 1997 and approximately $797,077 in
1998. Management believes that the Company's continued growth depends on its
ability to (i) strengthen its customer base by enhancing and diversifying the
use of its products, (ii) increasing the number of its customers and expanding
into additional markets, (iii) controlling production costs; and (iv) increasing
production. See "Description of Business - Products", "-Marketing", and
"-Manufuacturin .
Management believes that the Company will generate the majority of its
revenue from the sale of its AP+SeriesTM. Management anticipates that another
source of revenue will also be derived from installation of the AP+SeriesTM in
driver training simulators. The Company has developed a customized software
system according to specifications for driver training applications for use with
the AP+SeriesTM units (the "Pilot 2001"). Pursuant to an agreement dated
February 14, 1996 between the Company and AFT- IFTM, one of the world's foremost
driver training institutes ("AFT-IFTM"), AFT-IFTM purchased all rights, title
and interest in the Pilot 2001 software and subsequently granted Carnegie Mellon
University, Driver Training & Safety Institute ("CMU") the right to distribute
the Pilot 2001 software throughout North America. The Pilot 2001 software can
only be used in connection with the AP+SeriesTM units, therefore, management
anticipates entering into long-term contractual relationships with CMU and other
similar companies for installation of the AP+SeriesTM units in driver training
simulators. See "Description of Business - Product Development, Design and
Research".
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Additional revenue will be generated through the sale of software required
to operate the hardware of systems for other companies. Other sources of revenue
will be generated through the implementation of maintenance contracts,
integration contracts, accessory reorders and insurance rebates, as well as
through revenue generated by the Company's wholly-owned subsidiaries.
Moreover, the Company has entered into an agreement dated August 20, 1998
with American Overseas Corporation, an investment company formed under the laws
of the British Virgin Islands ("AOC"). AOC was formed for the purpose of
investing in emerging companies to assist in the market and sale of those
companies' products. Pursuant to the terms of the agreement, AOC has agreed to
assist in establishing marketing and distribution services for the Company's
products worldwide. AOC has further agreed to pay the Company $5,000,000 within
a thirty-six (36) month period for the non-exclusive, unlimited rights to
purchase the Company's products at a price of 5% above cost and to sell those
products throughout the world.
Products
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Onboard Computers. The Company has completed development of three different
onboard recording systems called the AP+SeriesTM (the APP1000, APP2000 and
APP3000), which monitor and record data for accident prevention, driver training
and evaluation, and maintenance operations for fleet vehicles worldwide. The
basic unit hardware is the same for the three series, although the APP2000 and
APP3000 series have upgrades and will perform more functions to meet the
requirements of the customer.
The AP+SeriesTM are often dubbed "black boxes" after the ones used in large
aircraft. The AP+SeriesTM units can be custom-designed to specific requirements
by using thousands of individual operating parameters and efficiently upgradable
to meet further needs of fleet management companies as they adapt to a changing
world. The AP+SeriesTM have the ability to monitor, record and retrieve
approximately 10,000 types of data. Some examples of the analyzed categories for
the transportation industry include, but are not limited to, (i) driving
chronologies (maximum speed, deceleration, idling, last 20 overspeedings, brake
occurrences and intensities), (ii) trip chronologies (driver identification,
date and time of vehicle usage, total driving time and distance, dangerous
braking occurrences), and (iii) vehicular chronologies (distance/speed, engine
rpm, lights, water temperature, oil temperature, air pressure, vehicular sway).
This data is permanently recorded thus often providing a record of critical
information such as "near misses" and actual accidents. The AP+SeriesTM are
flexible in their monitoring and can be custom tailored to meet required
specifications.
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Installation and Use. Installation and use of the AP+SeriesTM are
comprised of the following stages.
(i) Electronic sensors that normally pre-exist in each vehicle are located
and utilized whenever possible. In the event that a vehicle is not
equipped with pre-existing electronic sensors, these components are
installed in the existing electrical system throughout various
locations in the vehicle;
(ii) An AP+SeriesTM recording unit is located either on or under the
vehicle's dashboard. These units will then acquire the information
described above, which is delivered to the recording unit from the
electronic sensors located throughout the vehicle.
(iii)A "Smart card" is given to each driver and contains all information
deemed necessary by fleet/safety management, such as identifying the
driver (name, driver's license category, fleet number, etc.). In order
to start the vehicle, the driver must insert his "Smart card" into the
"Smart card" receptacle. The vehicle will not start without this
initial step, if programmed to do so, and will not operate in an
unauthorized vehicle or by an unauthorized driver.
(iv) The "Smart card" gives a permanent image of both driver and vehicular
patterns and is updated automatically each time the card is inserted
into the "Smart card" receptacle.
(v) Upon completion of the route, either daily or weekly, the fleet or
safety manager will insert the "Smart card" for a given vehicle and/or
driver into a "Smart card/memory" card reader that is usually located
at the fleet company's main office, thus submitting to management a
record of all collected data . The reading of the "Smart card"
containing all of the data takes approximately four seconds.
(vi) The recorded data can then be entered automatically into any personal
computer operating under the "Microsoft Windows" programs. The
collected data can then be evaluated for a precise analysis of vehicle
condition and driving performance. A fleet manager can review a
particular driver or vehicle in connection with overall performance or
for possible violations of established company standards regarding
speed, acceleration and deceleration. A fleet manager can also review
the overall performance of drivers or vehicles by viewing performance
from any IBM compatible computer terminal.
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The AP+SeriesTM are adaptable for use on all moving vehicles and equipment
including, but not limited to, trucks, school and commercial buses, ambulances
and other emergency vehicles, aircraft, boats and ships, trains, earth moving
and construction equipment, and virtually any other type of moving vehicle.
Moreover, management believes that the AP+SeriesTM are unique in the industry
due to their use of the "Smart card" technology. The use of AP+ custom software
gives the AP+SeriesTM the ability to be easily upgraded and customized to meet
customer specifications and needs. It also gives the AP+SeriesTM the ability to
be utilized outside of the fleet vehicle market.
Specific Features. Features of the AP+SeriesTM onboard recording
systems provide many cost-effective benefits as described below, including
reduced insurance rates, reduced fuel consumption, reduction in the occurrence
of accidents, better preventative maintenance, reduced over-speeding by drivers,
reduced theft, easier compliance with federal and local laws, and an effective
driver training tool.
Safety/Accident Prevention. Management considers the AP+SeriesTM
to be proactive management tools designed to promote safe and efficient driving
practices. The AP+SeriesTM constantly monitors adherence by drivers to
established company driving standards, such as acceleration, deceleration,
engine rpm and speed. The AP+SeriesTM also assists drivers on the road by
warning them when they may be violating established company safety standards. It
also records the parameters of actual vehicle operation for appropriate use in
driver training programs. Furthermore, the AP+SeriesTM can educate drivers to
adapt their driving patterns to road conditions and environment and provide a
powerful tool for performance evaluation of both driver and vehicle. Management
believes that not only does the AP+SeriesTM help in preventing accidents, but it
also is a beneficial tool when accidents do occur.
Reporting. The AP+SeriesTM automatically records vehicle
operational data concurrent with sudden accelerations and decelerations, or
collisions. The AP+SeriesTM are designed to ensure that the data is secure from
power failure and tampering. Such recorded data may be used for later analysis,
such as in accident reports, or to confirm or refute claims that may be made
against a company or its drivers. All data recorded from the AP+SeriesTM can be
printed from an office printer in a variety of standard or customized reports or
graphs. These reports can be used in driver education programs, maintenance
evaluation of vehicles, and in other general fleet management programs.
Security. The AP+SeriesTM provides security for vehicles and for
vehicle data. With use of an APP+SeriesTM, operational access to company
vehicles can be carefully, quickly and conveniently controlled by the fleet
manager.
Cost-Effective Use. Management believes that by constantly
monitoring fleet vehicles, the AP+SeriesTM permits a company to more accurately
schedule preventive maintenance, increase fuel economy, and extend overall
vehicle service life. System data feedback to drivers should encourage more
careful driving habits that will serve to reduce the frequency of repairs and
replacements, as well as the occurrence accidents. Use of excessive quantities
of fuel or oil, high maintenance vehicles and other dangerous vehicle conditions
can also be identified before they become hazardous to the company's financial
status or to the general public.
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The following table sets forth the approximate percentage of net revenues
derived from the sale of each of the AP+SeriesTM for fiscal year ended December
31, 1998:
Product Percentage
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APP1000 40%
APP2000 10%
APP3000 50%
APP4000 System. The Company is currently designing the APP4000 system. The
APP4000 system will include features such as a global positioning system (GPS")
for vehicular tracking, mapping and communications, an in-vehicle alcohol
sensor/breathalyzer unit, a fatigue sensor which will monitor and record driver
alertness, and a fingerprint application for greater security when used in
conjunction with the "Smart card". Management believes that with the inclusion
of these features in the APP4000 system, the AP+SeriesTM are unique within the
industry and will allow the Company to successfully market and sell its products
in a competitive environment.
Moreover, management believes that use of these features will provide the
Company with the opportunity to expand and diversify into the medical and other
fields. See "Description of Business-Products-Smart Cards".
Fuel Intake Monitoring System. The Fuel Intake Monitoring System ("FIMS")
was designed by the Company to automate and simplify many aspects of the fueling
process. Through the technological use of radio frequency communication, the
FIMS will provide a fleet owner with the ability to prevent fuel theft, receive
paperless billing for fuel consumed, and reduce vehicle downtime by simplifying
and speeding up the fueling process.
Design/Usage. The design of the FIMS consists of a vehicle unit which
is capable of storing and transmitting data concerning the vehicle, including
fuel level, odometer reading, fuel type required, and the maximum amount of fuel
permitted per filling. The other components of the system include a nozzle unit,
tank inlet antenna, ground loop antenna, station controller and an LCD display
on the fuel pump at the retail filling station.
Once a vehicle pulls into a FIMS equipped filling station, the system
automatically identifies the vehicle, reads the vehicle's fuel level, fuel type,
current mileage and authorized fuel load. This identification process takes
approximately five seconds. During this process, the FIMS disables the fuel pump
until the fuel pump nozzle is placed inside the vehicle's fuel tank. In the
event the driver should attempt to remove the nozzle and fill a "gerry can", the
FIMS will no longer "see" the vehicle and will terminate fueling. This makes
pilferage of fuel or "gerry canning" virtually impossible. Gerry canning is a
common method employed by drivers whereby a driver may fuel not only the company
vehicle, but also their own private vehicle or gas can. Studies have estimated
that one major oil company in Europe with 3.5 million vehicles under corporate
contract was subjected to an approximate 6% rate of fuel pilferage.
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An additional advantage of the FIMS is the elimination of the need for
drivers to carry cash or credit cards for refueling purposes. Fueling is
completely controlled by a company using the FIMS with computerized monitoring
of all relevant vehicle data and subsequent paperless billing.
As of the date of this Registration Statement, the Company has pilot tested
the FIMS at two Shell Oil locations in France, Ruffec and St. Cloud. Management
believes that these pilot tests have proven the concept of FIMS to be valuable
and successful. The FIMS was also tested in the manufacturing laboratories of
Schlumberger, Shell Retail Petroleum Europe and Lockheed Martin. The FIMS also
received "CE" approval for sale in Europe from Emitech (the equivalent of the
underwriters Laboratory in the United States).
Management has made a strategic business decision to hold introduction of
the FIMS into the marketplace until patent searches are completed. Management
anticipates that upon its introduction into the marketplace, the integration of
the FIMS into the AP+SeriesTM will be completed. There can be no assurance,
however, that such integration will be successful.
Other Products/Services. The Company has also designed and developed a
proprietary opacity sensor for incorporation into the AP+SeriesTM, which is
capable of reading vehicle emissions in real time during the operation of the
vehicle. This function will provide fleet managers with the ability to monitor
and record in real time and ensure their ability to maintain compliance with
applicable laws and regulations. Management intends to conduct patent research
on this technology which has been designed to meet new EPA rules and regulations
scheduled to take effect in late 1999.
The Company has also planned new product development to meet the needs of a
consumer related low-cost system to sell to the major automobile manufacturers.
The Company has two wholly-owned subsidiaries. International Purchasing
Services, Inc., a New York corporation ("IPS") is primarily responsible for
providing a general purchasing service to the Company for the supply of
electromechanical, active and passive components to multinational original
equipment manufacturers ("OEMs") throughout the world. IPS has representatives
and offices in England, France, Israel and India. The management and staff of
IPS have over twenty years of procurement experience, international
relationships, and a credit facility with over 100 vendors. Through IPS, the
Company has gained procurement expertise, component pricing advantages, a backup
manufacturing source, support staff, and international contacts.
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The other wholly-owned subsidiary of the Company is KMR Telecom Ltd, a
corporation organized under the laws of India ("KMR"). KMR is a manufacturing
company located in Secunderabad, India. KMR manufacturers Heat Shrink Tubing and
cable assemblies used in the telecommunications industry in India. KMR is one of
only six companies approved by the Indian government to supply these types of
products. KMR's largest customer is the Office of Telecommunications, a branch
of the Indian government. Management of the Company intends to expand the sale
of KMR's product line worldwide.
Smart Cards. The Company is currently in final negotiations with
Schlumberger Smart Card Division, which is the second largest "Smart card"
manufacturer in the world ("Schlumberger"), pertaining to an associates
agreement which would provide the Company with the right to implement and
utilize Smart card technologies. See "Manufacturing".
A Smart card is a small electronic device about the size of a credit card
that contains electronic memory and an embedded integrated circuit. The
integrated circuit laminated into the card holds information securely and
accurately. Smart cards can store information that they are programmed for. They
can be energized and accessed by many types of electronic readers and writers.
Smart cards can thus be used for a variety of purposes, including telephone
cards, electronic wallet, passports (repository for tickets and vouchers), keys
(security, passwords and access), medical records (repository of medical history
and insurance information), TV top terminals, and food stamps.
Industry statistics currently reflect that during 1998, over 613,200,000
Smart cards have been issued to applicants in Europe alone, and that by the year
2000, over 790,200,000 million Smart cards will have been issued to applicants
in Europe and over 999,300,000 to applicants world-wide.
The convergence of the Smart card and computing industries has created
numerous opportunities for potential users. Management believes that the unique
capabilities of its AP+SeriesTM, together with use of Smart card technology,
represents a fast growing new technology, which will enable the Company to
expand and enter into additional markets. Potential users of the technology will
be able to specialize in developing systems to support their applications or
industries, including airlines, hospitals, payroll, medical records, security,
and use on the internet.
Use of the "Smart card" will allow the AP+SeriesTM to be utilized by
customers for non-transportation operations, such as use in the medical field
for recording and updating patient records and in a wide variety of other fields
where the monitoring, recording and tracking of information is critical. "Smart
card" technology may even be used by customers of the Company to provide
security in any area utilizing the technology including, but not limited to,
payroll, drivers' licenses, passports, medical applications, debit cards, and
student identification cards.
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Management believes that it can successfully penetrate these and many other
markets as introduction of Smart card technology and adoption by consumers in
North America start to reach its maximum potential. Management is currently
negotiating with medical care facilities and hospitals concerning use of its
AP+SeriesTM. See "Customers and Marketing-Long Term Planning".
Product Development, Design and Research
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Management believes that the technological superiority of the AP+SeriesTM,
coupled with the unique abilities of these systems to monitor a wide range of
critical information, will provide the Company with a technological advantage in
the industry. As a result of extensive research and design efforts and the
successful testing worldwide of its products, the Company has received
significant interest from a number of institutions worldwide regarding its
products, and has subsequently sold its products to specific clients.
As of the date of this Registration Statement, the Company has installed
its AP+SeriesTM units in over 100 plus vehicles pursuant to an agreement with
AFT-IFTM, the largest driver training institute in Europe. The Company is also
assisting in the actual development of standards for new legislation. The new
legislation will be designed to standardize all onboard recording systems for
the entire European Economic Community. Management believes that its prominence
as a leader in the development of onboard recording systems will enhance the
marketability of its products in other countries and industries.
In the United States, Carnegie Mellon University/Driver Training & Safety
Institute of Pittsburgh, Pennsylvania ("CMU") has delivered a letter of intent
to the Company indicating its desire to establish a long-term relationship with
the Company. It is anticipated that CMU and its related entities will cooperate
in the research and development of new products, presence at trade shows, press
releases, and letters of recommendation. CMU has generally proposed that it
would act as a research arm for the Company and that the Company would act as
the sales and marketing arm for new, jointly developed onboard recording devices
for the occupational driving industry. CMU is also negotiating with the Company
for installation and use of the AP+SeriesTM in CMU's driver training simulators.
As of the date of this Registration Statement, an AP3000 system has been
installed on a driver training simulator at the CMU Driver Training & Safety
Institute in Pennsylvania.
Moreover, in conjunction with CMU, the Company is attempting to create
technology which will bring the United States closer to accident free highways.
The importance of driver training and accident prevention systems has reached
governmental bodies. CMU's Driver Training Institute has made a presentation of
the Company's AP+SeriesTM to the National Transportation Safety Board and the
American Trucking Association. In addition, some states have already enacted
legislation mandating individuals who have been convicted of driving while
intoxicated (:DWI") or driving under the influence ("DUI") to use alcohol
sensors and breathalyzers in their vehicles.
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The Company is also engaging in negotiations with I-SIM, which is the
manufacturer of the driving training simulators used by CMU, to install the
AP+SeriesTM on all I-SIM simulators throughout the world.
In addition, the Company and Lockheed Martin Corporation, Inc. ("Lockheed")
have entered into a manufacturing agreement dated January 24, 1997 and a
non-disclosure agreement dated January 14, 1997 relating to Lockheed's
assistance in the design and testing of the Company's products. See "Description
of Business - Manufacturing".
The Company has entered into a joint venture agreement dated January 4,
1999 with Software Hardware Specialists, Inc. ("SHS"), a New York based
engineering company engaged in the custom design of firmware (a specific type of
software which is required to facilitate communications between hardware and
software). Pursuant to the provisions of the joint venture agreement, SHS has
agreed to provide engineering, quality control, project management for the
Company's products, and are responsible for overseeing the manufacturing process
and establishing a repair depot for any of the Company's products. SHS has
developed a test bench capable of testing eight units simultaneously. SHS has
also designed firmware for the AP+SeriesTM according to specifications written
by the Company's engineering staff.
The Company has engaged Island Designers, Inc. ("ID") to design and develop
printed circuit board layouts for the AP+SeriesTM. In addition, ID has completed
limited production runs of the Company's products.
The Company intends to maintain three research and development centers.
"APP Florida" is currently operational in Florida and is considered the
overseeing arm of the Company's research and development team. SHS has
established a research and development center for the Company in New York. In
addition, the Company anticipates that CMU will provide a research and
development arm for the Company to assist in refining existing products and the
design and development of new products.
The Company spent approximately $251,467 and $310,506 on research and
development during the fiscal years ended December 31, 1998 and 1997,
respectively.
Manufacturing
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The Company currently subcontracts the manufacture of its AP+SeriesTM
primarily to Lockheed. The Company entered into a manufacturing agreement with
Lockheed dated January 24, 1997 whereby Lockheed agreed to assist in the
development and production of the AP+SeriesTM and FIMS. Furthermore, Lockheed
granted permission to the Company to use its name on the AP+SeriesTM and in
advertising for those products that Lockheed manufacturers. Lockheed has also
made two large production facilities available to the Company to supplement the
Company's manufacturing capabilities. The establishment of this working
relationship with Lockheed has enabled the Company to secure a line of credit
based on purchase orders, which will ultimately assist the Company in financing
the costs of production and inventory.
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The Company has also established relationships with two additional
manufacturing companies as a supplement to the resources of Lockheed. The
Company entered into a purchase agreement dated October 16, 1998 with Asteria
Electronics SDN BHD ("Asteria"), whereby Asteria agreed to manufacture the
AP+SeriesTM and accelerometers in Malaysia. As of the date of this Registration
Statement, the Company is negotiating with Asteria for a licensing arrangement
and the establishment of offices in the Far East to service both Far Eastern and
Middle Eastern markets.
The Company also entered into a manufacturing agreement dated April 1999
with Nexus Custom Electronics, Inc., a Vermont based company ("Nexus"). Pursuant
to the terms of the agreement, Nexus has agreed to provide its services and
facilities to the Company as an additional manufacturing source when needed.
Component Parts. As of the date of this Registration Statement, the Company
is in the final stages of negotiations with Schlumberger Smart Card Division,
which is the second largest "Smart card" manufacturer in the world
("Schlumberger"), pertaining to an associates agreement which would provide the
Company with the right to implement and utilize Smart card technologies. Prior
to entering into a definitive agreement with Schlumberger, Schlumberger agreed
to transfer to the Company all technology data relating to the Smart card.
Henceforth, the Company and Schlumberger entered into a technology transfer
agreement dated October 17, 1996 pursuant to which the Company has access to all
Smart card technology and associated products for development and distribution
by Schlumberger, and the ability to employ the Smart card technology. The
Company has also entered into non-disclosure agreements with Schlumberger. The
Company currently has the software, tooling, readers and cards to program its
products for various applications. Management anticipates that Smart card
technology may be used in a variety of industries including, but not limited to,
banking, medical, toll payment, payroll, drivers' licenses, security and postal
meters.
Customers and Marketing
- -----------------------
The Company sells its products primarily in Europe, Africa and in the
United States. Customers for the Company's AP+SeriesTM are primarily fleet
companies and driver training institutions.
The Company's current market concentration has been in Europe due to
existing relationships with certain clients and the wide acceptance of Smart
card technology in unrelated applications and industries. Moreover, effective
early 1999, European Economic Committee ("EEC") legislation will mandate the use
of onboard recording devices utilizing Smart card technology in all new trucks
and buses and all vehicles with eight seats or more. Management's primary
objective is to penetrate the European marketplace and target driver training
institutions.
14
<PAGE>
As the Company's products become widely recognized and the Company
establishes a prominent presence within the European, North American and Middle
Eastern markets, management intends to increase the distributorship base
focusing on major vehicle fleet operation. The Company intends to expand its
product line to accommodate the needs of the Company's customers in the
transportation industry and in other industries as well.
The Company intends to market its products through the use of distribution
agreements, joint ventures, direct sales and Internet sales. As a result of
management's experience in the international marketplace, the Company expects
that it will be able to adjust its marketing strategy in each market in
accordance with the particular customs, needs and methods of conducting business
of the particular culture. To aid in the marketing of the AP+SeriesTM and FIMS,
the Company intends to utilize training seminars and advertising promotional
tools, such as CD-ROMs, catalogs and participation in trade shows. The Company's
operational software will be available in various languages to meet the needs of
each particular market.
