Securities and Exchange Commission
Washington, D. C. 20549
_______________
Form 10-SB
______________
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 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 per share
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 within the
meaning of the Private Securities Litigation Reform Act of 1995. 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. On January 28, 1998
Medi-Hut, New Jersey, entered into an Agreement and Plan of Reorganization
with Indwest. The merger was treated as an acquisition of Indwest by
Medi-Hut, New Jersey, and a recapitalization of Medi-Hut, New Jersey.
Accordingly, Indwest was the surviving corporation and changed its name to
Medi-Hut Co. Inc., a Utah corporation. 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% of our 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, Delaware.
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, and hot
and cold packs through various vendors. In June of 1995 we received Food and
Drug Administration (the "FDA") approval of 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. We sell
our products through major drug wholesalers who then sell the products to
pharmacies and through mail order.
Principal Products.
Approximately 30% 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.
Our condoms are made of natural rubber latex and are silicone lubricated
with a reservoir tip. 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
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FDA prior to entering the United States marketplace. (See, "Government
Regulation," below.) Our condom sales account for approximately 30% of our
revenues. 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 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 does is injected. Our
insulin syringe is manufactured at an ISO 9002 facility in Korea.
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. 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, we believe,
provides superior value over limited use 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.
Distribution
Our existing products are sold through major drug wholesale chains in the
United States who then sell them through pharmacies and mail order. The sales
to wholesale distributors are conducted at our facility located in Lakewood,
New Jersey. At this time we have no sales representatives and all sales are
completed by phone calls or by periodic visits by our employees to the large
wholesalers. Most products are shipped directly from our warehouse or from
our manufacturer.
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 manufacturing 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
manufacturers in advance of needed product. All sales are on 30 day credit.
Returned merchandise is minimal due to the vigorous tests that our products
endure prior to shipment.
Principle Suppliers and Customers
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 major suppliers of our products. Calatex,
Inc., located in California, produces our condoms. H & P Industries, located
in Wisconsin, manufacturers 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. Banta Health Care
Products, Inc., located in Michigan, produces our miscellaneous paper
products. 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 major manufacturers could be replaced within
sixty (60) days.
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 60% of our product sales of insulin syringes, condoms and
alcohol preps. In 1998 we relied on four major customers, Rugby Watson
Pharmaceuticals, Darby Drug Co., Oxbrook Marketing and Vallar Consulting for
80% of our revenues from condoms and alcohol preps. The loss 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
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the consumer with quality medical products for a reasonable price. We have
incurred approximately $92,500 in research and development costs over the past
three years for the development, FDA registration and patent protection of our
Autoblock Syringe.
Our Elite brand Autoblock Safety 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 high acceptance
ratings 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 we
anticipate that it will be manufactured using sophisticated, patented,
high-tech machinery which will allow production of a precise quality product.
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 major
hospital distributors that will handle the selling, in house training of
users, warehousing and distribution of this product.
Competition
The primary factors which determine our competitive position in our
markets is the price and quality of our products. Except in the safety
syringe market, the products in our markets must meet certain FDA approvals
and therefore are similar. Most of the products we now sell have been sold
for many years and we believe the selling prices have become well established.
The competition is strong for condoms, alcohol preps, hot and cold packs and
insulin syringes. There have been major companies in these markets for many
years and they control the major market share.
We maintain our competitive stance by offering a quality product for less
money. Our alcohol preps are essentially identical to other alcohol preps in
the market, but are priced approximately 10% lower than the products of the
market leaders, Kendall Corporation and Becton Dickinson. The major condom
manufacturers are Carter Wallace, Inc. (Trojan) and Durex Consumer Products,
Inc., a division of London International Group, Inc. (Sheik). We believe our
condoms are superior to those in the market and we sell them approximately 25%
below the price of the market leaders. 3M and Becton Dickinson lead the hot
and cold pack market. We have teamed up with Packaging Electronics and Device
Corporation, who, we believe, can produce a superior product at a competitive
price.
The market for insulin syringes is unique in that the majority of
syringes are used in non-professional settings. 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 package our
insulin syringe similar to Becton Dickinson, who leads this market, but price
it approximately 30% lower than their published distributor price.
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
approximately 30% less 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 our competitors who have a passive syringe
device.
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Trademark, License and Intellectual Property
Our Autoblock Syringe holds United States Patent No. 5,562,626, issued
October 8, 1996. 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 510K
#K933569 which allows us to assign the manufacturing rights of the Autoblock
Syringe. (See, "Government Regulation," below.) We do not have any licenses,
franchise or concessions agreements in place for this product.
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 suppliers 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.
We hold a premarket notification known as a (510K) for our Autoblock
Syringe. The 510(K) is an application submitted to the FDA. 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 predicate and has the
same technological characteristics as the predicate device or (b) has the same
intended use as a predicate; 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 syringe, as
intended for use, was similar to devices on the market that had no spring
activation.
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.
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. None are covered by any collective bargaining
agreement, but we feel we have good relations with them.
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.
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
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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
major drug wholesalers. We realize revenue when products are shipped and
title passes to our wholesalers. Our inventory consists of finished products
the majority of which are warehoused at the manufacturer's or supplier's
facility. 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.
Merger Treatment
For accounting purposes, the merger in February of 1998 of Indwest, Inc.,
a Utah corporation, and Medi-Hut Co., Inc., a New Jersey corporation, was
treated as an acquisition of Indwest by Medi-Hut, New Jersey, and a
recapitalization of Medi-Hut, New Jersey. Indwest was the surviving
corporation and changed its name to Medi-Hut Co., Inc. Subsequently, Medi-Hut
changed its domicile from Utah to Delaware in February of 1998. 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
We have funded our cash requirements primarily through product sales and
sales of our common stock. We have used these funds to finance our
operations. At the end of our fiscal year in 1998 we had $167,920 in cash,
compared to $116,144 in 1997. As of the fiscal year ended October 31, 1998,
we had current assets of $416,048 with total liabilities of $83,506 for a
positive net worth of $332,542. Our operating losses totaled $12,330. As of
the eight month interim period ended June 30, 1999, we posted cash amounts of
$85,724 and current assets of $351,232. We had current liabilities of
$104,421 resulting in a positive net worth of $246,811. We posted an
operating loss of $81,079 for that interim period.
During fiscal year 1998 we raised an aggregate of $325,833 from the sale
of our common stock. We used those funds for operations. In August of 1999
we raised $1,000,000 from the sale of our common stock. We intend to use
these proceeds to commence the production of our Elite Autoblock Syringe.
(See, "Recent Sales of Unregistered Securities," below.)
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
----------- ---------- --------------
Cash/Cash Equivalents $ 116,144 $ 167,920 $ 85,723
Current Assets 189,085 416,048 351,232
Total Assets 220,045 445,368 379,957
Total Current Liabilities 133,743 83,506 104,421
Total Stockholder's Equity 86,302 361,862 275,536
Total Liabilities & Stockholder
Equity 220,045 445,368 379,957
Another source of cash is a $150,000 revolving line of credit we obtained
in October of 1997. Pursuant
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to the agreement, PNC Bank, N.A. agreed to make loans to us at 3% above the
prime interest rate. This line of credit expires on October 10, 1999. We
also have a second 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 expires in August 30, 1999. Both lines of credit are 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. We had a $0 balance
on the $150,000 credit line at the end of the fiscal years.
Management believes our cash flows and profits will be sufficient to
cover any needed debt financing. If additional funds are needed, 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. We have not
investigated the availability, source or terms for additional financing.
However, 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. If we raise funds
through the sale of our common stock, our then current 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 $ 489,836
Cost of Sales 843,131 590,912 352,273
Gross Profit 346,992 227,364 137,563
Selling, General & Administrative
Expenses 305,195 237,495 218,642
Operating Income or (Loss) 41,797 (10,131) (81,060)
Interest Income 1,328 2,126 1,679
Interest Expense (4,205) (4,000) 2,785
Net Income (loss) 6,592 (12,330) (86,326)
At the end of our fiscal year 1998 our revenues had dropped 33% from
1997. This was due to organizational expenses and a decrease in sales of our
private label insulin syringe. As a result of the decrease in revenues and
increase in expenses we posted an operating loss in 1998 of $10,131 compared
to an operating gain of $41,797 in 1997. We posted a net operating loss of
$81,080 for the interim period, compared to a net loss of $12,330 at the end
of the fiscal year. The interim period operating loss was mainly the result
of increased selling, general and administrative expenses.
