Securities and Exchange Commission
Washington, D. C. 20549
_______________
Form 10-SB/A
______________
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
MEDI-HUT CO., INC.
(Name of Small Business Issuer in its charter)
Delaware 222-436-721
(State of incorporation) (I. R. S. Employer Identification No.)
1935 Swarthmore Ave.
Lakewood, New Jersey 08701
(732) 901-0606
(Address and telephone number of principal executive offices and principal
place of business)
Securities registered pursuant to Section 12(b) of the Act:
None
________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Title of class
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FORWARD LOOKING STATEMENTS
In this registration statement references to "Medi-Hut" "we," "us," and
"our" refer to Medi-Hut Co., Inc.
This Form 10-SB contains certain forward-looking statements For this
purpose any statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Medi-Hut's control. These factors include but are not limited to economic
conditions generally and in the industries in which Medi-Hut may participate;
competition within Medi-Hut's chosen industry, including competition from much
larger competitors; technological advances and failure by Medi-Hut to
successfully develop business relationships.
DESCRIPTION OF BUSINESS
Business Development
Indwest, Inc. was incorporated in the state of Utah on August 20, 1981 as
Gibraltor Energy. Gibraltor Energy effected several name changes over the
years: Gibraltor Group in 1986, Computermall of Philadelphia, Inc., in 1987,
Steering Control Systems, Inc. in late 1987 and Indwest, Inc. in 1995.
Indwest did not have operations since its inception. Medi-Hut Co., Inc. was
incorporated in the state of New Jersey on November 22, 1982 and was involved
in the business of selling wholesale medical supplies ("Medi-Hut, New
Jersey").
On January 28, 1998 Medi-Hut, New Jersey entered into an Agreement and
Plan of Reorganization with Indwest. Indwest was the surviving corporation of
the merger and changed its name to Medi-Hut Co. Inc., a Utah corporation
("Medi-Hut, Utah"). Pursuant to the merger agreement, the directors and
officers of Indwest resigned and the management of Medi-Hut, New Jersey filled
the vacancies, and the former shareholders of Medi-Hut, New Jersey obtained
55.4% of the voting power.
On February 2, 1998 Medi-Hut Co., Inc. was incorporated in the state of
Delaware. On February 27, 1998, Medi-Hut, Utah completed a change of
domicile merger with Medi-Hut. We currently are a Delaware corporation
holding a Certificate of Authority to do business in the state of New Jersey.
Our Business
We private label insulin syringes, condoms, alcohol prep pads, hot and
cold packs, and over-the-counter drugs through various suppliers. We hold a
patent for a passive device safety syringe and in June of 1995 we received a
510 (k) Food and Drug Administration (the "FDA") approval to market our
patented Autoblock Safety Syringe (the "Autoblock Syringe"). (See, "Product
Development," below.) In April of 1999 we introduced our own "Elite" brand of
medical supplies and in September of 1999 we launched our Tru-Choice brand of
over-the-counter drugs ("Tru-Choice drugs"). We sell our products through drug
wholesalers who then sell the products to pharmacies and through mail order.
Principal Products.
During our fiscal year 1998, approximately 32% of our revenues come from
our alcohol prep pads. These alcohol preps complement our syringe product
line because they are primarily used as a topical antiseptic, anti-infective
prior to administering injections. Each soft, absorbent, non-woven pad is
impregnated with 70% isopropyl alcohol, USP. Our alcohol preps are made under
strict quality control guidelines in the United States. We produce our alcohol
preps in two sizes and package them 100 or 200 per box.
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Our condoms are made of natural rubber latex and are silicone lubricated
with a reservoir tip. Our latex condoms are made to exacting specifications,
with each condom electrically tested for holes during the manufacturing
process, dimensional checks are performed and leak tests using water are also
conducted. Our condoms are manufactured in Korea at a plant that is ISO 9002
approved and then our condoms are tested by the FDA prior to entering the
United States marketplace. (See, "Government Regulation," below.) Our condom
sales accounted for approximately 24% of our revenues during the fiscal year
1998. The FDA recently adopted a requirement that each individually wrapped
condom have a lot number and expiration date. We have been using lot numbers
and expiration dates on our condom packages for the last ten years. We have
not had any recalls or product complaints regarding our condoms.
Our medical products, which include our insulin syringes, hot and cold
packs, gauze, and paper products accounted for approximately 43% of our
revenues during fiscal year 1998. A further breakdown shows 16% of revenues
came from sales of syringes. No insulin syringes were sold during the 1998
fiscal year.
Our hot and cold therapy pack can be stored in a freezer for instant cold
therapy, or can be heated for heat therapy. Our hot and cold therapy pack
uses a non-toxic gel that naturally produces moist heat and has a soft
non-woven cover. When kept in the freezer for instant cold therapy the pack
remains flexible to mold to any area of the body. The pack can be heated
using a microwave, conventional oven or hot water. Our pack can be used over
and over again and remains effective for up to forty-five minutes and, we
believe, provides superior value over limited use or disposable packs. Our
packs are manufactured in the United States by Packaging Electronics and
Device Corporation, the company who holds the patent for our hot and cold
packs.
Our syringes are manufactured at an ISO 9002 facility in Korea. Our
insulin syringes are designed and calibrated specifically to allow precise
measurement of small amounts of insulin. Insulin syringes are longer and
slimmer than standard hypodermic syringes, have a maximum capacity of 1
milliliter, and are calibrated in biologically active insulin "units."
Insulin syringes are also designed to eliminate the amount of dead space in
the syringe tip to ensure that the full measured dose is injected.
In September of 1999 we launched our Tru-Choice drugs product line. This
product line includes pseudoephedrine, acetaminophen, ibuprofen, calcium
antacid, calcium carbonate, chlorpheniramine, aspirin, diphenhydramine,
simethicone and senna laxative. We have sold over $190,000 of these drug
products since their release.
Distribution
Our existing products are sold through large drug wholesale chains in the
United States who then sell them through pharmacies and mail order. We do not
use a large sales force. We conduct our sales to wholesale distributors from
our office located in Lakewood, New Jersey. We use three employees who
contact the wholesalers by telephone or make periodic visits. Once we have
made a sale to a wholesaler, we place a purchase order with one of our
third-party suppliers. Usually, the purchase order provides shipping
instructions to the third-party supplier for delivery of the product to the
wholesaler. In the event the product is not shipped by the third-party
supplier, we have the product delivered to our warehouse and then ship it
directly from our warehouse inventory to the wholesaler.
Our policy is to have at least 80% of a product in inventory prior to
generating a purchase order for the product. We carry a one month inventory
of products which are warehoused at the third-party manufacturer or assembly
facilities we use. Our customary business practice is for our large buyers to
place purchase orders several months in advance. This allows us to notify our
third-party suppliers in advance of needed product. All sales are on thirty
(30) day credit. Returned merchandise is minimal due to the vigorous tests
that our products endure prior to shipment.
Principle Suppliers and Customers
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We purchase products internationally from FDA registered and ISO 9002
approved medical device facilities, as well as, manufacturers here in the
United States. We rely on four suppliers of our products. Calatex, Inc.,
located in California, produces our condoms. H & P Industries, located in
Wisconsin, manufactures our alcohol preps and is currently in the process of
re-tooling its machines to increase its capacity. Shina Corporation, located
in Seoul, Korea, manufactures our syringes. Advanced Pharmaceutical, Inc.
produces our Tru-Choice drugs.
Banta Health Care Products, Inc., located in Michigan, produces our
miscellaneous paper products. We have teamed up with Packaging Electronics
and Device Corporation for production of our hot & cold packs. Packaging
Electronics and Device Corporation holds the patent to the hot and cold pack
we sell and allows us to distribute and use our Elite brand label on their
unique product. We are dependent upon these suppliers and the loss of any one
of these suppliers would have a material adverse effect on our operations.
However, we believe any of our suppliers could be replaced within sixty (60)
days.
Our ordinary course of business is to place a purchase order with our
third-party suppliers when we want to order product. We do not enter into
long term formal contracts with our third-party suppliers in regards to the
private brand labeling or manufacture of our products. However, we do require
such third-party suppliers to agree not to disclose confidential information
regarding the identity of our customers to third parties, to not directly or
indirectly compete with us, nor to contact our customers. We also require the
third-party supplier to agree to follow our delivery instructions in the
purchase order.
During the last three fiscal years our total number of customers has been
42, 38 & 35, respectively. During our fiscal year 1997 we relied on two major
customers, Rugby Watson Pharmaceuticals and Darby Drug Company for
approximately 50% ($649,157) of our aggregate sales. These companies
purchased primarily insulin syringes, condoms and alcohol preps. In 1998 we
relied on three major customers, Rugby Watson Pharmaceuticals, Darby Drug
Company, and Oxbrook Marketing for 80% ($620,361) of our aggregate sales.
These sales were primarily condoms and alcohol preps. The loss of any one of
these customers would have a material adverse effect on our results of
operations.
Product Development.
We are committed to search out and develop safety products for the health
care profession and to supply the consumer with quality medical products for a
reasonable price. We incurred approximately $32,201 in research and
development costs during 1995 for FDA registration and patent protection of
our Autoblock Syringe. We have not had any other research and development
costs since that time.
Our Elite brand Autoblock Syringe is our newest product. Safety
syringes are defined as those products that incorporate features designed to
safely cover the sharp needle with minimal effort and danger to the user by
preventing accidental needle sticks. There are two types of anti-stick
syringes: 1) Active device - this product demands that the user in some way
make a physical movement to activate the device after the injection and prior
to disposal; 2) Passive device - this product activates automatically after
injection and should be designed not to interfere with the normal injection
procedure.
Our Autoblock Syringe is a passive device which had a 90% acceptance
rating in its clinical evaluations. The Autoblock Syringe incorporates a
transparent sleeve into which the needle will automatically retract after use.
Unlike the anti-stick syringes that are now in the marketplace, our Autoblock
Syringe can be activated using a one hand technique. We believe our Autoblock
Syringe will decrease accidental needle sticks of medical service providers.
(See, "Managements' Discussion and Analysis - Results of Operations," below.)
We have not started production of the Autoblock Syringe, but in October
of 1999 we entered into a letter of intent and are currently negotiating the
production of the Autoblock Syringe in a FDA registered and ISO 9002 approved
facility in Korea. We anticipate that the Autoblock Syringe will be
manufactured using sophisticated, patented, high-tech machinery which will
allow production of a precise quality product. Management expects the
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$1 million raised in the August 1999 private placement to be adequate to fund
such production. Based on timely completion of the required assembling
machines, we expect to start production of the Autoblock Syringe in late 2000.
We intend to contract out the manufacture of the Autoblock Syringe at least
for the first 18 months so that we can enter the marketplace in an orderly and
timely manner. We expect to market our Autoblock Syringe through hospital
distributors that will handle the selling, in house training of users,
warehousing and distribution of this product.
Competition
Our markets are dominated by a few established companies which have been
in the market for several years and we believe the selling prices of our
products have become well established. The primary factors which allow us to
remain in the market is the price and quality of our products. During the
past seventeen years we have continued to operate in our markets even though
we believe we have less than a 1% share of such markets.
We compete with established companies such as The Kendall Corporation
which dominates the health profession alcohol preps market and Becton
Dickinson which dominates the consumer market for alcohol preps. The condom
market is dominated by Carter Wallace, Inc. (Trojan) and Durex Consumer
Products, Inc., a division of London International Group, Inc. (Sheik). 3M
and Becton Dickinson lead the hot and cold pack market. Becton Dickinson
dominates the insulin syringe market with 78% of the market and Sherwood
Medical has approximately 20% share and the remainder of manufacturers have
less than a 4% share.
We maintain our competitive stance by offering a quality product for less
money. All of our products are priced lower than products sold by the market
leaders, which allows our third party wholesalers to realize greater profits.
Our alcohol preps are essentially identical to other alcohol preps in the
market. Our condoms are subjected to a battery of tests before they are
released on the market and during the past ten (10) years we have not had a
recall or product complaint. We have also used lot numbers and expiration
dating on the packaging of all of our condoms for several years before it was
required by the FDA. When the need for a latex warning was deemed necessary
by the FDA, we were one of the first companies to comply with the law.