The Company has representatives and distributors in Israel, Europe, India
and Africa. The Company has entered into an agreement dated May 8, 1997 with
World Asset Management, Inc. ("WAM"), which is headquartered in New Milton
Hampshire, United Kingdom. Pursuant to the terms of the agreement, WAM has
agreed to (i) provide the Company with its expertise and "know-how" in
establishing distribution and sales channels in marketplace in the United
Kingdom; (ii) establish the necessary infrastructure to make a successful
introduction of the Company's products in the United Kingdom; and (iii) be
responsible for establishing an installation and service network for the
Company's products. In consideration thereof and the payment of $2,500 by WAM to
the Company, the Company issued 795,000shares of its Common Stock to WAM,
representing an approximate 4.31% equity interest.
The Company has entered into an agreement dated May 16, 1997 with Atlantic
Financial Management, Inc. ("AFM"), which is headquartered in Fouesnant, France.
Pursuant to the terms of the agreement, AFM has agreed to provide expertise to
the Company regarding the structure of sales/service and installation of the
Company's products in France. In consideration thereof and the payment of $2,500
by AFM to the Company, the Company issued 790,000 shares of its Common Stock to
AFM, representing an approximate 4.31% equity interest.
The Company has entered into an agreement dated June 4, 1997 with Avignon
Trading, Inc. ("Avignon"), which is headquartered in Savion, Israel. Pursuant to
the terms of the agreement, Avignon has agreed to (i) provide its ASIC design
(which is an advanced technology that can be used in the Company's products to
reduce costs) and (ii) setup installation and technical support for the
Company's products sold throughout Israel. In consideration thereof and the
payment of $2,500 by Avignon to the Company, the Company issued 800,000 shares
of its Common Stock to Avignon, representing an approximate 4.36% equity
interest.
15
<PAGE>
The Company has entered into an agreement dated April 11, 1997 with Darien
Partners Investments, Inc. ("Darien"), which is headquartered in Malaysia.
Pursuant to the terms of the agreement, Darien has agreed to (i) manage all
installation and service of the Company's products sold within the Far Eastern
and Middle Eastern countries; (ii) establishing an installation and service
network for the Far Eastern and Middle Eastern countries; and (iii) arrange
distribution channels and oversee manufacturing of the APP3000 dual axis
accelerometers. In consideration thereof and the payment of $2,500 by Darien to
the Company, the Company issued 795,000 shares of its Common Stock to Darien,
representing an approximate 4.31% equity interest.
The Company has also entered into an agreement dated December 14, 1998 with
Apache Future Incorporated ("AFI"), to act as the primary installer for the
AP+SeriesTM for North America. Management believes that this is a strong
strategic arrangement due the ability of AFI to send teams of highly experienced
installers to a job site for an indefinite period of time to train, install and
oversee the Company's products. AFI technicians are certified in onboard
computers and onboard lighting systems, vehicle inspection and acceptance,
personnel training, quality assurance and quality control programs, paint and
body work, mechanical, electrical and welding. AFI has installed thousands of
satellite and mobile communications systems in the trucking industry. They has
also removed, rebuilt and repaired over 4,300 transmissions and modified
thousands of heavy truck air brake systems and suspensions. AFI's staff has also
inspected, modified and/or repaired over 15,000 buses and have built some of the
most complicated trains in the world, including the M-4 commuter car and over
200 R-68s currently in use in New York City. See "Part II. Item 4. Recent Sales
of Unregistered Securities".
Long-term Planning. The Company seeks to capture market niches for
long-term business planning in the fields of both transportation and medicine.
Some of the proposed developments in the medical field include the use of Smart
card technology in doctors' offices, hospitals, ambulances and insurance
companies.
Pilot programs are being considered for physician practices whereby
patients are issued a Smart card which contains relevant medical history and
insurance information. Patient use of Smart cards will cut down on fraud and
misuse of insurance cards. Data from a patient's visit can be gathered to
integrate into an electronic bill for the insurance carriers and will save time
and effort in recording data while assisting to eliminate fraud within the
medical industry. Moreover, once an individual has had their vital information
recorded on a Smart card, that individual can be identified in an emergency
while still in an ambulance. By the time the individual reaches the hospital,
their physician, insurance company and medical history have all been retrieved
from the Smart card reader in the ambulance and relayed to the hospital
administration and treating physicians.
Management believes that within the transportation industry, the Company's
AP+SeriesTM, coupled with Smart card technology, may be utilized in emergency
vehicles for police, fire and ambulance departments. In addition, they may be
used with the department of motor vehicles to create and track drivers'
licenses, create passports, or create medical cards, which would provide instant
access to critical information.
16
<PAGE>
Competition
- -----------
The onboard recording systems industry is highly competitive. The Company's
major competitors in the marketplace are primarily Cadec, a division of Cummings
Engine, Mobile Data Systems, Orpak, Qualcomm, VDO, Elextor, Rockwell Tripmaster
and Eaton Corporation. Such competition appears to be related to the Global
Positioning Systems. Data Express and Qualcomm have similar products, and Mobile
Data Systems has developed a system closely resembling the Company's
AP+SeriesTM. Moreover, the Company may also face competition from other, similar
companies with financial resources far greater than those of the Company.
However, management of the Company believes that it can compete favorably with
its competitors due to proprietary state-of-the-art technology and superiority,
pricing, and flexibility of its products..
Employees and Consultants
- -------------------------
As of the date of this Registration Statement, the Company employs 21
persons on a full-time basis and 4 persons on a part-time basis. The Company's
President and Chief Executive Officer will primarily be responsible for all
day-to-day operations of the Company. Other services are provided by outsourcing
and management contracts. As the need arises and funds become available,
however, management may seek additional employees as necessary in the best
interests of the Company. The following lists and describes certain services
performed for the Company by consultants. See "Item 5. Directors, Executive
Officers, Promoters and Control Persons - Advisors and Consultants".
(i) The Company and Bristol Consulting Ltd. ("Bristol") entered into an
agreement dated July 30, 1998 regarding consulting services. Pursuant
to the provisions of the agreement, Bristol agreed to (i) assist the
Company in the development of an international market for the
Company's product lines, and (ii) advise the Company in the Middle
East and Far East regarding corporate structure, capital acquisition,
contracts, equity partners and mergers and acquisitions.
(ii) The Company and Royce Anderson & Monroe, Inc. ("Royce Anderson")
entered into an agreement dated July 30, 1998 regarding consulting
services. Pursuant to the provisions of the agreement, Royce Anderson
agreed to (i) assist the Company with corporate structure,
acquisitions, mergers and equity partners.
The Company is not a party to any labor contract or collective bargaining
agreement. The Company has experienced no significant labor stoppages in recent
years, and management believes that such relations are satisfactory. See
"Directors, Executive Officers, Promoters and Control Persons".
17
<PAGE>
Patents, Licenses, Trademarks, Concessions and Royalty Agreements
- -----------------------------------------------------------------
Within the next six months, management intends to file an application for
trademark protection for its "AP+SeriesTM" products with the United States
Department of Commerce, Patent and Trademark Office. Upon issuance of a
certificate of registration for the trademark "AP+SeriesTM", such registration
will remain in full force and effect for a period of ten years. Management of
the Company must then comply with certain rules and regulations pertaining to
the issuance of such registration of the trademark. Such registration will be
canceled after six years by the Commissioner of Patents and Trademarks unless,
before the end of the sixth year following the date of issuance, management
files an affidavit of continued use. Moreover, such registration will expire ten
years following the date of issuance, unless management files an application for
renewal of the registration.
Other than as previously disclosed herein, the Company has no patents,
licenses, franchises, concessions or royalty agreements that are material to its
business as a whole. The Company will conduct a patent search on the FIMS and,
based upon the results of its search, intends to file an application with the
United States Department of Commerce, Patent and Trademark Office for issuance
of a patent covering the FIMS.
Government Regulation
- ---------------------
The Company's operations may be subject to a variety of laws, regulations
and licensing requirements of federal, state and local authorities. In certain
jurisdictions, the Company may be required to obtain licenses or permits, to
comply with standards governing employee selection and training, and to meet
certain standards in the design and manufacture of the Company's products. The
loss of such licenses, or the imposition of conditions to the granting or
retention of such licenses, could have a material adverse effect on the Company.
The Company's advertising and sales practices may be regulated by both the
Federal Trade Commission and state consumer protection laws. Such regulations
may include restrictions on the manner in which the Company may promote the sale
of its products and the obligation of the Company to provide certain of its
customers with rescission rights.
The Company's research and development facilities, including any
manufacturing facilities, may be subject to regulation and inspection standards
established by the Occupational Safety and Health Administration ("OSHA"). As of
the date of this Registration Statement, none of the Company's facilities have
been inspected for compliance with the standards established by OSHA. .
18
<PAGE>
The Company's products may be subject to regulation by various agencies
including the U.S. Department of Transportation and the Federal Highway
Administration, as well as local authorities. Each of these agencies may
regulate various aspects of licensing, permitting and operations of the
Company's products. See "Description of Business - Risk Factors - Government
Regulation".
Political and Economic Policies in Foreign Countries
- ----------------------------------------------------
The Company intends on entering the global marketplace including, but not
limited to, the marketplace in the United Kingdom, Israel, Africa and the Far
East and Middle East. As a result, the Company's operations and sale of its
products in these countries may be subject to political, economic, legal and
other uncertainties occurring within these countries. Changes in policies by the
respective governments may result in changes in laws, regulations or the
interpretation thereof, confiscatory taxation, restrictions on imports and
sources of supply, import duties, corruption, and currency revaluation, all of
which may materially and adversely affect the Company. Moreover, economic
reforms and growth in the Far East and Middle East countries have been
initiated, and success in certain countries has been more prevalent than in
others. The continuation or increase of any such disparities regarding economic
reforms and growth could affect the political and social stability of the Far
East and Middle East, and thus the operations of the Company. Moreover, there
can be no assurance that future controversies will not arise which would
threaten trade relations between the United States and the respective country.
In any of such eventualities, the business of the Company could be adversely
affected.
Risk Factors
- ------------
The shares of the Company are highly speculative and involve an extremely
high degree of risk. Shareholders of the Company should consider the following
risk factors.
Lack of Substantial Revenues. Although the Company has been in operation
since 1993, it has had only limited sales. Therefore, the Company does not have
any prior substantial financial results upon which an assessment of the
Company's potential for success may be based. Accordingly, the success of the
Company is dependent on management's ability to continue financing the business
operations of the Company. The Company must therefore be considered a going
concern, subject to all the risks and uncertainties which are characteristic of
a new business enterprise, including the problems, expenses and other
difficulties typically encountered in the course of establishing new markets,
training new personnel, and organizing and conducting operations. The Company
faces all of the risks specifically inherent in the type of business in which
the Company engages. There can be no assurance that the Company will be able to
operate successfully or profitably. The auditors have deemed the Company a going
concern; that is, assumption of the continuity of operations of the Company in
the absence of evidence to the contrary.
19
<PAGE>
Dependence on Key Personnel. The Company is substantially dependent upon
the personal efforts and abilities of its officers and directors, Richard J.
Goodhart, Steven H. Wahrman and Jean Paul Daveau. The loss of any of the
Company's officers or directors could be detrimental to the operations of the
Company and have a materially adverse affect on the Company's ability to operate
successfully. However, such officers and directors have entered into extended
employment agreements with the Company. The Company also intends to purchase
"key man" life insurance for such officers and directors.
The Company's current officers and directors will not engage in other
businesses for their own account. They will devote their full time to the
affairs of the Company.
Need for Qualified Employees. The success of the Company is dependent upon
its ability to attract and retain qualified technical, marketing and production
personnel, either by contractual outsourcing or hiring of employees. The Company
may have to compete with other larger companies for such personnel, and there
can be no assurance that the Company will be able to attract or retain such
qualified personnel.
Competition. The Company is aware that the onboard recording systems
industry is highly competitive. Many of the Company's competitors may have
substantially greater technical, financial and marketing resources than the
Company.
Need for Additional Financing. As of the date of this Registration
Statement, the Company has not generated significant revenue from sale of its
products. Since its inception, the Company has financed itself primarily from
principal shareholders, bank loans and lines of credit. The continued
development of the Company's products and expansion and operation of the
Company's business may be dependent upon its ability to obtain additional
financing. There can be no assurance that the Company can obtain additional
financing from either debt or equity financing, bank loans or other sources on
terms acceptable to the Company, or at all. If available, any additional equity
financings may be dilutive to the Company's shareholders and any debt financing
may contain further restrictive covenants and additional debt service
requirements, which could adversely affect the Company's operating results.
Control of Company. As of the date of this Registration Statement and
without taking into account the shares of Common Stock that may be acquired upon
exercise of certain warrants, three of the directors of the Company as a group
beneficially own approximately 45% of the outstanding shares of Common Stock.
Based upon this ownership interest, these three directors may be in a position
to effectively control the business and affairs of the Company, including
certain significant corporate actions such as the sale or purchase of assets and
the issuance and sale of the Company's securities.
Dependence on Patents and Proprietary Technology. The Company's success may
depend, in part, on its ability to obtain patent protection for its products and
to preserve the Company's trade secrets. As of the date of this Registration
Statement, the Company is conducting a patent search regarding the FIMS. There
can be no assurance that others have not independently developed, or will not
independently develop, similar products and technologies or otherwise duplicate
any of the Company's products and technologies.
20
<PAGE>
Moreover, there can be no assurance that the validity of any patent issued
to the Company would be upheld if challenged by others in litigation or that the
Company's activities would not infringe patents owned by others. The Company
could incur substantial costs in defending itself in suits brought against it,
or in suits in which the Company seeks to enforce its patent rights against
others. In addition, the Company may be required to obtain licenses to patents
or other proprietary rights of third parties in connection with the development
and use of its products and technologies. No assurance can be given that any
such licenses required would be made available on terms acceptable to the
Company, or at all.
Dependence on Existing Contractual Relations. The Company's success will
depend on the successful introduction and marketing of its products in the
global marketplaces which may, in turn, be dependent upon the continued
existence of favorable contractual relations with its manufacturers and with
suppliers of integral component parts. These agreements and the operations of
the Company may be dependent on the Company's continued favorable relationships
with its manufacturers and suppliers. The Company's operations would be
materially and adversely affected by the failure of such manufacturers and
suppliers to honor these agreements. In the event of a dispute, enforcement of
these agreements could be time consuming and costly. There is no assurance that
such favorable contractual relations will continue, and if so, that they will be
in the best interests of the Company.
Risks of International Sales. The products of the company are sold in the
United States and internationally, principally in Europe and Africa, with
intentions to expand globally. International sales may be subject to political
and economic risks, including political instability, currency controls and
exchange rate fluctuations, and changes in import/export regulations, tariff and
freight rates. Changes in tariffs or other trade policies could adversely affect
the Company's customers or suppliers.
Government Regulation; No Assurance of Compliance. The Company's research
and development and manufacturing facilities may be subject to regulation and
inspection standards established by the Occupational Safety and Health
Administration ("OSHA"). As of the date of this Registration Statement, none of
the Company's facilities have been inspected for compliance with the standards
established by OSHA. Although the Company believes that it is in material
compliance with current standards, there can be no assurance that any inspection
will not reveal that the Company has failed to comply with the standards
established by OSHA and that, as a result, the Company may be required to expend
sums, which can be costly, to assure compliance with OSHA regulations.
The Company's products may be subject to regulation by various agencies,
including the U.S. Department of Transportation and the Federal Highway
Administration, as well as local authorities. Each of these agencies may
regulate various aspects of licensing, permitting and operations of the Company
in connection with the design, development, manufacture and installation of its
products. Although management believes that imposition of any such regulations
will not impose great burdens upon the operation of the Company, such
regulations are subject to constant change. Unforeseen changes in such
regulations may have a significant impact on the Company.
21
<PAGE>
Restrictions of the Company's Activities. The Company has financed its
operations in part by obtaining bank loans and lines of credit. One such
financing consists of a Small Business Administration guaranteed purchase order
line of credit originated by Marine Midland Bank. In order to obtain this line
of credit, the Company signed an agreement that restricts its activities with
respect to subsequent borrowing, the structure of the Company, and its
securities. In addition, the Bank of Smithtown required that Mr. Richard
Goodhart, a director of the Company, pledge a certain number of his shares of
Common Stock. The Company will undertake such steps as may be necessary to
ensure that any and all action taken or to be taken by the Company will be
acceptable to and approved by Marine Midland Bank in accordance with the terms
of the agreement.
Future Sales of Common Stock. As of the date of this Registration
Statement, the Company has 18,377,150 shares of its Common Stock issued and
outstanding. Of the 18,377,150 of the Company's current outstanding shares of
Common Stock, 281,180 are free trading and 18,095,970 shares are restricted as
that term is defined in Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"). The Securities Act and Rule 144 promulgated
thereunder place certain prohibitions on the sale of such restricted securities.
Such restricted shares will not be eligible for sale in the open market without
registration except in reliance upon Rule 144 under the Securities Act. In
general, a person who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
"affiliates" of the Company as that term is defined under the Securities Act,
would be entitled to sell within any three month-period a number of shares that
does not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume on all national securities exchanges and through NASDAQ
during the four calendar weeks preceding such sale, provided that certain
current public information is then available. If a substantial number of the
shares owned by the existing shareholders were sold pursuant to Rule 144 or a
registered offering, the market price of the Company's Common Stock could be
adversely affected.
As of the date of this Registration Statement, the Company is currently
involved in an offering under Rule 504 of Regulation D to raise $592,289 and,
assuming all shares of Common Stock are sold, 408,475 shares of Common Stock
will be issued and outstanding upon the termination of the offering. The
possibility exists that, when permitted, the sale to qualified investors of
these shares could have a depressing effect on the price of the Common Stock.
Further, future sales of shares of Common Stock pursuant to offerings could also
adversely affect the Company's ability to raise capital in the future.
22
<PAGE>
Volatility of Stock Price. The markets for equity securities have been
volatile and the price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter to quarter variations in operating results,
news announcements, trading volume, sales of Common Stock by officers, directors
and principal shareholders of the Company, general trends, changes in the supply
and demand for the Company's shares, and other factors.
Broker-Dealer Sales of the Company's Shares. The Common Stock of the
Company will be defined as "penny stocks" under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Exchange Act and such penny stock
rules and regulations promulgated thereunder generally impose additional sales
practice and disclosure requirements upon broker-dealers who sell the Company's
Common Stock to persons other than "accredited investors" (generally, defined as
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or an annual income exceeding $200,000 ($300,000 jointly
with a spouse)) or in transactions not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must
make a suitability determination for each purchaser and receive the purchaser's
written agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the Securities and Exchange Commission.
Consequently, the penny stock rules may affect the willingness of broker-dealers
to make a market in or trade the common shares of the Company and thus may also
affect the ability of shareholders of the Company's Common Stock to resell those
shares in the public markets.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
For Fiscal Year Ended December 31, 1998 compared with Fiscal Year Ended December
31, 1997
Results of Operation
- --------------------
The Company's net losses for fiscal year ended December 31, 1998 were
approximately $427,728 compared to a net loss of approximately $756,743 for
fiscal year ended December 31, 1997. This decrease in net loss is attributable
primarily to a substantial decrease in expenses relating to research and
development and payroll, and an increase in gross profits during 1998.
The research and development expenses for fiscal year ended 1998 were
approximately $110,224 compared to research and development expenses of
approximately $310,506 for fiscal year 1997. Other net expenses (payroll) in the
approximate amount of $124,633 decreased during fiscal year ended 1998 from
approximately $255,960 during fiscal year ended 1997.
23
<PAGE>
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1998, the Company's current assets were $671,685 and its
current liabilities were $1,209,937. As of December 31, 1998, the current
liabilities exceeded current assets by $538,252. As of December 31, 1997, the
Company's current assets were $32,874 and its current liabilities were $885,344.
As of December 31, 1997, the current liabilities exceed current assets by
$852,470.
Although current liabilities increased during fiscal year 1998, the overall
decrease in current liabilities exceeding current assets in fiscal year 1998 was
due primarily to an increase in accounts receivable and inventory and a
corresponding decrease in current portion of loans payable to banks.
From December 31, 1997 to December 31, 1998, accounts receivable increased
from approximately $2,174 to $272,763.
From December 31, 1997 to December 31, 1998, current portion of loans
payable to banks decreased from $504,101 to 267,739; accounts payable increased
from $225,779 to $598,875.
Total assets increased primarily as a result of the increase in current
assets and the valuation of the Company's property, plant and equipment from
$15,962 at fiscal year end 1997 to $241,728 for fiscal year end 1998. However,
total liabilities also increased as a result of long term loans payable to bank
and advances from shareholders.
Stockholders' equity (deficit) decreased from ($1,721,904) for fiscal year
ended 1997 to ($1,953,486) for fiscal year ended 1998. To provide capital, the
Company sold stock in a private placement offering or issued stock in exchange
for debts of the Company. See "Part II Item 4. Recent Sales of Unregistered
Securities".
From the date of this Registration Statement, management believes that the
Company can satisfy its cash requirements for approximately the next six months
based on its current assets. To date, the Company has received approximately
$40,000 in subscriptions for shares of Common Stock.
Item 3. Description of Property.
- --------------------------------
Except as described above, the Company does not own any other real estate
or other properties. The Company leases office space both in the United States
and in Europe. Its executive offices are located at145 Oser Avenue, Suite 100,
Hauppauge, New York 11788; its research facility is located at 2900 72nd Street
North, St. Petersburg, Florida 33733, and its international offices are located
at Rue d'Alsace-Lorraine #44, Brussels, Belgium 1050. Construction has also
begun on an approximate 15,000 square foot building located in Secunderabad,
India, for the Company's subsidiary, KMR. Management believes that the Company's
offices are adequate for its reasonable foreseeable needs. The Company does not
intend to acquire any properties.
24
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- -----------------------------------------------------------------------
The following table sets forth the name and address, as of the date of this
Registration Statement, and the approximate number of shares of Common Stock of
the Company owned of record or beneficially by each person who owned of record,
or was known by the Company to own beneficially, more than five percent (5%) of
the Company's Common Stock, and the name and shareholdings of each officer and
director, and all officers and directors as a group as of the date of this
Registration Statement and as adjusted to reflect the sale of the shares of
Common Stock previously sold under the Private Placement Memorandum dated
January 29, 1999 and the sale of shares of Common Stock currently being offered
under the Private Placement Memorandum dated April 7, 1999, pursuant to the Rule
504, Regulation D offering.