When this registration statement becomes effective we will become a fully
reporting company, the SEC reporting requirements will add additional expenses
to our operations, including the expense of filing this registration
statement, preparing annual reports and preparation and filing of Form 10K's
and 10Q's.
Management believes after the Autoblock Syringe is in production it will
provide a new source of revenue due to an anticipated increase in user demand
for these types of safety syringes. 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.
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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
government 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, and that we can modify or
replace the programs that will be affected by the end of 1999 at a cost which
will not be significant. Under a reasonably likely worst case scenario,
however, our computer systems and/or operations could be materially affected
by the Year 2000 problem.
We have made inquiries to our third-party suppliers to ascertain if such
suppliers are Year 2000 compliant. At this time, management is satisfied that
such suppliers have made or are making appropriate examinations and necessary
upgrades to insure Year 2000 readiness. 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 cancel the lease with a 90 days
written notice to the landlord.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of August 10, 1999, 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
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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 %
Vincent J. Sanpietro 819,800 7.8 %
Robert Russo 5,000 * %
All executive officers and
directors as a group 4,104,000 39.2 %
*Less than one percent
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. 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
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planning. He is the Managing Senior Partner of Koenig, Russo and Associates,
LLC. 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
None of our named executive officers received any cash compensation,
bonuses, stock appreciation rights, long term compensation, stock awards or
long-term incentive rights from us prior to our merger with Medi-Hut, New
Jersey. We have not entered into employment contracts with our executive
officers and their compensation is determined at the discretion of our Board
of Directors. During our fiscal year 1998 Joseph Sanpietro received
compensation of $83,940 and Vincent Sanpietro received $59,540.
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal year 1998 we have paid $8,950 to Keonig, Russo &
Associates LLC for the accounting services provided to us by Robert Russo.
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 yearly quarter which
corresponds to our 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.
Year Quarter High Low
----- ------- --------- ----------
1998 First 4.0625 3.5
Second 3.5625 1.125
Third 1.4375 0.3125
Fourth 0.53125 0.125
1999 First 0.5000 0.3125
Second 0.4200 0.2000
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
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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 our Board authorized the issuance of an aggregate of
1,751,251 common shares in a private transaction to twelve persons for $33,333
in costs paid for or on behalf of Indwest, Inc. and services rendered to
Indwest in the previous year.
On January 28, 1998, pursuant to a merger agreement our Board authorized
the issuance of an aggregate of 4,295,000 common shares to twenty persons to
accomplish the exchange of shares with Medi-Hut, New Jersey, and our
recapitalization.
On March 17, 1998, our Board authorized the issuance of an aggregate of
27,000 common shares for $67,500 cash in a private transaction with eight
persons.
In a private transaction 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 their services to us. (See,
"Description of Securities - Warrants," below.)
10
<PAGE>
On June 4, 1998, pursuant to Rule 504 of Regulation D, our Board
authorized the issuance of 500,000 common shares to two accredited, New York
persons for $225,000.
On August 4, 1999, we offered exclusively to New York residents and
pursuant to Rule 504 of Regulation D, an aggregate of 2,200,000 common shares
for $1,000,000. Five accredited investors purchased 2,200,000 common shares
for the $1 million aggregate offering price No underwriting discounts or
commissions were paid for this offering.
In connection with these issuances of our securities, we believe that
each purchaser (i) was aware that the securities had not been registered under
federal securities laws, (ii) acquired the securities for his/her/its own
account for investment purposes of the federal securities laws, (iii)
understood that the securities would need to be indefinitely held unless
registered or an exemption from registration applied to a proposed disposition
and (iv) except for our offerings under Rule 504, 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.
Dividends
We have not paid a dividend on our common stock and do not anticipate
doing so in the foreseeable future.
Preferred Stock
Medi-Hut has not authorized or issued any preferred stock.
Warrants
Pursuant to a consulting agreement with Columbia Financial Group, (See,
"Recent Sales of Unregistered Securities," above) we issued common stock
purchase warrants as follows:
<TABLE>
<CAPTION>
Exercise Exercise Term
No. of Price Per --------------------------------------
Date of Grant Shares Share Start Expiration Vesting Rights
- ------------- ------ ------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
The warrants remain outstanding as of June 30, 1999.
11
<PAGE>
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:
Medi-Hut Company, Inc.
Financial Statements
October 31, 1998 and 1997
<PAGE> 12
Medi-Hut Company, Inc.
Index to the Financial Statements
October 31, 1998 and 1997
<PAGE> 13
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
Additional Information
Schedules of Selling, General and Administrative Expenses...12
<PAGE> 14
<Letterhead of
Rosenberg Rich
Baker Berman
& Company
A Professional Association of
Certified Public Accountants
380 Foothill Road * PO Box 6483 * Bridgewater NJ 08807-0483
908-231-1000 * Fax: 908-231-6894 * E-mail: [email protected]>
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.
/s/ Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
November 23, 1998
1
<PAGE> 15
Medi-Hut Company, Inc.
Balance Sheets
October 31,
----------------------------
1998 1997
------------- --------------
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
------------- --------------
Total Current Assets 416,048 189,085
------------- --------------
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
Patent and Licensing Costs, net of accumulated
amortization of $4,724 and $3,114,
respectively 27,477 29,087
------------- --------------
Total Assets 445,368 220,045
============= ==============
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
Preferred stock, $4 par value, 200,000
shares authorized, no shares issued or
outstanding - -
Common stock 8,023 1,000
Additional paid-in capital 280,867 -
Retained earnings 72,972 85,302
------------- -------------
Total Stockholders' Equity 361,862 86,302
------------- -------------
Total Liabilities and Stockholders'
Equity $ 445,368 $ 220,045
============= =============
See notes to the financial statements. 2
<PAGE> 16
Medi-Hut Company, Inc.
Statements of Operations
Year Ended October 31,
1998 1997
-------------- --------------
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 237,495 305,195
-------------- --------------
Income (Loss) from Operations (10,131) 41,797
-------------- --------------
Other Income (Expense)
Interest income 2,126 1,328
Interest expense (4,000) (4,205)
Profit sharing plan expense - (28,678)
-------------- --------------
Total Other Income (Expense) (1,874) (31,555)
-------------- --------------
Income (Loss) Before Provision for Income Taxes (12,005) 10,242
Provision for Income Taxes 325 3,650
-------------- --------------
Net Income (Loss) $ (12,330) $ 6,592
============== ==============
Earnings (Loss) per Common Share $ (.002) $ 65.92
============== ==============
Weighted Average of Common Shares Outstanding 5,849,838 100
============== ==============
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> 17
<TABLE>
<CAPTION>
Medi-Hut Company, Inc.
Statement of Stockholders' Equity
Period from November 1, 1996 to October 31, 1998
Common Stock (No
Common Par Value Prior to Additional
Shares Recapitalization) Paid-In Retained
Issued ($.001)Par Value Capital Earnings Total
------------- ------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances, October 31, 1996 100 $ 1,000 $ - $ 78,710 $ 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 250,000 250 224,750 - 225,000
Net (Loss) Year Ended October 31, 1998 - - - (12,330) (12,330)
------------- ------------------- ---------- ---------- ----------
Balances, October 31, 1998 8,022,800 $ 8,023 $ 280,867 $ 72,972 $ 361,862
============= =================== ========== ========== ==========
See notes to the financial statements. 4
</TABLE>
<PAGE> 18
Medi-Hut Company, Inc.
Statements of Cash Flows
Year Ended October 31,
1998 1997
-------------- --------------
Cash Flows From Operating Activities
Net Income (Loss) $ (12,330) $ 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
Decrease (Increase) in Assets
Accounts receivable (157,905) 19,334
Inventory (14,181) 10,84274
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
============== ==============
See notes to the financial statements. 5
<PAGE> 19
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.
Patent and licensing costs 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> 20 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
Revenue 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 expense is recorded for the fair
market value of the stock issued, or in the case of warrants, for the
difference between the stock's fair market value on the date of grant and the
warrant exercise price.
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> 21 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: $.001 par value; 100,000,000 shares authorized;
8,022,800 shares issued and outstanding.
At October 31, 1997: 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
===========
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> 22 8
Medi-Hut Company, Inc.