The market for insulin syringes is unique because this type of syringe is
used in a non-professional setting, namely diabetic patients. We believe our
syringe meets the needs of the diabetic patient because it is easy to read and
has a needle that is sharp enough to allow for a comfortable injection. We
also use packaging similar to the market leader Becton Dickinson for our
insulin syringe.
We have teamed up with Packaging Electronics and Device Corporation for
the production of our hot and cold packs. Packaging Electronics holds the
patent for our particular hot and cold pack and, therefore, produces a unique
product at a competitive price. Our hot and cold pack incorporates a soft
non-woven fabric that surrounds a non-toxic gel and can be reused again and
again.
The safety syringe market is dominated by Becton Dickinson and Sherwood
Medical. Both of these companies manufacture an active device which requires
two hands and activates manually after the injection. Our Autoblock Syringe
can be activated using a one hand technique. We expect to price this product
lower than our competitors. Retractable Technology, a Texas Corporation, has
entered the market place recently with a passive device similar to our
Autoblock Syringe. However, we intend to price our Autoblock Syringe
approximately 15% less than this competitor's passive syringe device.
Trademark, License and Intellectual Property
Our Autoblock Syringe holds United States Patent No. 5,562,626, issued
October 8, 1996. We believe that this patent is of material importance to the
future growth of our business because of the anticipated growth in the safety
syringe markets. The Autoblock Syringe is classified as a passive anti-stick
safety syringe and is one of the few that can be activated with the ease of
use of a normal plastic disposable syringe. We also hold the FDA 510 (k)
#K933569 which allows us to assign the manufacturing rights of the Autoblock
Syringe. (See, "Government Regulation," below.) The 510(k) is listed as an
initial distributor of a Class II Special Controls device. We do not
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have any licenses, franchise or concessions agreements in place for this
product at this time. We believe our future success will depend, in part, on
our ability to protect our Autoblock Syringe patent and to launch full scale
manufacturing of these syringes. However, if a third party infringes upon our
patent we could expend substantial costs in its protection.
Government Regulation
Our medical products are subject to regulation by the federal FDA and
various other federal and state agencies as well as by a number of foreign
governmental agencies. Our third-party manufacturers are primarily
responsible for our products meeting these regulations. We believe they are
in compliance in all material respects with the regulations. Compliance with
these regulations has not had, and is not expected to have, a material adverse
effect on our business.
The companies in the United States that manufacture our products must be
registered with the FDA. Our contract manufacturers must comply with an FDA
registration process and are subject to random and unannounced on-site FDA
periodic inspections. Our foreign suppliers finished products are analyzed
and tested by the FDA either once the product enters the United States, or
when it is taken off the shelf of a pharmacy or hospital. Our third party
manufacturers are responsible for education of their employees regarding FDA
requirements and receive all changes of rules applicable either to product
compliance or good manufacturing procedures as announced in the Federal
Register. We notify our suppliers of changes that we deem necessary or we are
aware of that are being discussed within the governmental agencies. By
keeping our third party manufacturers informed we help them remain on the
cutting edge of governmental changes in laws.
We filed a Section 510(k) notification of intent to market our Autoblock
Syringe and on March 14, 1995 the FDA granted approval to manufacture and
market the Autoblock Syringe in the United States. This 510(k) approval is
not FDA approval of the Autoblock Syringe, but approval to market the syringe.
The purpose of a 510(k) is to demonstrate that the medical device is
substantially equivalent to a legally marketed device that was or is currently
on the United States market. A device is substantially equivalent if, in
comparison to a legally marketed device it (a) has the same intended use as a
legally marketed device and has the same technological characteristics as such
device or (b) has the same intended use as such device; and has different
technological characteristics that have to be proved safe.
In the case of our Autoblock Syringe, we were required to perform a
clinical evaluation study to prove that the Autoblock Syringe, as intended for
use, was similar to devices on the market that had no spring activation. We
then met with the FDA after the clinical evaluation. The FDA inquired about
the number of syringes used in the evaluation and where in the hospitals the
evaluations were located. After this meeting the FDA granted the 510(k)
without further inquiry.
Our FDA registration is listed as an initial distributor. If, and when
we decide to manufacture the Autoblock Syringe through another FDA registered
manufacturer or manufacture the Autoblock Syringe in-house, we will, if
necessary, register the manufacturer, or we will register Medi-Hut itself as a
manufacturer. After registration with the FDA, the FDA will inspect the
facility for compliance with the general controls. The general controls
provisions require annual registration, listing of devices, good manufacturing
practice, and labeling. It also prohibits misbranding and adulteration. The
Autoblock Syringe is classified as a Class II, Special Controls device which
is subject to additional controls. If the FDA has questions at the time of an
inspection, we will have a reasonable time to answer and comply with the
necessary governmental concerns.
We purchase product from international suppliers who we require to be ISO
9002 approved. ISO 9002, the International Quality System Standard, is a
quality assurance program with a principle focus on management responsibility,
planning, monitoring, corrective action, and documentation. These principles
are applied to the production and the installation aspects of a business. ISO
9002 applies in situations when:
a) The specified requirements for product are stated in terms of an
established design or specification, and
b) Confidence in product conformance can be attained by adequate
demonstration of a supplier's capabilities in production, installation and
servicing.
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An ISO 9002 facility uses procedures that include management, quality plans,
contracts, document/data, purchasing, traceability, process control,
correct/prevent, storage/handle, quality records, auditing, training,
servicing, and statistics.
Employees
We have three employees, two of which are directors and officers.
Reports to Security Holders
Following the effective date of this registration statement, we will be
required to comply with the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). We will file annual, quarterly
and other reports with the Securities and Exchange Commission (the "SEC"). We
also will be subject to the proxy solicitation requirements of the Exchange
Act and, accordingly, will furnish an annual report with audited financial
statements to our stockholders. We currently use an investor relations firm,
Columbia Financial Group, and interested persons may call at (888) 301-6271.
Columbia Financial Group has also entered into an agreement on our behalf with
Internet Stock Market Resources for dissemination of our company information
to its subscribers.
Available Information
Copies of this registration statement may be inspected, without charge,
at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington D.C.
20549 and at the Northeast Regional offices of the SEC located at 7 World
Trade Center, Suite 1300, New York, New York 10048. The public may obtain
information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0300. Copies of this material also should be available through
the Internet by using the SEC's EDGAR Archive, the address of which is
http://www.sec.gov.
MANAGEMENTS' DISCUSSION AND ANALYSIS
Medi-Hut is in the business of selling wholesale medical supplies through
drug wholesalers. We realize revenue when products are shipped and title
passes to our wholesalers. Our inventory consists of finished products which
are warehoused at the third-party manufacturer's or supplier's facility or
when necessary at our own warehouse. Revenue is net of returns, which have
historically been less than 2% of gross sales. Costs of sales primarily
consist of the cost of the products purchased from third-party vendors and
shipping costs. Selling, general and administrative expenses include
employee salaries and benefits, employee travel expenses, advertising, office
expenses and occupancy costs. Our fiscal year ends on October 31 and the
interim period used in these discussions is the eight month period ended June
30, 1999.
Merger Treatment
In February of 1998, Medi-Hut, New Jersey became a public company by
completing a merger with Indwest, Inc., a publicly traded company seeking a
merger candidate. Pursuant to the merger agreement, Indwest issued 4,295,000
of its common shares to twenty shareholders of Medi-Hut, New Jersey in
exchange for 100% of the outstanding shares of that company. Indwest was the
surviving entity and changed its name to Medi-Hut Co., Inc. As a result of
the merger Medi-Hut, Utah acquired the business operations, products and
assets of Medi-Hut, New Jersey.
The merger was structured as a tax free stock-for-stock exchange
according to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. For accounting purposes, the merger was treated as an acquisition of
Indwest by Medi-Hut, New Jersey, and a recapitalization of Medi-Hut, New
Jersey. As a result of the merger, the former shareholders of Medi-Hut, New
Jersey held 55.4% of Medi-Hut, Utah's outstanding common shares. Immediately
after the merger, affiliates held 5,419,789 common shares and non-affiliates
held 2,326,011 common shares.
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Subsequently, Medi-Hut, Utah changed its domicile from Utah to Delaware.
Indwest had no operations since inception and the surviving corporation's
operations are entirely those of the former and new Medi-Hut.
Liquidity and Capital Resources
In over seventeen years of business, we have had adequate cash flows to
operate our business activities. We have required little short term debt
financing and management expects with the introduction of our new product
lines, we will meet our present requirements for working capital and capital
expenditures. We have funded our cash requirements primarily through revenues
and sales of our common stock. As of June 30, 1999 we had $85,723 in cash
with total current assets of $371,315. We had current liabilities of $104,421
resulting in a positive net worth of $266,894. We posted an operating loss of
$99,590 for the eight month interim period. We posted current assets of
$441,298 at the end of fiscal year 1998 with 49.4% of that sum represented by
accounts receivable. The increase in accounts receivable was due to the sale
of condoms to a new account in the last month of the fiscal year.
A summary of our audited balance sheets for the years ended October 31,
1998 and 1997 and our balance sheet for the eight month interim period ended
June 30, 1999 are as follows:
Years Ended October 31, Interim Period Ended
1997 1998 June 30, 1999
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Cash/Cash Equivalents $ 116,144 $ 167,920 $ 85,723
Current Assets 189,085 441,298 371,315
Total Assets 220,045 479,018 420,275
Total Current Liabilities 133,743 83,506 104,421
Total Stockholder's Equity 86,302 395,512 315,854
Total Liabilities & Stockholder
Equity 220,045 479,018 420,275
Net cash used for our operating activities was $235,718 for the 1998
fiscal year, compared to $26,164 net cash provided by operating activities for
1997. The net loss posted for fiscal year 1998 was a result of decreased
revenues. As of October 31, 1998, our principal commitments consisted of
office and warehouse space. Future minimum lease payments are $36,080 through
the year 2000 and our rent expenses have totaled $22,639 and $26,661 for
fiscal year 1998 and 1997, respectively.
Net cash provided by financing during fiscal year 1998 was $289,390, and
came primarily from sales of our common stock. We sold 27,000 common shares
for $67,500 in January of 1998 and 500,000 common shares in June of 1998 for
$225,000. In August of 1999 we raised $1,000,000 from the sale of 2,200,000
common shares, which we intend to use to commence the production of our
Autoblock Syringe. (See, "Recent Sales of Unregistered Securities," below.)
Another source of cash is a working capital line of credit for $50,000
under which PNC Bank, N.A. has agreed to make loans at 2% above the prime
interest rate. This credit line was renewed in August of 1999 and will expire
in August of 2000. We also had a $150,000 revolving line of credit we
obtained in October of 1997. Pursuant to the agreement, PNC Bank, N.A. agreed
to make loans to us at 3% above the prime interest rate. This line of credit
expired on October 10, 1999. Both lines of credit were secured by all the
assets of Medi-Hut and personal guarantees of our executive officers. As of
the fiscal years ended 1998 and 1997 there was $39,195 and $37,695
outstanding, respectively, on the $50,000 line of credit. As of June 30, 1999
the amount outstanding was $39,651. We had a $0 balance on the $150,000
credit line at the end of both fiscal years.
On October 4, 1999, we received preliminary approval from the New Jersey
Economic Development Authority for $5.75 million in financial assistance to
build a Autoblock Syringe manufacturing facility in New Jersey. However, the
New Jersey Authority may not be able to allocate tax-exempt private activity
bonds if it
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receives financing requests which exceed its private activity bond caps or if
it determines that other projects should have priority over Medi-Hut's
project. We are awaiting their final decision.
If additional funds are needed for our future growth, we can not assure
that funds will be available from any source, or, if available, that we will
be able to obtain the funds on terms agreeable to us. The acquisition of
funding through the issuance of debt could result in a substantial portion of
our cash flows from operations being dedicated to the payment of principal and
interest on the indebtedness, and could render us more vulnerable to
competitive and economic downturns.