- --------------------------------------------------------------------------------
Title of Class Name and Address Amount and Nature (1) Percent
of Beneficial Owner of Class of Class
- --------------------------------------------------------------------------------
(2)
Common Stock Richard J. Goodhart 4,928,640 26.2%
145 Oser Avenue, Suite 100
Hauppauge, New York 11788
Common Stock Steven H. Wahrman 2,360,960 12.6%
145 Oser Avenue, Suite 100
Hauppauge, New York 11788
Common Stock Jean Paul Daveau 1,049,680 5.6%
145 Oser Avenue, Suite 100
Hauppauge, New York 11788
Common Stock(3) All officers and directors 8,339,280 44.4%
as a group (3 persons)
- --------------------------------------------------------------------------------
(1) Does not assume the exercise of warrants granted to certain officers
and directors of the Company for an aggregate of 1,500,000 shares of
Common Stock at $1.45 per share.
(2) All percentage figures assume that all shares of Common Stock
currently being offered in the Rule 504, Regulation D offering, are
sold.
(3) These are all restricted shares of common stock.
25
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
Directors/Executive Officers. The directors and executive officers of the
Company are as follows:
Name Age Position with the Company
- ---- --- -------------------------
Richard J. Goodhart 49 Director and Chairman of the
Board, Chief Executive Officer
Steven H. Wahrman 41 Director and President, Chief
Operating Officer
Jean Paul Daveau 43 Director and Executive Vice
President of Engineering/Design
Ives Wahrman 74 Director
Martin Goodhart 77 Director
RICHARD J. GOODHART has been a Director, the Chairman of the Board and
Chief Executive Officer of the Company since October of 1993. Mr. Goodhart has
had nineteen years in international sales and marketing in the electronic
component industry and ten years in purchasing management. He has received the
Small Business Association Eastern Region 1996 Exporter of the Year award and
has been nominated for the "Global Vision 2000" award for 1996. In addition, Mr.
Goodhart was elected for the "Who's Who in International Electronics" for 1994
and 1995 and was a recipient of the New York State "Export Entrepreneur of the
Year" award. Prior to his involvement in the Company, Mr. Goodhart held
positions as the Vice President of Sale and Finance for Ex-Electronics and was
International Sales and Marketing Manager for Jaco Electronics. Mr. Goodhart
holds a Bachelor of Science degree in Business Management from Western New
England College.
STEVEN H. WAHRMAN has been a Director, the President and Chief Operating
Officer of the Company since February of 1996. Mr. Wahrman is responsible for
all phases of worldwide implementation of market research, strategic planning
and promotion and the daily operations of the Company. Mr. Wahrman has nineteen
years of experience in sales and marketing. For a period of fourteen years, Mr.
Wahrman was President of S.W. Intimates and was named "Who's Who in American's
Young Business" in 1992. Mr. Wahrman holds a Bachelor of Science degree in
Marketing with a minor in Advertising from The American University.
JEAN PAUL DAVEAU has been a Director and the Executive Vice President of
Engineering and Design of the Company since October of 1993. Mr. Daveau is
responsible for establishing and overseeing the engineering and design staff and
all aspects of technical research, including the compilation of specifications
and manuals. Mr. Daveau has spent over a decade developing onboard recording
systems. He is a world renown leader of design in the onboard recording industry
and has worked with Royal Dutch Shell, Schlumberger, and Western Atlas. In
addition, Mr. Daveau is an expert in the fields of hardware and software, and in
that capacity has acted as a consultant engineer in the industrial computing
industry. For a period of five years, Mr. Daveau was the President and Managing
Director of Microsam. In 1990, he received the "Chivas de L'Exploitation
Professionelle" and the "Trophee de L'Enterprise" awards.
26
<PAGE>
IVES WAHRMAN has been a Director of the Company since February of 1996. Mr.
Wahrman has an extensive background in the field of merchandise marketing. His
positions have included Merchandise Manager for J.M.Fields and Vice President
and Merchandise Manager for McCrorys. In addition, Mr. Wahrman has served on the
board of directors of the Temple Beth Israel in York, Pennsylvania, and is
currently a volunteer for York County Area Agency on Aging at York Hospital in
York, Pennsylvania.
MARTIN GOODHART has been a Director of the Company since February of 1996.
Mr. Goodhart Mr. Goodhart has nearly fifty years of experience in the commercial
finance industry. He has held a position with new York Factors, was the
Assistant Vice President of Rosenthal & Rosenthal, and was the Vice President of
both Hilldun Corporation and Sterling Factors. Mr. Goodhart is well recognized
by his peers and has given numerous lectures on finance to the Fashion Institute
of Technology, Pace College and Dellotte Haskin & Sells. He has served as
President of the Finance Club of New York, whose members include banks, large
financial institutions and private owners of financial companies. In addition,
Mr. Goodhart was the President of the Empire Credit Club of New York. The
Company believes that Mr. Goodhart's experience will bring a tremendous field of
knowledge and contacts to the Company.
As of the date of this Registration Statement, two family relationships
exist among the named directors. Mr. Martin Goodhart is the father of Mr.
Richard Goodhart and Mr. Ives Wahrman is the father of Mr. Steven Wahrman. No
other family relationships exist among any of the named directors and executive
officers. No arrangement or understanding exists between any such director or
officer and any other persons pursuant to which any director or executive
officer was elected as a director or executive officer of the Company. The
directors of the Company are elected annually and serve until their successors
take office or until their death, resignation or removal. The executive officers
serve at the pleasure of the Board of Directors of the Company.
As of the date of this Registration Statement, no director or executive
officer of the Company is or has been involved in any legal proceeding
concerning (i) any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (ii) any conviction in a
criminal proceeding or being subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses) within the past five years; (iii)
being subject to any order, judgment or decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) being found by a court, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law (and the
judgment has not been reversed, suspended or vacated).
27
<PAGE>
Advisors/Consultants. The significant advisors and consultants to the
Company are listed below. The Company has no obligation or agreement to hire or
pay any consultant or advisor other than those listed below. The Company may,
however, as the need arises retain such consultants and advisors as management
deems necessary in the best interests of the Company.
The Company has retained Royce Anderson and Monroe, Inc., a New York
corporation ("Royce Anderson"), in connection with consulting services for the
development of the North American market. Royce Anderson will assist the company
with corporate structure, acquisitions, mergers and equity partners. In exchange
for Royce Anderson's services, the Company has agreed to issue to Royce Anderson
483,828 shares of its Common Stock. In the event Royce Anderson fails to fulfill
the terms of its agreement, a pro rata portion of the shares of Common Stock
will be returned to the Company. The number of shares which may be returned will
be determined by dividing the total number of shares issued by 60 (i.e,
8,063.80) and then determining the number of months remaining in the term of the
agreement.
The Company has also entered into a consulting agreement with Bristol
Consulting Ltd., a New York corporation ("Bristol"), for assistance in the
development of an international market for the Company's product lines. Bristol
will also assist and advise the Company in the Middle East and the Far East
regarding corporate structure, capital acquisition, contracts, equity partners
and mergers and acquisitions. Pursuant to the terms of the agreement, Bristol
received compensation in the amount of $5,000 per month for the months of July,
August and September 1998, and will receive compensation in the amount of
$10,000 per month for the remaining 57 months of the agreement. All such
compensation shall be deferred and shall accrue until such time as the Company
has the funds necessary to pay same. In addition, Bristol has been issued
689,414 shares of the Company's Common Stock. In the event Bristol fails to
complete the terms of the agreement, a pro rata portion of the shares will be
returned to the Company. The number of shares which may be returned will be
determined by dividing the total number of shares issued by 60 (i.e., 11,490.25)
and then determining the number of months remaining in the term of the
agreement.
Item 6. Executive Compensation.
- -------------------------------
As of the date of this Registration Statement, none of the officers or
directors of the Company have received any compensation for their respective
roles to date or during fiscal years 1997 and 1998. The Company has entered into
compensation agreements with each of its three executive officers, Mr. Richard
Goodhart, Mr. Steven Wahrman and Mr. Jean Paul Daveau. Pursuant to the
provisions of the compensation agreements, each officer will receive an annual
salary of $120,000 (of which the first six months commencing January 1, 1999
will be deferred and will accrue without interest). Each officer will also
receive a yearly bonus equal to 1% of the net profits for the preceding year.
Each compensation agreement provides for an extension period of one year, with
the ability to be renewed on a yearly basis for a period of five years upon
majority vote of the Board of Directors. In addition, each officer is entitled
to receive warrants equal to 500,000 shares of the Company's Common Stock,
exercisable for $1.45 per share. Each warrant is exercisable for a period of
five years commencing January 1, 1999.
28
<PAGE>
Item 7. Certain Relationships and Related Transactions.
- -------------------------------------------------------
On October 28, 1998, the Company entered into an agreement and plan of
reorganization with International Purchasing Service, Inc. ("IPS"). Pursuant to
the terms and provisions of the agreement and plan of reorganization, the
Company agreed to transfer and assign to Richard Goodhart, the then sole
shareholder of IPS, 1,600,000 shares of its Common Stock in exchange for all of
the issued and outstanding shares of common stock of IPS.
On October 28, 1998, the Company entered into an agreement and plan of
reorganization with KMR Telecom Limited (India Corp.) ("KMR"). At the date of
the agreement and plan of reorganization, Richard Goodhart was an equity owner
of approximately forty-nine percent (49%) of the issued and outstanding shares
of common stock of KMR and Dinesh and Ritu Kumar were the joint equity owners of
approximately fifty-one percent (51%) of the issued and outstanding shares of
common stock of KMR. Pursuant to the terms and provisions of the agreement and
plan of reorganization, the Company agreed to transfer and assign to Richard
Goodhart 392,000 shares of its Common Stock and to transfer and assign to Dinesh
and Ritu Kumar 408,000 shares of its Common Stock in exchange for all of the
issued and outstanding shares of common stock of KMR.
Item 8. Description of Securities.
- ----------------------------------
The Company is authorized to issue 50,000,000 shares of Common Stock, no
par value.
Common Stock
- ------------
Holders of shares of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders of the Company. Except as may be
required by law, holders of shares of Common Stock will not vote separately as a
class, but will vote together with the holders of outstanding shares of other
classes or capital stock. There is no right to cumulate votes for the election
of directors. A majority of the issued and outstanding Common Stock constitutes
a quorum at any meeting of stockholders and the vote by the holders of a
majority of the outstanding shares is required to effect certain fundamental
corporate changes such as liquidation, merger or an amendment to the Articles of
Incorporation.
29
<PAGE>
Holders of shares of Common Stock are entitled to receive dividends if, as
and when, declared by the Board of Directors out of funds legally available
therefore. The Company's agreement with its bank lender may prohibit payment of
Common Stock dividends without the consent of the lender. Upon liquidation of
the Company, holders of shares of Common Stock are entitled to share ratably in
all assets of the Company remaining after payment of liabilities. Holders of
shares of Common Stock have no conversion, redemption or preemptive rights. The
outstanding shares of Common Stock are fully paid and nonassessable. The shares
of Common Stock issued upon exercise of warrants and payment therefore, will be
validly issued, fully paid and nonassessable.
PART II
- -------
Item 1. Market for Common Equity and Related Stockholder Matters
- ----------------------------------------------------------------
As of the date of this Registration Statement, there has been no public
market for the shares of Common Stock of the Company. It is the intention of
management that the shares of Common Stock of the Company will be traded in the
over-the-counter market and quoted on the NASDAQ. The Company must meet certain
criteria in order to qualify for inclusion on NASDAQ.
The 18,377,150 shares of Common Stock outstanding as of the date of this
Registration Statement are held by approximately 159 holders of record in the
United States.
The Board of Directors has never authorized or declared the payment of any
dividends on the Company's Common Stock and does not anticipate the declaration
or payment of cash dividends in the foreseeable future. The Company intends to
retain future earnings, if any, to finance the development and expansion of its
business. Future dividend policies will be subject to the discretion of the
Board of Directors and will be contingent upon, among other things, future
earnings, the Company's financial condition, capital requirements, general
business conditions, level of debt, restrictions with respect to payment of
dividends with respect to bank loans, and other relevant factors.
Transfer Agent
- --------------
The transfer agent and registrar for the Common Stock is Continental
Transfer & Trust Company, 2 Broadway, New York, N.Y. 10004, telephone number
(212) 509-4000.
Item 2. Legal Proceedings.
- --------------------------
Management is not aware of any legal proceedings contemplated by any
governmental authority or other party involving the Company or its properties.
No director, officer or affiliate of the Company is (i) a party adverse to the
Company in any legal proceedings, or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against the Company or its properties.
30
<PAGE>
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- --------------------------------------------------------------------------------
Since the reorganization of the Company into a corporation and to date, the
Company's current principal independent accountant has not resigned or declined
to stand for re-election or were dismissed. There have been no disagreements
with the Company's current principal independent accountant which were not
resolved on any matter concerning accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
Moreover, the Company's current principal independent accountant has not
provided an adverse opinion or disclaimer of opinion to the Company's financial
statements, nor modified their opinion as to uncertainty, audit scope or
accounting principles.
The Company's principal independent accountant is Jeff R. Pearlman, 19 West
34 Street, Suite 1118, New York, New York 10001.
Item 4. Recent Sales of Unregistered Securities.
- ------------------------------------------------
(i) On October 28, 1998, the Company entered into an agreement and plan of
reorganization with International Purchasing Service, Inc. ("IPS"),
whereby the Company issued 1,600,000 shares of its Common Stock to
Richard Goodhart, the then sole shareholder of IPS, in exchange for
all of the issued and outstanding shares of IPS. The issuance of the
Common Stock described herein was made in connection with a plan of
reorganization transaction not involving a public offering to a single
investor. The certificate representing issuance of such shares of
Common Stock by the Company to Richard Goodhart has a legend
indicating that the shares of Common Stock cannot be resold without
registration under the Securities Act of 1933, as amended (the "1933
Securities Act") or in compliance with an available exemption from
registration.
(ii) On October 28, 1998, entered into an agreement and plan of
reorganization with KMR Telecom Limited (India Corp.)("KMR") whereby
the Company issued 392,000 shares of its Common Stock to Richard
Goodhart and 408,000 shares of its Common Stock to Dinesh and Ritu
Kumar, jointly, in exchange for all of the issued and outstanding
shares of common stock of KMR. The issuance of the Common Stock
described herein was made in connection with a plan of reorganization
transaction not involving a public offering to two investors. The
certificates representing issuance of such shares of Common Stock by
the Company to Richard Goodhart and to Dinesh and Ritu Kumar, jointly,
have a legend indicating that the shares of Common Stock cannot be
resold without registration under the 1933 Securities Act or in
compliance with an available exemption from registration.
31
<PAGE>
(iii)On January 25, 1999, the Company commenced an offering of 500,000
shares of its Common Stock at $1.45 per share, for an aggregate
offering of $725,000, pursuant to Section 4(2) of the Securities Act
and Regulation D, Rule 504, thereunder (the "Offering"). The Offering
was conducted on a "all or none/best efforts" basis until the receipt
of $250,000 in gross subscriptions from investors and, thereafter,
continued on a "best efforts" basis until either the sale of 500,000
shares of Common Stock or May 25, 1999, whichever occurred earlier.
On April 6, 1999, at midnight, the Company terminated the Offering. A
total of $407,711 was received in subscriptions from investors
representing the issuance of 281,180 shares of Common Stock. The
Offering was terminated in order to ensure that investors who
subscribed for shares of Common Stock prior to April 7,1999 received
"freely tradable, unrestricted" shares of Common Stock in accordance
with the provisions of Rule 504 of Regulation D. Earlier in the year,
the Securities and Exchange Commission promulgated amendments to Rule
504 limiting the circumstances where "freely tradable" securities may
be issued in reliance on Rule 504. The amendments to Rule 504 were
effective on April 7, 1999. Therefore, investors purchasing shares of
Common Stock prior to April 7, 1999 under the Offering received
"freely tradable, unrestricted" shares of Common Stock, which are
generally eligible for sale in the open market without registration
under the Securities Act.
(iv) As of the date of this Registration Statement, the Company is
continuing its efforts to raise capital by offering for sale 408,475
of its shares of Common Stock at $1.45 per share pursuant to an
offering memorandum dated April 7, 1999. Investors who purchase shares
of Common Stock on April 7, 1999 and thereafter will generally receive
"restricted" shares, as that term is defined in Rule 144 under the
Securities Act. To date, the Company has not received any
subscriptions from investors.
As of the date of this Registration Statement, the Company has 18,377,150
shares of its Common Stock issued and outstanding. Of the 18,377,150 of the
Company's current outstanding shares of Common Stock, 281,180 shares are free
trading. At such time, the holders may offer and sell these shares of Common
Stock at such times and in such amounts as they may respectively determine in
their sole discretion.
The holders of free trading Common Stock in the capital of the Company may
in the future offer these shares of Common Stock through market transactions at
prices prevailing in the OTC market or at negotiated prices which may be fixed
or variable and which may differ substantially from OTC prices, when such prices
exist. The holders have not advised the Company that they anticipate paying any
consideration, other than the usual and customary broker's commission, in
connection with the sales of these free trading shares of Common Stock. The
holders are acting independently of the Company making such decisions with
respect to the timing, manner and size of each sale.
32
<PAGE>
Of the 18,377,150 of the Company's current outstanding shares of Common
Stock, 18,095,970 shares are "restricted shares" as that term is defined in the
Securities Act of 1933 and the rules and regulations thereunder. To be eligible
for sale in the public market, the holders must comply with Rule 144. In
general, Rule 144 allows a person holding restricted shares for a period of at
least one year to sell within any three month period that number of shares which
does not exceed the greater of 1% of the Company's then outstanding shares or
the average weekly trading volume of the shares during the four calendar weeks
preceding such sale. Rule 144 also permits, under certain circumstances, sale of
shares by a person who is not an affiliate of the Company and who has satisfied
a two year holding period without any volume limitations, manner of sale
provisions or current information requirements. As defined in Rule 144, an
affiliate of an issuer is a person who, directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, such issuer, and generally includes members of the Board of Directors.
Sales pursuant to Rule 144 or otherwise, if in sufficient volume, could have a
depressive effect on the market price of the Company's securities. Moreover, the
possibility of such sales may have a depressive effect on market prices.
To date, no sales of restricted shares of Common Stock have been made.
Item 5. Indemnification of Officers and Directors.
- --------------------------------------------------
Section 78.751 of Chapter 78 of the Nevada Revised Statutes contains
provisions for indemnification of the officers and directors of the Company. The
Bylaws require the Company to indemnify such persons to the full extent
permitted by law. The Bylaws with certain exceptions, eliminate any personal
liability of a director to the Company or its shareholders for monetary damages
to the Company or its shareholders for gross negligence or lack of care in
carrying out the director's fiduciary duties as such. Nevada law permits such
indemnification if a director or officer acts in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Company. A director or officer must be indemnified as to any matter in which he
successfully defends himself.
The officers and directors of the Company are accountable to the
shareholders of the Company as fiduciaries, which means such officers and
directors are required to exercise good faith and integrity in handling the
Company's affairs.
A shareholder may be able to institute legal action on behalf of himself
and all other similarly situated shareholders to recover damages where the
Company has failed or refused to observe the law. Shareholders may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce their rights, including rights under certain federal
and state securities laws and regulations. Shareholders who have suffered losses
in connection with the purchase or sale of their interest in the Company due to
a breach of a fiduciary duty by an officer or director of the Company in
connection with such sale or purchase including, but not limited to, the
misapplication by any such officer or director of the proceeds from the sale of
any securities, may be able to recover such losses from the Company.
33
<PAGE>
The Company and its affiliates may not be liable to its shareholders for
errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud or a knowing violation of the law, since provisions have been
made in the Articles of Incorporation and By-laws limiting such liability. The
Articles of Incorporation and By-laws also provide for indemnification of the
officers and directors of the Company in most cases for any liability suffered
by them or arising out of their activities as officers and directors of the
Company if they were not engaged in intentional misconduct, fraud or a knowing
violation of the law. Therefore, purchasers of these securities may have a more
limited right of action than they would have except for this limitation in the
Articles of Incorporation and By-laws. In the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act of 1933 is contrary to public policy and, therefore,
unenforceable
The Company may also purchase and maintain insurance on behalf of directors
and officers insuring against any liability asserted against such person
incurred in the capacity of director or officer or arising out of such status,
whether or not the Company would have the power to indemnify such person.
Item 6. Financial Statements.
- -----------------------------
Reference is made to Part III, Item 1 and 2 - Index to and Description of
Exhibits for a list of all financial statements filed as part of this
Registration Statement on Form 10-SB.
PART III
- --------
Item 1 & 2. Index to and Description of Exhibits.
- -------------------------------------------------
(a) The following Financial Statements are filed as a part of this
Registration Statement:
1. Independent Auditors' Report dated January 13, 1999.
2. Combined Balance Sheets for fiscal year ended December 31, 1997 and
December 31, 1996.
3. Combined Statements of Operation for fiscal year ended December 31,
1997 and December 31, 1996.
4. Statement of Stockholders' Deficit for Years ended December 31, 1997
and 1996.
5. Combined Statements of Cash Flow for fiscal year ended December 31,
1997 and December 31, 1996.
6. Notes to Financial Statements for December 31, 1997 and 1996.
7. Independent Auditors' Report dated April 13, 1999.
8. Consolidated Balance Sheet for year ended December 31, 1998.
9. Consolidated Statement of Operations for year ended December 31, 1998.
10. Consolidated Statement of Stockholders' Equity for year ended December
31, 1998
34
<PAGE>
11. Consolidated Statement of Cash Flows for year ended December 31, 1998.
12. Consolidated Notes to the Financial Statements for the year ended
December 31, 1998.
13. Independent Auditors' Report dated May 26, 1999.
14. Consolidated Balance Sheet for first quarter ended March 31, 1999.
15. Consolidated Statement of Income and Loss for first quarter ended
March 31, 1999.
16. Consolidated Statement of Cash Flow for First Quarter Ended March 31,
1999.
17. Notes to Financial Statements for First Quarter Ended March 31, 1999.
(b) The following Exhibits are filed as part of this Registration
Statement:
- --------------------------------------------------------------------------------
Exhibit No. Description
- --------------------------------------------------------------------------------
2 Not applicable.
3 Articles of Incorporation for the Company
By-laws of the Company
4 Not Applicable
9 Not Applicable
10.1 Agreement and Plan of Reorganization dated October 28, 1998
between the Company and KMR Telecom Limited.
10.2 Agreement and Plan of Reorganization dated October 28, 1998
between the Company and International Purchasing Service, Inc.
10.3 Consulting Agreement dated July 30, 1998 between the Company and
Royce Anderson & Monroe, Inc.
10.4 Consulting Agreement dated July 30, 1998 between the Company and
Bristol Consulting Ltd.