Notes to the Financial Statements
WARRANTS
Pursuant to a consulting agreement, 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
No compensation expense has been recorded in accordance with FASB 123 since
the warrant exercise prices at the measurement/grant date are higher than the
Company's fair market value per share.
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.
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. The PPM was issued as a "best
efforts" in order for the company to raise a maximum of $3,000,000 additional
capital through the offering of 1,200,000 shares of its common stock ($.001
par value) at prices ranging from $1 to $2.50 per share. 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 (250,000 common shares at $1 per share less a 10%
commission) through October 31, 1998.
MAJOR CUSTOMER
For the years ended October 31, 1998 and 1997, the Company had three and one
major customers, respectively, sales to which represented approximately 80%
and 50%, 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.
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> 23 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 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 $ - $ -
============ ==============
10
<PAGE> 24
<Letterhead of
Rosenberg Rich
Baker Berman
& Company
A Professional Association of
Certified Public Accountants
380 Foothill Road * PO Box 6483 * Bridgewater NJ 08807-0483
908-231-1000 * Fax: 908-231-6894 * E-mail: [email protected]>
Independent Auditors' Report
To the Board of Directors and Stockholders of
Medi-Hut Company, Inc.
Our report on our basic financial statements of Medi-Hut Company, Inc. as of
October 31, 1998 and 1997 appears on page 1. Those audits were made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The additional information on the following page is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
November 23, 1998
<PAGE> 25 11
Medi-Hut Company, Inc.
Schedules of Selling, General and Administrative Expenses
Year Ended
October 31,
----------------------------
1998 1997
-------------- ------------
Officers' salaries $ 122,520 $ 180,100
Warehouse salaries 12,700 10,750
Selling supplies 1,294 1,097
Delivery expense 3,177 2,173
Advertising - 422
Business promotion 880 200
License and permits 860 544
General insurance 17,743 18,975
Payroll taxes 11,258 14,916
Rent 22,639 26,661
Office supplies and expense 2,523 841
Postage 370 384
Accounting and legal 3,600 6,550
Bank charges 69 450
Repairs and maintenance 327 251
Utilities 2,240 2,300
Depreciation 526 526
Employee welfare 13,122 12,614
Amortization 3,010 3,063
Garbage removal 1,137 1,189
Auto expense 11,736 12,352
Annual report 40 80
Contributions 13 130
Outside services 82 777
Travel and entertainment 1,189 2,951
Telephone 4,440 4,782
Miscellaneous taxes - 117
-------------- ------------
$ 237,495 $ 305,195
============== ============
<PAGE> 26 12
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
-------------
TOTAL CURRENT ASSETS $ 351,232.38
PROPERTY AND EQUIPMENT
Furniture and Fixtures $ 27,316.23
Accumulated Depreciation(F&F) (27,316.23)
--------------
TOTAL PROPERTY AND EQUIPMENT $ 0.00
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)
--------------
TOTAL OTHER ASSETS $ 28,725.10
--------------
TOTAL ASSETS $ 379,957.48
==============
<PAGE> 27
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)
Notes Payable 39,651.25
--------------
TOTAL CURRENT LIABILITIES $ 104,421.03
EQUITY
Capital Stock $ 8,022.80
Additional paid in capital 280,867.20
Retained earnings 72,972.53
NET INCOME (LOSS) (86,326.08)
--------------
TOTAL EQUITY $ 275,536.45
--------------
TOTAL LIABILITIES AND EQUITY $ 379,957.48
==============
<PAGE> 28
Medi-Hut Co., Inc.
INCOME STATEMENT
For The Period
November 01, 1998
to
June 30, 1999
-------------------
SALES
Sales $ 491,598.43
Interest Income 1,679.30
Sales discounts ( 3,441.91)
-----------------
Total SALES $ 489,835.82
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 $ 137,562.83
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
<PAGE> 29 -2-
Medi-Hut., Inc.
INCOME STATEMENT
For The Period
Salaries Officers 103,500.00
Salaries Warehouse 8,100.00
Accounting 14,500.00
Bank Charges 140.65
Burglar Alarm 402.78
Cleaning 100.85
Group Life Insurance 1,209.60
Heat, Light, And Power 1,206.19
Hospitalization 10,008.12
Insurance 1,753.97
Legal 494.00
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
------------------
Total GENERAL & ADMINISTRATIVE $ 216,197.37
------------------
Total NET OPERATING INCOME (LOSS) $ ( 81,079.54)
OTHER (INCOME) AND EXPENSES
Interest $ 2,785.16
Depreciation Expense 263.07
Amort of Organization Expense 632.00
------------------
Total OTHER (INCOME) AND EXPENSES $ 3,680.23
------------------
NET INCOME (LOSS) BEFORE TAX $ ( 84,759.77)
<PAGE> 30 2
Medi-Hut Co., Inc.
INCOME STATEMENT
For The Period
INCOME TAXES
Corp. Business Tax $ 1,566.31
------------------
INCOME TAXES $ 1,566.31
------------------
NET INCOME (LOSS) $ ( 86,326.08)
==================
<PAGE>31 3
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.
3.1 Articles of Incorporation of Medi-Hut.
3.2 Articles of Merger filed February 20, 1998.
3.3 Articles of Merger filed February 27, 1998.
3.4 Bylaws of Medi-Hut.
10.1 Lease between Medi-Hut Co., Inc. and Stamos &
Sommers, LLC, dated December 12, 1997.
11.1 Statement re computation of earnings per share
27.1 Financial Data Schedule
________________________
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.
8/23/99
Date: _______________________ Medi-Hut Co., Inc.
/s/ Joseph Sanpietro, Pres.
By: ________________________________
Joseph Sanpietro, President
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this 28th day
of January, 1998, among Indwest, Inc., a Utah corporation ("Indwest");
Medi-Hut Co., Inc., a New Jersey corporation, any and all of its subsidiaries
and fictitious names (hereinafter collectively referred to as "Medi-Hut") and
its shareholders (hereinafter "Shareholders").
Indwest wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of Medi-Hut for and in exchange for stock of Indwest, in a
stock for stock transaction intending to qualify as a tax-free exchange
pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. The parties intend for this Plan to represent the terms and
conditions of such tax-free reorganization, which Plan the parties hereby
adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the holders of all
the issued and outstanding stock of Medi-Hut agree to assign, transfer, and
deliver to Indwest, free and clear of all liens, pledges, encumbrances,
charges, restrictions or known claims of any kind, nature or description, all
of their shares of Medi-Hut stock, and Indwest agrees to acquire such shares
on the date thereof, or as soon as practicable thereafter, by issuing and
delivering in exchange therefore solely common shares of Indwest's stock, par
value $0.001, in the aggregate of 4,560,000 shares, of the then issued and
outstanding shares of Indwest subject to the provisions of this Plan. Such
shares will represent at least 57% of the issued and outstanding shares of
Indwest. Subsequent to the date hereof, the Shareholders shall, upon the
surrender of the Medi-Hut certificates representing their respective
beneficial and record ownership one hundred percent (100%) of the issued and
outstanding shares of Medi-Hut to Indwest, as soon as practicable hereafter,
and further provided an exemption from the registration provisions of Section
5 of the Securities Act of 1933 is available for the issuance thereof, the
Shareholders shall be entitled to receive a certificate(s) evidencing shares
of the exchanged Indwest stock as provided for herein. Upon the consummation
of the transaction contemplated herein, Indwest shall merge with Medi-Hut and
become the surviving corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number
of Indwest shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in Indwest common
stock, which may occur between the date of the execution of this Plan and the
date of the delivery of such shares.
1.3 Delivery of Certificates. The Shareholders shall transfer to
Indwest at the closing provided for in Section 2 (the "Closing") the shares of
common stock of Medi-Hut listed opposite their respective names on Exhibit A
hereto (the "Medi-Hut shares") in exchange for shares of the common stock of
Indwest as outlined above in Section 1.1 hereof (the "Indwest Stock"). All of
such shares of Indwest stock shall be issued at the closing to the
Shareholders, in the numbers shown opposite their respective names in Exhibit
"A." The transfer of Medi-Hut shares by the Shareholders shall be effected by
the delivery to Indwest at the Closing of certificates representing the
transferred shares endorsed in blank or accompanied by stock powers executed
in blank, with all signatures guaranteed by a national bank and with all
necessary transfer taxes and other revenue stamps affixed and acquired at the
Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution hereof, and from
time to time thereafter, the Shareholders shall execute such additional
instruments and take such other action as Indwest may request in order to more
effectively sell, transfer and assign clear title and ownership in the
Medi-Hut shares to Indwest.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held at
the law offices of Daniel W. Jackson, Esq. on or before February 15, 1998 or
at such other time or place as may be mutually agreed upon in writing by the
parties. The Closing may also be accomplished by wire, express mail or other
courier service, conference telephone communications or as otherwise agreed by
the respective parties or their duly authorized representatives. In any
event, the closing of the transactions contemplated by this Plan shall be
effected as soon as practicable after all of the conditions contained herein
have been satisfied.