Any future securities offerings will be effected pursuant to applicable
exemptions under federal and state laws. The purchasers and manner of
issuance will be determined according to our financial needs and the available
exemptions. At this time we have not decided to offer securities and,
accordingly, have not determined the type of offering or the type or number of
securities which we might offer. We have no plans to make a public offering
of our common stock at this time. We also note that if we issue more shares
of our common stock our shareholders may experience dilution in the value per
share of their common stock.
Results of Operations
The following table summarizes the results of our operations for the
fiscal years ended October 31, 1998 and 1997 and for the eight month interim
period ended June 30, 1999.
Years Ended October 31, Interim Period Ended
1997 1998 June 30, 1999
------------- ------------- -------------------
Sales $ 1,165,565 $ 779,537 $ 488,156
Cost of Sales 818,573 552,173 352,273
Gross Profit 346,992 227,364 135,883
Selling, General &
Administrative Expenses 333,875 254,345 236,369
Operating Income or (Loss) 13,117 (26,981) (100,486)
Interest Income 1,328 2,126 (1,679)
Interest Expense (4,205) (4,000) 2,785
Provision for Income Taxes 3,650 325 1,566
Net Income (loss) 6,590 (29,180) (103,158)
Sales. Sales decreased $386,028 from fiscal year 1997 to 1998. As of
June 30, 1999 we posted $488,156 in sales. This decrease in sales was a
result of a decrease in sales of our private label insulin syringe. We lost
the Rugby Laboratories account due to that company's change in ownership and
the new management's decision to use a manufacturer who produced the syringe
in the United States. The loss of this account represented approximately
$375,000 in sales. As a result of the decrease in sales we posted an
operating loss in 1998 of $26,981 compared to an operating income of $13,117
in 1997. Sales remained down through the interim period due to the loss of
insulin syringe sales and we posted a net operating loss of $100,486.
However, as of October 1999 we have an order for our Elite brand insulin
syringes and orders for our Tru-Choice drugs. Management believes these
developments should increase our sales for the upcoming fiscal quarter.
Cost of Sales. Cost of sales remained relatively constant, approximately
70% of sales, for fiscal year 1997, 1998 and the interim period.
Selling, General and Administrative. In fiscal year 1998, selling,
general and administrative expenses dropped $79,530 from fiscal year 1997.
The decrease in expenses resulted primarily from a $55,630 decrease in officer
and employee salaries and termination of the profit sharing plan in fiscal
year 1998. We posted $236,369 for
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such expenses during the eight month interim period. In the future we expect
to see an increase in our general and administrative expenses due to
accounting and legal fees required for preparation of annual and quarterly
reports which are required of a fully reporting company.
Income Tax. We have approximately $32,000 available net operating loss
carry forwards as of October 31, 1998. We may use these carry forwards to
reduce our Federal taxable income and tax liabilities in future years. The
carry forwards begin to expire October 31, 2012. As of June 30, 1999 we
recorded $1,566 for corporate business tax.
Management expects our Tru-Choice drugs and the Autoblock Syringe to
provide new sources of revenue during fiscal year 2000. Management also
anticipates increases in user demand for safety syringes as states and OSHA
make regulatory changes requiring such devices. Currently, OSHA's Bloodborne
Pathogens Standard, adopted December 6, 1991, requires methods be used in the
workplace to eliminate or minimize employee exposure to blood or other
potential infectious materials. (29 CFR 1910.1030(d)(2) (I-ii).) OSHA has
recently requested information from health care providers to establish the
need for further regulations. On November 5, 1999 OSHA announced new
directives which did not establish new requirements, but reminded employers to
use readily-available technology in safety and health programs. However, OSHA
has not taken definitive action at this filing and we cannot assure that such
regulations requiring the use of safety syringes will be established in the
future. However, we believe that more medical care facilities are increasing
their use of safer medical devices to avoid accidental needle sticks.
Management believes the following factors will affect our future results
of operations: 1) Maintenance of our market share due to pricing our quality
products below our competitors prices; 2) continued concern of the public and
government entities about sexually transmitted diseases; 3) changes in federal
and regulations which will require use of safety syringes by health care
workers; and 4) continued multi-dose injection regimes for insulin users.
Quarterly Trends
We do not anticipate experiencing seasonal fluctuations in our operations
because sales of medical supplies is not seasonal in nature.
Year 2000 Compliance
We have completed a review of our computer systems and operations to
determine the extent to which our business will be vulnerable to potential
errors and failures as a result of the "Year 2000" problem. Year 2000
failures could result in system failures or miscalculations, causing
disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices, provide services or engage
in similar activities. These failures, miscalculations and disruptions could
have a material adverse effect on our business, operations and financial
condition.
We have concluded, based on our review of our operations and computer
systems, that our significant computer programs and operations will not be
materially affected by the Year 2000 problem. Our computer systems include a
personal computer using Write Plus software package. The computer calculates
and produces our inventory, pricing, accounting and invoicing. We completed an
in-house protocol check which demonstrated that the system was in full
compliance. Due to the minimal computer hardware and software we use, we can
modify or replace any programs that are not year 2000 compliant at an
insignificant cost.
Under a reasonably likely worst case scenario, our operations may
experience accounting or billing errors and inventory miscalculations. As a
contingency plan we have placed purchase orders with our suppliers into the
first quarter of 2000. We have ordered these products under our current
payment terms.
We have also made inquiries to our third-party suppliers to ascertain if
they are Year 2000 compliant. Based upon written responses provided by these
suppliers, management is satisfied that two suppliers, H&P
9
<PAGE>
Industries and Calatex, Inc., are Year 2000 compliant. The remaining
suppliers are making appropriate examinations and necessary upgrades to insure
Year 2000 readiness. We will continue to monitor the progress of these
suppliers and will use our contingency plan of stock piling products in
November and December to mitigate potential disruptions. Although we do not
anticipate any material adverse effects, we cannot guarantee that no
disruptions in products or services will occur if multiple suppliers
experience Year 2000 problems.
PROPERTIES
We lease 3500 square feet of office and warehouse space located in
Lakewood, New Jersey. The leased premises are part of a 35,000 square foot
industrial park. The term of the lease is for five years and will expire in
February of 2000. We currently pay $2,025.21 per month, but the monthly rent
payment is contingent upon increases in taxes, insurance and common area
maintenance expense. We have the right to renew the lease for a period of
five (5) years after the initial term and we may cancel the lease with a 90
days written notice to the landlord. We are currently negotiating a new lease
with additional space to accommodate our anticipated growth.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our
outstanding common stock of; (i) each person or group known by us to own
beneficially more than 5% of our outstanding common stock, (ii) each of our
executive officers, (iii) each of our director's and (iv) all executive
officers and directors as a group. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or
investment power with respect to securities. Except as indicated by footnote,
the persons named in the table below have sole voting power and investment
power with respect to the shares of common stock shown as beneficially owned
by them. The percentage of beneficial ownership is based on 10,472,800 shares
of common stock outstanding as of August 10, 1999.
MANAGEMENT
Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
- ----------------------- --------------------- ---------------------
Joseph A. Sanpietro 3,279,200 31.3 %
1935 Swarthmore Avenue
Lakewood, New Jersey 08701
Vincent J. Sanpietro 819,800 7.8 %
1935 Swarthmore Avenue
Lakewood, New Jersey 08701
Robert Russo 5,000 * %
1935 Swarthmore Avenue
Lakewood, New Jersey 08701
All executive officers and
directors as a group 4,104,000 39.2 %
*Less than one percent
10
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Our directors, executive officers and key employees and their respective
ages and positions with us are set forth below. Biographical information for
each of those persons is also presented below. Our bylaws provide for a Board
of Directors consisting of three directors. Our directors serve for terms of
one year. Our executive officers are chosen by our Board of Directors and
serve at its discretion. Joseph Sanpietro and Vincent Sanpietro are brothers.
Directors and Officers
Name Age Position Held
----------------------- ---- --------------------
Joseph A. Sanpietro 49 President, Director
Vincent J. Sanpietro 52 Secretary, Director
Robert Russo 40 Treasurer, Director
Joseph A. Sanpietro. President and Director of Medi-Hut since January 1998.
Since 1982 Mr Sanpietro served as President of Medi-Hut, New Jersey. He
graduated from Hofstra University in 1972, with a Bachelor of Science degree
in chemistry and he continued his education at Seton Hall University with
studies in chemistry and law. Mr. Sanpietro has had challenging careers with
Cooper Laboratories, as a front line analytical chemist; Schering-Plough as an
international analytical chemist leader where he was the youngest assistant
manager with both BS and MS chemists reporting directly to him. Mr. Sanpietro
was a project manager at Johnson & Johnson heading a multi-million dollar
relocation startup project.
Vincent Sanpietro. Secretary and Director of Medi-Hut since January 1998.
Mr. Sanpietro served as Secretary for Medi-Hut, New Jersey, since 1982. He
graduated with a B.S. degree in Business Administration from New York
Institute of Technology. He held managerial positions in Wells Recruiting
Personnel and he was President of Focus Personnel, an Illinois Corporation.
Mr. Sanpietro was also Vice President of Sales of Focus Medical Products, Inc.
Robert Russo. Treasurer and a Director of Medi-Hut since March 1998. He is
the Managing Senior Partner of Koenig, Russo and Associates, LLC and has been
employed with that firm since 1982. Mr. Russo graduated from Seton Hall
University, New Jersey, with a degree in accounting and received his Masters
in Business Administration in business finance. He has extensive experience
in accounting, auditing, and business management. Mr. Russo has concentrated
his work in the field of taxes, employee benefit programs, business,
financial, estate and retirement planning. Mr. Russo is also a member of the
New Jersey Society of Certified Public Accountants and the American Institute
of Certified Public Accountants.
EXECUTIVE COMPENSATION
Indwest, Inc.'s executive officers did not receive any cash compensation,
bonuses, stock appreciation rights, long term compensation, stock awards or
long-term incentive rights during the fiscal year 1998. The following table
shows the compensation Medi-Hut, New Jersey paid to its executive officers
during the most recent fiscal year ended October 31, 1998.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------
Fiscal Other Annual
Name and Principal Position Year Salary ($) Bonus Compensation
- ---------------------------- ---- ---------- ----- ---------------
Joeseph A. Sanpietro, President 1998 $ 83,940 0 0
and Director
11
<PAGE>
Vincent J. Sanpietro, Secretary 1998 59,540 0 0
and Director
Robert Russo, Treasurer and 1998 0 0 0
Director
Compensation of Directors
We do not have any standard arrangement for compensation of our directors
for any services provided as director, including services for committee
participation or for special assignments.
Employment Contracts
We have not entered into employment contracts with our current executive
officers. The entire Board of Directors, using their business judgment,
determines the yearly salary for each officer. We believe the salaries paid
to our executive officers are reasonable based on their experience and
responsibilities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal year 1998 and 1997 we paid $6,260 and $6,550 to Koenig,
Russo & Associates LLC for the accounting services provided to us by Robert
Russo, our Treasurer. Mr. Russo owns a 100% interest in Keonig, Russo &
Associates LLC.
LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of the
date of this filing.
MARKET PRICE FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Our common stock is traded over-the-counter and quoted on the OTC NASDAQ
Electronic Bulletin Board under the symbol "MHUT." The following table
presents the range of the high and low bid prices of our stock as reported by
the Nasdaq Trading and Market Services for each fiscal quarter for the last
two fiscal years ending October 31 and the eight month interim period ended
June 30, 1999. We had no market activity in our stock prior to February of
1998. Such quotations represent prices between dealers and may not include
retail markups, markdowns, or commissions and may not necessarily represent
actual transactions.
Quarter Ended High Low
---------------- -------- ------
April 30, 1998 4.5 0.05
July 30, 1998 3.375 0.9375
October 31, 1998 1.125 0.28
January 31, 1999 0.53125 0.125
April 30, 1999 0.52 0.23
July 31, 1999 1.03125 0.22
There were approximately 298 stockholders of record as of August 10,
1999. We have not declared dividends on our common stock and do not
anticipate paying dividends on our common stock in the foreseeable future.
Penny Stock
12
<PAGE>
Our shares will be subject to the provisions of Section 15(g) and Rule
15g-9 of the Exchange Act, commonly referred to as the "penny stock rule."