11 Not Applicable
16 Not Applicable
21 Not Applicable
24 Not Applicable
- --------------------------------------------------------------------------------
The following additional Exhibits are filed as part of this Registration
Statement:
- --------------------------------------------------------------------------------
Exhibit No. Description
- --------------------------------------------------------------------------------
None
- --------------------------------------------------------------------------------
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
ACCIDENT PREVENTION PLUS, INC.,
a Nevada corporation
By: /s/ Steven H. Wahrman
-----------------------------------
Steven H. Wahrman, President
DATE: May 31, 1999
36
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Board of Directors
Accident Prevention Plus, LLC and Affiliate
Hauppauge, NY
I have audited the accompanying combined balance sheets of Accident Prevention
Plus, LLC and Affiliate as of December 31, 1997 and December 31, 1996 and the
related combined statements of operations, stockholders' deficits, and cash
flows for the years then ended. 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 audits.
Except as discussed in the following paragraph, I conducted my audits 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
audits provide a reasonable basis for my opinion.
I was not engaged as auditor until after December 31, 1997 and in accordance
with the terms of my engagement I have not applied procedures necessary to
satisfy myself about the classification and amounts comprising the balance sheet
at December 31, 1995.
In my opinion, except for the effects of such adjustment, if any, as might have
been determined to be necessary in the statements of operation, stockholder
deficit, and cash flows had I been able to satisfy myself about the
classification and amounts comprising the balance sheet at December 31, 1995,
the combined financial statements referred to above, present fairly in all
material respects the financial positions of Accident Prevention Plus, LLC and
Affiliate as of December 31, 1997 and December 31, 1996 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Companies will continue as a going-concern. As shown in the financial
statements, the Companies incurred net losses of $821,695 for 1997 and
$1,166,457 for 1996. At December 31, 1997 and December 31, 1996, current
liabilities exceed current assets by $852,470 and $775,950, respectively and the
Companies have stockholders' deficiencies of $1,721,904 and $910,209,
respectively. These factors, and the others discussed in the note 6, raise
substantial doubt about the Companies' ability to continue as a going-concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Companies
cannot continue in existence.
- ----------------------------
JEFF R. PEARLMAN, CPA
January 13, 1999
<PAGE>
ACCIDENT PREVENTION PLUS, LLC AND AFFILIATE
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
ASSETS
Current assets
Accounts receivables $ 2,174 $ 16,048
Inventory 29,200 803
Prepaid expenses 1,500 5,065
----------- -----------
Total current assets 32,874 21,916
----------- -----------
Property, plant and equipment
Less, accumulated depreciation 15,962 20,886
----------- -----------
Other assets
Loans receivables - foreign entity 149,444 145,416
Due from officer 147,567 147,567
Advances from officers 0 48,920
Security deposits 4,500 4,500
----------- -----------
Total other assets 301,511 346,403
----------- -----------
Total assets $ 350,347 $ 389,205
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Cash overdraft $ 4,720 $ 1,465
Current portion of long term debt 4,380 8,446
Current portion of loans payable - bank 504,101 639,285
Accounts payable 225,779 85,804
Accrued expenses,
taxes, and sundry payables 132,554 36,766
Customer deposits 13,810 26,100
----------- -----------
Total current liabilities 885,344 797,866
----------- -----------
Long term liabilities
Loans payable - bank, less current portion 543,942 68,161
Long term debt, less current portion 214 4,594
Loans payable - other 428,793 428,793
Advances - shareholder 213,958 0
----------- -----------
Total long term liabilities 1,186,907 501,548
----------- -----------
Total liabilities 2,072,251 1,299,414
----------- -----------
Stockholders' deficit
Members' deficit (1,187,291) (620,583)
Common stock, 100 shares issued and
outstanding, at no par value 100 100
Retained deficit (534,713) (289,726)
----------- -----------
Total stockholders' deficit (1,721,904) (910,209)
----------- -----------
Total liabilities and stockholders' equity $ 350,347 $ 389,205
=========== ===========
See auditor's report and accompanying notes to financial statements.
<PAGE>
ACCIDENT PREVENTION PLUS, LLC AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
Revenues $ 495,855 $ 337,058
Cost of sales 273,468 227,831
----------- -----------
Gross profit 222,387 109,227
Revenue - other services 0 86,102
----------- -----------
Total revenue 222,387 195,329
----------- -----------
Operating expenses
Payroll 255,960 233,050
Payroll taxes and benefits 54,338 41,401
Rent 75,423 35,786
Research and development 310,506 654,269
Commissions - foreign entity 9,282 56,474
Commissions - others 0 38,540
Consulting fees 0 9,796
Telephone and utility 14,973 21,749
Office and Postage 7,910 15,244
Travel and Entertainment 128,594 111,578
Insurance 15,484 25,675
Advertising 12,939 8,075
Computer expense 8,206 5,410
Professional fees 9,727 24,503
Shipping charges 8,680 4,870
License and fees 925 4,512
Bad debt expense 43,548 20,554
Bank charges 5,592 2,633
Depreciation 7,324 6,523
Misc. expenses 9,719 2,582
----------- -----------
Total operating expenses 979,130 1,323,224
----------- -----------
Loss before other income and expenses (756,743) (1,127,895)
Interest expense (96,576) (51,943)
Interest income 32,654 13,769
----------- -----------
Loss before provisions for income taxes (820,665) (1,166,069)
Income taxes (1,030) (388)
----------- -----------
Net Loss $ (821,695) $(1,166,457)
=========== ===========
See auditor's report and accompanying notes to financial statements.
<PAGE>
ACCIDENT PREVENTION PLUS, LLC AND AFFILIATE
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Common Members' Retained
stock capital/deficit deficit
----- --------------- -------
Balance, beginning $ 100 $ -- $ (43,852)
Capital contributions 300,000
Net loss (920,583) (245,874)
----------- ----------- -----------
Balance, December 31, 1996 $ 100 (620,583) (289,726)
Capital contributions 10,000
Net loss (576,708) (244,987)
----------- ----------- -----------
Balance, December 31, 1997 $ 100 $(1,187,291) $ (534,713)
=========== =========== ===========
See auditor's report and accompanying notes to financial statements.
<PAGE>
ACCIDENT PREVENTION PLUS, LLC AND AFFILIATE
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996
Net loss ($ 821,695) ($1,166,457)
Adjustments to reconcile net loss
to net cash from operating activities:
Depreciation 7,324 6,523
Bad debt expense 43,548 20,554
(Increase) / decrease in accounts receivable (29,674) 103,079
(Increase) / decrease in inventory (28,397) 1,806
(Increase) / decrease in prepaid expenses 3,565 (110)
Increase in accounts payable 143,230 12,522
Increase in accrued expenses, taxes
& sundry payables 95,788 25,212
(Decrease) / increase in customer deposit (12,290) 26,100
----------- -----------
Net cash used by operating activities (598,601) (970,771)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Increase in security deposits 0 (4,000)
Capital expenditures (2,400) (12,997)
----------- -----------
Net cash used by investing activities (2,400) (16,997)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Loans to foreign entity (4,028) (40,058)
Decrease in long term debt-leases (8,446) (9,095)
Advances from / (to) shareholders / members 262,878 (19,966)
Loans payable - other 428,793
Members' capital contribution 10,000 300,000
Proceeds from banks 340,597 302,446
----------- -----------
Net cash provided by financing activities 601,001 962,120
----------- -----------
Net Decrease in cash 0 (25,648)
Cash - beginning of year 0 25,648
----------- -----------
Cash - end of year $ 0 $ 0
=========== ===========
Supplementary Disclosure
Interest paid $ 96,576 $ 51,943
Income tax paid $ 1,030 $ 388
See auditor's report and accompanying notes to financial statements.
<PAGE>
ACCIDENT PREVENTION PLUS, LLC AND AFFILIATE
COMBINED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Organization and Business Activity: Accident Prevention Plus, Inc. (The
"Company"), was incorporated in the state of New York in 1993. The Company
designs, sells and distributes on-board recording and fuel intake monitoring
systems that will assist the transportation industry. This system can monitor
and record data for accident prevention, maintenance and anti-theft programs in
cars, vans, buses, trucks, trains and private aircrafts. During 1996, the
Company changed its name to Accident Prevention Plus, LLC when it was converted
into a limited liability corporation.
International Purchasing Services, Inc. ("IPS"), a company under common
ownership, was incorporated in 1993 in New York to buy and sell both military
and commercial electrical equipment. All of the sales were derived from European
and Asian Countries.
Basis of Accounting: The financial statements are prepared on the accrual basis
of accounting. Income is recorded when earned and expenses are recorded when
incurred.
Principles of Combination: The accompanying combined financial statements
include the accounts of the Company and IPS, (collectively the "Companies"). A
majority member of the Company, own 100% of the stock of IPS. Intercompany
transactions and balances have been eliminated in combination.
Accounts Receivable: At December 31, 1997 and 1996, the combined accounts
receivable for the Companies were pledged as collateral in connection with bank
loans. Based on prior experience, no allowance was required.
Income Taxes: The Companies file separate tax returns. The Company as a limited
liability corporation is not subject to income tax. Income or losses flow
directly to the members individually.
Deferred income taxes are provided for temporary differences between financial
statement and income tax reporting. Temporary differences giving rise to the
deferred tax asset consist primarily for the availability of operating loss
carryforwards. IPS has provided a valuation allowance to reduce the deferred tax
asset since it cannot be determined more likely than not that the operating loss
carryforwards will be utilized.
At December 31,1997, IPS has available $534,713 of unused operating loss
carryforwards that may be applied against future taxable income and that expire
in various years through 2012.
Property & Equipment: Property and equipment are stated at cost and are
depreciated over their estimated useful lives using the straight-line and
accelerated methods. Expenditures for maintenance and repairs are charged to
operations. Replacements, renewals and betterments that materially extend the
life of the assets, are capitalized.
<PAGE>
Note 1 - Summary of Significant Accounting Policies (Continued)
- ---------------------------------------------------------------
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles require management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Development Costs: Costs associated with research and development are charged to
operations when incurred and are included in operating expenses.
Note 2 - Property and Equipment
- -------------------------------
The following is a summary of property and equipment:
12/31/97 12/31/96
-------- --------
Equipment & Computers $42,668 $40,268
Less: Accumulated Depreciation 26,706 19,382
------- -------
NET PROPERTY AND EQUIPMENT $15,962 $20,886
======= =======
The Depreciation expense for the periods ending December 31, 1997 and 1996,
amounted to $7,324 and $6,523, respectively.
Note 3 - Loans Payable - Banks
- ------------------------------
Following is a summary of loans payable - banks at December 31, 1997 and
December 31, 1996:
1997 1996
---- ----
Note payable to bank (Commercial grid note in
1996), due November 30, 2001, interest payable
monthly at 2.00% over prime rate, secured by
inventory, accounts receivable, machinery and
equipment and contract rights $ 500,000 $ 500,000
SBA guaranty loan due April 13, 2001, interest
payable monthly at 11.50%, secured by inventory,
accounts receivable, machinery and equipment and
contract rights 73,228 82,446
SBA guaranty loans due upon demand, interest
payable monthly at 10.25% to 11.00%, secured by
inventory, accounts receivable, machinery and
equipment and contract rights 474,815 125,000
------- -------
1,048,043 707,446
Less, current portion 504,101 639,285
--------- ----------
$ 543,942 $ 68,161
========== ==========
<PAGE>
Note 3 - Loans Payable - Bank (Continued)
- -----------------------------------------
During 1997, the Companies were in default of its loan obligations for
non-performance and as such, the debt is reflected as a current liability. In
November 1998, the Companies renegotiated the terms of its commercial grid note
with the lending institution (see note 6). The settlement converted the demand
obligation to a three-year term loan with interest to be charged on unpaid
principal at 2% above the published prime rate. The Companies are required to
make aggregate payments, totaling $60,619 for interest, legal costs and three
months prepayment of principal.
The term note (previously known as commercial grid note) is payable as follows:
1999 - monthly payments of $5,000
2000 - monthly payments of $10,000
2000 - monthly payments of $15,000 and any remaining unpaid balance.
Accordingly, the new terms of the obligation have been classified as long-term
debt at December 31, 1997.
The minimum payments required under such obligations are as follows:
For the year ended December 31,
1998 $504,101 (not paid to-date)
1999 $ 74,285
2000 $134,285
2001 $335,372
Note 4 - Economic Dependency
- ----------------------------
During 1997 and 1996, the Company derived majority of its revenues from three
European entities, amounted to $227,442 and $29,690, respectively.
Note 5 - Related Party Transactions
- -----------------------------------
In 1996, the Companies advanced $48,920 to their officers. The advances are
non-interest bearing. During 1997, the officers repaid such advances and
provided the Companies with working capital amounting to $213,958. Such loans
are non-interest bearing and without terms for repayment and have been
classified as non-current.
The Companies advanced its officer/majority shareholder/member money to acquire
a 49% interest in a foreign company. Such advances are non-interest bearing and
without terms for repayment. In conjunction with aforementioned acquisition, the
Companies also have advanced additional funds which are interest bearing and
without terms for repayment from these foreign entities.
<PAGE>
Note 6 - Ability as Going Concern
- ---------------------------------
The Companies have sustained substantial operating losses in recent years. In
addition, the Companies have used substantial amounts of working capital in its
operations. Further, at December 31, 1997, current liabilities exceed current
assets by $852,470, and total liabilities exceed total assets by $1,721,904.
During 1997, two banks have demanded immediate payment of the outstanding
principal balance of $1,048,043, plus accrued interest on notes payable because
the banks claim that the companies violated certain provisions of the loan
agreements. During 1998, the companies were able to renegotiate its obligation
with a lending institution (see note 3). Management has proposed alternatives in
an attempt to restructure the agreement with the other bank.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Companies, which in turn is dependent upon the Companies' ability to meet its
financing requirements, and the success of its future operations. In 1998,
management has negotiated with several of their major vendors to convert their
debt to equity. In addition, the Companies' shareholders/members intend to
provide the Companies with working capital and the Companies are trying to raise
capital in a private placement. Management believes that actions presently being
taken to revise the Companies' operating and financial requirements provide the
opportunity for the Companies to continue as a going concern.
Note 7 - Commitments and Contingencies
- --------------------------------------
Operating Lease: The Company operated its businesses in two different locations,
leased on a yearly basis. Rent expense amounted to $75,423 and $35,786 for 1997
and 1996, respectively. Currently, the Companies are occupying space from an
entity that is a vendor and a customer.
The Company leased transportation equipment under non-cancelable operating
leases expiring between December 1998 and June 2000.
Minimum future rental payments are:
December 31, 1997 $22,608
December 31, 1998 $22,608
December 31, 1999 2,864
-------
Total Minimum Future Rentals $48,080
=======
Loans Payable - Other: In 1996, the Company received $428,793 from a
not-for-profit organization to develop a commercial device, including software,
as described in project definition under the terms and conditions on the
technology deployment center task order for the project entitled "Fuel Intake
Monitoring System". Pursuant to the agreement the not-for-profit organization
was to receive structured repayments based on revenues generated from the
product sales. In the event that there are no revenues within two years of the
completion of the funding agreement, all rights to the product will revert
exclusively to the not for profit organization. For the years ended December 31,
1997 and 1996, the Companies have incurred costs amounting to $310,506 and
$654,26 (majority of which was earmarked for this project), respectively, which
are included in operating expenses, in conjunction with this product development
without generating any revenues.
<PAGE>
Note 8 - Other Relevant Matters
- -------------------------------
Employment Contract: The Company has entered into an employment contract with
its three executive officers for base annual salary of $120,000 per year, per
individual, effective January 1, 1999. Fifty percent of the initial year's
compensation will be deferred to future period. In addition, these individuals
will receive a one percent bonus on net taxable income and each person has the
right to purchase 500,000 shares of common stock at $1.45/share within next five
years. These contracts can be renewed annually for additional four years.
The respective parties mutually agreed to cancel prior employment agreements.
Pension Plan: IPS has a 401K plan for its employees and is not required to
contribute money to the plan.
Note 9 - Subsequent Events
- --------------------------
In October 1998, Accident Prevention Plus, Inc. ("APP") was formed to acquire
the Company and IPS. New shares of APP's common stock were issued to the
respective members and shareholders to acquire a 100% interest of both the
Company and IPS. In addition, APP issued its common stock to the Companies
majority shareholder/member to acquire his 49% ownership interest of the foreign
company (see note 5). Also, APP has acquired the remaining 51% ownership
interest of the foreign company in a stock for stock.
In August 1998, The Company had entered into a non-exclusive worldwide
distribution agreement with an entity for $5,000,000. It will receive $2,000,000
in the first year and the balance remitted within 24 months thereafter.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Board of Directors
Accident Prevention Plus, Inc. and Subsidiaries
Hauppauge, NY
I have audited the accompanying consolidated balance sheets of Accident
Prevention Plus, Inc., and subsidiaries as of December 31, 1998, and the related
consolidated statement of operations, retained deficit and cash flows for the
year then ended. 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 audits. We did not audit the financial
statements of KMR Telecom, LTD, and International Purchasing Services (India)
Inc., consolidated subsidiaries, which statements reflect total assets of
$855,407 as of December 31, 1998, respectively, and total revenue of $168,766
for the nine months then ended. These statements were audited by other auditors
whose report had been furnished to us and our opinion, insofar as it relates to
the amounts included for KMR Telecom, LTD, and International Purchasing Services
(India) Inc., is based solely on the report of the other auditors.
I conducted my 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.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Although the Company has sustained a
net operating loss for the year ended December 31, 1998, recent developments as
discussed in note 7 and note 10, which reflects an infusion of cash for working
capital, provides the ability of the Company to continue as a going concern.
In my opinion, based on my audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Accident Prevention Plus, Inc., and
subsidiaries as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with general accepted
accounting principles.
- ----------------------------
JEFF R. PEARLMAN, CPA
April 13, 1999
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets
Accounts receivables, net of allowance
for doubtful accounts of $41,610 $ 272,763
Inventory 372,308
Prepaid and deferred expenses 26,614
-----------
Total current assets 671,685
-----------
Property, plant and equipment, net of
accumulated depreciation of $59,493 241,728
-----------
Other assets
Due from officer 277,616
Security deposits 27,586
-----------
Total other assets 305,202
-----------
Total assets $ 1,218,615
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Cash overdraft $ 25,404
Current portion of loans payable - banks 267,739
Current portion of loans payable - other
Accounts payable 598,875
Accrued expenses and other
current liabilities 269,419
Due to related parties 48,500
-----------
Total current liabilities 1,209,937
-----------
Long term liabilities
Loans payable - bank, less current portion 1,074,026
Loans payable - other, less current portion 5,517
Advances from grant 428,793
Advances - shareholders 453,828
-----------
Total long term liabilities 1,962,164
-----------
Total liabilities 3,172,101
-----------
Stockholders' deficit
Common stock, authorized 50,000,000 shares,
par value $.001 issued and outstanding 18,095,970 shares 18,096
Additional paid in capital 395,422
Retained deficit (2,367,004)
-----------
Total stockholders' deficit (1,953,486)
-----------
Total liabilities and stockholders' equity (deficit) $ 1,218,615
===========
See auditor's report and accompanying notes to financial statements
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Revenues $ 780,248
Cost of sales 420,372
---------
Gross profit 359,876
---------
Operating expenses
Payroll 124,633
Payroll taxes and benefits 32,636
Rent 14,980
Research and development 110,224
Consulting 141,957
Insurance 18,429
Telephone and utility 39,585
Office and postage 16,629
Repairs and maintenance 6,781
Advertising 9,525
Travel and entertainment 79,190
Computer expense 1,968
Professional fees 66,540
License and fees 2,549
Shipping charges 17,352
Bad debt expense 63,760
Bank charges 14,989
Depreciation 10,100
Misc. expenses 15,777
---------
Total operating expenses 787,604
---------
Net loss from operations (427,728)
Other expenses
Interest expense (179,917)
Foreign currency loss (2,155)
---------
Total other expenses (182,072)
---------
Net loss before provisions for income taxes (609,800)
Prevision for income taxes 0
---------
Net Loss $(609,800)
=========
See auditor's report and accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
Common Stock Additional Retained Total
Shares Amount Paid in Capital Earnings/(Deficit) Stockholders' Equity
------ ------ --------------- ------------------ --------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 11,927,280 $ 11,927 $ 301,604 $ (1,757,204) $ 10,483,607
Net loss before adjustment -- -- -- (609,800) (609,800)
Issuance of stock-
services rendered 6,053,690 6,054 1,000 -- 7,054
Issuance of stock-
conversion of liabilities 115,000 115 92,818 92,933
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1998 18,095,970 $ 18,096 $ 395,422 $ (2,367,004) $ (1,953,486)
============ ============ ============ ============ ============
See auditor's report and accompanying notes to financial statements
</TABLE>
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(609,800)
Adjustments to reconcile net loss
to net cash from operating activities:
Depreciation 10,100
Allowance for bad debts 41,610
Increase in accounts receivable (97,370)
Decrease in inventory 71,435
Increase in prepaid and deferred expenses (25,000)
Increase in accounts payable 57,156
Increase in accrued expenses, and
other current liabilities 207,473
Decrease in customer deposit (13,810)
---------
Net cash used by operating activities (358,206)
---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (31,552)
Advances from related parties 29,608
Advances from shareholders 233,594
---------
Net cash provided by investing activities 231,650
---------
CASH FLOW FROM FINANCING ACTIVITIES
Cash overdraft 22,054
Proceeds from sale of stock 4,000
Proceeds from banks 106,922
Decrease in long term debt and capital leases (6,420)
---------
Net cash provided by financing activities 126,556
---------
Net change in cash 0
Cash - beginning of year 0
---------
Cash - end of year $ --
=========
Supplementary Disclosure
Interest paid $ 179,917
Non-cash transactions,
conversion of liabilities to common stock $ 95,777
See auditor's report and accompanying notes to financial statements
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Organization and Business Activity: Accident Prevention Plus, Inc. (APP), was
incorporated in the state of New York in 1993. The business designs, sells and
distributes on-board recording and fuel intake monitoring systems that will
assist the transportation industry. This system can monitor and record data for
accident prevention, maintenance and anti-theft programs in cars, vans, buses,
trucks, trains and private aircrafts. During 1996, APP changed its name to
Accident Prevention Plus, LLC (limited liability corporation). In October 1998,
Accident Prevention Plus, Inc, the ("Company") was incorporated in Nevada and
merged with Accident Prevention Plus, LLC.
International Purchasing Services, Inc. ("IPS"), was incorporated in 1993 in New
York to buy and sell both military and commercial electrical equipment and
components. All of the sales were derived predominantly from European Countries.
KMR Telecom LTD. and International Purchasing Services (India), Inc.,
(collectively known as "KMR") were setup in India in 1991, and 1994,
respectively to manufacture and sell telecommunication equipment to Indian
Department of Transportation.