2.2 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence
the transaction contemplated hereby.
2.3 Mediation Arbitration. If a dispute arises out of or relates to
this Plan, or the breach thereof, and if said dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation under the Commercial Mediation
Rules of the American Arbitration Association, before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out of
or relating this Plan, or breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the Award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
<PAGE>
Section 3
Representations, Warranties and Covenants of Indwest
Indwest represents and warrants to, and covenants with, the Shareholders
and Medi-Hut as follows:
3.1 Corporate Status. Indwest is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah. Indwest
has full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is
no jurisdiction in which the character and location of the assets owned by it,
or the nature of the business transacted by it, requires qualification.
Included in the Indwest schedules (defined below) are complete and correct
copies of its Articles of Incorporation and Bylaws as in effect on the date
hereof. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of Indwest's Articles of Incorporation or Bylaws. Indwest has taken
all action required by law, its Articles of Incorporation, its Bylaws, or
otherwise, to authorize the execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of Indwest as of the
date hereof consists of 50,000,000 common shares, par value $0.001 and
200,000 preferred shares, par value $.001. The common shares of Indwest
issued and outstanding are fully paid, non-assessable shares. There are no
outstanding options, warrants, obligations convertible into shares of stock,
or calls or any understanding, agreements, commitments, contracts or promises
with respect to the issuance of Indwest's common stock or with regard to any
options, warrants or other contractual rights to acquire any of Indwest's
authorized but unissued common shares. There are no issued and outstanding
preferred shares. As of the Closing, Indwest shall have not more than
8,000,000 shares issued and outstanding.
3.3 Financial Statements.
(a) Indwest hereby warrants and covenants to Medi-Hut that the
audited financial statements dated August 31, 1997 and December 31, 1996,
fairly and accurately represent the financial condition of Indwest and that no
material change has occurred in the financial condition of Indwest.
(b) Indwest hereby warrants and represents that the audited
financial statements for the periods set forth in subparagraph (a), supra,
fairly and accurately represent the financial condition of Indwest as
submitted heretofore to Medi-Hut for examination and review.
3.4 Conduct of Business. Indwest is a development stage company and
has not engaged in any operational activities prior to the date hereof.
Indwest will use its best efforts to maintain and preserve its business
organization, employee relationships and goodwill intact, and will not,
without the prior written consent of Medi-Hut, enter into any material
commitments except in the ordinary course of business.
Indwest will conduct itself in the following manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be
made in the Articles of Incorporation or Bylaws of Indwest.
(b) Capitalization, etc. Indwest will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
3.5 Options, Warrants and Rights. Indwest has no options, warrants or
stock appreciation rights related to the authorized but unissued Indwest
common stock. There are no existing options, warrants, calls, or commitments
of any character relating to the authorized and unissued Indwest common stock,
except options, warrants, calls, or commitments, if any, to which Indwest is
not a party and by which it is not bound.
3.6 Title to Property. Indwest has good and marketable title to all of
its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of Indwest, and the properties and
assets of Indwest are subject to no mortgage, pledge, lien or encumbrance,
unless as otherwise disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of Indwest, threatened by or against or
effecting Indwest at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Indwest does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, warrant, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality.
3.8 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, Indwest and its present management will (i) give to
the Shareholders and Medi-Hut, or their duly authorized representatives, full
access, during normal business hours, to all of its books, records, contracts
and other corporate documents and properties so that the Shareholders and
Medi-Hut, or their duly authorized representatives, may inspect them; and (ii)
furnish such information concerning the properties and affairs of Indwest as
the Shareholders and Medi-Hut, or their duly authorized representatives, may
reasonably request. Any such request to inspect Indwest's books shall be
directed to Indwest's counsel, Daniel W. Jackson, at the address set forth
herein under Section 10.4 Notices.
3.9 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Indwest and its representatives will keep confidential any
information which they obtain from the Shareholders or from Medi-Hut
concerning its properties, assets and the proposed business operations of
Medi-Hut. If the terms and conditions of this Plan imposed on the parties
hereto are not consummated on or before 5:00 p.m. MST on February 13, 1998 or
otherwise waived or extended in writing to a date mutually agreeable to the
parties hereto, Indwest will return to Medi-Hut all written matter with regard
to Medi-Hut obtained in connection with the negotiations or consummation of
this Plan.
3.10 Conflict with Other Instruments. The transactions contemplated by
this Plan will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreements or instrument to which Indwest was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of Indwest.
3.11 Corporate Authority. Indwest has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to the Shareholders and Medi-Hut, or their respective
representatives, at the Closing, a certified copy of resolutions of its Board
of Directors authorizing execution of this Plan by its officers and
performance thereunder.
3.12 Consent of Shareholders. Indwest hereby warrants and represents
that the Shareholders of Indwest, being the owners of a majority of the issued
and outstanding stock of the Corporation consented in writing to the
authorization to execute this Agreement and Plan of Reorganization as between
Indwest and Medi-Hut pursuant to a stock-for-stock transaction in which
Indwest would acquire one hundred percent of the issued and outstanding shares
of Medi-Hut in exchange for the issuance of a total of 4,560,000 common shares
of Indwest and thereby Medi-Hut shall merge with and into Indwest.
3.13 Special Covenants and Representations Regarding the Exchanged
Indwest Stock. The consummation of this Plan and the transactions herein
contemplated include the issuance of the exchanged Indwest shares to the
Shareholders, which constitutes an offer and sale of securities under the
Securities Act of 1933, as amended, and applicable states' securities laws.
Such transaction shall be consummated in reliance on exemptions from the
registration and prospectus requirements of such statutes which depend
interlace on the circumstances under which the Shareholders acquire such
securities. In connection with the reliance upon exemptions from the
registration and prospectus delivery requirements for such transactions, at
the Closing, Shareholders shall cause to be delivered to Indwest a Letter(s)
of Investment Intent in the form attached hereto as Exhibit B and incorporated
herein by reference.
3.14 Undisclosed or Contingent Liabilities. Indwest hereby represents
and warrants that it has no undisclosed or contingent liabilities which have
not been disclosed to Medi-Hut in writing or in this Agreement or in any
Exhibit attached hereto.
3.15 Information. The information concerning Indwest set forth in this
Plan, and the Indwest schedules attached hereto, are complete and accurate in
all material respects and do not contain, or will not contain, when delivered,
any untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to Medi-Hut in connection with this
Plan.
3.16 Title and Related Matters. Indwest has good and marketable title
to all of its properties, interests in properties, and assets, real and
personal, which are reflected, or will be reflected, in the Indwest balance
sheets, free and clear of any and all liens and encumbrances.
3.17 Contracts or Agreements. Indwest is not bound by any material
contracts, agreements or obligations which it has not already disclosed to
Medi-Hut in writing or in this Agreement or in any Exhibit attached hereto.
3.18 Governmental Authorizations. Indwest has all licenses,
franchises, permits and other government authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof.
3.19 Compliance with Laws and Regulations. Indwest has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Indwest or except to the
extent that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to Medi-Hut.
3.20 Approval of Plan. The Board of Directors of Indwest has
authorized the execution and delivery of this Plan by Indwest and have
approved the Plan and the transactions contemplated hereby. Indwest has full
power, authority, and legal right to enter into this Plan and to consummate
the transactions contemplated hereby.
3.21 Investment Intent. Indwest is acquiring the Medi-Hut shares to be
transferred to it under this Plan for the purpose of merging with Medi-Hut and
not with a view to the sale or distribution thereof, and Indwest shall cancel
the Medi-Hut shares upon the completion of the merger.