Section 15(g) sets forth-certain requirements for transactions in penny stocks
and Rule 15g-9 (d) (1) incorporates the definition of penny stock that is
found in Rule 3a51-1 of the Exchange Act.
The SEC generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. If
our shares are deemed to be a penny stock, trading in the shares will be
subject to additional sales practice requirements on broker-dealers who sell
penny stocks to persons other than established customers and accredited
investors. Accredited investors are persons with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with
their spouse.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security and must
have received the purchasers written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock. A broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price information
for the penny stocks held in account and information on the limited market in
penny stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in our common stock and may
affect the ability of shareholders to sell their shares.
OTC Bulletin Board Eligibility Rule
In January of 1999, the SEC granted approval of amendments to the NASD
OTC Bulletin Board Eligibility Rules 6530 and 6540. These amendments now
require a company listed on the OTC Bulletin Board to be a reporting company
and current in its reports filed with the SEC. As a result of this rule
change we have voluntarily filed this registration statement in order to
become a fully reporting company and maintain the listing of our common stock
on the OTC Bulletin Board. The NASD eligibility rule requires that the SEC
come to a position of no further comment regarding any Form 10 registration
statement before the NASD considers a company compliant. We cannot assure that
the SEC will come to such a position in regards to this registration statement
prior to our phase-in-date of February 2000. According to the eligibility
rule, if we are not in compliance at our phase-in date our common stock will
be removed from the OTC Bulletin Board. In that event, we intend to move our
listing to the National Quotation Bureau's Pink Sheets. This delisting may
adversely affect the market, if any, in our stock.
RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities sold by us within the
past three years without registration:
On January 23, 1998, Indwest issued an aggregate of 1,751,251 common
shares to twelve persons for $33,333 in costs paid for or on behalf of Indwest
and for services rendered to Indwest in connection with the merger with
Medi-Hut, New Jersey. The issuance of such shares was exempt from
registration under the Securities Act of 1933 by reason of Sections 3(b) and
4(2) as a private transaction not involving a public distribution.
On March 2, 1998 we issued warrants to Columbia Financial Group to
purchase 200,000 shares of our common stock at an aggregate exercise price of
$775,000 in consideration for its public relations services. (See,
"Description of Securities - Warrants," below.) The issuance of such
warrants was exempt from registration under the Securities Act of 1933 by
reason of Sections 3(b) and 4(2) as a private transaction not involving a
public distribution.
In March 17, 1998, we sold an aggregate of 27,000 common shares for
$67,500 to eight persons. The issuance of such shares was exempt from
registration under the Securities Act of 1933 by reason of Sections 3(b) and
4(2) as a private transaction not involving a public distribution.
On June 4, 1998, pursuant to Rule 504 of Regulation D, we sold 500,000
common shares to two accredited persons for $225,000. A 10% commission was
paid for this offering.
13
<PAGE>
On June 1, 1999 we issued an aggregate of 500,000 warrants to Columbia
Financial Group in consideration for its services as our public relations
consultant. The warrants are exercisable upon issuance for a period of three
years, ending June 1, 2003, with an aggregate exercise price of $437,500.
(See, "Description of Securities - Warrants," below.) The issuance of such
warrants was exempt from registration under the Security Act of 1933 by reason
of Sections 3(b) and 4(2) as a private transaction not involving a public
distribution.
On August 4, 1999, we offered an aggregate of 2,200,000 common shares for
$1,000,000 pursuant to Rule 504 of Regulation D. Five accredited investors
purchased 2,200,000 common shares for the $1 million aggregate offering price
A 10% commission was paid for this offering.
In each of the private transactions above we believe that each purchaser
(i) had access to or was provided information regarding Medi-Hut; (ii) was
aware that the securities had not been registered under federal securities
laws; (iii) acquired the securities for his/her/its own account for investment
purposes of the federal securities laws; (iv) understood that the securities
would need to be indefinitely held unless registered or an exemption from
registration applied to a proposed disposition; and (v) was aware that the
certificate representing the securities would bear a legend restricting its
transfer. We believe that, in light of the foregoing, the sale of our
securities to the respective acquirers did not constitute the sale of an
unregistered security in violation of the federal securities laws and
regulations by reason of the exemptions provided under Sections 3(b) and 4(2)
of the Securities Act, and the rules and regulations promulgated thereunder.
DESCRIPTION OF SECURITIES
Common Stock
We have 100,000,000 authorized common shares, par value $.001, of which
10,472,800 common shares are issued and outstanding. All of our outstanding
common shares are fully paid for and nonassessable. Each share of common
stock is entitled to one vote at shareholders meetings. Our shares of common
stock have no preemptive rights, conversion rights, no redemption or sinking
fund provisions, and are not liable to further call or assessment. Each share
is entitled to share ratably in any asset available for distribution to
holders of equity securities upon the liquidation of Medi-Hut.
Preferred Stock
Medi-Hut has not authorized or issued any preferred stock.
Warrants
Pursuant to consulting agreements with Columbia Financial Group, (See,
"Recent Sales of Unregistered Securities," above) we issued 200,000 common
stock purchase warrants on March 2, 1998 which vested upon issue and expire on
March 2, 2001. The exercise prices are for 50,000 shares at $3.00, $3.50,
$4.00 and $5.00. On June 1, 1999 we granted 500,000 common stock purchase
warrants which vested upon issue and expire on June 1, 2002. The exercise
prices are for 125,000 shares at $0.50, $0.75, $1.00 and $1.25. The warrants
remain outstanding as of June 30, 1999.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and bylaws do not provide for
indemnification of our directors and officers. However, pursuant to Delaware
General Corporate Law Section 145 we must indemnify a present and former
director and officer of Medi-Hut who is successful on the merits or otherwise
in defense of an action or claim. We will indemnify such person for actual
and reasonable expenses incurred by such person only if we determine that such
indemnification is authorized. Such determination will be based upon whether
such person conducted himself in good faith and reasonably believed that his
conduct was in, or not opposed to, the our best interests. In a criminal
action the person must not have had a reasonable cause to believe his conduct
was unlawful. We may advance expenses if the person provides a written
affirmation that he will repay the advance if he is adjudged not to have met
the standard of conduct. Also, we are authorized to purchase insurance on
behalf of an individual for liabilities incurred whether or not we would have
the power or obligation to indemnify him.
FINANCIAL STATEMENTS
Our audited financial statements for the fiscal years ended October 31,
1998 and 1997, and our unaudited financial statements for the eight month
interim period ended June 30, 1999 are as follows:
<PAGE>
Medi-Hut Company, Inc.
Financial Statements
October 31, 1998 (Restated) and 1997
<PAGE>
Medi-Hut Company, Inc.
Index to the Financial Statements
October 31, 1998 (Restated) and 1997
Page
Independent Auditors' Report on the Financial Statements .......... 1
Financial Statements
Balance Sheets .............................................. 2
Statements of Operations .................................... 3
Statement of Stockholders' Equity............................ 4
Statements of Cash Flows .................................... 5
Notes to the Financial Statements............................ 6-10
Independent Auditors' Report on the Additional Information .. 11
<PAGE>
Rosenberg Rich
Baker Berman
& Company
_________________
a Professional Association of
CERTIFIED PUBLIC ACCOUNTANTS
380 Foothill Road * PO Box 6483 * Bridgewater, NJ 08807-0483
Phone: 908-231-1000 * Fax: 908-231-6894
Independent Auditors' Report
To the Board of Directors and Stockholders of
Medi-Hut Company, Inc.
We have audited the balance sheets of Medi-Hut Company, Inc. as of October 31,
1998 and 1997 and the related statements of operations, stockholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Medi-Hut Company, Inc. as of
October 31, 1998 and 1997, and the results of their operations, and cash flows
for the years then ended in conformity with generally accepted accounting
principles.
As discussed in the "RESTATEMENT" note to the financial statements, the
Company revised its valuation of the warrants issued and, accordingly, the
October 31, 1998 financial statements have been restated to reflect the
revised valuation.
/s/ Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
November 23, 1998, except for the "RESTATEMENT" note to the financial
statements which is dated November 4, 1999.
<PAGE>
Medi-Hut Company, Inc.
Balance Sheets
October 31,
----------------------------
1998 1997
------------- --------------
(Restated)
Assets
Current Assets
Cash $ 167,920 $ 116,144
Accounts receivable 204,881 46,976
Inventory 38,739 24,558
Prepaid expenses 4,508 1,407
Prepaid consulting expense - current 25,250 -
------------- --------------
Total Current Assets 441,298 189,085
------------- --------------
Machinery and Equipment 27,316 27,316
Less: Accumulated Depreciation (27,053) (26,528)
------------- --------------
Net Machinery and Equipment 263 788
Capitalized Cost Reduction, net of
accumulated amortization of $3,216 and
$1,815, respectively 1,580 1,085
Prepaid consulting expense, net of
current portion 8,400 -
Patent and Licensing Costs, net of
accumulated amortization of $4,724 and
$3,114, respectively 27,477 29,087
------------- --------------
Total Assets 479,018 220,045
============= ==============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 44,311 67,420
Lines of credit 39,195 37,695
Profit sharing plan payable - 28,628
------------- --------------
Total Current Liabilities 83,506 133,743
------------- --------------
Stockholders' Equity
Common stock 8,273 1,000
Additional paid-in capital 331,117 -
Retained earnings 56,122 85,302
------------- --------------
Total Stockholders' Equity 395,512 86,302
------------- --------------
Total Liabilities and Stockholders'
Equity $ 479,018 $ 220,045
============= ==============
See notes to the financial statements. 2
<PAGE>
Medi-Hut Company, Inc.
Statements of Operations
Year Ended October 31,
-----------------------------
1998 1997
------------- --------------
(Restated)
Net Sales $ 779,537 $ 1,165,565
------------- --------------
Cost of Goods Sold
Beginning inventory 24,558 35,400
Net Purchases 554,539 755,887
Custom fees/freight 11,815 51,844
------------- --------------
Cost of Goods Available for Sale 590,912 843,131
Less: Ending Inventory 38,739 24,558
------------- --------------
Cost of Goods Sold 552,173 818,573
------------- --------------
Gross Profit 227,364 346,992
Selling, General and Administrative
Expenses 254,345 333,875
------------- --------------
Income (Loss) from Operations (26,981) 13,117
------------- --------------
Other Income (Expense)
Interest income 2,126 1,328
Interest expense (4,000) (4,205)
------------- --------------
Total Other Income (Expense) (1,874) (2,877)
------------- --------------
Income (Loss) Before Provision for Income Taxes (28,855) 10,240
Provision for Income Taxes 325 3,650
------------- --------------
Net Income (Loss) $ (29,180) $ 6,590
============= ==============
Earnings (Loss) per Common Share $ (.005) $ 65.92
============= ==============
Weighted Average of Common Shares Outstanding 5,953,263 100
============= ==============
Supplemental Earnings (Loss) per Common Share $ 0.004
==============
Supplemental Weighted Average of
Common Shares Outstanding 1,699,549
==============
See notes to the financial statements. 3
<PAGE>
Medi-Hut Company, Inc.
Statement of Stockholders' Equity
Period from November 1, 1996 to October 31, 1998
<TABLE>
<CAPTION>
Common Stock (No
Common Par Value Prior to Additional
Shares Recapitalization) Paid-In Retained
Issued ($.001Par Value) Capital Earnings Total
------------- ------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances, October 31, 1996 100 $ 1,000 $ - $ 8,710 $ 79,710
Net Income, Year Ended October 31, 1997 - - - 6,592 6,592
------------- ------------------- ---------- ---------- ----------
Balances, October 31, 1997 100 1,000 - 85,302 86,302
Recapitalization of Medi-Hut Company, Inc.:
Exchange of all common shares with
Indwest (100) (1,000) 1,000 - -
Outstanding common shares of Indwest
prior to exchange 1,699,549 1,700 (1,700) - -
Issuance of common shares prior to
exchange with Medi-Hut 1,751,251 1,751 31,582 - 33,333
Exchange of Indwest common shares for
all common shares of Medi-Hut 4,099,000 4,099 (4,099) - -
Issuance of common shares 196,000 196 84,304 - 84,500
Acquisition costs related to above - - (122,443) - (122,443)
Issuance of Common Shares Pursuant to a
Private Placement Memorandum 27,000 27 67,473 - 67,500
Issuance of Common Shares Pursuant to a
Private Placement Memorandum (Restated) 500,000 500 224,500 - 225,000
Issuance of Warrants for Services Provided
(Restated) - - 50,500 - 50,500
Net (Loss) Year Ended October 31, 1998
(Restated) - - - (29,180) (29,180)
------------- ------------------- ---------- ---------- ----------
Balances, October 31, 1998 (Restated) 8,272,800 $ 8,273 $ 331,117 $ 56,122 $ 395,512
============= =================== ========== ========== ==========
See notes to the financial statements. 4
</TABLE>
<PAGE>
Medi-Hut Company, Inc.