On October 28, 1998, the Company acquired IPS and KMR in a business combination
accounted for as a pooling of interests. IPS became a wholly owned subsidiary of
the Company through the exchange of 1,600,000 shares of the Company's common
stock for all of its outstanding stock. KMR became a wholly owned subsidiary of
the Company through the exchange of 800,000 shares of the Company's common stock
for all of its outstanding stock. The accompanying financial statements of 1998
are based on the assumption that the companies were combined for the full year.
KMR's financial statements are for the nine months ended December 31,1998, in
order to be in conformity with the parent's year-end.
Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Company and all of its wholly owned subsidiaries,
(collectively the "Companies"). Intercompany transactions and balances have been
eliminated in consolidation.
Accounts Receivable: Based on prior experience, an allowance for doubtful
accounts of 15% was established for the Indian entities only.
Income Taxes: Deferred income taxes are provided for temporary differences
between financial statement and income tax reporting. Temporary differences
giving rise to the deferred tax asset consist primarily for the availability of
operating loss carryforwards. IPS has provided a valuation allowance to reduce
the deferred tax asset since it cannot be determined more likely than not, that
the operating loss carryforwards will be utilized.
<PAGE>
Note 1 - Summary of Significant Accounting Policies - continued
- ---------------------------------------------------------------
Property & Equipment: Property and equipment are stated at cost and are
depreciated over their estimated useful lives using the straight-line and
accelerated methods. Expenditures for maintenance and repairs are charged to
operations. Replacements, renewals and betterments that materially extend the
life of the assets, are capitalized. The Companies use same depreciation methods
for both financial reporting and income tax purposes.
Inventory: Consist of finished products and electrical components, which are
stated at cost, determined on the first-in first-out basis. Maintenance,
operating and office supplies are not inventoried.
Development Costs: Costs associated with research and development are charged to
operations when incurred and are included in operating expenses.
Deferred Costs: These costs consist of legal and SEC filing fees associated with
the filing of a private offering under Rule 504D (see note 7).
Foreign Currency Translation: For the foreign subsidiaries whose functional
currency is the local foreign currency, balance sheet accounts are translated at
exchange rates in effect at the end of the year and income statement accounts
are translated at average exchange rates for the year. Translation gains and
losses are included as a separate component of stockholders' equity. For foreign
subsidiaries whose functional currency is the U.S. dollar and for foreign
subsidiaries operating in hyperinflationary economies, nonmonetary assets and
liabilities are translated at historical rates, monetary assets and liabilities
are translated at exchange rates in effect at the end of the year, and income
statement accounts are translated at average rates for the year. Translation
gains and losses of such foreign subsidiaries are included in consolidated
results of operations.
Note 2 - Property and Equipment
- -------------------------------
The following is a summary of property and equipment:
Land $ 40,106
Equipment & Computers 261,115
--------
Total $301,221
Less: Accumulated Depreciation 59,493
--------
Net Property and Equipment $241,728
========
The Depreciation expense for the year ended December 31, 1998 amounted to
$10,100.
<PAGE>
Note 3 - Loans Payable - Banks
- ------------------------------
Term note payable to bank, due on November 30,
2001, interest rate of 2.0%over prime rate, per
annum, secured by inventory, accounts receivable,
machinery and equipment and contract rights. (see
below for payment schedule) $497,306
SBA guaranty loans due upon demand, interest
payable monthly at 11.00%, per annum, secured by
inventory, accounts receivable, machinery and
equipment and contract rights 58,140
Note payable to bank, due upon demand, only
interest payable monthly at 9.75%, per annum,
secured by inventory, accounts receivable,
machinery and equipment and contract rights 474,816
A term note payable to bank, principal and
interest due on 12/31/99, interest rate of 9%,
Secured by personal guarantee of an officer 60,000
Bank Loan (India), due upon demand 112,437
Term loan (India) payable to bank, in 5 years, at
interest rate of 16.07% per annum, with monthly
payment of $2,123 127,380
-------
Total 1,330,079
Less, current portion 256,053
-------
$1,074,026
==========
Since 1997, the U.S. Companies were in default of its loan obligations for
non-performance. In November 1998, the Companies renegotiated the terms of its
commercial grid note with the lending institution (see note 7). The settlement
converted the demand obligation to a three-year term loan with interest to be
charged on unpaid principal at 2% above the published prime rate. The Companies
were required to make aggregate payments, totaling $60,000 for interest, legal
costs and three months prepayment of principal.
The term note (previously known as commercial grid note) is payable as follows:
1999 - monthly payments of $5,000 ($60,000/yr)
2000 - monthly payments of $10,000 ($120,000/yr)
2001 - monthly payments of $15,000 and any remaining unpaid balance. ($305,000)
<PAGE>
Loans Payable-Other: Equipment and auto loans (India), payable monthly over two
year period at various interest rates.
Current Portion $11,686
Long-term Portion $ 5,517
-------
$17,203
-------
Note 4 - Income Taxes
- ---------------------
At December 31, 1998, IPS had available $632,685 of unused operating loss
carryforwards which will be partially applied pursuant to the change of
ownership rules.
Note 5 - Economic Dependency
- ----------------------------
During 1998, sales to three European companies and the Indian government
aggregated $239,844 and $467,764, respectively.
Note 6 - Related Party Transactions
- -----------------------------------
In 1998, the officers provided the Companies with working capital amounting to
$242,924. Such loans are non-interest bearing and without terms for repayment
and have been classified as non-current. Also, in 1996, one of the officers
provided the Company with $50,000 as a loan at the interest rate of 8% per
annum. To date, no interest or principal has been repaid.
Also, to date, KMR has advanced $277,616 to its officer and employees, without
terms for repayment and have been classified as a non-current asset.
Note 7 - Ability as Going Concern
- ---------------------------------
The Companies have sustained substantial operating losses in recent years. In
addition, the Companies have used substantial amounts of working capital in its
operations. Further, at December 31, 1998, current liabilities exceed current
assets by $538,252, and total liabilities exceed total assets by $1,953,486.
During 1998, the Companies were able to renegotiate some of their obligations
with a lending institution (see note 3).
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Companies, which in turn is dependent upon the Companies' ability to meet its
financing requirements, and the success of its future operations. In 1998,
management has negotiated with several of their major venders to convert their
debt to equity. In addition, the Companies have successfully raised in excess of
$416,000 (a private placement required a minimum of $250,000 to be raised) to
generate funds for working capital. Management believes that these funds will
provide the opportunity for the Companies to continue as a going concern (See
subsequent events).
<PAGE>
Note 8 - Commitments and Contingencies
- --------------------------------------
Operating Lease: The Companies operated their businesses in three different
locations (two in the US, one in India). Rent expense amounted to $14,980 for
1998. The Companies have been occupying space from entities that are vendors and
customers.
The Companies leased transportation equipment under non-cancelable operating
leases expiring between December 1998 and June 2000.
Minimum future rental payments are:
December 31,1999 $ 12,038
December 31,2000 $ 8,412
2001 and thereafter $ 8,670
Advances From Grant: In 1996, APP received $428,793 from a not for profit
organization to develop a commercial device, including software, as described in
project definition under the terms and conditions on the Technology Deployment
Center task order for the project entitled "Fuel Intake Monitoring System".
Pursuant to the agreement the not-for-profit organization was to receive
structured repayments based on revenues generated from the product sales. In the
event that there are no revenues within two years of the completion of the
funding agreement, all rights to the product will revert exclusively to the not
for profit organization. As of December 31, 1998, APP had incurred costs
amounting to $1,216,242, which are included in operating expenses since 1996, in
conjunction with this product and other product development without generating
any revenues, directly attributable to the grant.
Employment Contract: The Company has entered into an employment contracts with
their three officers, commencing from January 1, 1999 that provides for a
minimum annual salary, adjusted for cost-of-living changes, incentives based on
the company's attainment of specified levels of sales. All prior employment
agreements, except for a technology assignment agreement, have been cancelled.
Each officer has the right to purchase Warrants that represent 500,000 shares of
Common Stock at $1.45 per share within five years of signing the employment
agreement.
Note 9 - Other Relevant Matters
- -------------------------------
Pension Plan: IPS has a 401K plan for its employees and is not required to
contribute money to the plan.
Note 10 - Subsequent Events
- ---------------------------
Private Placement: The Companies raised $407,711 on a private placement under
Rule 504D filing, which is exempt under the Securities and Exchange Commission
act of 1933. The minimum private offering had been set at $250,000 and the funds
were released in April 1999.
Public Offering: The Companies are seeking to raise a total of $1,000,000 (less
monies raised under the private placement) under the new Rule 504D, as amended
by the Securities and Exchange Commission, effective April 7, 1999.
<PAGE>
JEFF R. PEARLMAN
- --------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANT 19 WEST 34 ST. SUITE 1118
NEW YORK, N.Y. 10001
TEL. (212) 714-9565, FAX (212) 714-1071
To the Board of Directors
Accident Prevention Plus, Inc. and Subsidiaries
Hauppauge, NY
I have compiled the accompanying consolidated balance sheet of Accident
Prevention Plus, Inc. and Subsidiaries as of March 31, 1999 and the related
consolidated statement of operations, stockholders' deficit and cash flows, for
the three months then ended in accordance with standards established by the
Statement 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/ Jeff R. Pearlman
- ---------------------
JEFF R. PEARLMAN
May 26, 1999
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
ASSETS
Current assets
Cash overdraft $ 208
Accounts receivables, net of allowance
for doubtful accounts of $41,610 110,720
Inventory 471,212
Prepaid and deferred expenses 19,114
-----------
Total current assets 601,254
-----------
Property, plant and equipment
Less, accumulated depreciation 244,096
-----------
Other assets
Due from officer 282,368
Security deposits 31,554
-----------
Total other assets 313,922
-----------
Total assets $ 1,159,272
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of loans payable - banks 258,100
Accounts payable 722,253
Accrued expenses,
taxes, and sundry payables 336,178
Due to related parties 49,000
-----------
Total current liabilities 1,365,531
-----------
Long term liabilities
Loans payable - banks, less current portion 1,050,696
Advances from grant 428,793
Advances - shareholders 574,289
-----------
Total long term liabilities 2,053,778
-----------
Total liabilities 3,419,309
-----------
Stockholders' deficit
Common stock, 50,000,000
authorized shares, at $.001 par value
and 18,095,970 issued and outstanding 18,096
Additional paid in capital 395,422
Retained deficit (2,673,555)
-----------
Total stockholders' deficit (2,260,037)
-----------
Total liabilities and stockholders' equity $ 1,159,272
===========
See accompanying notes and accountants' report
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Revenues $ 69,031
Cost of sales 35,485
-----------
Gross profit 33,546
-----------
Operating expenses
Payroll 103,332
Payroll taxes and benefits 10,353
Rent 3,731
Research and development 28,820
Consulting 65,000
Insurance 1,970
Telephone and utility 11,000
Office and postage 7,060
Repairs and maintenance 894
Advertising 150
Travel and entertainment 21,194
Professional fees 18,884
License and fees 340
Shipping charges 874
Bad debt expense 2,017
Bank charges 2,358
Depreciation 3,132
Misc. expenses 7,967
-----------
Total operating expenses 289,076
-----------
Loss before other income and expenses (255,530)
Interest expense (53,184)
Other Income 2,888
-----------
Loss before provisions for income taxes (305,826)
Income taxes (725)
-----------
Net Loss (306,551)
Retained deficit as of January 1, 1999 (2,367,004)
-----------
Retained deficit as of March 31, 1999 $(2,673,555)
===========
See accompanying notes and accountants' report
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(306,551)
Adjustments to reconcile net loss
to net cash from operating activities:
Depreciation 3,132
Decrease in accounts receivable 162,043
Increase in inventory (98,904)
Decrease in prepaid and deferred expenses 7,500
Increase in accounts payable 123,378
Increase in accrued expenses, taxes
& sundry payables 66,650
---------
Net cash used by operating activities (42,752)
---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (5,499)
Advances from related parties 500
Advances from shareholders 111,709
---------
Net cash provided by investing activities 106,710
---------
CASH FLOW FROM FINANCING ACTIVITIES
Payments to banks (38,346)
---------
Net cash provided by financing activities (38,346)
---------
Net Increase in cash 25,612
Cash - beginning of year (25,404)
---------
Cash - end of year $ 208
=========
Supplementary Disclosure
Interest paid $ 53,184
Income taxes paid $ 725
See accompanying notes and accountants' report
<PAGE>
ACCIDENT PREVENTION PLUS, INC. AND SUBSIDIARIES
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Organization and Business Activity: Accident Prevention Plus, Inc. (APP), was
incorporated in the state of New York in 1993. The business designs, sells and
distributes on-board recording and fuel intake monitoring systems that will
assist the transportation industry. This system can monitor and record data for
accident prevention, maintenance and anti-theft programs in cars, vans, buses,
trucks, trains and private aircrafts. During 1996, APP changed its name to
Accident Prevention Plus, LLC (limited liability corporation). In October 1998,
Accident Prevention Plus, Inc., the ("Company") was incorporated in Nevada and
merged with Accident Prevention Plus, LLC.
International Purchasing Services, Inc. ("IPS"), was incorporated in 1993 in New
York to buy and sell both military and commercial electrical equipment and
components. All of the sales were derived predominantly from European Countries.
KMR Telecom LTD. and International Purchasing Services (India), Inc.,
(collectively known as "KMR") were setup in India in 1991, and 1994,
respectively to manufacture telecommunication equipment for the Indian
Department of Transportation.
On October 28, 1998, the Company acquired IPS and KMR in a business combination
accounted for as a pooling of interests. IPS became a wholly owned subsidiary of
the Company through the exchange of 1,600,000 shares of the Company's common
stock for all of its outstanding stock. KMR became a wholly owned subsidiary of
the Company through the exchange of 800,000 shares of the Company's common stock
for all of its outstanding stock. The accompanying financial statements of 1998
are based on the assumption that the companies were combined for the full year.
Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Company and all of its wholly owned subsidiaries,
(collectively the "Companies"). Intercompany transactions and balances have been
eliminated in consolidation.
Accounts Receivable: Based on prior experience, an allowance for doubtful
accounts was established for the Indian entities only.
Income Taxes: Deferred income taxes are provided for temporary differences
between financial statement and income tax reporting. Temporary differences
giving rise to the deferred tax asset consist primarily for the availability of
operating loss carryforwards. IPS has provided a valuation allowance to reduce
the deferred tax asset since it cannot be determined more likely than not, that
the operating loss carryforwards will be utilized.
<PAGE>
Note 1 - Summary of Significant Accounting Policies - continued
- ---------------------------------------------------------------
Property & Equipment: Property and equipment are stated at cost and are
depreciated over their estimated useful lives using the straight-line and
accelerated methods. Expenditures for maintenance and repairs are charged to
operations. Replacements, renewals and betterments that materially extend the
life of the assets, are capitalized. The Companies use same depreciation methods
for both financial reporting and income tax purposes.
Inventory: Consist of finished products and electrical components, which are
stated at cost, determined on the first-in first-out basis. Maintenance,
operating and office supplies are not inventoried.
Development Costs: Costs associated with research and development are charged to
operations when incurred and are included in operating expenses.
Deferred Costs: These costs consist of legal and SEC filing fees associated with
the filing of a private offering under Rule 504D (see note 9).
Foreign Currency Translation: For the foreign subsidiaries whose functional
currency is the local foreign currency, balance sheet accounts are translated at
exchange rates in effect at the end of the year and income statement accounts
are translated at average exchange rates for the year. Translation gains and
losses are included as a separate component of stockholders' equity. For foreign
subsidiaries whose functional currency is the U.S. dollar and for foreign
subsidiaries operating in hyperinflationary economies, nonmonetary assets and
liabilities are translated at historical rates, monetary assets and liabilities
are translated at exchange rates in effect at the end of the year, and income
statement accounts are translated at average rates for the year. Translation
gains and losses of such foreign subsidiaries are included in consolidated
results of operations.
Note 2 - Property and Equipment
- -------------------------------
The following is a summary of property and equipment:
Land $ 40,106
Equipment & Computers 266,614
--------
Total $306,720
Less: Accumulated Depreciation 62,624
--------
Net Property and Equipment $244,096
========
The Depreciation expense for the three months ended March 31, 1999 amounted to
$3,132.
<PAGE>
Note 3 - Loans Payable - Banks
- ------------------------------
Term note payable to bank, due on November 30,
2001, interest rate of 2.0% over prime rate, per
annum, secured by inventory, accounts receivable,
machinery and equipment and contract rights. (see
below for payment schedule) $ 497,306
SBA guaranty loans due upon demand, interest
payable monthly at 11.00%, per annum, secured by
inventory, accounts receivable, machinery and
equipment and contract rights 54,499
Note payable to bank, due upon demand, only
interest payable monthly at 9.75%, per annum,
secured by inventory, accounts receivable,
machinery and equipment and contract rights 474,816
A term note payable to bank, principal and
interest due on 12/31/99, interest rate of 9%,
Secured by personal guarantee of an officer 60,000
Bank Loan (India), due upon demand 95,035
Term loan (India) payable to bank, in 5 years, at
interest rate of 16.07% per annum, with monthly
payment of $2,123 127,380
----------
Total 1,308,796
Less, current portion 258,100
----------
$1,050,696
==========
In November 1998, the Companies renegotiated the terms of its commercial grid
note with the lending institution (see note 6). The settlement converted the
demand obligation to a three-year term loan with interest to be charged on
unpaid principal at 2% above the published prime rate. The Companies were
required to make aggregate payments, totaling $60,000 for interest, legal costs
and three months prepayment of principal.
The term note (previously known as commercial grid note) is payable as follows:
1999 - monthly payments of $5,000 ($60,000/yr)
2000 - monthly payments of $10,000 ($120,000/yr)
2001 - monthly payments of $15,000 and any remaining unpaid balance. ($305,000)
<PAGE>
Note 4 - Income Taxes
- ---------------------
At March 31, 1999, APP and Subsidiaries had available $938,071 of unused
operating loss carryforwards which will be partially applied pursuant to the
change of ownership rules.
Note 5 - Related Party Transactions
- -----------------------------------
During the three months ended March 31, 1999, the officers provided the
Companies with working capital amounting to $111,709. Such loans are
non-interest bearing and without terms for repayment and have been classified as
non-current.
Also, to date, KMR has advanced $282,368 to its officer and employees, without
terms for repayment and have been classified as a non-current asset.
Note 6 - Ability as Going Concern
- ---------------------------------
The Companies have sustained substantial operating losses in recent years. In
addition, the Companies have used substantial amounts of working capital in its
operations. Further, at March 31, 1999, current liabilities exceed current
assets by $764,277, and total liabilities exceed total assets by $2,260,037.
During 1998, the Companies were able to renegotiate some of their obligations
with a lending institution (see note 3).
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Companies, which in turn is dependent upon the Companies' ability to meet its
financing requirements, and the success of its future operations. In 1998,
management has negotiated with several of their major venders to convert their
debt to equity. In addition, the Companies have successfully raised in excess of
$420,000 (a private placement required a minimum of $250,000 to be raised) to
generate funds for working capital. Management believes that these funds will
provide the opportunity for the Companies to continue as a going concern (See
subsequent events).
Note 7 - Commitments and Contingencies
- --------------------------------------
Operating Lease: The Companies operated their businesses in three different
locations (two in the US, one in India). Rent expense amounted to $3,731 for the
three months ended March 31, 1999. The Companies have been occupying space from
entities that are vendors and customers.
The Companies leased transportation equipment under non-cancelable operating
leases expiring between April 1999 and December 2001.
Minimum future rental payments are:
March 31, 2000 $13,920
March 31, 2001 13,920
April 1, 2001 and thereafter 11,460
<PAGE>
Advances From Grant: In 1996, APP received $428,793 from a not for profit
organization to develop a commercial device, including software, as described in
project definition under the terms and conditions on the Technology Deployment
Center task order for the project entitled "Fuel Intake Monitoring System".
Pursuant to the agreement the not-for-profit organization was to receive
structured repayments based on revenues generated from the product sales. In the
event that there are no revenues within two years of the completion of the
funding agreement, all rights to the product will revert exclusively to the not
for profit organization. As of March 31, 1999, APP had incurred costs amounting
to $1,245,062, which are included in operating expenses since 1996, in
conjunction with this product and other product development without generating
any revenues, directly attributable to the grant.
Employment Contract: The Company has entered into an employment contracts with
their three officers, commencing from January 1, 1999 that provides for a
minimum annual salary of $10,000 per month per individual, adjusted for
cost-of-living changes, incentives based on the company's attainment of
specified levels of sales. All prior employment agreements, except for a
technology assignment agreement, have been canceled.
Each officer has the right to purchase Warrants that represent 500,000 shares of
Common Stock at $1.45 per share within five years of signing the employment
agreement.
Note 8 - Other Relevant Matters
- -------------------------------
Pension Plan: IPS has a 401K plan for its employees and is not required to
contribute money to the plan.
Note 9 - Subsequent Events
- --------------------------
Private Placement: To date, the Companies raised $420,761 on a private placement
under Rule 504D filing, which is exempt under the Securities and Exchange
Commission act of 1933. The minimum private offering had been set at $250,000
initially and partial funds were released in May 1999, balance of $50,000 is in
escrow account.
Public Offering: The Companies are seeking to raise a total of $1,000,000 (less
monies raised under the private placement) under the new Rule 504D, as amended
by the Securities and Exchange Commission, effective April 7, 1999.
Certificate of Authority
New York State Department of Taxation and Finance - Sales Tax
Identification Number
113461611
(Use this number on all returns and correspondence)
ACCIDENT PREVENTION PLUS INC. VALIDATED
145 OSER AVE. PROCESSING DIV
HAUPPAUGE, NY 11788 SALES TAX
03/10/1999
DEPT. OF TAX AND FINANCE
is authorized to collect sales and use taxes under Articles 28 and 29 of the New
York State Tax Law.
NOT TRANSFERABLE
This certificate must be prominently displayed in your
place of business listed above.
Fraudulent or other improper use of this certificate may cause it to be revoked.
This certificate may not be photocopied or reproduced.
See other side for important notice regarding liability for sales and use taxes.
<PAGE>
New York State Department of Taxation and Finance
Important Notice Regarding Liability for Sales and Use Taxes
The attached Certificate of Authority is evidence that you are authorized to
collect sales and use tax. It must be prominently displayed at you place of
business.
As a registered vendor, you must file timely quarterly* sales tax returns and
remit any sales taxes collected in accordance with the dates listed below. A
sales tax return must be filed even if you are not conducting business and do
not owe any sales tax.