3.22 Unregistered Shares and Access to Information. Indwest
understands that the offer and sale of the Medi-Hut shares have not been
registered with or reviewed by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, or with or by any state securities law
administrator, and no federal, state securities law administrator has reviewed
or approved any disclosure or other material concerning Medi-Hut or the
Medi-Hut shares. Indwest has been provided with and reviewed all information
concerning Medi-Hut, the Medi-Hut shares as it has considered necessary or
appropriate as a prudent and knowledgeable investor to enable it to make an
informed investment decision concerning the Medi-Hut shares. Indwest has made
an investigation as to the merits and risks of its acquisition of the Medi-Hut
Shares and has had the opportunity to ask questions of, and has received
satisfactory answers from, the officers and directors of Medi-Hut concerning
Medi-Hut, the Medi-Hut shares and related matters, and has had an opportunity
to obtain additional information necessary to verify the accuracy of such
information and to evaluate the merits and risks of the proposed acquisition
of the Medi-Hut shares.
3.23 Obligations. Indwest is not aware of any outstanding obligations
to any of its employees or consultants as of the Closing.
3.24 Indwest Schedules. Indwest has delivered to Medi-Hut the
following items listed below, hereafter referred to as the "Indwest
Schedules", which is hereby incorporated by reference and made a part hereof.
A certification executed by a duly authorized officer of Indwest on or about
the date within the Plan is executed to certify that the Indwest Schedules are
true and correct.
(a) Copy of Articles of Incorporation, as amended, and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officers' Certificate as required under Section 6.2 of the
Plan;
(f) Opinion of counsel as required under Section 6.4 of the Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of Medi-Hut
Medi-Hut represents and warrants to, and covenants with, the
Shareholders and Indwest as follows:
4.1 Corporate Status. Medi-Hut is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey incorporated on November 22, 1982,. Medi-Hut has full corporate power
and is duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public authorities to
own all of its properties and assets and to carry on its business on all
material respects as it is now being conducted, and there is no jurisdiction
in which the character and location of the assets owned by it, or the nature
of the business transacted by it, requires qualification. Included in the
Medi-Hut schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Medi-Hut's
Articles of Incorporation or Bylaws. Medi-Hut has taken all action required
by law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize
the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of Medi-Hut as of the
date hereof consists of 100 common shares. As of the date hereof all common
shares of Medi-Hut issued and outstanding are fully paid, non-assessable
shares. There are no outstanding options, warrants, obligations convertible
into shares of stock, or calls or any understanding, agreements, commitments,
contracts or promises with respect to the issuance of Medi-Hut's common stock
or with regard to any options, warrants or other contractual rights to acquire
any of Medi-Hut's authorized but unissued common shares.
4.3 Conduct of Business. Medi-Hut, Inc. private labels insulin
syringes, condoms, alcohol preps, hot & cold packs etc., and will manufacture
it own patented brand anti-stick safety syringes. The new safety syringe will
incorporate a transparent sleeve into which the needle will automatically
retract after use. The industry is moving to provide a safer working
environment both for the medical worker as well as for the patient. The most
frequently reported occupational safety problem in hospitals is accidental
needle sticks.
Medi-Hut will use its best efforts to maintain and preserve its business
organization, employee relationships and goodwill intact, and will not,
without the prior written consent of Indwest, enter into any material
commitments except in the ordinary course of business.
Medi-Hut agrees that Medi-Hut will conduct itself in the following
manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be
made in the Certificate of Incorporation or Bylaws of Medi-Hut.
(b) Capitalization, etc. Medi-Hut will not make any change in
its authorized or issued shares of any class, declare or pay any dividend or
other distribution, or issue, encumber, purchase or otherwise acquire any of
its shares of any class.
4.4 Title to Property. Medi-Hut has good and marketable title to all
of its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of Medi-Hut, and the properties and
assets of Medi-Hut are subject to no mortgage, pledge, lien or encumbrance,
unless as otherwise disclosed in its financial statements.
4.5 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of Medi-Hut, threatened by or against or
effecting Medi-Hut at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Medi-Hut does not have any knowledge of any default on its part with respect
to any judgment, order, writ, injunction, decree, warrant, rule, or regulation
of any court, arbitrator, or governmental agency or instrumentality.
4.6 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, Medi-Hut and its present management will (i) give
to Indwest, or their duly authorized representatives, full access, during
normal business hours, to all of its books, records, contracts and other
corporate documents and properties so that Indwest, or their duly authorized
representatives, may inspect them; and (ii) furnish such information
concerning the properties and affairs of Medi-Hut as the Shareholders and
Medi-Hut, or their duly authorized representatives, may reasonably request.
Any such request to inspect Medi-Hut's books shall be directed to Medi-Hut's
representative, at the address set forth herein under Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Medi-Hut and its representatives will keep confidential any
information which they obtain from the Shareholders or from Medi-Hut
concerning its properties, assets and the proposed business operations of
Medi-Hut. If the terms and conditions of this Plan imposed on the parties
hereto are not consummated on or before 5:00 p.m. MST on February 13, 1998 or
otherwise waived or extended in writing to a date mutually agreeable to the
parties hereto, Medi-Hut will return to Indwest all written matter with regard
to Indwest obtained in connection with the negotiations or consummation of
this Plan.
4.8 Investment Intent. The Shareholders represent and covenant that
they are acquiring the unregistered and restricted common shares of Indwest to
be delivered to them under this Plan for investment purposes and not with a
view to the subsequent sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns agree to execute and deliver to
Indwest on the date of Closing or no later than the date on which the
restricted shares are issued and delivered to the Shareholders, their assigns,
or designees, an Investment Letter similar in form to that attached hereto as
Exhibit B.
4.9 Unregistered Shares and Access to Information. Medi-Hut and the
Shareholders understand that the offer and sale of Indwest shares to be
exchanged for the Medi-Hut shares have not been registered with or reviewed by
the securities and Exchange Commission under the Securities Act of 1933, as
amended, or with or by any state securities law administrator, and no federal
or state securities law administrator has reviewed or approved any disclosure
or other material facts concerning Indwest or Indwest stock. Medi-Hut and the
Shareholders have been provided with and reviewed all information concerning
Indwest and Indwest shares, to be exchanged for the Medi-Hut shares as they
have considered necessary or appropriate as prudent and knowledgeable
investors to enable them to make informed investment decisions concerning the
Indwest shares, to be exchanged for the Medi-Hut shares. Medi-Hut and the
Shareholders have made an investigation as to the merits and risks of their
acquisition of the Indwest shares, to be exchanged for the Medi-Hut shares and
have had the opportunity to ask questions of, and have received satisfactory
answers from, the officers and directors of Indwest concerning Indwest shares
to be exchanged for the Medi-Hut shares and related matters, and have had an
opportunity to obtain additional information necessary to verify the accuracy
of such information and to evaluate the merits and risks of the proposed
acquisition of the Indwest shares to be exchanged for the Medi-Hut shares.
4.10 Title to Shares. The Shareholders are the beneficial and record
owners, free and clear of any liens and encumbrances, of whatever kind or
nature, of all of the shares of Medi-Hut of whatever class or series, which
the Shareholders have contracted to exchange.
4.11 Contracts.
(a) Set forth in the Medi-Hut Schedules are copies or
descriptions of all material contracts which written or oral, all agreements,
franchises, licenses, or other commitments to which Medi-Hut is a party or by
which Medi-Hut or its properties are bound.
(b) Except as may be set forth in the Medi-Hut Schedules,
Medi-Hut is not a party to any contract, agreement, corporate restriction, or
subject to any judgment, order, writ, injunction, decree, or award, which
materially and adversely effect the business, operations, properties, assets,
or conditions of Medi-Hut.
(c) Except as set forth in the Medi-Hut Schedules, Medi-Hut is
not a party to any material oral or written (i) contract for employment of any
officer which is not terminable on 30 days (or less) notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended, or otherwise covered; (iii) agreement
providing for the sale, assignment or transfer of any of its rights, assets or
properties, whether tangible or intangible, except sales of its property in
the ordinary course of business with a value of less than $2,000; or (iv)
waiver of any right of any value which in the aggregate is extraordinary or
material concerning the assets or properties scheduled by Medi-Hut, except for
adequate value and pursuant to contract. Medi-Hut has not entered into any
material transaction which is not listed in the Medi-Hut Schedules or
reflected in the Medi-Hut financial statements.
4.12 Material Contract Defaults. Medi-Hut is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business, operations, properties or
assets, or condition of Medi-Hut, and there is no event of default or event
which, with notice of lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other
commitment in respect of which Medi-Hut has not taken adequate steps to
prevent such default from occurring, or otherwise compromised, reached a
satisfaction of, or provided for extensions of time in which to perform under
any one or more contract obligations, among others.