Statements of Cash Flows
Year Ended October 31,
1998 1997
------------- -------------
(Restated)
Cash Flows From Operating Activities
Net Income (Loss) $ (29,180) $ 6,592
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided (Used) by Operating Activities:
Depreciation and amortization 3,536 3,589
Deferred income taxes - 3,500
Amortization of prepaid consulting expense 16,850 -
Decrease (Increase) in Assets
Accounts receivable (157,905) 19,334
Inventory (14,181) 10,842
Prepaid expenses (3,101) (757)
Increase (Decrease) in Liabilities
Accounts payable and accrued expenses (23,109) (14,183)
Profit sharing plan payable (28,628) (2,753)
------------- -------------
Net Cash Provided (Used) by Operating
Activities (235,718) 26,164
------------- -------------
Cash Flows From Investing Activities
Purchases of patent and licensing costs - (975)
Purchase of capitalized cost reduction (1,896) -
------------- -------------
Net Cash (Used) by Investing Activities (1,896) (975)
------------- -------------
Cash Flows From Financing Activities
Proceeds from sale of common stock 287,890 -
Proceeds from lines of credit 10,000 50,000
Repayment of lines of credit (8,500) (12,305)
------------- -------------
Net Cash Provided by Financing Activities 289,390 37,695
------------- -------------
Net Increase in Cash 51,776 62,884
Cash at Beginning of Period 116,144 53,260
------------- -------------
Cash at End of Period $ 167,920 $ 116,144
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest $ 4,000 $ 3,855
============= =============
Income taxes $ 325 $ 150
============= =============
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING
ACTIVITIES
Common stock purchase warrants were issued by the
Company during 1998 for consulting services
received amounting to $50,500
See notes to the financial statements. 5
<PAGE>
Medi-Hut Company, Inc.
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Medi-Hut Company, Inc. ("Medi-Hut" or "the Company"), a company in the
business of selling wholesale medical supplies, was originally incorporated in
the State of New Jersey on November 22, 1982. On January 28, 1998, the
Company entered into an Agreement and Plan of Reorganization (APR) with a
public company Indwest, Inc. (Indwest), a Utah company incorporated on August
20, 1981 (formerly known as Gibraltor Energy, Gibraltor Group, Computermall of
Philadelphia, Inc. and Steering Control Systems, Inc.). Pursuant to the APR,
Medi-Hut's shareholders exchanged 100% of their common shares for 4,295,000
newly issued shares of Indwest on March 3, 1998.
For accounting purposes, the acquisition has been treated as an
acquisition of Indwest by Medi-Hut and a recapitalization of Medi-Hut. The
historical financial statements prior to January 28, 1998 are those of
Medi-Hut. Pro-forma information is not presented since the combination is
considered a recapitalization. Subsequent to the exchange, Medi-Hut merged
with Indwest whereby Medi-Hut ceased to exist and Indwest, the surviving
corporation, changed its name to Medi-Hut Company, Inc. On February 2, 1998,
Medi-Hut Company, Inc. changed its state of domicile from Utah to Delaware.
The surviving corporation's operations are entirely those of the former and
new Medi-Hut.
Accounts Receivable
No reserve for doubtful accounts has been established since management
believes that all accounts receivable are collectible in full.
Inventory
Inventory is stated at the lower of cost (determined on a first-in,
first-out basis) or market. Market values represent the lower of replacement
cost or estimated net realizable value.
Depreciation
Machinery and equipment are stated at cost. Depreciation is computed
using the straight line method for financial reporting purposes which amounted
to $526 for the years ended October 31, 1998 and 1997. The estimated useful
lives of the machinery and equipment assets for financial statement purposes
are five years. For income tax purposes, recovery of capital costs for
machinery and equipment is made using accelerated methods over the asset's
class life. Repairs and maintenance expenditures which do not extend the
useful lives of the related assets are expensed as incurred.
Amortization
The capitalized cost reduction on the auto lease is being amortized over
the life of the lease (24 months). Total amortization for the years ended
October 31, 1998 and 1997 was $1,400 and $1,452, respectively.
Research and Development
The only research and development costs incurred relate to patent and
licensing costs which are being amortized over their remaining useful lives of
20 years on a straight line basis beginning on the patent application date of
September 11, 1995. The patent was approved on October 8, 1996. Total
amortization for the year ended October 31, 1998 and 1997 was $1,610 each
year.
Earnings (Loss) Per Common Share
Earnings (loss) per common share, in accordance with the provisions of
Financial Accounting Standards Board No. 128, "Earnings Per Share", is
computed by dividing net income (loss) by the weighted average number of
shares of common stock outstanding during the period which are those of the
former Medi-Hut for years ended October 31, 1998 and 1997, respectively.
Common stock equivalents (warrants) have not been included in this computation
since the effect would be anti-dilutive.
<PAGE> 6
Medi-Hut Company, Inc.
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Supplemental Earnings (Loss) Per Common Share
The supplemental earnings (loss) per common share gives effect to the APR
as if the transaction had occurred on November 1, 1996. Accordingly, the
weighted average number of shares of common stock outstanding during the
period in computing supplemental earnings (loss) per common share are those of
Indwest for the year ended October 31, 1997.
Revenue Recognition
Revenues from product sales is recognized at the time of shipment
provided that the resulting receivable is deemed probable of collection.
Income Taxes
In accordance with the provisions of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS No. 109"), deferred taxes are
recognized for operating losses that are available to offset future taxable
income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to realized. The Company incurred
net operating losses for financial-reporting and tax-reporting purposes.
Accordingly, the deferred tax asset has been offset entirely by a valuation
allowance against the related deferred tax asset for the year ended October
31, 1998 and October 31, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Securities Issued for Services
The Company accounts for common stock and common stock purchase warrants
issued for services by reference to the fair market value of the Company's
stock on the date of stock issuance or warrant grant in accordance with
Financial Accounting Standards Board No. 123 "Accounting for Stock-Based
Compensation. (FASB 123)" Compensation/consultant expense is recorded for the
fair market value of the stock and warrants issued.
CONCENTRATIONS OF CREDIT AND BUSINESS RISK
The Company maintains cash balances in a financial institution. Accounts
at the institution are insured by the Federal Deposit Insurance Corporation up
to $100,000 per account, of which the Company's accounts may, at times, exceed
the federally insured limits.
The Company provides credit in the normal course of business to customers
located primarily in the northeastern portion of the U.S. The Company
performs ongoing credit evaluations of its customers.
INVENTORY
Inventory consists of purchased finished goods which totaled $38,739 and
$24,558 at October 31, 1998 and October 31, 1997, respectively.
<PAGE> 7
Medi-Hut Company, Inc.
Notes to the Financial Statements
LINES OF CREDIT
On October 10, 1997, the Company obtained a $150,000 revolving line of
credit under which the bank has agreed to make loans at 3% above the prime
interest rate. The line expired on October 10, 1998 but was renewed until
October 10, 1999 and may be used to support and finance the Company's
commercial foreign letters of credit. As of October 31, 1998 and October 31,
1997, there were $0 outstanding on this line of credit.
At October 31, 1998 and 1997, the Company had a $0 open letters of
credit.
Also on October 10, 1997, the Company obtained a $50,000 working
capital line of credit under which the bank has agreed to make loans at 2%
above the prime interest rate. The line expired on August 30, 1998, but was
renewed until August 30, 1999. As of October 31, 1998 and October 31, 1997,
there was $39,195 and $37,695 outstanding on this line of credit,
respectively.
Both lines of credit are secured by all of the Company's assets and
personal guarantees of the Company's officers.
COMMON STOCK
At October 31, 1998: voting, $.001 par value; 100,000,000 shares
authorized; 8,272,800 shares issued and outstanding.
At October 31, 1997: voting, no par value; 100 shares authorized, issued
and outstanding.
OPERATING LEASE COMMITMENTS
The Company leases certain office and warehouse space (90 days
cancelable) and an automobile under operating leases.
The following is a schedule of future minimum rental payments
(exclusive of common area charges) required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year as of
October 31, 1998.
Year Ending October 31,
1999 $ 25,323
2000 10,757
-----------
Total minimum payments required $ 36,080
===========
Rent expense for the years ended October 31, 1998 and 1997 amounted to
$22,639 and $26,661, respectively.
The office and warehouse lease contain provisions for contingent rental
payments based upon increases in taxes, insurance and common area maintenance
expense.
PROFIT SHARING PLAN
The Company sponsored a qualified profit sharing plan (the plan) effective
October 31, 1993 which set forth certain requirements for eligibility,
vesting and contributions for all full time employees. Contributions to the
plan were discretionary and determined annually by management. The plan was
terminated in February 1998. The profit sharing plan expense for the years
ended October 31, 1998 and 1997 was $0 and $28,678, respectively.
<PAGE> 8
Medi-Hut Company, Inc.
Notes to the Financial Statements
WARRANTS
Pursuant to a two year consulting agreement beginning on March 2, 1998 for
public relations services, the Company issued common stock purchase warrants
as follows:
Exercise Term
No. of Price Per -------------------------- Vesting
Date of Grant Shares Share Start Expiration Rights
- -------------- ------- --------- ------------- ------------- -----------
March 2, 1998 50,000 $ 3.00 March 2, 1998 March 2, 2001 Upon Issue
March 2, 1998 50,000 3.50 March 2, 1998 March 2, 2001 Upon Issue
March 2, 1998 50,000 4.00 March 2, 1998 March 2, 2001 Upon Issue
March 2, 1998 50,000 5.00 March 2, 1998 March 2, 2001 Upon Issue
Consultant expense has been recorded in accordance with FASB 123 as a
part of selling, general and administrative expenses (see "RESTATEMENT"). The
fair value of each warrant issued is estimated on the grant date using the
black scholes pricing model with the following weighted-average assumptions
used for grants for the years ended October 31, 1998 and 1997; dividend yield
of 0%, risk-free interest of 5%, and expected lives of 3 years for the
warrants.
At October 31, 1998 and 1997, there were 200,000 and 0 shares eligible
for exercise, respectively, at prices ranging from $3.00 to $5.00 per share.
The weighted average remaining contractual life of the warrants is 3 years and
0 years, respectively, for the years ended October 31, 1998 and 1997. The
weighted average exercise price of the warrants is $3.88 and $0, respectively,
for the years ended October 31, 1998 and 1997.
PRIVATE PLACEMENT MEMORANDUM
The Company, beginning on March 16, 1998 and lasting up to September 16,
1998, issued a Private Placement Memorandum (PPM) which complied with the
offering exemptions from registration and qualification under the Securities
Act of 1933 and applicable state securities law. Additional capital has been
raised for $67,500 as 27,000 common shares were issued as a result of this PPM
as well as $225,000 (500,000 common shares at $.50 per share less a 10%
commission) through October 31, 1998.
MAJOR CUSTOMERS
For the years ended October 31, 1998 and 1997, the Company had three and
one major customers, respectively, sales to which represented approximately
80%($620,361) and 50% ($549,157), respectively, of the Company's revenues.
The Company had accounts receivable balances due from these customers of
$126,345 and $20,749 at October 31, 1998 and October 31, 1997, respectively.
The loss of these customers would have a materially adverse effect on the
Company.