Quarterly Period Filing Deadline
---------------- ---------------
December - February March 20
March - May June 20
June - August September 20
September - November December 20
(Postmark on envelope is proof of filing date)
* If taxable sales and purchases subject to use tax exceed $300,000 in any one
quarter, you must file on a monthly basis. See Publication 750, "A Guide to
Sales Tax in New York State," for more information on filing requirements.
You are responsible for filing returns until you advise us that your business is
closed and you return you Certificate of Authority.
Failure to file your return on time will result in a minimum $50 penalty even if
there is no tax due. Failure to receive tax forms is not an acceptable excuse
for late filing. It is your responsibility to file on time even if you have not
received a preaddressed form. If you do not receive your forms at least two
weeks before the due date, you can obtain the forms by calling toll free
1-800-462-8100. From areas outside U.S. and Canada, call (518) 485-6800.
All sales taxes collected or required to be collected must be reported and
remitted in the quarter in which the transaction takes place. Failure to file
returns and remit taxes when due will result in the assessment of penalty and
interest.
<PAGE>
ARTICLES OF INCORPORATION
OF
ACCIDENT PREVENTION PLUS, INC.
ARTICLE 1
---------
SECTION 1.01 CORPORATION NAME. The name of the corporation is:
ACCIDENT PREVENTION PLUS, INC.
ARTICLE 2
---------
SECTION 2.01 PRINCIPAL OFFICE. The corporation's registered office in the State
of Nevada is located at 177 East 7th Street, Carson City, County of Carson,
State of Nevada, Zip Code 89701. The mailing address is 177 East 7th Street,
Carson City, Nevada, 89701.
SECTION 2.02 ADDITIONAL OFFICES. The corporation may maintain an office, or
offices in such other place within or without the State of Nevada as may be from
time to time designated by the Board of Directors, or by the By-Laws of said
Corporation, and that this Corporation may conduct all Corporation business of
every kind and nature, including the holding of all meetings of Directors and
Stockholders, outside the State of Nevada as well as within the State of Nevada.
ARTICLE 3
---------
SECTION 3.01 NATURE OF THE BUSINESS. The Corporation may engage in any lawful
activity for which a corporation may be arranged under the General Laws of
Nevada.
SECTION 3.02 ADDITIONAL ACTIVITIES. The Corporation may engage in any lawful
activity including, but not limited to, the following:
(A) Shall have the power to make contracts.
(B) Shall have the power to purchase, hold, and sell or convey Real
Property or Personal Property in the State of Nevada or in any other
State, Territory of the United States, or any Country.
<PAGE>
(C) Shall have the power to appoint such officers or agents as the
officers of the Corporation shall require, and shall have the power to
pay compensation for he services provided.
(D) Shall have the power to borrow money and contract debts as necessary
for the benefit of the Corporation's business.
(E) Shall have the power to lend money as is necessary for the benefit of
the Corporation's business.
(F) Shall have the power to enter into General or Limited Partnerships,
Joint Ventures or other business associations.
ARTICLE 4
---------
SECTION 4.01 CAPITAL STOCK. The Corporation is authorized to issue Twenty Five
Million (25,000,000) shares of stock with a par value of one mill ($.001) per
share.
SECTION 4.02 USE OF THE STOCK. The Board of Directors may fix the use of the
stock from time to time as they deem necessary for the carrying out of the
Corporation's business.
ARTICLE 5
---------
SECTION 5.01 GOVERNING BOARD. The Governing Board of the Corporation shall
known as Directors. The Board of Directors shall be elected by the stockholders
at the annual meeting, or such other time as the bylaws may provide, and shall
hold office until their successors are respectively elected and qualified.
SECTION 5.02 NUMBER OF DIRECTORS. The initial Board of Directors shall have one
(1) director. The number of Directors may from time to time be increased or
decreased in such a manner as shall be provided by the By-Laws of this
Corporation, providing that the number of Directors conforms to the Statutes of
the Corporation Law of the State of Nevada.
SECTION 5.03 INITIAL DIRECTOR'S NAMES AND ADDRESSES. The name and post office
address of the initial Board of Directors is:
Richard Goodhart
177 East 7th Street
Carson City, NV 89701
<PAGE>
ARTICLE 6
---------
SECTION 6.01 ASSESSMENT OF STOCKHOLDERS FOR CORPORATE DEBT. The private property
of Shareholders, Directors, Officers, employees and or Agent of the Corporation
shall be forever exempt from all corporate debts of any kind whatsoever.
ARTICLE 7
---------
INCORPORATOR. The name and post office address of the incorporator signing the
articles of incorporation is:
Nevada State Incorporating Services, Inc.
177 East 7th Street
Carson City, Nev. 89701
ARTICLE 8
---------
LIFE OF THE CORPORATION. The Corporation is to have perpetual existence.
ARTICLE 9
---------
RESIDENT AGENT. The resident agent for this Corporation shall be:
NEVADA STATE INCORPORATING SERVICES, INC.
177 East 7th Street
Carson City, Nevada 89701
I hereby sign as the incorporator for the above corporation on October 28, 1998.
INCORPORATOR
/s/ John A. McQuirk
----------------------------
John A. McQuirk for
Nevada State Incorporating Services, Inc.
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock) Filed by:
Accident Prevention Plus, Inc.
------------------------------
(Name of Corporation)
We the undersigned Steven H. Wahrman (President or Vice President) and
Richard Goodhart (Secretary or Assistant Secretary) of Accident Prevention Plus,
Inc. (Name of Corporation) do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 11th day of November, 1998 adopted a resolution to amend the
original articles as follows:
Article 4-01 is hereby amended to read as follows:
The Corporation is authorized to issue Fifty Million (50,000,000) shares of
stock with a par value of one mill ($.001) per share.
FILED DENISE ZUROWSKI
The Office of the Notary Public, State of New York
Secretary of State of the NO. 01ZU5060497
STATE OF NEVADA Qualified in Suffolk County
MAR. 3, 1999 Commission Expires MAY 20, 2000
No. C25198-98 /s/ Denise Zurowski
/s/ Dean Heller
Secretary of State
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 18,430,000 that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
DENISE ZUROWSKI /s/ Steven H. Wahrman
Notary Public, State of New York ---------------------
NO. 01ZU5060497 President or VIce President
Qualified in Suffolk County
Commission Expires MAY 20, 2000 /s/ Richard Goodhart
--------------------
State of New York Secretary or Assistant Secretary
ss.
County of Suffolk
On 1/8/99, personally appeared before me, a Notary Public, Richard Goodhart
who acknowledged...
<PAGE>
RECEIPT OF SECRETARY OF STATE
-----------------------------
<PAGE>
CERTIFICATE OF INCORPORATION
----------------------------
<PAGE>
Attorney's Copy
- ---------------
----------------------------------
Name of Corporation
CORPORATE DETAILS
-----------------
as at , 19
Date of Incorporation:
State of Incorporation: Nevada
Principal Place of Business:
Chairperson: Director:
Director: Director:
Officers:
President
Vice-President
Secretary
Treasurer
Bank Accounts:
Fiscal Year:
Annual Meeting Date:
Attorney:
Accountant:
Registered Agent:
Shareholders: Number of Shares
------------- ----------------
LOCATION OF CORPORATE RECORDS
-----------------------------
Retained Forwarded Date/Initials
in Office to Client
[ ] Minute book [ ]
[ ] Share Certificate book [ ]
[ ] Share Ledger [ ]
[ ] Seal [ ]
File in office notebook of Corporation
<PAGE>
----------------------------------
Name of Corporation
CORPORATE DETAILS
-----------------
as at , 19
Date of Incorporation:
State of Incorporation: Nevada
Principal Place of Business:
Chairperson: Director:
Director: Director:
Officers:
President
Vice-President
Secretary
Treasurer
Bank Accounts:
Fiscal Year:
Annual Meeting Date:
Attorney:
Accountant:
Registered Agent:
Shareholders: Number of Shares
------------- ----------------
<PAGE>
BY-LAWS
-------
OF
--
Accident Prevention Plus, Inc.
------------------------
A Nevada Corporation
ARTICLE I - OFFICES
-------------------
The registered office of the Corporation in the State of Nevada shall be located
in the City and State designated in the Articles of Incorporation. The
Corporation may also maintain offices at such other places within or without the
State of Nevada as the Board of Directors may, from time to time, determine.
ARTICLE II- MEETING OF SHAREHOLDERS
- -----------------------------------
Section 1 - Annual Meetings: (Chapter 78.310)
- ----------------------------
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors.
Section 2 - Special Meetings: (Chapter 78.310)
- -----------------------------
Special meetings of the shareholders may be called by the Board of Directors or
such person or persons authorized by the Board of Directors and shall be held
within or without the State of Nevada.
Section 3 - Place of Meetings: (Chapter 78.310)
- ------------------------------
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Nevada as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporations registered office in the state of Nevada.
Section 4 - Notice of Meetings: (Section 78.370)
- -------------------------------
(a) Written or printed notice of each meeting of shareholders, whether annual or
special, signed by the president, vice president or secretary, stating the time
when and place where it is to be held, as well as the purpose or purposes for
which the meeting is called, shall be served either personally or by mail, by or
at the direction of the president, the secretary, or the officer or the person
calling the meeting, not less than ten or more than sixty days before the date
of the meeting, unless the lapse of the prescribed time shall have been waived
before or after the taking of such action, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the Corporation or to
the current address, which a shareholder has delivered to the Corporation in a
written notice.
- --------------------------------------------------------------------------------
*Unless otherwise stated herein all references to "Sections" in these Bylaws
refer to those sections contained in Title 78 of the Nevada Private Corporations
Law.
NV Bylaws-1
<PAGE>
(b) Further notice to a shareholder is not required when notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to him or her during the period
between those two consecutive annual meetings; or all, and at least two payments
sent by first-class mail of dividends or interest on securities during a
12-month period have been mailed addressed to him or her at his or her address
as shown on the records of the Corporation and have been returned undeliverable.
Section 5 - Quorum: (Section 78.320)
- -------------------
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), a quorum shall be
present at all meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote on that matter are represented at the
meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder from the meeting, after the
commencement of a meeting, or the refusal of any shareholder represented in
person or by proxy to vote, shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(c) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
Section 6- Voting and Acting: (Section 78.320 & 78.350)
- -----------------------------
(a) Except as otherwise provided by law, the Articles of Incorporation, or these
Bylaws, any corporate action, the affirmative vote of the majority of shares
entitled to vote on that matter and represented either in person or by proxy at
a meeting of shareholders at which a quorum is present, shall be the act of the
shareholders of the Corporation.
(b) Except as otherwise provided by statute, the Certificate of Incorporation,
or these bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation.
(c) Where appropriate communication facilities are reasonably available, any or
all shareholders shall have the right to participate in any shareholders'
meeting, by means of conference telephone or any means of communications by
which all persons participating in the meeting are able to hear each other.
Section 7 - Proxies: (Section 78.355)
- --------------------
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, his authorized officer,
director, employee or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but not limited to, a
facsimile signature, or by his attorney-in-fact there unto duly authorized in
writing. Every proxy shall be revocable at will unless the proxy conspicuously
states that it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the shareholder, or a
photographic, photostatic, facsimile, shall be treated as a valid proxy, and
treated as a substitution of the original proxy, so long as such transmission is
a complete reproduction executed by the shareholder. If it is determined that
the telegram, cablegram or
NV Bylaws-2
<PAGE>
other electronic transmission is valid, the persons appointed by the Corporation
to count the votes of shareholders and determine the validity of proxies and
ballots or other persons making those determinations must specify the
information upon which they relied. No proxy shall be valid after the expiration
of six months from the date of its execution, unless otherwise provided in the
proxy. Such instrument shall be exhibited to the Secretary at the meeting and
shall be filed with the records of the Corporation. If any shareholder
designates two or more persons to act as proxies, a majority of those persons
present at the meeting, or, if one is present, then that one has and may
exercise all of the powers conferred by the shareholder upon all of the persons
so designated unless the shareholder provides otherwise.
Section 8 - Action Without a Meeting: (Section 78.320)
- -------------------------------------
Unless otherwise provided for in the Articles of Incorporation of the
Corporation, any action to be taken at any annual or special shareholders'
meeting, may be taken without a meeting, without prior notice and without a vote
if written consents are signed by a majority of the shareholders of the
Corporation, except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws, than that
proportion of written consents is required. Such written consents must be filed
with the minutes of the proceedings of the shareholders of the Corporation.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 1 - Number, Term, Election and Qualifications: (Section 78.115, 78.330)
- ------------------------------------------------------
(a) The first Board of Directors and all subsequent Boards of the Corporation
shall consist of ( ), unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The Board of Directors or
shareholders all have the power, in the interim between annual and special
meetings of the shareholders, to increase or decrease the number of Directors of
the Corporation. A Director need not be a shareholder of the Corporation unless
the Certificate of Incorporation of the Corporation or these Bylaws so require.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors of the Corporation shall be
elected at the first annual shareholders' meeting and at each annual meeting
thereafter, unless their terms are staggered in the Articles of Incorporation of
the Corporation or these Bylaws, by a plurality of the votes cast at a meeting
of shareholders, by the holders of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors. Thereinafter,
Directors will be elected at the annual meeting of shareholders and shall hold
office until the annual meeting of the shareholders next succeeding his
election, unless their terms are staggered in the Articles of Incorporation of
the Corporation (so long as at least one - fourth in number of the Directors of
the Corporation are elected at each annual shareholders' meeting) or these
Bylaws, or until his prior death, resignation or removal. Any Director may
resign at any time upon written notice of such resignation to the Corporation.
NV Bylaws-3
<PAGE>
(d) All Directors of the Corporation shall have equal voting power unless the
Articles of Incorporation of the Corporation provide that the voting power of
individual Directors or classes of Directors are greater than or less than that
of any other individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or may be dependent
upon any fact or event that may be ascertained outside the Articles of
Incorporation if the manner in which the fact or event may operate on those
voting powers is stated in the Articles of Incorporation. If the Articles of
Incorporation provide that any Directors have voting power greater than or less
than other Directors of the Corporation, every reference in these Bylaws to a
majority or other proportion of Directors shall be deemed to refer to majority
or other proportion of the voting power of all the Directors or classes of
Directors, as may be required by the Articles of Incorporation.
Section 2 - Duties and Powers: (Section 78.120)
- ------------------------------
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such as those stated under Nevada
state law, are in the Articles of Incorporation or by these Bylaws, expressly
conferred upon or reserved to the shareholders or any other person or persons
named therein.
Section 3 - Regular Meetings: Notice: (Section 78.310)
- -------------------------------------
(a) A regular meeting of the Board of Directors shall be held either within or
without the State of Nevada at such time and at such place as the Board shall
fix.
(b) No notice shall be required of any regular meeting of the Board of Directors
and, if given, need not specify the purpose of the meeting; provided, however,
that in case the Board of Directors shall fix or change the time or place of any
regular meeting when such time and place was fixed before such change, notice of
such action shall be given to each director who shall not have been present at
the meeting at which such action was taken within the time limited, and in the
manner set forth in these Bylaws with respect to special meetings, unless such
notice shall be waived in the manner set forth in these Bylaws.
Section 4 - Special Meetings; Notice: (Section 78.310)
- -------------------------------------
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required statute, written notice of special meetings
shall be mailed directly to each Director, addressed to him at his residence or
usual place of business, or delivered orally, with sufficient time for the
convenient assembly of Directors thereat, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or given to
him orally, not later than the day before the day on which the meeting is to be
held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mails, so
addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph
NV Bylaws-4
<PAGE>
company. A notice, or waiver of notice, except as required by these Bylaws, need
not specify the business to be transacted at or the purpose or purposes of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairperson:
- ------------------------
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in his absence, any
other director chosen by the Board of Directors shall preside.
Section 6 - Quorum and Adjournments: (Section 78.3 15)
- ------------------------------------
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or these Bylaws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at time of the adjournment and,
unless the time and place of the adjourned meeting are announced at the time of
the adjournment, to the other Directors who were present at the adjourned
meeting.
Section 7 - Manner of Acting: (Section 78.315)
- -----------------------------
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by law, by the Articles of Incorporation, or
these bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof, at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action, by
all of the Directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors, or any committee
thereof, and have the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or committee for all
purposes.
(c) Where appropriate communications facilities are reasonably available, any or
all directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of
NV Bylaws-5
<PAGE>
Directors meeting, by means of conference telephone or any means of
communications by which all persons participating in the meeting are able to
hear each other.
Section 8 - Vacancies: (Section 78.335)
- ----------------------
(a) Unless otherwise provided for by the Articles of Incorporation of the
Corporation, any vacancy in the Board of Directors occurring by reason of an
increase in the number of directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any director, or other cause,
shall be filled by an affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board or by a sole remaining Director, at any
regular meeting or special meeting of the Board of Directors called for that
purpose except whenever the shareholders of any class or classes or series
thereof are entitled to elect one or more Directors by the Certificate of
Incorporation of the Corporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the Directors
elected by such class or classes or series thereof then in office, or by a sole
remaining Director so elected.
(b) Unless otherwise provided for by law, the Articles of Incorporation or these
Bylaws, when one or more Directors shall resign from the board and such
resignation is effective at a future date, a majority of the directors, then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote otherwise to take effect when such resignation or
resignations shall become effective.
Section 9 - Resignation: (Section 78.335)
- ------------------------
A Director may resign at any time by giving written notice of such resignation
to the Corporation.
Section 10 - Removal: (Section 78.335)
- ---------------------
Unless otherwise provided for by the Articles of Incorporation, one or more or
all the Directors of the Corporation may be removed with or without cause at any
time by a vote of two-thirds of the shareholders entitled to vote thereon, at a
special meeting of the shareholders called for that purpose, unless the Articles
of Incorporation provide that Directors may only be removed for cause, provided
however, such Director shall not be removed if the Corporation states in its
Articles of Incorporation that its Directors shall be elected by cumulative
voting and there are a sufficient number of shares cast against his or her
removal, which if cumulatively voted at an election of Directors would be
sufficient to elect him or her. If a Director was elected by a voting group of
shareholders, only the shareholders of that voting group may participate in the
vote to remove that Director.
Section 11 - Compensation: (Section 78.140)
- --------------------------
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
NV Bylaws-6
<PAGE>
Section 12 - Committees: (Section 78.125)
- ------------------------
Unless otherwise provided for by the Articles of Incorporation of the
Corporation, the Board of Directors, may from time to time designate from among
its members one or more committees, and alternate members thereof, as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Unless the Articles of Incorporation or Bylaws state
otherwise, the Board of Directors may appoint natural persons who are not
Directors to serve on such committees authorized herein. Each such committee
shall serve at the pleasure of the Board and, unless otherwise stated by law,
the Certificate of Incorporation of the Corporation or these Bylaws, shall be
governed by the rules and regulations stated herein regarding the Board of
Directors.
ARTICLE IV - OFFICERS
---------------------
Section 1 - Number. Qualifications, Election and Term of Office:
- ----------------------------------------------------------------
(Section 78.130)
(a) The Corporation's officers shall have such titles and duties as shall be
stated in these Bylaws or in a resolution of the Board of Directors which is not
inconsistent with these Bylaws. The officers of the Corporation shall consist of
a president, secretary and treasurer, and also may have one or more vice
presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable. Any
officer may hold two or more offices in the Corporation.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
duly elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
Section 2 - Resignation:
- ------------------------
Any officer may resign at any time by giving written notice of such resignation
to the Corporation.
Section 3 - Removal:
- --------------------
Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any officer
or assistant officer, if appointed by another officer, may likewise be removed
by such officer.
Section 4 - Vacancies:
- ----------------------
(a) A vacancy, however caused, occurring in the Board and any newly created
Directorships resulting from an increase in the authorized number of Directors
may be filled by the Board of Directors.
NV Bylaws-7
<PAGE>
Section 5 - Bonds:
- ------------------
The Corporation may require any or all of its officers or Agents to post a bond,
or otherwise, to the Corporation for the faithful performance of their positions
or duties.
Section 6 - Compensation:
- -------------------------
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V - SHARES OF STOCK
---------------------------
Section 1 - Certificate of Stock: (Section 78.235)
- ---------------------------------
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertificated shares.
(b) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both capacities. If any officer who has signed or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2 - Lost or Destroyed Certificates: (Section 104.8405)
- -------------------------------------------
The Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have been
acquired by a bona fide purchaser,
NV Bylaws-8
<PAGE>
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of such loss,
theft or destruction, as may be imposed by the Corporation.
Section 3 - Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
- --------------------------------
(a) Transfers or registration of transfers of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney duly authorized by a written power of attorney; and
in the case of shares represented by certificates, only after the surrender to
the Corporation of the certificates representing such shares with such shares
properly endorsed, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date: (Section 78.215 & 78.350)
- ------------------------
(a) The Board of Directors may fix, in advance, which shall not be more than
sixty days before the meeting or action requiring a determination of
shareholders, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, or to consent
to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed, the
record date for shareholders entitled to notice of meeting shall be at the close
of business on the day preceding the day on which notice is given, or, if no
notice is given, the day on which the meeting is held, or if notice is waived,
at the close of business on the day before the day on which the meeting is held.
(b) The Board of Directors may fix a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(c) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjourned meeting.
Section 5 - Fractions of Shares/Scrip: (Section 78.205)
- --------------------------------------
The Board of Directors may authorize the issuance of certificates or payment of
money for fractions of a share, either represented by a certificate or
uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the event
of liquidation, in proportion to the fractional holdings; or it may authorize
the
NV Bylaws-9
<PAGE>
payment in case of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the manual or facsimile signature of an officer
or agent of the Corporation or its agent for that purpose, exchangeable as
therein provided for full shares, but such scrip shall not entitle the holder to
any rights of shareholder, except as therein provided. The scrip may contain any
provisions or conditions that the Corporation deems advisable. If a scrip ceases
to be exchangeable for full share certificates, the shares that would otherwise
have been issuable as provided on the scrip are deemed to be treasury shares
unless the scrip contains other provisions for their disposition.
ARTICLE VI - DIVIDENDS (Section 78.2 15 & 78.288)
----------------------
(a) Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or
series.
(b) Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless:
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be issued
approve the issue; or
(iii)there are no outstanding shares of the class or series of shares that
are authorized to be issued.
ARTICLE VII- FISCAL YEAR
------------------------
The fiscal year of the Corporation shall be fixed, and shall be subject to
change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII- CORPORATE SEAL (Section 78.065)
----------------------------
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors. The use of a seal or
stamp by the Corporation on corporate documents is not necessary and the lack
thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX - AMENDMENTS
-----------------------
Section 1 - By Shareholders:
- ----------------------------
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 2 - By Directors: (Section 78.120)
- -------------------------
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, Bylaws of the Corporation.
NV Bylaws-10
<PAGE>
ARTICLE X - WAIVER OF NOTICE: (Section 78.375)
-----------------------------
Whenever any notice is required to be given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the person or persons
entitled to such notice, whether before or after the meeting by any person,
shall constitute a waiver of notice of such meeting.