4.13 Conflict with Other Instruments. The consummation of the within
transactions will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which Medi-Hut was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of Medi-Hut.
4.14 Governmental Authorizations. Medi-Hut is in good standing in the
State of New Jersey. Except for compliance with federal and state securities
laws, no authorization, approval, consent or order of, or registration,
declaration, or filing with, any court or other governmental body is required
in connection with the execution and delivery by Medi-Hut of this Plan and the
consummation by Medi-Hut of the transactions contemplated hereby.
4.15 Compliance with Laws and Regulations. Medi-Hut has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Medi-Hut or except to the
extent that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to Indwest.
4.16 Approval of Plan. The Board of Directors of Medi-Hut have
authorized the execution and delivery of this Plan by Medi-Hut and have
approved the Plan and the transactions contemplated hereby. Medi-Hut has full
power, authority, and legal right to enter into this Plan and to consummate
the transactions contemplated hereby.
4.17 Information. The information concerning Medi-Hut set forth in
this Plan, and the Medi-Hut Schedules attached hereto, are complete and
accurate in all material respects and do not contain, or will not contain,
when delivered, any untrue statement or a material fact or omit to state a
material fact the omission of which would be misleading to Indwest in
connection with this Plan.
4.18 Medi-Hut Schedules. Medi-Hut has delivered to Indwest the
following items listed below, hereafter referred to as the "Medi-Hut
Schedules", which is hereby incorporated by reference and made a part hereof.
A certification executed by a duly authorized officer of Medi-Hut on or about
the date within the Plan is executed to certify that the Medi-Hut Schedules
are true and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements;
(c) Resolution of Board of Directors approving Plan;
(d) Consent of Shareholders approving Plan;
(e) A list of key employees, including current compensation,
with notation as to job description and whether or not such employee is
subject to written contract, and if subject to a contract or employment
agreement a copy of the same;
(f) A schedule showing the name and location of each bank or
other institution with which Medi-Hut has an account and the names of the
authorized persons to draw thereon or having access thereto;
(g) A schedule setting forth the shareholders, together with
the number of shares owned beneficially or of record by each (also attached as
Exhibit A);
(h) Schedule of all material contracts;
(i) Officers' Certificate as required by Section 7.2 of the
Plan;
Section 5
Special Covenants
5.1 Medi-Hut Information Incorporated in Indwest's Reports. Medi-Hut
represents and warrants to Indwest that all the information furnished under
this Plan shall be true and correct in all material respects and that there is
no omission of any material fact required to make the information stated not
misleading. Medi-Hut agrees to indemnify and hold Indwest harmless, including
each of its Directors and Officers, and each person, if any, who controls such
party, under any applicable law from and against any and all losses, claims,
damages, expenses or liabilities to which any of them may become subject under
applicable law, or reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
actions, whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based on
any untrue statement, alleged untrue statement, or omission of a material fact
contained in such information delivered hereunder.
5.2 Indwest Information Incorporated in Medi-Hut's Reports. Indwest
represents and warrants to Medi-Hut that all the information furnished under
this Plan shall be true and correct in all material respects and that there is
no omission of any material fact required to make the information stated not
misleading. The current officers and directors of Indwest agree to indemnify
and hold Medi-Hut harmless, including each of its Directors and Officers, and
each person, if any, who controls such party, under any applicable law from
and against any and all losses, claims, damages, expenses or liabilities to
which any of them may become subject under applicable law, or reimburse them
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based on any untrue statement, alleged untrue
statement, or omission of a material fact contained in such information
delivered hereunder.
5.3 Special Covenants and Representations Regarding the Exchanged
Indwest Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the Indwest shares in exchange for one
hundred percent (100%) of the issued and outstanding shares of Medi-Hut to the
Shareholders constitutes the offer and sale of securities under the Securities
Act and the applicable state statutes, which depend, inter alia, on the
circumstances under which the Shareholders acquire such securities. Indwest
intends to rely on the exemption of the registration provision of Section 5 of
the Securities Act as provided for under Section 4.2 of the Securities Act of
1933, which states "transactions not involving a public offering", among
others. Each Shareholder upon submission of his Medi-Hut shares and the
receipt of the Indwest shares exchanged therefor, shall execute and deliver to
Indwest a letter of investment intent to indicate, among other
representations, that the Shareholder is exchanging the Medi-Hut shares for
Indwest shares for investment purposes and not with a view to the subsequent
distribution thereof. A proposed Investment Letter is attached hereto as
Exhibit B and incorporated herein by reference for the general use by the
Shareholders, as they may determine.
5.4 Action Prior to Closing. Upon the execution hereof until the
Closing date, and the completion of the consolidated audited financials,
(a) Medi-Hut and Indwest will (i) perform all of its obligations
under material contracts, leases, insurance policies and/or documents relating
to its assets and business; (ii) use its best efforts to maintain and preserve
its business organization intact, to retain its key employees, and to maintain
its relationship with existing potential customers and clients; and (iii)
fully comply with and perform in all material respects all duties and
obligations imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state governmental
authorities.
(b) Neither Medi-Hut nor Indwest will (i) make any change in its
Articles of Incorporation or Bylaws except and unless as contemplated pursuant
to Section 3 of this Plan; (ii) enter into or amend any contract, agreement,
or other instrument of the types described in the parties' schedules, except
that a party may enter into or amend any contract or other instrument in the
ordinary course of business involving the sale of goods or services, provided
that such contract does not involve obligations in excess of $10,000.
Section 6
Conditions Precedent to Obligations of
Medi-Hut and the Shareholders
All obligations of Medi-Hut and the Shareholders under this Plan are
subject to the satisfaction, on or before the Closing date, except as
otherwise provided for herein, or waived or extended in writing by the parties
hereto, of the following conditions:
6.1 Accuracy of Representations. The representations and warranties
made by Indwest in this Plan were true when made and shall be true as of the
Closing date (except for changes therein permitted by this Plan) with the same
force and effect as if such representations and warranties were made at and as
of the Closing date; and, Indwest shall have performed and complied with all
aspects of this Agreement, unless waived or extended in writing by the parties
hereto. Medi-Hut shall have been furnished with a certificate, signed by a
duly authorized executive officer of Indwest and dated the Closing date, to
the foregoing effect.
6.2 Officers' Certificate. Medi-Hut and the Shareholders shall have
been furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of Indwest, to the effect that no litigation,
proceeding, investigation, claim, demand or inquiry is pending, or to the best
knowledge of Indwest, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Plan, or
which might result in any material adverse change in the assets, properties,
business, or operations of Indwest, and that this Agreement has been complied
with in all material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of Indwest, nor shall any event have occurred which,
with lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
Indwest, except as otherwise disclosed to Medi-Hut.
6.4 Opinion of Counsel of Indwest. Indwest shall furnish to Medi-Hut
and the Shareholders an opinion dated as of the Closing date and in form and
substance satisfactory to Medi-Hut and the Shareholders to the effect that:
(a) Indwest is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Utah, and with all
requisite corporate power to perform its obligations under this Plan.
(b) The business of Indwest, as presently conducted, including,
upon the consummation hereof, the ownership of all of the issued and
outstanding shares of Medi-Hut, does not require it to register it to do
business as a foreign corporation on any jurisdiction other than under the
jurisdiction of its Articles of Incorporation or Bylaws and Indwest has
complied to the best of its knowledge in all material respects with all the
laws, regulations, licensing requirements and orders applicable to its
business activities and has filed with the proper authorities, including the
Department of Commerce, Division of Corporations, and Secretary of State for
the State of Utah, all statements and reports required to be filed.
(c) The authorized and outstanding capital stock of Indwest as
set forth in Section 3.2 above, and all issued and outstanding shares have
been duly and validly authorized and issued and are fully paid and
non-assessable.
(d) There are no material claims, suits or other legal
proceedings pending or threatened against Indwest of any court or before or by
any governmental body which might materially effect the business of Indwest or
the financial condition of Indwest as a whole and no such claims, suits or
legal proceedings are contemplated by governmental authorities against
Indwest.
(e) To the best knowledge of such counsel, the consummation of
the transactions contemplated by this Plan will not violate or contravene the
provisions of the Certificate of Incorporation or Bylaws of Indwest, or any
contract, agreement, indenture, mortgage, or order by which Indwest is bound.