RELATED PARTY TRANSACTIONS
Accounting services of $6,260 and $6,550 for years ended October 31, 1998
and 1997, respectively, were provided by a firm of which certain individuals
in that firm are shareholders/directors of the Company. The amounts are
included in acquisition costs ($2,660) and accounting and legal ($3,600) in
1998 and entirely to accounting and legal ($6,550) in 1997.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, Accounts Receivable, Accounts Payable and Lines of Credit
The carrying amount approximates fair value because of the short maturity
of these instruments.
Limitations
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgement and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
<PAGE> 9
Medi-Hut Company, Inc.
Notes to the Financial Statements
INCOME TAXES
The income tax provision (benefit) is comprised of the following:
Federal State Total
---------- ---------- ----------
Year Ended October 31, 1998
Current $ - $ 325 $ 325
Deferred - - -
---------- ---------- ----------
$ - $ 325 $ 325
========== ========== ==========
Year Ended October 31, 1997
Current $ - $ 150 $ 150
Deferred 2,180 1,320 3,500
---------- ---------- ----------
$ 2,180 $ 1,470 $ 3,650
========== ========== ==========
Deferred taxes recognized for temporary differences between the basis of
assets and liabilities for financial statement and income tax purposes. The
differences relate entirely to net operating loss carryforwards for both
Federal and State income tax purposes.
The Company has available net operating loss carryforwards at October 31,
1998, which may be used to reduce Federal taxable income and tax liabilities
in future years, approximating $32,000 which begin to expire October 31, 2012
and are subject to certain annual limitations.
The differences between income tax provision (benefit) in the financial
statements and the tax expense (benefit) computed at the U.S. Federal
Statutory rate are as follows:
October 31,
1998 1997
------------ ------------
Tax provision (benefit) (15)% 35 %
Valuation reserve 15 % (35)%
------------ ------------
Effective tax rate - -
============ ============
The Company's total deferred tax asset and valuation allowance at October
31, 1998 is as follows:
October 31,
1998 1997
------------- ------------
Total deferred tax asset $ 3,000 $ 3,000
Less valuation allowance (3,000) (3,000)
------------- ------------
Net deferred tax asset $ - $ -
============= ============
RESTATEMENT
The Company revised its valuation of the warrants issued on March 2,
1998. The warrants pertain to a 2 year consulting agreement with a firm
providing public relation services in lieu of cash beginning on March 2, 1998.
Accordingly, the financial statements for the year ended October 31, 1998 have
been restated to reflect a portion of the $50,500 valuation as consultant
expense ($16,850) with the remainder set up for future periods as a prepaid
asset ($33,650).
The Company has also revised the number of shares that were issued
pursuant to a private placement memorandum from 250,000 to 500,000. This
increase resulted from a drop in market price from the agreement date to the
delivery date of the shares. The effects of this restatement is a $500
increase to common stock with a corresponding decrease of $500 to Additional
Paid-in Capital. The weighted average of common shares outstanding also
increased 103,425 shares due to this restatement.
<PAGE> 10
Medi-Hut Co., Inc.
BALANCE SHEET
June 30, 1999
ASSETS
CURRENT ASSETS
Checking account $ 20,562.80
Cash in Bank 65,160.78
Accounts Receivable 173,627.55
Deferred Insurance 6,138.98
Merchandise Inventory 85,742.27
PREPAID EXPENSES 20,083.00
----------------
TOTAL CURRENT ASSETS $ 371,315.38
PROPERTY AND EQUIPMENT
Furniture and Fixtures $ 27,316.23
Accumulated Depreciation(F&F) (27,316.23)
-----------------
TOTAL PROPERTY AND EQUIPMENT $
OTHER ASSETS
Auto Lease Cap Reduction $ 4,796.20
Accum Lease Amort Charge (3,848.00)
Patent 32,500.90
Accum. Amort.-Patent (4,724.00)
Prepaid consulting expense-lon 20,235.00
-----------------
TOTAL OTHER ASSETS $ 48,960.10
------------------
TOTAL ASSETS $ 420,275.48
=================
**Unaudited**
1
<PAGE>
Medi-Hut Co., Inc.
BALANCE SHEET
June 30, 1999
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable $ 64,173.90
Fed. Witholding Tax Payable 223.20
Medicare tax payable 0.00
State Witholding Tax Payable 372.68
Sales Tax Payable 0.00
ACCRUED TAXES 39,651.25
-----------------
TOTAL CURRENT LIABILITIES $ 104,421.03
EQUITY
Capital Stock $ 8,272.80
Additional paid in capital 354,617.20
Retained earnings 56,122.53
NET INCOME (LOSS) (103,158.08)
-----------------
TOTAL EQUITY $ 315,854.45
-----------------
TOTAL LIABILITIES AND EQUITY $ 420,275.48
=================
** Unaudited **
2
<PAGE>
Medi-Hut Co., Inc.
INCOME STATEMENT
For The Period
November 01, 1998
to
June 30, 1999
------------------
SALES
Sales $ 491,598.43
Sales discounts (3,441.91)
------------------
Total SALES $ 488,156.52
COST OF SALES
BEGINNING INVENTORY $ 38,738.82
Purchases 404,126.60
Purchases discounts ( 6,915.56)
Freight In 1,520.00
Ending Inventory ( 85,742.27)
Freight out 545.40
------------------
Total COST OF SALES $ 352,272.99
------------------
Total GROSS PROFIT $ 135,883.53
SELLING EXPENSES
Advertising $ 2,300.00
Brochures & catalogues 145.00
-----------------
Total SELLING EXPENSES $ 2,445.00
GENERAL & ADMINISTRATIVE
Rubbish collection $ 582.05
Delivery Expense 2,202.35
Selling Supplies 1,558.83
Insurance - General 18,053.75
Legal & accounting 336.50
Business Promotion 76.32
Outside services 2,500.00
Postage expense 132.00
Travel & entertainment 7,364.94
Salaries Officers 103,500.00
Salaries Warehouse 8,100.00
Accounting 14,500.00
Bank Charges 140.65
Burglar Alarm 402.78
* Unaudited *
1
<PAGE>
Medi-Hut Co., Inc.
INCOME STATEMENT
For The Period
Cleaning 100.85
Group Life Insurance 1,209.60
Heat, Light, And Power 1,206.19
Hospitalization 10,008.12
Insurance 1,753.97
Depreciation Expense 263.07
Legal 494.00
Consulting expense 16,832.00
Licenses and Permits 280.50
Office supplies and expense 5,133.31
Payroll Tax 9,330.83
Car Lease 7,976.00
Rent 16,318.91
Telephone General 2,934.92
Amort of Organization Expense 632.00
------------------
Total GENERAL & ADMINISTRATIVE $ 233,924.44
------------------
Total NET OPERATING INCOME (LOSS) $ (100,485.91)
OTHER (INCOME) AND EXPENSES
Interest Income $ ( 1,679.30)
Interest 2,785.16
------------------
Total OTHER (INCOME) AND EXPENSES $ 1,105.86
------------------
NET INCOME (LOSS) BEFORE TAX $ (101,591.77)
INCOME TAXES
Corp. Business Tax $ 1,566.31
------------------
INCOME TAXES $ 1,566.31
------------------
NET INCOME (LOSS) $ ( 103,158.08)
==================
** Unaudited **
2
<PAGE>
Medi-Hut Company, Inc.
Notes to the Condensed Financial Statements
June 30, 1999 and 1998
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the eight months ended June 30, 1999 and 1998 are not
necessarily indicative of the results that may be expected for the years ended
October 31, 1999 and 1998, respectively.
NOTES PAYABLE
The Company has in place a $50,000 working capital line of credit under which
the bank has agreed to make loans at 2% above the prime interest. As of June
30, 1999, there was $39,651 outstanding.
SUBSEQUENT EVENT
Pursuant to Rule 504 of Regulation D, an aggregate of 2,200,000 common shares
were issued for $1,000,000 on August 4, 1999.
<PAGE>
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
We have not had a change in or disagreement with our principal
independent accountant during the past two fiscal years.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits
Exhibit Number Description
- -------------- ----------------
2.1 Agreement and Plan of Reorganization between Indwest, Inc.
and Medi-Hut Co., Inc, New Jersey, dated January 28, 1998
(filed August 23, 1999)
3.1 Articles of Incorporation of Medi-Hut (filed August 23, 1999)
3.2 Articles of Merger filed February 20, 1998 (filed August 23,
1999)
3.3 Articles of Merger filed February 27, 1998 (filed August 23,
1999)
3.4 Bylaws of Medi-Hut (filed August 23, 1999)
10.1 Lease between Medi-Hut and Stamos & Sommers, LLC, dated
December 12, 1997 (filed August 23, 1999)
10.2 Form of Confidential Agreement (attached)
10.3 Line of Credit between Medi-Hut and PNC Bank, N.A. (attached)
10.4 Consultant Agreement between Columbia Financial Group and
Medi-Hut, dated June 1, 1999 (attached)
11 Statement re computation of earnings per share (attached)
27 Financial Data Schedule (attached)
________________________
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, who is duly authorized.
11/29/99
Date: _________________________________ Medi-Hut Co., Inc.
/s/ Joseph Sanpietro, President
By: ________________________________
Joseph Sanpietro, President
<Letterhead of Caltex, Inc. appears here>
August 20, 1999
Mr. Joseph A. Sanpietro
Medi-Hut Co., Inc.
1935 Swarthmore Ave.
Lakewood, NJ 09802
Dear Mr. Sanpietro,
This letter is to inform you that the distribution of our condoms in
either our company brand label, your Elite brand or any brand name required by
Medi-Hut Co., Inc. will be protected as follows:
1. Not to disclose this confidential agreement outside our company.
2. To limit dissemination of this information to only those employees who
have a need to know in order to perform their duties.
3. Not to use this information in any manner which would impair the rights of
Medi-Hut Co., Inc., such as to use this information in competition, either
directly or indirectly with Medi-Hut., Inc.
4. To bill Medi-Hut., Inc. directly and not to have any contact with your
customer whatsoever.
5. To follow your delivery instructions as contained in your purchase orders.
Thank you for the many years that we have serviced your company and we look
forward to many more.
Best Regards,
Calatex, Inc.
/s/ Dukee Kwan
President
BUSINESS LOAN AGREEMENT
Borrower: MEDI-HUT CO, INC. (TIN:22-2436721) Lender: Midlantic Bank,
N.A.
1935 SWARTHMORE AVENUE Rt. 36 and East Gale Drive
LAKEWOOD, NJ 08701 Moorestown, NJ 08057
THIS BUSINESS LOAN AGREEMENT between MEDI-HUT CO, INC ("Borrower") and
Midlantic Bank, N.A. ("Lender") is made and executed on the following terms
and conditions. Borrower has received prior commercial loans from Lender or
has applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; and (b) all such Loans shall be and shall remain subject to the
following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of August 30, 1996, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Business Loan Agreement from
time to time.
Borrower. The word "Borrower" means MEDI-HUT CO, INC. The word "Borrower"
also includes, as applicable, all subsidiaries and affiliates of Borrower as
provided below in the paragraph titled "Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly, whether granted now
or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any Collateral
for the indebtedness, including without limitation all Borrowers granting such
a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety,
or otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness may
be or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means Midlantic Bank, N.A., its successors and
assigns.
Loan. The word "Loan" or Loans" means and includes without limitation any and
all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note or
notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith: (c) liens of materialmen, mechanics, warehousemen, or carriers,
or other like liens arising in the ordinary course of business and securing
obligations which are not yet delinquent; (d) purchase money liens or purchase
money security interests upon or in any property acquired or held by Borrower
in the ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens"; (e) liens and security interests
which, as of the date of this Agreement, have been disclosed to and approved
by the Lender in writing; and (f) those liens and security interests which in
the aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form or a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien
or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created
bylaw, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions
set forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender Security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence of
insurance as required below; and (e) any other documents required under this
Agreement or by Lender or its counsel, including without limitation any
guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and substance
satisfactory to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related Documents,
and such other authorizations and other documents and instruments as Lender or
its counsel, in their sole discretion, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representation and Warranties. The representations and warranties set forth
in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender,
as of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any
Loan, and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of New Jersey and
is validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as a foreign
corporation and is in good standing in all states in which the failure to so
qualify would have a material adverse effect on its business or financial
condition.
Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower: do not require the consent or approval of any other person,
regulatory authority or governmental body; and do not conflict with, result in
a violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of the
date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not presently
due and payable, Borrower owns and has good title to all of Borrower's
properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All
of Borrower's properties are titled in Borrower's legal name, and Borrower has
not used, or filed a financing statement under, any other name for at least
the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., the
New Jersey Industrial Site Recovery Act, NJSA Section 13:1k-6 ("ISRA"), the
New Jersey Spill Compensation and Control Act, NJSA 58:10-23.11, et. seq., or
other applicable state or Federal laws, rules, or regulations adopted pursuant
to any of the foregoing. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (a) During the period of
Borrower's ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of
any hazardous waste or substance by any person on, under, or about any of the
properties. (b) Borrower has no knowledge of, or reason to believe that there
has been (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance by any
prior owners or occupants of any of the properties, or (ii) any actual or
threatened litigation or claims of any kind by any person relating to such
matters. (c) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the properties shall use, generate, manufacture,
store, treat, dispose of, or release any hazardous waste or substance on,
under, or about any of the properties; and any such activity shall be
conducted in compliance with all applicable federal, state and local laws,
regulations, and ordinances, including without limitation those laws,
regulations and ordinances described above. Borrower authorizes Lender and
its agents to enter upon the properties to make such inspections and tests as
Lender may deem appropriate to determine compliance of the properties with
this section of the Agreement. Any inspections or tests made by Lender shall
be at Borrower's expense and for Lender's proposes only and shall not be
construed to create any responsibility or liability on the part of Lender to
Borrower or to any other person. The representations and warranties contained
herein are based on Borrower's due diligence in investigating the properties
for hazardous waste. Borrower hereby (a) releases and waives any future
claims against Lender for indemnity or contribution in the event Borrower
becomes liable for cleanup or other costs under any such laws, and (b) agrees
to indemnify and hold harmless Lender against any and all claims, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to Borrower's
ownership or interest in the properties. Whether or not the same was or
should have been known to Borrower. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the payment of
the Indebtedness and the termination or expiration of this Agreement and shall
not be affected by Lender's acquisition of any interest in any of the
properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves have been
provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to any
such plan, (ii) Borrower has not withdrawn from any such plan or initiated
steps to do so, (iii) no steps have been taken to terminate any such plan,
and (iv) there are no unfunded liabilities other than those previously
disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business, or
Borrower's Chief executive office, if Borrower has more than one place of
business, is located at 1935 SWARTHMORE AVENUE, LAKEWOOD, NJ 08701. Unless
Borrower has designated otherwise in writing this location is also the office
or offices where Borrower keeps its records concerning the Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all information
hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information is
dated or certified; and none of such information is or will be incomplete by
omitting to state any material fact necessary to make such information not
misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect until
such time as Borrower's Indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, compiled by
a certified public accountant satisfactory to Lender. All financial reports
required to be provided under this Agreement shall be prepared in accordance
with generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables.
Inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations as Lender
may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be canceled or diminished without at
least ten (10) days' prior to written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Borrower or
any other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such loss payable or other endorsement as Lender may
require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the
properties insured; (e) the then current property values on the basis of which
insurance has been obtained, and the manner of determining those values; and
(f) the expiration date of the policy. In addition, upon the request of
Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, on Lender's forms, and in the
amounts and by the guarantors named below:
Guarantors Amounts
JOSEPH SANPIETRO Unlimited
VINCENT SANPIETRO Unlimited
Other Arrangements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to in the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies, and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income, or profits.
Provided however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (a) the legality of
the same shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with respect to
such contested assessment, tax, charge, levy, lien, or claim in accordance
with generally accepted accounting practices. Borrower, upon demand of
Lender, will furnish to Lender evidence of payment of the assessments, taxes,
charges, levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written statement of
any assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely manner,
and promptly notify Lender if Borrower learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of the
Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal
laws, ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards and
other requirements of ERISA and other laws applicable to Borrower's employee
benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records and
to make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to
such records at all reasonable times and to provide Lender with copies of any
records it may request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender at
least annually and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other officer
or person acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the date of
the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of
a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission
on Borrower' s part in connection with any environmental activity whether or
not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all
Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including
any request or policy not having the force of law) shall impose, modify or
make applicable any taxes (except U.S. federal, state or local income or
franchise taxes imposed on Lender), reserve requirements, capital adequacy
requirements or other obligations which could (a) increase the cost to Lender
for extending or maintaining the credit facilities to which this Agreement
relates, (b) reduce the amounts payable to Lender under this Agreement or the
Related Documents, or (c) reduce the rate of return on Lender's capital as a
consequence of Lender's obligations. With respect to the credit facilities to
which this agreement relates, then Borrower agrees to pay Lender such
additional amounts as will compensate Lender therefor, within five (5) days
after Lender's written demand for such payment, which demand shall be
accompanied by an explanation of such imposition or charge and a calculation
in reasonable detail of the additional amounts payable by Borrower, which
explanation and calculations shall be conclusive in the absence of manifest
error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrower money, including capital
leases, (b) except as allowed as a Permitted Lien, sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's accounts,
except to Lender.
Continuity of Operations. (a) Engage in any business activities substantially
different than those in which Borrower is presently engaged, (b) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock), provided,
however that notwithstanding the foregoing, but only so long as no Event of
Default has occurred and is continuing or would result from the payment of
dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on
its stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments to
satisfy their liabilities under federal and state law which arise solely from
their status as Shareholders of a Subchapter S Corporation because of their
ownership of shares of stock of Borrower, or (d) purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise
or entity, or (c) incur any obligation as surety or guarantor other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that Borrower
or any Guarantor has with Lender; or (b) Any other Event of Default shall have
occurred.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all
accounts Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant, or condition contained
in this Agreement or in any of the Related Documents, or failure of Borrower
to comply with or to perform any other term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished
to Lender by or on behalf of Borrower or any Grantor under this Agreement or
the Related Documents is false or misleading in any material respect, either
now or at the time made or furnished.
Defective Collateralization. This agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security interest) at any time and
for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a going
business, insolvency application for or appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type
of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower, or Borrower becomes
unable or fails to pay its debts generally as they become due, or admits in
writing its inability to pay its debts.
Creditor or Forfeiture Proceedings. One or more judgements or orders for the
payment of money exceeding $50,000 in the aggregate is rendered against
Borrower and continues unsatisfied and not effectively stayed for a period of
30 days, or commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower, any creditor of any Grantor against any collateral
securing the indebtedness, or by any governmental agency. This includes a
garnishment, attachment, or levy on or of any of Borrower's deposit accounts
with Lender.
Material Change. A material adverse change occurs in the financial
conditionof Borrower or the value of collateral.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent or seeks, claims or otherwise attempts to limit, modify or revoke
the guarantee of any Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Misapplication of Funds. Borrower has applied funds provided by Lender for
purposes other than those authorized by Lender.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that in the case of an Event of Default of the
type described in the "Insolvency" subsection above, such acceleration shall
be automatic and not optional. In addition, Lender shall have all the rights
and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender's
rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower or of any Grantor shall not affect
Lender's right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of New Jersey. Lender and Borrower hereby waive the right
to any jury trial in any action or proceeding brought by either Lender or
Borrower against the other. Borrower waives all defenses and rights to
interpose any setoff or counterclaim of any nature, except only a defense
pertaining to the existence of an Event of Default. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender' s sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests. Borrower further waives all rights of offset or counterclaim that
it may have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower's obligation under the Loans irrespective of
the failure or insolvency of any holder of any interest in the Loans.
Borrower further agrees that the purchaser of any such participation interests
may enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's out-
of-pocket expenses, including attorneys' fees, incurred in connection with the
preparation, execution, enforcement and collection of this Agreement or in
connection with the Loans made pursuant to this Agreement. Lender may pay
someone else to help collect the Loans and to enforce this Agreement, and
Borrower will pay that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and Lender's legal expenses, whether
or not there is a lawsuit, including attorneys' fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgement collection services.
Such attorney's fees shall include both the fee of Lender's outside counsel
and the allocated cost of services of Lender's in-house counsel. Borrower
also will pay any court costs, in addition to all other sums provided by law.
Notices. All notices required to be given under this Agreement shall be given
in writing, may be sent by telefacsimilie, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above. Any party may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying that the purpose
of the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower will
keep Lender informed at all times of Borrower's current address(es).
No Joint Venture or Partnership. The relationship of Borrower and Lender
created by this Agreement is strictly that of debtor-creditor, and nothing
contained in this Agreement or in any of the Related Documents shall be deemed
or construed to create a partnership or joint venture between Borrower and
Lender.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in
all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodations to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement shall be considered to have been relied upon by
Lender and will survive the making of the Loan and delivery to Lender of the
Related Documents, regardless of any investigation made by Lender or on
Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender' s right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent in subsequent instances where such consent is required, and in all
cases such consent may be granted or withheld in the sole discretion of
Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
AUGUST 30, 1995.
BORROWER:
MEDI-HUT CO, INC
/s/ Joseph Sanpietro
By: ___________________________________________________
JOSEPH SANPIETRO, PRESIDENT
LENDER:
Midlantic Bank, N.A.
By: ____________________________________________________
Authorized Officer
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: MEDI-HUT CO, INC (TIN: 22-2436721) Lender: Midlantic Bank N.A.
1935 SWARTHMORE AVENUE Rt. 38 and East Gate Drive
LAKEWOOD, NJ 08701 Moorestown, NJ 08057
LOAN TYPE. This is a Variable Rate (2.000% over Lender's prime rate, making
an initial rate of 10.250%), Revolving Line of Credit Loan to a Corporation
for $100,000.00 due on August 1, 1997.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
Personal, Family or Household Purposes.
Personal Investment.
Acquire Equipment for Business or Commercial Purposes.
Business, Agricultural and All Other.
SPECIFIC PURPOSE. The specific purpose of this loan is: TO SUPPORT LETTERS OF
CREDIT & WORKING CAPITAL.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $100,000.00 as follows:
Undisbursed Funds: $100,000.00
Note Principal: $100,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $0.00
Other Charges Paid in Cash: $500.00
$500.00 LOAN FEES ________________
Total Charges Paid in Cash: $500.00
AUTOMATIC PAYMENTS. Borrower hereby authorizes Lender automatically to deduct
from Borrower's account numbered 10402011343 the amount of any loan payment.
If the funds in the account are insufficient to cover any payment, Lender
shall not be obligated to advance the funds to cover the payment. At any time
and for any reason, Borrower or Lender may voluntarily terminate Automatic
Payments.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN THE BORROWER'S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO
LENDER. THIS AUTHORIZATION IS DATED AUGUST 30, 1996.
BORROWER:
MEDI-HUT CO, INC
/s/ Joseph Sanpeitro
By: _________________________________________
JOSEPH SANPIETRO, PRESIDENT
This FINANCING STATEMENT is presented to a filing officer for tiling pursuant
to the Uniform Commercial Code. Maturity date (if any):
FOR OFFICE USE ONLYDebtor(s) Name (Last Name, First) Complete Address
Maturity date (if any):
MEDI-HUT CO, INC
1935 SWARTHMORE AVENUE FOR OFFICE USE ONLY
LAKEWOOD, NJ 08701
Secured Party(ies) and Complete Address
Midlantic Bank, N.A.
Rt. 38 and East Gate Drive
Moorestown, NJ 08057
Assignee(s) or Secured Party and Complete Address
This Financing Statement covers the following types (or terms) of property:
All inventory, Chattel Paper, Accounts, Equipment and General intangibles;
whether any of the foregoing is owned now or acquired later; all accessories,
attachments, tools, parts, supplies, increases, additions, replacements, and
substitutions relating to any of the foregoing; all records of any kind
relating to any of the foregoing; all proceeds relating to any of the
foregoing (including insurance, general intangibles, instruments, rents,
monies, payments and other accounts proceeds).