ARTICLE XI- INTERESTED DIRECTORS: (Section 78.140)
---------------------------------
No contract or transaction shall be void or voidable if such contract or
transaction is between the corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
Officers, are directors or officers, or have a financial interest, when such
Director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and are noted in the minutes of such meeting, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the shareholders; or
(d) the fact of the common directorship, office or financial interest is
not disclosed or known to the Director or Officer at the time the transaction is
brought before the Board of Directors of the Corporation for such action.
Such interested Directors may be counted when determining the presence of a
quorum at the Board of Directors' or committee meeting authorizing the contract
or transaction.
ARTICLE XII - ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT:
----------------------------------------------------------------------
(Section 78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its president, secretary
and treasurer and all of its Directors, along with the post office box or street
address, either residence or business, and a designation of its resident agent
in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
NV Bylaws-11
<PAGE>
RESOLUTIONS ADOPTED BY INCORPORATOR
-----------------------------------
OF
--
ACCIDENT PREVENTION PLUS, INC.
------------------------------
The undersigned, being the sole Incorporator of the corporation hereby
adopts the following resolutions:
(1) RESOLVED, that a copy of the Certificate of Incorporation of the
Corporation, together with the original receipt showing payment of the
statutory organization tax and filing fee, be inserted in the Minute
Book of the Corporation.
(2) RESOLVED, that the form of First By-Laws submitted to the meeting be,
and the same hereby are, adopted as and for the By-Laws of the
Corporation, and that a copy thereof be placed in the Minute Book of
the Corporation, directly following the Certificate of Incorporation.
(3) RESOLVED, that the following persons be, and they hereby are, elected
as Directors of the Corporation, to serve until the first annual
meeting of shareholders, and until their successors are elected and
qualify:
/s/ Richard J. Goodhart
- --------------------------------
/s/ Steven H. Wahrman
- --------------------------------
/s/ Jean-Paul DaVeau
- --------------------------------
/s/ Ives Wahrman
- --------------------------------
/s/ Martin Goodhart
- --------------------------------
Dated: 10/28/98
------------------------
/s/ John A. McQuirk
------------------------------
Incorporator
-1-
<PAGE>
Instructions for Organization of a Corporation with Sole Director/Shareholder
-----------------------------------------------------------------------------
A small corporation commonly is comprised of a Sole Director/Shareholder.
One must basically follow the same procedure to organize this type of small
corporation as it would if this corporation had more than one Director and for
Shareholder. However there are some documents that are specific to this type of
organization that must be highlighted at this time. Specifically, the
"Resolution Adopted by the Sole Director/Shareholder" inserted in this booklet
as page 1. The Resolution requires close attention to detail when filling out
the following information:
1. Corporate Name;
2. Corporate officers: President, Vice President, Secretary and Treasurer.
It is important to note, that under Nevada law one individual may hold any
combination of officer positions in a corporation
3. The name of the Corporation' treasurer and the name and location of the
financial Institution where he/she is authorized to open up a bank account on
behalf of the Corporation.
4. Date;
5. Have Sole Director/Shareholder sign the resolution.
In addition, the share certificate marked "Specimen" should be removed from the
certificate book and inserted as Appendix A and a conformed copy of the Banking
resolution as Appendix B.
Instruction sheet
<PAGE>
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
LIST OF OFFICERS AND DIRECTORS
OF
Date April 26, 1999
Name: Accident Prevention Plus, Inc.
Address 145 Oser Ave, Suite 100, Hauppauge, NY 11788
Telephone Number 516-300-0600 Federal Identification No.
OFFICERS
--------
Names Addresses
----- ---------
Chairman/CEO Richard Goodhart c/o Accident Prevention Plus, Inc.
145 Oser Ave,
Hauppauge, NY 11788
President /COO Steven Wahrman 145 Oser Ave, Hauppauge, NY 11788
Exec Vice-President Jean Paul Daveau 145 Oser Ave, Hauppauge, NY 11788
Secretary Jean Paul Daveau 145 Oser Ave, Hauppauge, NY 11788
Asst. Secretary Richard Goodhart 145 Oser Ave, Hauppauge, NY 11788
Treasurer NA
Asst. Treasurer NA
DIRECTORS
---------
Names Addresses
----- ---------
Martin Goodhart 145 Oser Ave, Hauppauge, NY 11788
Ives Wahrman 145 Oser Ave, Hauppauge, NY 11788
COUNSEL
-------
Name: Seth Ben-Ezra c/o Steven J. Goldstein, P.C.,
Address: 500 N. Broadway, Suite 243, Jericho, NY 11753
Telephone No. 516-681-0022
<PAGE>
AGREEMENT AND
CERTIFIED COPY OF RESOLUTION OF
BOARD OF DIRECTORS
OF
ACCIDENT PREVENTION PLUS, INC.
145 OSER AVE., SUITE 100
HAUPPAUGE, NY 11788
Resolved:
I. That Continental Stock Transfer & Trust Company of 2 BROADWAY, NEW YORK,
NEW YORK, 10004 be and hereby is appointed Transfer Agent of the ACCIDENT
PREVENTION, PLUS INC. stock of this Corporation.
II. That the Transfer Agent be and hereby is authorized to issue and
countersign certificates of said stock of this Corporation in such names and for
such numbers of shares up to the full amount of such stock which is authorized
but unissued and to deliver such certificates as may be directed by resolution
of the Board of Directors or by order of the President or a Vice-President and
Secretary or Assistant Secretary or Treasurer and an opinion of counsel in form
and substance satisfactory to it and such other documentation as it may require.
III. That the Transfer Agent be and hereby is authorized to accept for
transfer any outstanding certificates of said stock of this Corporation properly
endorsed and stamped as required by law, and to issue and countersign new
certificates for a like number of shares of the same class of stock in place
thereof and to deliver such new certificates.
IV. That the said Transfer Agent may use its own judgment in matters
affecting its duties hereunder and shall be liable only for its own gross
negligence, and that this Corporation indemnifies and holds harmless the said
Transfer Agent for each act done by it in good faith in reliance upon any
instrument or stock certificate believed by it to be genuine and to be signed,
countersigned or executed by any person or persons authorized to sign,
countersign or execute the same.
V. That any certificates of the said stock issued and countersigned by the
Transfer Agent shall bear the actual or facsimile signature of the present or
any future President, and CHAIRMAN OF THE BOARD or SECRETARY and the actual or
facsimile seal of this Corporation. Should any officer die, resign or be removed
from office prior to the issuance of any certificates of stock which bear his
signature, the Transfer Agent may continue, until written notice to the contrary
is received, to issue and register such certificates as and for the stock
certificates of this Corporation notwithstanding such death, resignation or
removal, and such certificates when issued shall continue to be and to
constitute valid certificates of stock of this Corporation.
VI. That the Transfer Agent shall issue a new certificate or certificates
of said stock in lieu of lose, destroyed or stolen certificate or certificates
of such stock upon the order of the Corporation, evidenced by a certified copy
of a resolution of the Board of Directors, or written direction of the President
or Vice-President or Secretary or Treasurer, and upon the giving of a bond
satisfactory to the Transfer Agent and Registrar, protecting it from any loss.
VII. That the Transfer Agent is authorized and directed to open and
maintain such ledgers and other books and to keep such records as may be
required or deemed advisable in the performance of its agency.
VIII. That this appointment and the authorizations in these resolutions
contained shall cover and include any additional shares of said class of stock
which may hereafter be authorized by this Corporation.
IX. That when certificates of this Corporation's stock shall be presented
to it for transfer, the Transfer Agent is hereby authorized to refuse to
transfer the same until it is satisfied that the requested transfer is legally
in order; and that this Corporation shall indemnify and hold harmless the
Transfer Agent, and the Transfer Agent shall incur no liability for the refusal,
in good faith, to make transfers which it, in its judgment, deems improper or
unauthorized. The Transfer Agent may rely upon the Uniform Commercial Code and
generally accepted industry practice in effecting transfers, or delaying or
refusing to effect transfers.
1
<PAGE>
X. That when the said Transfer Agent deems it expedient it may apply to
this Corporation, or the counsel for this Corporation, or to its own counsel for
instructions and advice; that this Corporation will promptly furnish or will
cause its counsel to furnish such instructions and advice, and, for any action
taken in accordance with such instructions or advice, or in case such
instructions and advice shall not be promptly furnished as required by this
resolution, this Corporation will indemnify and hold harmless said Transfer
Agent from any and all liability, including attorneys fees and court costs. The
Transfer Agent may, at its discretion, but shall have no duty to prosecute or
defend any action or suit arising out of authorizations hereby granted unless
this Corporation shall, when requested, furnish it with funds or the equivalent
to defray the costs of such prosecution or defense.
XI. That the said Transfer Agent may deliver from time to time at its
discretion, to this Corporation, for safekeeping or disposition by this
Corporation in accordance with law, such records accumulated in the performance
of its duties as it may deem expedient, and this Corporation assumes all
responsibility for any failure thereafter to produce any paper, record or
document so returned if, and when, required.
XII. That this Corporation shall indemnify and hold harmless said Transfer
Agent from any and all liability, including attorneys fees and court costs, for
any action taken by the Transfer Agent in connection with its appointment and
conduct as Transfer Agent, except for said agent's own wilful misconduct or
gross negligence, and shall, at the request of said Transfer Agent, defend any
action brought against the agent hereunder.
XIII. That the Transfer Agent authorized to forward certificates of Stock,
Scrip and Warrants of this Corporation issued on transfer or otherwise by first
class mail under a blanket bond of indemnity covering the non-receipt of such
Stock, Scrip and Warrants by any of the stockholders of this Corporation, in
which bond this Corporation and the Transfer Agent are directly or indirectly
named as obligees;
That in the event of non-receipt by any stockholder of this Corporation of
certificates of Stock, Scrip and Warrants so mailed, the said Transfer Agent is
authorized to issue new certificates of said Stock, Scrip and Warrants for a
like amount in place thereof, upon receipt from the stockholders of an affidavit
and proof of loss provided for under said blanket bond and the issuance by the
Surety Company of an assumption of the loss under said blanket bond, all without
further action or approval of the Board of Directors or the officers of this
Corporation.
XIV. That the proper officers of this Corporation be and they hereby are
authorized and directed to deliver to the Transfer Agent a sufficient supply of
blank stock certificates and to renew such supply from time to time upon request
of the Transfer Agent and to pay the Transfer Agent prevailing fees and
reimburse it for disbursements incurred by it when and as the same are billed to
this Corporation which, to the extent such fees and disbursements remain unpaid,
hereby grants to the Transfer Agent a lien on the books, records and other
property of this Corporation in the custody or possession of the Transfer Agent.
XV. That the Transfer Agent is hereby authorized without any further action
on the part of this Corporation to appoint as successor Transfer Agent any
corporation or company which may succeed to the business of the Transfer Agent
by merger, consolidation or otherwise (such corporation or company being
hereinafter called the "Successor"); the Successor to have the same authority
and appointment contained in this resolution as if this Corporation itself had
appointed it Transfer Agent. The Successor shall, when appointed, be the Agent
of this Corporation and not an Agent of Continental Stock Transfer & Trust
Company.
XVI. That the Secretary or Assistant Secretary be and hereby are instructed
to certify a copy of these resolutions under the seal of this Corporation and to
lodge the same with Continental Stock Transfer & Trust Company, together with
such certified documents, opinions of counsel, certificates, specimen signatures
of officers and information as Continental Stock Transfer & Trust Company may
require in connection with its duties as Transfer Agent and immediately upon any
change therein which might affect Continental Stock Transfer & Trust Company in
its duties to give the Transfer Agent written notice thereof and to furnish such
additional certified documents, certificates, specimen signatures of officers
and information as Continental Stock Transfer & Trust Company may require, it
being understood and agreed that Continental Stock Transfer & Trust Company
shall be fully protected and held harmless for the failure of this Corporation
to give proper and sufficient notice of any such change.
XVII. That this document, when executed by the Corporation, shall
constitute the full agreement between it and Continental Stock Transfer & Trust
Company and shall not be amended or modified except in writing signed by both
parties.
XVIII. This agreement shall be interpreted under the laws of the State of
New York.
2
<PAGE>
Certificate of Secretary
I, RICHARD GOODHART (ASST), Secretary of ACCIDENT PREVENTION PLUS, INC. a
corporation duly organized and existing under the laws of the State of NEVADA DO
HEREBY CER1IFY:
A. That the foregoing is a true copy of a certain Resolution duly adopted,
in accordance with the By-Laws, by the Board of Directors of the said
Corporation at, and recorded in the minutes of a meeting of the said Board duly
held on APRIL 19, 1999, and of the whole of the said Resolution, and that the
said Resolution has not been rescinded or modified.
B. That, accompanying this Certificate are:
(1) A copy of the Charter or Certificate of Incorporation of the said
Corporation, with all amendments to date, duly certified under official
seal by the state officer having custody of the original thereof;
(2) A true and complete copy of the By-Laws of the said Corporation,
as at present in force;
(3) A signature card bearing the names and specimen signatures of all
the officers of the said Corporation;
(4) Specimens of certificates of each denomination and class of stock
of the said Corporation in the form adopted by the said Corporation; and
(5) An opinion by counsel for the Corporation covering validity of the
outstanding shares referred to in the above-mentioned Resolution and their
registration or exemption from registration under the Securities Act of
1933 as amended.
C. That the total authorized stock of the said Corporation is: 50,000,000
Shares, divided into
NA Shares of COMMON Stock of .001 Par Value each;
NA Shares of NA Stock of NA Par Value each;
NA Shares of NA Stock of NA Par Value each;
That of the said authorized stock, there are now issued:
18,377,150 Shares of the said COMMON Stock
NA Shares of the said NA Stock
NA Shares of the said NA Stock,
that such issue has been duly authorized, and that all of the said shares are
fully paid.
D. That the following data are true and correct with respect to the said
Corporation:
Names of Officers Addresses
----------------- ---------
CHAIRMAN & CEO RICHARD GOODHART 145 OSER AVE, SUITE 100
PRESIDENT & COO STEVEN WAHRMAN HAUPPAUGE, NY 11788
EXEC. VICE PRESIDENT JEAN PAUL DAVEAU
Secretary JEAN PAUL DAVEAU SAME
Asst. Secretary RICHARD GOODHART
Treasurer NA
Asst. Treasurer NA
Counsel SETH BEN-EZRA c/o STEVEN J. GOLDSTEIN, P.C.
Address 500 NORTH BROADWAY, SUITE 243 JERICHO, NY 11753
Address of the Corporation 145 OSER AVE, SUITE 100, HAUPPAUGE, NY 11780
IN WITNESS WHEREOF, I have hereunto set my hand, and affixed the seal of
the said Corporation, this 26th day of APRIL, 1999.
/s/ Richard Goodhart, Asst. Sec.
----------------------------------
ASST. Secretary
(CORP0RATE SEAL)
Agreed and accepted: Continental Stock Transfer & Trust Company
(CORPORATE SEAL) By
[Graphic Omitted] ---------------------------------------
3
<PAGE>
FIRM NAME: Accident Prevention Plus, Inc. DATE: 4/26/99
OFFICERS SIGNATURES
-------- ----------
Richard Goodhart CEO /s/ Richard Goodhart
Steven Wahrman Pres. /s/ Steven Wahrman
Jean Paul Daveau Exec. V-Pres. Signature to Follow
V-Pres.
Jean Paul Daveau Signature to Follow
Treas.
Richard Goodhart Asst. Sec'y. /s/ Richard Goodhart
AUTHORIZED SIGNATURES
FOR THE TRANSFER DEPARTMENT OF
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<PAGE>
No. of Shares Authorized
Name: Accident Prevention Plus, Inc. Pref. 1st
(Name of association, corporation or trustee) Pref. 2nd
Address: 145 Oser Ave., Suite 100, Hauppauge, NY 11788 Common 50,000,000
- --------------------------------------------------------------------------------
I, Steven H. Wahrman, President of Accident Prevention Plus, Inc. do hereby
certify that the said association/corporation/trust keeps a place for the
transfer of its stock at No. 2 Broadway, c/o Continental Stock Transfer & Trust
Company, in the city of New York, New York.
Incorporated or Organized 10/28/98, Laws of the State of Nevada
STATE OF NEW YORK DENISE ZUROWSKI
Notary Public, State of New York
City of ss. NO. 01ZU5060497
Qualified in Suffolk County
County of Suffolk Commission Expires MAY 20, 2000
On this 26th day of April 1999, before me the subscriber, personally came Steven
Wahrman, to me known, and who being by me duly sworn, did depose and say that he
is the President of the corporation above named and that he executed the
foregoing certificate on behalf of said corporation pursuant to authority vested
in him by a vote of the board of directors of said association.
/s/ Denise Zurowski, Notary Public Commissioner of Deeds
(Certificate to be filed with the State Tax Commission by Associations,
Corporations, and Trustees under Section 275-a Tax Law)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into as of
this 10/28/98 by and among Accident Prevention Plus, Inc. (Nevada Corp.),
(referred to as "APP), with its offices and principal place of business at 145
Oser Avenue, Hauppauge, NY, and KMR Telecom Limited (India Corp.)with principal
place of business at Flat #3, 3-43-165 West Marredpally, Secunderabad, India,
(referred to as "KMR"), and its shareholders as approved by the Board of
Directors "Shareholder", who are the holders of the majority of the issued and
outstanding shares of common stock of APP and Richard Goodhart as the owner of
all of the issued and outstanding shares of KMR , with respect to the following
facts:
A. Richard Goodhart, who is the owner of 49% equity in KMR and has been assigned
exclusive "Power of Attorney" (see attached) for KMR, and Dinesh and Ritu Kumar,
whom jointly own 51% of KMR wish to merge and become a wholly owned subsidiary
of "APP"
B. Upon the execution hereof "KMR" shall assign such ownership and rights to
"APP".
C. This Agreement constitutes a plan or reorganization within the meaning of
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended. "APP"
shall acquire pursuant hereto, 100 percent of the outstanding "KMR" shares,'in
exchange for 5 percent of the outstanding shares of "APP".
NOW, THEREFORE, the parties hereto agree as follows:
1. THE ACQUISITION
---------------
1.1. Upon the terms and conditions set forth herein, "APP" hereby agrees to
transfer and assign to Richard Goodhart 392,000 shares amounting to 49 percent
of 5 percent of the issued and outstanding shares of its common stock and Dinesh
and Ritu Kumar shall jointly receive 408,000 shares amounting to 51 percent of 5
percent of the issued and outstanding shares of "APP". Upon completion of the
transaction, "KMR" shall become a wholly owned subsidiary of "APP".
1.2. Title to shares. Concurrent herewith, Richard Goodhart and jointly, Dinesh
and Ritu Kumar, shall convey to "APP" good and marketable title to "KMR's"
shares, except such restrictions as are imposed by federal and state securities
laws, liabilities, or restrictions created, if any, by "KMR". RICHARD GOODHART
shall deliver to "APP" all certificates representing "KMR's" shares duly
endorsed for transfer.
2. EXCHANGE
---------
2.1. As consideration for the acquisition of the 1,086,900 shares of "KMR",
"APP" shall issue to and for the benefit of Richard Goodhart shareholder,
effective as of the date hereof 392,000 shares and Dinesh and Ritu Kumar joint
shareholders shall be jointly issued 408,000 shares of "APP" duly authorized,
fully paid and nonassessable common stock at $001 par value.
2.2. (a) "KMR" Shareholders shall have good and marketable title to "APP"
shares, acknowledging any debts, liabilities, obligations, claims or
restrictions, except such restrictions as are imposed by federal or
<PAGE>
state securities laws. Concurrently herewith, "AP"' shall deliver to "KMR", a
letter directed to "KMR", the Continental Transfer Agent, authorizing the
issuance of certificates representing 800,000 shares. Each Shareholder shall
execute and deliver an investment certificate to "APP" in the form of Exhibit
2.2.
(b) Except for such shares which may be registered pursuant to a
registration statement to be filed with the SEC, the 800,000 shares shall be
restricted from sale to the public and shall retain their restricted nature for
a period of two years from the closing Date. Each certificate shall bear an
appropriate legend describing the transfer restriction.
2.3. Legend. Each stock certificate representing "APP" shares shall bear the
following legends:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 ("1933 Act") nor under any
applicable state securities act and may not be offered or sold except
pursuant to (I) an effective registration statement relating to such
stock under the 1933 Act and any applicable state securities act, (II)
to the extent applicable, Rule 144 under the 1933 Act (or any similar
rule under such act or acts relating to the disposition of
securities), or (III) an opinion of counsel satisfactory to the
Corporation that an exemption from registration under such Act or Acts
is available.
3. REPRESENTATIONS AND WARRANTIES OF "APP"
---------------------------------------
"APP" represents and warrants to "KMR" that: all representation and warranties
have been waived.
4. REPRESENTATIONS AND WARRANTIES OF "KMR"
---------------------------------------
"KMR" represents and warrants to each Shareholder and "APP" that: all
representation and warrants have been waived.
5. CONDITIONS TO "KMR" OBLIGATIONS
-------------------------------
Unless waived by "APP" in writing, "KMR" obligations hereunder are subject to
the satisfaction on or prior to the date hereof.
6. CONDITIONS TO "APP" OBLIGATIONS
-------------------------------
Unless waived by "KMR" in writing, the "APP" obligations hereunder are subject
to the satisfaction on or prior to the date hereof.
7. INDEMNITY
---------
The Shareholders agree to waive any indemnification, hold harmless, reimburse
and defend "APP" and "KMR" against any claim, costs, expense, liability,
obligation, loss or damage (including legal fees) of any nature, incurred by or
imposed upon the Companies which results, arises out of or is based upon:
(a) any misrepresentation by the Shareholders or breach of any warranty by the
Shareholders in this Agreement or in any Exhibit or Schedule attached
hereto; or
(b) any breach or default in performed by each of them hereunder.
8. CLOSING
-------
The consummation of the transactions contemplated herein shall take place at the
offices of "APP" within fourteen days after the ratification of this Agreement
by "APP" Board of Directors. "APP" shall convene a special meeting of its Board
of Directors for the purpose of passing upon this agreement within fourteen days
from date.
<PAGE>
9. MISCELLANEOUS
-------------
9.1. Notice. All notices, demands or other communications required or desired to
be delivered hereunder by any party shall be in writing and shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be served personally,
service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail, such notice
shall be conclusively deemed given forty-eight (48) hours after the deposit
thereof in the United States mail addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
a) Mr. Seth I. Ben-Ezra, c/o Stephen J. Goldstein, PC
500 North Broadway, Suite 243
Jericho, NY 11753
b) Richard Goodhart 99 Aspen Drive East
Woodbuzy, NY 11797
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by written notice delivered
in the manner aforesaid to the other party or parties hereto.