(f) This Plan constitutes a legal, valid and binding obligation
of Indwest enforceable in accordance with its terms, subject to the effect of
any bankruptcy, insolvency, reorganization, moratorium, or similar law
effecting creditors' rights generally and general principles of equity
(regardless of whether such principles are considered in a proceeding in
equity or law).
(g) The execution and delivery of this Plan and the consummation
of the transactions contemplated hereby have been ratified by a majority of
the Shareholders of Indwest and have been duly authorized by its Board of
Directors.
(h) Indwest has not, nor will it undertake any action, the
result of which would endanger the tax-free nature of the Plan.
6.5 Good Standing. Medi-Hut shall have received a Certificate of Good
Standing from the State of Utah, dated within ninety (90) days prior to
Closing, but in no event later than ten days subsequent to the execution
hereof certifying that Indwest is in good standing as a corporation in the
State of Utah.
6.6 Other Items. Medi-Hut and the Shareholders shall have received
such further documents, certifications or instruments relating to the
transactions contemplated hereby as Medi-Hut and the Shareholders may
reasonably request.
Section 7
Conditions Precedent to Obligations of Indwest
All obligations of Indwest under this Plan are subject, at its option,
to the fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties
made by Medi-Hut and the Shareholders under this Plan were true when made and
shall be true as of the Closing date (except for changes therein permitted by
this Plan) with the same force and effect as if such representations and
warranties were made at and as of the Closing date; and, Indwest shall have
performed and complied with all aspects of this Agreement, unless waived or
extended in writing by the parties hereto. Indwest shall have been furnished
with a certificate, signed by a duly authorized executive officer of Medi-Hut
and dated the Closing date, to the foregoing effect.
7.2 Officers' Certificate. Indwest shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of Medi-Hut, to the effect that no litigation, proceeding,
investigation, claim, deed, or inquiry is pending, or to the best knowledge of
Medi-Hut, threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties, business, or
operations of Medi-Hut, and that this Agreement has been complied with in all
material respects.
7.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of Indwest, nor shall any event have occurred which,
with lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
Medi-Hut, except as otherwise disclosed to Indwest.
7.4 Dissenters' Rights Waived. Shareholders representing at one
hundred percent (100%) of the issued and outstanding shares of Medi-Hut, and
each of them, have agreed and hereby waive any dissenters' rights, if any,
under the laws of the State of New Jersey in regards to any objection to this
Plan as outlined herein and otherwise consent to and agree and authorize the
execution and consummation of the within Plan in accordance to the terms and
conditions of this Plan by the management of Medi-Hut.
7.5 Other Items. Indwest shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as Indwest may reasonably request.
7.6 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to Indwest.
Section 8
Termination
8.1 Termination by Medi-Hut or the Shareholders. This Plan may be
terminated at any time prior to the Closing date by action of Medi-Hut or the
Shareholders, if Indwest shall fail to comply in any material respect with any
of the covenants or agreements contained in this Plan, or if any of its
representations and warranties contained herein shall be inaccurate in any
material respect.
8.2 Termination by Indwest. This Plan may be terminated at any time
prior to the Closing date by action of Indwest if Medi-Hut shall fail to
comply in any material respect with any of the covenants or agreements
contained in this Plan, or if any of its representations or warranties
contained herein shall be inaccurate in any material respect.
8.3 Termination by Mutual Consent
(a) This Plan may be terminated at any time prior to the Closing
date by mutual consent of Indwest, expressed by action of its Board of
Directors, Medi-Hut or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this Plan
shall be of no further force and effect and no obligation, right or liability
shall arise hereunder. Each party shall bare its own costs in connection
herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Robert Russo,
CPA, Fred Koeing & Company, 277 West Clay Avenue, Roselle Park, New Jersey
07204, as their agent and attorney in fact (the "Shareholders'
Representative") with full power and authority until the Closing to execute,
deliver and receive on their behalf all notices, requests and other
communications hereunder; to fix and alter on their behalf the date, time and
place of the Closing; to waive, amend or modify any provisions of this Plan
and to take such other action on their behalf in connection with this Plan,
the Closing and the transactions contemplated hereby as such agent deems
appropriate; provided, however, that no such waiver, amendment or modification
may be made if it would decrease the number of shares to be issued to the
Shareholders under Section 1 hereof or increase the extent of their obligation
to Indwest hereunder, unless agreed in writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to time, after the
Closing date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of the Plan.
10.2 Payments of Costs and Fees. Indwest and Medi-Hut shall each bear
their own costs and expenses, including any legal and accounting fees in
connection with the negotiation, execution and consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, Medi-Hut and the Shareholders
shall cause to have promptly prepared and disseminated a news release
concerning the execution and consummation of the Plan, such press release and
communication to be released promptly and within the time required by the
laws, rules and regulations as promulgated by the United States Securities and
Exchange Commission, and concomitant therewith to cause to be prepared a full
and complete letter to Indwest's shareholders which shall contain information
required by Regulation 240.14f-1 as promulgated under Section 14(f) as
mandated under the Securities and Exchange Act of 1934, as amended.
10.4 Notices. All notices and other communications required or
permitted hereunder shall be sufficiently given if personally delivered, sent
by registered mail, or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission addressed to the following parties
hereto or at such other addresses as follows:
If to Indwest: Indwest, Inc.
215 South State Street, Suite 1100
Salt Lake City, Utah 84111
With a copy to: Daniel W. Jackson, Esq.
215 South State Street, Suite 1100
Salt Lake City, Utah 84111
If to Medi-Hut: Medi-Hut Co, Inc.
1935 Swarthmore, Ave.
Lakewoood, New Jersey 08701
With a copy to: Robert Russo, CPA
Fred Koeing & Company
277 West Clay Avenue
Roselle Park, New Jersey 07204
or at such other addresses as shall be furnished in writing by any party in
the manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed, sent
by facsimile transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire agreement
between the parties relating to the subject matter hereof, including any
previous letters of intent, understandings, or agreements between Indwest,
Medi-Hut and the Shareholders with respect to the subject matter hereof, all
of which are hereby merged into this Plan, which alone fully and completely
expresses the agreement of the parties relating to the subject matter hereof.
Excepting the foregoing agreement, there are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
10.6 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Utah, except to the
extent preempted by federal law, in which event (and to that extent only)
federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this Plan is
intended to qualify as a "tax-free" reorganization under the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
Medi-Hut and Indwest acknowledge, however, that each are being represented by
their own tax advisors in connection with this transaction, and neither has
made any representations or warranties to the other with respect to treatment
of such transaction or any part or effect thereof under applicable tax laws,
regulations or interpretations; and no attorney's opinion or tax revenue
ruling has been obtained with respect to the tax consequences of the
transactions contemplated by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in any action
or suit to enforce this Plan, or secure relief from any default hereunder or
breach hereof, the nonprevailing party or parties shall reimburse the
prevailing party or parties for all costs, including reasonable attorney fees,
incurred in connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law or in equity, and may be enforced concurrently or separately, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, therefore, or
thereafter occurring or existing. Any time prior to the expiration of thirty
(30) days from the date hereof, this Plan may be amended by a writing signed
by all parties hereto, with respect to any of the terms contained herein, and
any term or condition of this Plan may be waived or the time for performance
thereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
10.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which together shall constitute one and the same
instruments.
10.11 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not effect in any way the meaning or
interpretation of the Plan.
10.12 Parties in Interest. Except as may be otherwise expressly
provided herein, all terms and provisions of this Plan shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal and legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement of
Reorganization effective the day and year first set forth above.
INDWEST, INC.
Attest:
/s/ Robert Gallagher
By: ____________________________
Its President
MEDI-HUT CO., INC.
Attest:
/s/ Joseph Sanpietro
By: _____________________________
Its President
SHAREHOLDERS:
Attest:
/s/ 2/11/98 /s/ Vincent Sanpietro
_____________________ By________________________________________________
Attest:
_____________________ By________________________________________________
Attest:
_____________________ By________________________________________________
Schedule (e)
KEY EMPLOYEES OF MEDI-HUT CO., INC.
Name Annual Salary
Joseph Sanpietro $156,000
Vincent Sanpietro $78,000
Tonie Sanpietro $12,000
There are no employment contracts.