When collateral is crops or fixtures complete this portion of form.
a. Description of real estate (Sufficient to identify the property).
b> Name and complete address of record owner
a. (X) Proceeds of Collateral are also covered.b. (X) Products of Collateral
are also covered. No. of additional sheets presented ( )
( ) Filled with Register of Deeds and Mortgages of
____________________________ County, (X) Secretary of State
( ) Filled with County Clerk of
___________________________________________________ County,
Signature of Debtor(s) Signature(s) of Secured Party(ies) or Assignee(s)
/s/ Joseph Sanpietro Midlantic Bank, N.A.
JOSEPH SANPIETRO, PRESIDENT
FILING OFFICER COPY - This form of statement is approved by the Secretary of
State of New Jersey.
STANDARD FORM -- UNIFORM COMMERCIAL CODE -- FORM UCC-1. ( REV.9/81)
<Letterhead of Columbia Financial Group appears here
1301 York Road, Suite 400, Lutherville, MD 21093
Tel: (410) 321-1799 Fax: (410) 321-1753, 888-301-6271
www.cfgstocks.com>
CONSULTANT AGREEMENT
Columbia Financial Group is an investor relations, direct marketing,
publishing, public relations ans advertising frim with expertise in the
dissemination of information about publicly traded companies. Also in the
business of providing investor relations services, public relations services,
publishing, advertising services, fufillment services, as well as internet
related services.
Agreement made this 5th day of July, 1999, between Medi-Hut Company, Inc.
(hereinafter referred to as "Corporation"), and Columbia Financial Group, Inc.
(hereinafter referred to as "Consultant"), (collectively referred to as the
"Parties"):
Recitals:
The Corporation desires to engage the services of the Consultant to
perform for the Corporation consulting services regarding all phases of the
Corporation's "Investor Relations" to include direct investor relations and
broker/dealer relations as such may pertain to the operation of the
Corporation's business.
The Consultant desires to consult with the Board of Directors, the
Officers of the Corporation, and certain adiministrative staff members of the
Corporation, and to undertake for the Corporation consultation as to the
company's investor relations activities involving corporate relations and
relationships with various broker/dealers involved in the regulated securities
industry.
AGREEMENT
1. The respective duties and obligation of the contracting parties shall
be for a periodof twelve (12) months commencing on the date first appearing
above. This Agreement may be terminated by either parties only in accordance
with the terms and conditions set forth in Paragraph 7.
Services Provided by Consultant
2. Consultant will provide consulting services in connection with the
Corporation's "investor relations" dealings with NASD broker/dealer and the
investing public. (At no time shall the Consultant provide services which
would require consultant to be resigistered and licensed with any federal or
state reulatorty body of self-regulating agency.) During the term of this
Agreement, Consultant will provide those services customarily provided by an
investor relations firm to a Corporation, including but not limited to the
following:
(1) Aiding a Corporation in developing a marketing plan directed at
informing the investing public as to the business of the Corporation; and
(2) Providing assistance and experitise in devising an advertising campaign
in conjunction with the marketing campaign as set forth in (1) above; and
(3) Advise the Corporation and provide assistance in dealing with
institutional investors as it pertains to the Company's offerings of its
securities; and
(4) Aid and assist the Corporation in the Corporation's efforts to secure
"market makers" which will trade the Corporation's stock to the public by
providing such information as may be required; and
(5) Aid and advise the Corporation in establishing a means of securing
nationwide interst in the Corporation's securities; and
(6) Aid and assist the Corporation in creating an "institutional site
program" to provide ongoing and continuos information to fund managers; and
(7) Aid and consult with the Corporation in the preparation and
dissemination of press releases and news announcements; and
(8) Aid and consult with the Corporation in the preparation and
dissemination of all "due diligence" packages requested by and furnished to
NASD reigistered broker/dealers, the investing public, and/or other
institutional and/or fund managers requesting such information from the
Corporation.
Compensation
3. In consideration for services provided by Consultant to the Corporation
the Corporation shall pay or cause to be delivered to the Consultant on the
execution of this agreement or as otherwise provided by the following:
a. Within seven (7) to ten (10) business days from the date of this
agreement Corporation shall deliver to Consultant or cause to be in existence
500,000 warrants. These warrants will have a three (3) year expiration date
from the date of this contract.
The warrants are to be issued with the following exercise prises:
125,000 warrants at $.50
125,000 warrants at $.75
125,000 warrants at $1.00
125,000 warrants at $1.25
Compliance
4. At the time of Consultants execution of the warrants referred to in #3,
Compensation above, common shares underlying the warrants, delivered by
Corporation to Consultant will, at that particular time, be incorporated, in
the next registration filed by the corporation. The warrants shall have
"piggy back" registration rights and will, at the expense of the Corporation,
be included in said registration.
Representation of Corporation
5. (a). The Corporation, upon entering this Agreement, hereby warrants and
guarantees to the Consultant that to the best knowledge of the Officers and
Directors of the Company, all statements, either written or oral, made by the
Corporation to the Consultant are true and accurate, and contain no
misstatements of a material fact. Consultant acknowledges that estimates of
performance made by Corporation are based upon the best information available
to Corporation officers at the time of said estimates of performance. The
Corporation officers ant the time of said estimates of performance. The
Corporation acknowledges tha the information it delivers to the Consutant will
be used by the Consultant in preparing materials regarding the Company's
business, including but not necessarily limited to, its financial condition,
for dissemination to the public. Therefore, in accordance with Paragraph 6,
below, the Corporation shall hold harmless the Consultant from any and all
error, omissions, misstantements, except those made in a negligent or
intentionally misleading manner in connection with all information furnished
by Corporation to Consultant.
(b) Consultant shall agree to release information only with written or verbal
approval of the company.
6. In addition to the representations and warranties set forth above, the
Corporation further warrants to the Consultant that the share makeup of the
Corporation is as follows:
1. Authorized: shares.
2. Issued: shares.
3. Outstanding: shares.
4. Free trading (float): shares (approx.)
5. Shares subject to Rule 144 restrictions: shares (approx.)
Limited Liability
7. With regard to the services to be performed by the Consultant pursuant to
the terms of this Agreement, the Consultant shall not be liable to the
corporation, or to anyone who may claim any right due to any relationship with
the Corporation, or any acts or omissions in the performance of services on
the part of the Consultant, or on the part of the agents or employees of the
Consultant, except when said acts or omissions of the Consultant are due to
its willful misconduct or culpable negligence.
Termination
8. This Agreement may be terminated by either party upon the giving of not
less than sixty (60) days written notice, delivered to the parties at such
address or addresses as set forth in Paragraph 9, below. In the event this
Agreement is terminated by the Corporation, all compensation paid by
Corporation to the Consultant shall be deemed earned. In the event this
Agreement is terminated by Consultant, a portion of the compensation paid by
Corporation to Consultant shall be "back-charged" to Consultant, and payable
to the Corporation as follows:
(a) In the event the Agreement is terminated by the Consultant in months 1
through 6, Consultant shall repay to Corporation two thirds (2/3rds) of the
fees paid pursuant to Paragraph 3 above.
(b) In the event the Consultant terminates this Agreement during months 7
through 10, the Corporation shall be entitled to a return of fifth percent
(50%) of the fees paid in accordance with Paragraph 3 above; thereafter, all
fees paid shall be deemed earned.
Notices
9. Notices to be sent pursuant to the terms and conditions of this Agreement,
shall be sent as follows:
Timothy J. Rieu Joseph A. Sanpietro
Columbia Financial Group Medi-Hut Company, Inc.
1301 York Road, Ste. 400 1935 Swarthmore Avenue
Lutherville, Maryland 21093 Lakewood, NJ 08701
Attorneys' Fees
In the event any litigation or controversy, including arbitration, arises
out of or in connection with this Agreement between parties hereto, the
prevailing party in such litigation, arbitration or controversy, shall be
entitled to recover from the other parties, all reasonable attorney's fees,
expenses and suit costs, including those associated within the appellate or
post judgement collection proceedings.
Arbitration
10. In connection with any controversy or claim arising out of or relating to
this Agreement, the parties hereto agree that such controversy shall be
submitted to arbitration, in conformity with the Federal Arbitration Act
(Section 9 U.S. Code Section 901 et seq), and shall be conducted in accordance
with the Rules of the American Arbitration Association. Any judgment rendered
as a result of the arbitration of any dispute herein, shall upon being
rendered by the arbitrators be submitted to a Court of competent jurisdiction
within the State of Florida or in any state where a party to this action
maintains its principal business or is a Corporation incorporated in said
state.
Governing Law
11. This Agreement shall be construed under and in accordance with the laws
of the State of New Jersey, and all parties hereby consent to New Jersey as
the proper jurisdiction for said proceedings provided herein.
Parties Bound
12. This Agreement shall be binding on and inure to the benefit of the
contracting parties and their respective heirs, executors, administrations,
legal representatives, successors, and assigns when permitted by this
Agreement.
Legal Construction
13. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, the invalidity, illegality, or unenforceability shall not affect any
other provision, and this Agreement shall be construed as if the invalid,
illegal, or unenforceable provision had never been contained in it.
Prior Agreements Superseded
14. This Agreement constitutes the sole and only Agreement of the contracting
parties and supersedes any prior understandings or written or oral agreements
between the respective parties. Further, this Agreement may only be modified
or changed by written agreement signed by all the parties hereto.
Multiple Copies or Counterparts of Agreement
15. The original and one or more copies of this Agreement may be executed by
one or more of the parties hereto. In such event, all of such executed copies
shall have the same force and effect as the executed original, and all of such
counterparts taken together shall have the effect of a fully executed
original. Further this Agreement may be signed by the parties and copies
hereof delivered to each party by way of facsimile transmission, and such
facsimile copies shall be deemed original copies for all purposes if original
copies of the parties' signatures are not delivered.
Liability of Miscellaneous Expenses
16. The Corporation shall be responsible to any misellaneous fees and costs
approved in writing prior by the Company or its agents to commitment that are
unrelated to the agreement made between the Parties.
Headings
16. Headings used throughout this Agreement are for reference and
convenience, and in no way define, limit or describe the scope or intent of
this Agreement or effect its provisions.
IN WITNESS WHEREOF, the parties have set their hands and seal as of the
date written above.
BY: /s/ Timothy J. Rieu
-------------------
Timothy J. Rieu, President
Columbia Financial Group
BY: /s/ Joseph Sanpietro
--------------------
Joseph Sanpietro, President
Medi-Hut Company, Inc.
Medi-Hut Company, Inc.
Statement re: Computation of Earnings Per Share
Years Ended October 31
1998 1999
------------ ------------
Average shares outstanding 5,953,263 1,699,549
Net Income (loss) (29,180) 6,592
Earnings (loss) per share - primary (.005) .004
Earnings (loss) per share - diluted (.005) .004)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 8-MOS YEAR
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1998
<PERIOD-END> JUN-30-1999 OCT-31-1998
<CASH> 85,724 167,920
<SECURITIES> 0 0
<RECEIVABLES> 173,628 204,881
<ALLOWANCES> 0 0
<INVENTORY> 85,742 38,739
<CURRENT-ASSETS> 371,315 441,298
<PP&E> 27,316 27,316
<DEPRECIATION> 27,316 27,053
<TOTAL-ASSETS> 420,275 479,018
<CURRENT-LIABILITIES> 104,421 83,506
<BONDS> 0 0
0 0
0 0
<COMMON> 8,273 8,273
<OTHER-SE> 307,581 387,239
<TOTAL-LIABILITY-AND-EQUITY> 420,275 479,018
<SALES> 488,157 779,537
<TOTAL-REVENUES> 488,157 779,537
<CGS> 352,273 552,173
<TOTAL-COSTS> 236,369 254,345
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,106 1,874
<INCOME-PRETAX> (101,592) (28,855)
<INCOME-TAX> 1,566 325
<INCOME-CONTINUING> (103,158) (29,180)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (103,158) (29,180)
<EPS-BASIC> (.014) (.005)
<EPS-DILUTED> (.014) (.005)
</TABLE>