9.2. Modifications or amendments. No amendment, change or modification of this
document shall be valid unless in writing and signed by all of the parties
hereto.
9.3. Waiver. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute a waiver of any other provisions hereof.
9.4. Successors and Assigns. All of the terms and provisions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, representatives and successors, provided, however, that
no party shall be entitled to assign its rights hereunder or delegate its
responsibilities without the prior written consent of all other parties.
9.5. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
9.6. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience in reference. In the event
of a conflict between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
9.7. Exhibits and Schedules. Each fact or statement recited or contained in any
exhibit, schedule, certificate or other instrument delivered by or on behall'of
the parties hereto, or in connection with the transactions contemplated hereby,
shall be deemed a representation and a warranty hereunder.
9.8. Further Assurances. Each of the parties hereto shall execute and deliver,
if required, additional papers, documents, and other assurances, and shall do
all acts and things reasonably necessary in connection with the performance of
their obligations hereunder and to cariy out the intent of the parties and this
agreement.
<PAGE>
9.9 Applicable Law and Severability. In the event of controversy this agreement
and the exhibits forming a part hereof shall be governed by the laws of the
State of New York's conflict of laws rules applicable to agreements executed and
to be wholly performed within the State of New York. Nothing contained herein
shall be construed so as to require the commission of any act contrary to law,
and wherever there is a conflict between any provision contained herein and any
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right of contract, the latter shall prevail but the
provision of this document which is affected shall be curtailed and limited only
to extent necessary to comply with the requirements of the law.
9.10 Enforceability. It is agreed that the rights granted to the parties
hereunder are of a special unique kind and character and that, in the event of a
breach by any party of any material provision of this document, the other party
or parties would not have any adequate remedy at law. It is expressly agreed,
therefore, that the rights of the parties hereunder may be enforced by an action
for specific performance and such other equitable relief as is provided under
the laws of the State of New York.
9.11 Attorney's Fees and Cost. In the event any action is instituted by a party
hereto to enforce any of the terms or provisions hereof, the prevailing party in
such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the Court.
9.12 Entire Agreement. This document, together with any related documents
referred to in this Agreement constitutes the entire understanding and agreement
of the parties with respect to the subject matter of this Agreement, and all
prior agreements, understandings or representations are hereby terminated and
canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the day and year first above written.
Accident Prevention Plus, Inc. KMR Telecom Limited
/s/ Steven H. Wahrman /s/ Richard Goodhart
- ------------------------------- ---------------------------------
President Authorized Representative
- ------------------------------- ---------------------------------
10/28/98 10/28/98
- ------------------------------- ---------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into as of
this 10/28/98 by and among Accident Prevention Plus, Inc. (Nevada Corp.),
(referred to as "APP), with its offices and principal place of business at 145
Oser Avenue, Hauppauge, NY, and International Purchasing Service Inc. (NY
Corp.), (referred to as "IPS"),and its shareholders as approved by the Board of
Directors "Shareholder", who are the holders of the majority of the issued and
outstanding shares of common stock of APP and Richard Goodhart as the owner of
all of the issued and outstanding shares of 1PS, with respect to the following
facts:
A. Richard Goodhart is the owner and exclusive holder of IPS wishes to merge and
become a wholly owned subsidiary of "APP".
B. Upon the execution hereof "IPS" shall assign such ownership and rights to
"APP".
C. This Agreement constitutes a plan or reorganization within the meaning of
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended. "APP"
shall acquire pursuant hereto, 100 percent of the outstanding "IPS" shares, in
exchange for 10 percent of the outstanding shares of "APP".
NOW, THEREFORE, the parties hereto agree as follows:
1. THE ACQUISITION
---------------
1.1. Upon the terms and conditions set forth herein, "APP" hereby agrees to
transfer and assign to Richard Goodhart 1,600,000 shares amounting to 10 percent
of the issued and outstanding shares of its common stock and shall receive in
exchange for 200 of the issued and outstanding shares of"IPS". Upon completion
of the transaction, "IPS" shall become a wholly owned subsidiary of "APP Inc.".
1.2. Title to shares. Concurrent herewith, Richard Goodhart shall convey to
"APP" good and marketable title to "IPS"'s shares, except such restrictions as
are imposed by federal and state securities laws, liabilities, or restrictions
created, if any, by "IPS". RICHARD GOODHART shall deliver to "APP" all
certificates representing "IPS's Shares duly endorsed for transfer.
2. EXCHANGE
--------
2.1. As consideration for the acquisition of the 200 shares, "APP" shall issue
to and for the benefit of RICHARD GOODHART Shareholder, effective as of the date
hereof 1,600,000 shares of "APP" duly authorized, fully paid and nonassessable
common stock, $.OOl par value, as follows:
2.2. (a) Richard Goodhart shall have good and marketable title to "APP" shares,
acknowledging any debts, liabilities, obligations, claims or restrictions,
except such restrictions as are imposed by federal or state securities laws.
Concurrently herewith, "APP" shall deliver to Richard Goodhart, a letter
directed to "IPS", the Continental Transfer Agent, authorizing the issuance of
certificates representing 1,600,000 shares. Each Shareholder shall execute and
deliver an investment certificate to "APP" in the form of Exhibit 2.2.
<PAGE>
(b)Except for such shares which may be registered pursuant to a
registration statement to be filed with the SEC, the 1,600,000 shares shall be
restricted from sale to the public and shall retain their restricted nature for
a period of two years from the closing Date. Each certificate shall bear an
appropriate legend describing the transfer restriction.
2.3. Legend. Each stock certificate representing "APP" shares shall bear the
following legends:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 ("1933 Act") nor under any
applicable state securities act and may not be offered or sold except
pursuant to (I) an effective registration statement relating to such
stock under the 1933 Act and any applicable state securities act, (II)
to the extent applicable, Rule 144 under the 1933 Act (or any similar
rule under such act or acts relating to the disposition of securities),
or (III) an opinion of counsel satisfactory to the Corporation that an
exemption from registration under such Act or Acts is available.
3. REPRESENTATIONS AND WARRANTIES OF "APP"
---------------------------------------
"APP" represents and warrants to "IPS" that: all representation and warranties
have been waived.
4. REPRESENTATIONS AND WARRANTIES OF "IPS"
---------------------------------------
"IPS" represents and warrants to each Shareholder and "APP" that: all
representation and warrants have been waived.
5. CONDITIONS TO "IPS" OBLIGATiONS
-------------------------------
Unless waived by "APP" in writing, "IPS" obligations hereunder are subject to
the satisfaction on or prior to the date hereof
6. CONDITIONS TO "APP" OBLIGATIONS
-------------------------------
Unless waived by "IPS" in writing, the "APP" obligations hereunder are subject
to the satisfaction on or prior to the date hereof.
7. INDEMNITY
---------
The Shareholders agree to waive any indenmification, hold harmless, reimburse
and defend "APP" and "IPS" against any claim, costs, expense, liability,
obligation, loss or damage (including legal fees) of any nature, incurred by or
imposed upon the Companies which results, arises out of or is based upon:
(a) any misrepresentation by the Shareholders or breach of any warranty by the
Shareholders in this Agreement or in any Exhibit or Schedule attached
hereto; or
(b) any breach or default in performed by each of them hereunder.
8. CLOSING
-------
The consummation of the transactions contemplated herein shall take place at the
offices of "APP" within fourteen days after the ratification of this Agreement
by "APP" Board of Directors. "APP" shall convene a special meeting of its Board
of Directors for the purpose of passing upon this agreement within fourteen days
from date.
<PAGE>
9. MISCELLANEOUS
-------------
9.1. Notice. All notices, demands or other communications required or desired to
be delivered hereunder by any party shall be in writing and shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be served personally,
service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail, such notice
shall be conclusively deemed given forty-eight (48) hours after the deposit
thereof in the United States mail addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
a) Mr. Seth I. Ben-Ezra, c/o Stephen j. Goldstein, PC
500 North Broadway, Suite 243
Jericho, NY 11753
b) Richard Goodhart 99 Aspen Drive East
Woodbury, NY 11797
Any party hereto may change its address for the purpose of receiving notices,
demands and other conununications as herein provided by written notice delivered
in the manner aforesaid to the other party or parties hereto.
9.2. Modifications or amendments. No amendment, change or modification of this
document shall be valid unless in writing and signed by all of the parties
hereto.
9.3. Waiver. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute a waiver of any other provisions hereof.
9.4. Successors and Assigns. All of the terms and provisions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, representatives and successors, provided, however, that
no party shall be entitled to assign its rights hereunder or delegate its
responsibilities without the prior written consent of all other parties.
9.5. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
9.6. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience in reference. In the event
of a conflict between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
9.7. Exhibits and Schedules. Each fact or statement recited or contained in any
exhibit, schedule, certificate or other instrument delivered by or on behalf of
the parties hereto, or in connection with the transactions contemplated hereby,
shall be deemed a representation and a warranty hereunder.
9.8. Further Assurances. Each of the parties hereto shall execute and deliver,
if required, additional papers, documents, and other assurances, and shall do
all acts and things reasonably necessaiy in connection with the performance of
their obligations hereunder and to carry out the intent of the parties and this
agreement.
9.9. Applicable Law and Severability. In the event of controversy this agreement
and the exhibits forming a part hereof shall be governed by the laws of the
State of New York without regard to New York's conflict of laws rules applicable
to agreements executed and to be wholly performed within the State of New York.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is a conflict between any provision
contained herein and any
<PAGE>
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right of contract, the latter shall prevail but the
provision of this document which is affected shall be curtailed and limited only
to extent necessary to comply with the requirements of the law.
9.10. Enforceability. It is agreed that the rights granted to the parties
hereunder are of a special and unique kind and character and that, in the event
of a breach by any party of any material provision of this document, the other
party or parties would not have any adequate remedy at law. It is expressly
agreed, therefore, that the rights of the parties hereunder may be enforced by
an action for specific performance and such other equitable relief as is
provided under the laws of the State of New York.
9.11. Attorney's Fees and Cost. In the event any action is instituted by a party
hereto to enforce any of the terms or provisions hereof, the prevailing party in
such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the Court.
9.12. Entire Agreement. This document, together with any related documents
referred to in this Agreement, constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement,
and all prior agreements, understandings or representations are hereby
terminated and canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the day and year first above written.
Accident Prevention Plus, Inc. International Purchasing Service, Inc.
/s/ Steven H. Wahrman /s/ Richard Goodhart
- ------------------------------ --------------------------------------
President President
- ------------------------------ --------------------------------------
10/28/98 10/28/98
- ------------------------------ --------------------------------------
Royce Anderson & Monroe, Inc.
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
CONSULTING AGREEMENT dated as of the 30th day of July, 1998, between Royce
Anderson & Monroe, Inc., of La Destra Mill Neck, NY 11765, and Accident
Prevention Plus, Inc., of 145 Oser Ave. Ste 100 - Hauppauge, NY 11788
Accident Prevention Plus, Inc. desires to hire Royce Anderson & Monroe, Inc to
assist and asvise for commercial application in The United States and and the
rest of the western hemisphere as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures for geographic allocation of business resources
in areas described in this paragraph.
1. Services; Term
Royce Anderson & Monroe, Inc. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing on the
thirtieth of July, 1998, for five years terminating on thirtieth of July, 2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Royce Anderson & Monroe, Inc. shall be retained as described in item number
1, above: Royce Anderson & Monroe, Inc., and its associates is to receive
10% of the stock in the new company, (Accident Prevention Plus, Inc.) to be
formed. The 10% can not be diluted by the issuance of new stock to officers
and directors for a period of five years.
4. Travel Expenses
In the event that, at Accident Prevention Plus, Inc.'s request, Royce Anderson &
Monroe, Inc. or its representatives is required to travel away from their
corporate offices in Mill Neck, New York, in the performance of their duties
hereunder, the Accident Prevention Plus, Inc. shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, Inc. if Royce Anderson & Monroe, Inc. does not
conform to agreed upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Royce Anderson & Monroe, Inc.
shall retain all stock and rights prior to any termination.
<PAGE>
Royce Anderson & Monroe, Inc.
447 Northfield Aye,
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
CONSULTING AGREEMENT dated as of the _________________ day of July, 1998,
between Royce Anderson & Monroe, Inc., of 447 Northfield Avenue, Suite 200, West
Orange, NJ 07012, and Accident Prevention Plus, LLC, of 145 Oser Ave. Suite 100,
Hauppauge, NY 11788.
Accident Prevention Plus, LLC desires to hire Royce Anderson & Monroe, Inc. to
assist and advise for commercial application in The United States and the rest
of the western hemisphere as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures for geographic allocation of business resources
in areas described in this paragraph.
1. Services; Term
Royce Anderson & Monroe, Inc. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing
_____________ on the of July, 1998, for five years terminating on the
_____________ of July, 2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Royce Anderson & Monroe, Inc. shall be retained as described in item number
1, above: Royce Anderson & Monroe, Inc., and its associates are to receive
10% of the stock in the new company, (Accident Prevention Plus, Inc.) to be
formed. The 10% can not be diluted by the issuance of new stock to officers
and directors for a period of five years.
4. Travel Expenses
In the event that, at Accident Prevention Plus, LLC's request, Royce Anderson &
Monroe, Inc. or its representatives are required to travel away from their
corporate offices in West Orange, New Jersey, in the performance of their duties
hereunder, then Accident Prevention Plus, LLC shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, LLC if Royce Anderson & Monroe, Inc. does not
conform to agrged upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Royce Anderson & Monroe, Inc.
shall retain all stock and rights prior to any termination.
<PAGE>
In the event that this Agreement is terminated in accordance with this paragraph
2, the Company shall have no further obligation to Royce Anderson & Monroe, Inc.
under this Agreement after the date of such termination, except that Royce
Anderson & Monroe, Inc. shall be entitled to receive any consideration to which
it is entitled pursuant to paragraph 2 hereof which has accrued and has not been
paid up to and including the date of termination.
6. Confidential Information
All confidential information which Royce Anderson & Monroe, Inc. may now
possess, may obtain during or after the Term, or may create prior to the end of
the Term relating to the business of the Accident Prevention Plus, Inc., shall
not be published, disclosed or made accessible by him to any other person, firm,
or corporation either during or after the Term or used by him except during the
Term in the business and for the benefit of the Accident Prevention Plus, Inc.,
without the prior written consent of the Accident Prevention Plus, Inc..
7. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, the successors and assigns of the Accident Prevention Plus, Inc. and the
assigns, heirs and personal representatives of Royce Anderson & Monroe, Inc.;
provided, however, that Royce Anderson & Monroe, Inc. may assign, transfer or
otherwise convey any of its rights or delegate any of its duties under this
Agreement without the written consent of the Accident Prevention Plus, Inc..
8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to conflicts of law.
9. Entire Agreement
This Agreement represents the entire agreement and any other documents
pertaining to said paragraph #2, above which are mutually agreed upon and signed
by both parties with respect to matters contemplated herein and supercedes any
prior oral or written agreements or undertakings between the parties with
respect to such matters.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Royce Anderson & Monroe, Inc. Accident Prevention Plus, Inc. by
Authorized Representative Richard Goodhart, Chairman and CEO
Alex Moskowitz
/s/ Alex Moskowitz /s/ Richard Goodhart, CEO
- ----------------------------- ----------------------------------
Steven H. Wahrman, President
/s/ Steven H. Wahrman
-----------------------------------
<PAGE>
Royce Anderson & Monroe, Inc.
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
Attachment A
1. Advise to
a) Commercial application
1. United States
2. Other areas of the Western Hemisphere
2. Corporate Structure
3. Capital Acquisition
4. Contract Application
5. Equity Partners
6. Mergers and Acquisitions
<PAGE>
ROYCE ANDERSON & MONROE
447 Northfield Ave.
Suite 200
West Orange, N.J. 07012
Phone: (973) 622-3023 Fax: (973) 622-3023
Under Rule 144 SEC Regulation, Accident Prevention Plus LLC or their attorney
cannot refuse a Letter of Opinion for relief in regard to taking legend off
stock in the above mentioned Corporation provided all SEC requirements are met.
Accident Prevention Plus, LLC must accept Corporation's own Counsel Letter of
Opinion.
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
CONSULTING AGREEMENT dated as of the 30th day of July, 1998, between Bristol
Consulting LTD, of P.O. Box 290767 Brooklyn, NY 11229, and Accident Prevention
Plus, Inc., of 145 Oser Ave. Ste. 100 - Hauppauge, NY 11788
Accident Prevention Plus, Inc. desires to hire Bristol Consulting LTD. (Bristol
Consulting LTD.) to assist and advise for commercial application in Europe, the
Middle East and Far East, as to Corporate Structure, Capital Acquisition,
Contract Application, Equity Partners and Mergers and Acquisitions. It will also
advise and coordinate procedures, for geographic allocation of business
resources in areas described in this paragraph.
1. Services; Term
Bristol Consulting LTD. hereby agrees to provide services as consultant to
Accident Prevention Plus, LLC, Inc. for a period of five years commencing on
the thirtieth of July, 1998, for five years terminating on the thirtieth July,
2003.
2. Services to be performed
(See Attachment A)
3. Compensation
a) Bristol Consulting LTD. shall be retained as described in item number 1,
above:
i. Three months at $5000 per month.
ii. For balance of contract, Bristol Consulting LTD. will be paid $10,000
per month.
b) Bristol Consulting LTD. and its associates is to receive 5% of the stock of
the new company (APP Incorporated -- to be formed) which can not be diluted
by the issuance of new stock to officers and directors for a period of five
years except in relation to their contracts.
4. Travel Expenses
In the event that, at Accident Prevention Plus, Inc.'s request, Bristol
Consulting LTD. or its representatives is required to travel away from their
corporate offices in Brooklyn, New York, in the performance of their duties
hereunder, the Accident Prevention Plus, Inc. shall reimburse the corporation
for all expenses incurred by the corporation or its representatives in
connection with such travel.
<PAGE>
5. Termination
This Agreement may be terminated prior to the end of the Term:
(a) By Accident Prevention Plus, Inc. if Bristol Consulting LTD. does not
conform to agreed upon stipulation in this contract and as is outlined in number
2, or any other documents pertaining to said paragraph #2, above which are
mutually agreed upon and signed by both parties. Bristol Consulting LTD. shall
retain all stock and rights prior to any termination.
In the event that this Agreement is terminated in accordance with this paragraph
2, the Company shall have no further obligation to Bristol Consulting LTD. under
this Agreement after the date of such termination, except that Bristol
Consulting LTD. shall be entitled to receive any consideration to which it is
entitled pursuant to paragraph 2 hereof which has accrued and has not been paid
up to and including the date of termination.
6. Confidential Information
All confidential information which Bristol Consulting LTD. may now possess, may
obtain during or after the Term, or may create prior to the end of the Term
relating to the business of the Accident Prevention Plus, Inc., shall not be
published, disclosed or made accessible by him to any other person, firm, or
corporation either during or after the Term or used by him except during the
Term in the business and for the benefit of the Accident Prevention Plus, Inc.,
without the prior written consent of the Accident Prevention Plus, Inc..
7. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, the successors and assigns of the Accident Prevention Plus, Inc. and the
assigns, heirs and personal representatives of Bristol Consulting LTD. ;
provided, however, that Bristol Consulting LTD. may assign, transfer or
otherwise convey any of its rights or delegate any of its duties under this
Agreement without the written consent of the Accident Prevention Plus, Inc..
8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to conflicts of law.
9. Entire Agreement
This Agreement represents the entire agreement and any other documents
pertaining to said paragraph #2, above which are mutually agreed upon and signed
by both parties with respect to matters contemplated herein and supercedes any
prior oral or written agreements or undertakings between the parties with
respect to such matters.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Bristol Consulting LTD. Accident Prevention Plus, Inc., by
Authorized Representative Richard Goodhart, Chairman and CEO
Professor Sheldon Friedland
/s/ Sheldon Friedland /s/ Richard Goodhart, CEO
- --------------------------- ------------------------------------
Steven H. Wahrman, President
/s/ Steven H. Wahrman
------------------------------------
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
Attachment A
1. Advise to
a) Commercial application
1. Europe
2. Middle East
3. Far East
2. Corporate structure
3. Capital Acquisition
4. Contract Application
5. Equity Partners
6. Mergers and Acquisitions
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
This is an amendment to the contract, dated July 30, 1998, between Bristol
Consulting, LTD and Accident Prevention Plus, LLC:
Termination:
Should either company fail to perform the services as outlined in point 2
(attachment A) The following procedure for stock issuance and consulting fees
will be amended as follows:
1. For every month that this agreement is in force Bristol Consulting shall
accrue stock holdings equal to 8,063 shares monthly for a period of 59
months with the final distribution to be 8,111 shares which equal a total
of 483,828 shares.
2. The consulting companies will accrue a fee at the rate of $5,000 per month
for the first 3 months of service and $10,000/month thereafter or until the
date of termination of this agreement.
3. All stock which has not been accrued for services will be returned to the
company. However, the consultant company will have the option to purchase
this stock at the stock option price as determined in management employment
contracts dated January 1, 1999 for a period of 60 days from the
termination of this Agreement.
4. Should Consultant Company wish to liquidate any of their holdings after the
18 month waiting period, which equates to 145,134 shares they have full
right to do so. Other stock that may be issued can only be liquidated on a
month to month accrual bases of 8,063 shares/month thereafter.
5. Should APP fault in any of their company obligations then this Agreement
will remain in full effect for the term of five years as stated in 1.
Services Term.
/s/ Sheldon Friedland
- ---------------------------------
Sheldon Friedland, President
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
This is an amendment to the contract, dated July 30, 1998, between Bristol
Consulting, LTD and Accident Prevention Plus, LLC:
Of the 787,614 shares of common stock in APP originally contracted for by
Bristol Consulting in conjunction with providing the services contracted by APP,
Bristol Consulting has distributed common stock to independent associates for
completion of the above referenced contract.
The Bristol Consulting ownership is currently 689,414 shares. All stock remains
under the same restrictions under rule 144 SEC regulations.
/s/ Sheldon Friedland
- -------------------------------
Sheldon Friedland, President
<PAGE>
Bristol Consulting LTD.
P.O. Box 290767
Brooklyn, NY 11229
Phone: (718) 891-8101 Fax: (718) 891-0105
Under Rule 144 SEC Regulation, Accident Prevention Plus LLC or their attorney
cannot refuse a Letter of Opinion for relief in regard to taking legend off
stock in the above mentioned Corporation provided all SEC requirements are met.
Accident Prevention Plus, LLC must accept Corporation's own Counsel Letter of
Opinion.