Schedule (f)
NAME AND LOCATION OF MEDI-HUT CO., INC.'S
BANK ACCOUNT AND AUTHORIZED SIGNATORIES
PNC Bank
32 North Main Street
Cranbury, NJ 08512
Authorized Signatories: Joseph Sanpietro
Vincent Sanpietro
SHAREHOLDERS OF MEDI-HUT CO, INC.
Name Shares
Joseph Sanpietro 80 shares
Vincent Sanpietro 20 shares
TOTAL 100 shares
CERTIFICATE OF INCORPORATION
OF
MEDI-HUT CO., INC.
FIRST. The name of this corporation shall be:
MEDI-HUT CO., INC.
SECOND. Its registered office in the State of Delaware is to be located
at 1013 Centre Road, in the City of Wimington, County of New Castle, 19085,
and its registered agent at such address is CORPORATE AGENTS, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Hundred Million (100,000,000) shares at a par value of $.001 each,
amounting to One Hundred Thousand Dollars ($100,000.00)
FIFTH. The name and mailing address of the incorporator is as follows:
Debra M. Carll
Corporate Agents, Inc.
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
IN WITNESS WHEREOF, The undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this second day of February, A.D. 1998.
/s/ Debra M. Carll
- ----------------------
Debra M. Carll
Incorporator
ARTICLES OF MERGER FOR
INDWEST, INC. A UTAH
CORPORATION
Pursuant to the provisions of Section 16-10a-1105 of the Utah Revised
Business Corporation Act, Indwest, Inc., a Utah corporation (Indwest), hereby
adopts and files the following Articles of Merger as the surviving corporation
to the merger of Medi-Hut Co., Inc., a New Jersey corporation ("Medi-Hut"),
with and into Indwest:
FIRST: Agreement and Plan of Merger. A copy of the Agreement and Plan
of Merger (the "Plan") governing the change of domicile merger between the
Indwest and Medi-Hut, as adopted by the Boards of Directors of Indwest and
Medi-Hut and as approved by the shareholders of Indwest and Medi-Hut on
January 28, 1998, is attached hereto as Exhibit "A". The Plan, which is
incorporated herein by this reference, results in the change of domicile of
the New Jersey corporation and the termination of the corporations existance.
SECOND: Shareholder Approval. The approval of the shareholders of
Indwest and Medi-Hut was required to effectuate the merger. The number of
shares of stock outstanding in each of the corporations (and the number of
votes entitled to be cast) as of the date of the adoption of the Plan was as
follows:
Entity Type of Shares Number of Shares Outstanding
- ------ -------------- ----------------------------
Indwest, Inc. (Utah) Common 1,699,549
Medi-Hut Co., Inc. (New Jersey) Common 100
The number of shares of stock of each corporation which voted for and
against the Plan was as follows:
Entity Type of Shares For Against
- ------ -------------- --- -------
Indwest, Inc. (Utah) Common 100 0
Medi-Hut Co., Inc. (New Jersey) Common 1,530,000 0
THIRD: Sufficiency of Vote. The number of votes cast for the Plan by
each voting group entitled to vote was sufficient for approval of the merger
by each such voting group.
FOURTH: Principal Place of Business of the Corporation. The principal
place of business in the State of Utah for Indwest is 215 South State Street,
Salt Lake City, Utah 84111.
FIFTH: Following the merger Article I to the Articles of Incorporation
of the surviving corporation shall be amended as follows:
A.Delete Article I in its entirety and substitute in its place the
following:
Article One. The name of the Corporation is Medi-Hut Co., Inc.
SIXTH: Registered Agent. Pursuant to the provisions of Utah Code
Annotated Section 16-10a-1107(2), the Corporation's registered agent in the
State of Utah is the Secretary of the State of Utah, whose address is 160 East
300 South, P.O. Box 45801, Salt Lake City, Utah 84801. The corporation hereby
consents to the service of process on it in accordance with the provisions of
Utah Code Annotated Section 16-10a-1107(2)(a)(ii), as amended.
DATED this 28th day of January, 1998.
/s/ Robert Gallagher
- --------------------
Robert Gallagher
President
<Date Stamp dated February 27, 1998
for the Secretary of State for the
State of Delaware appears here>
ARTICLES OF MERGER FOR
MEDI-HUT CO., INC.
A DELAWARE CORPORATION
Pursuant to the provisions of Section252 of the Delaware General
Corporation Law, Medi-Hut Co., Inc., a Delaware corporation ("Medi-Hut DL"),
hereby adopts and files the following Articles of Merger as the surviving
corporation to the merger of Medi-Hut Co., Inc., a Utah corporation ("Medi-Hut
UT"), with and into Medi-Hut DL:
FIRST: The name and place of incorporation of each corporation which is
a party to this merger is as follows:
Name Place of Incorporation
Medi-Hut Co., Inc. Utah
Medi-Hut Co., Inc. (Survivor) Delaware
SECOND: The Agreement and Plan of Merger (the "Plan") has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with Section252 of the Delaware General Corporation
Law.
THIRD: The approval of the shareholders of the Medi-Hut DL and Medi-Hut
UT was required to effectuate the merger. The number of shares of stock
outstanding in each of the corporations (and the number of votes entitled to
be cast) as of the date of the adoption of the Plan was as follows:
Shares
Entity Type of Shares Outstanding
Medi-Hut Co., Inc. (Utah) Common 8,000,000
Medi-Hut Co., Inc. (Delaware) Common 100
The number of shares of stock of each corporation which voted for and
against the Plan was as follows:
Entity Type of Shares For Against
Medi-Hut Co., Inc. (Utah) Common 4,099,000 0
Medi-Hut Co., Inc. (Delaware) Common 100 0
FOURTH: The number of votes cast for the Plan by each voting group
entitled to vote was sufficient for approval of the merger by each such voting
group.
FIFTH: Following the merger the Certificate of Incorporation of Medi-Hut
DL shall be the Certificate of Incorporation of the surviving company.
SIXTH: The complete executed Plan is on file at the registered office
and at the place of business of Medi-Hut DL, located at 1935 Swarthmore Ave.,
Lakewood, New Jersey 08701.
SEVENTH: A copy of the Plan will be furnished by Medi-Hut DL, on request
and without cost, to any shareholder of either corporation which is a party to
the merger.
EIGHTH: The merger will be effective upon the filing of the Articles of
Merger.
DATED this 23rd day of February, 1998.
MEDI-HUT CO., INC., a Delaware corporation
By /s/ Anita Patterson
- ----------------------
Anita Patterson, President
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 23rd day of February, 1998, personally appeared before me Anita
Patterson, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that she is the President
of Medi-Hut Co., Inc. and that said document was signed by her in behalf of
said corporation by authority of its bylaws, and said Anita Patterson
acknowledged to me that said corporation executed the same.
/s/ John W. Peters
- ------------------
NOTARY PUBLIC
By /s/ Jeanne Ball
- ------------------
Jeanne Ball, Secretary
<Notary Stamp of John W. Peters appears here>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 23rd day of February, 1998, personally appeared before me Jeanne
Ball, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that she is the Secretary
of Medi-Hut Co., Inc., and that said document was signed by her in behalf of
said corporation by authority of its bylaws, and said Jeanne Ball acknowledged
to me that said corporation executed the same.
/s/ John W. Peters
- ------------------
NOTARY PUBLIC
<Notary Stamp of John W. Peters appears here>
BYLAWS
------
OF
MEDI-HUT CO., INC.
(a Delaware corporation)
ARTICLE I
---------
STOCKHOLDERS
------------
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in
the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent,
or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate therefore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate of the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series
of the stock of the corporation shall be uncertificated shares. Within a
reasonable time after the issuance or transfer of any uncertificated shares,
the corporation shall send to the registered owner thereof any written notice
prescribe by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered from
(either represented by a certificate or uncertificated) or bearer from
(represented by a certificate) which shall entitle the holder to receive a
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share or an uncertificated fractional
share shall, but scrip or warrants shall not unless otherwise provided
therein, entitle the holder to exercise voting rights, to receive dividends
thereon, and to participate in any of the assets of the corporation in the
event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not
exchanged for certificates representing the full shares or uncertificated full
shares before a specified date, or subject to the conditions that the shares
for which scrip or warrants are exchangeable may be sold by the corporation
and the proceeds thereof distributed to the holders of scrip or warrants, or
subject to any other conditions which the Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
indorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the recorded date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting. In order that the
corporation may determine that stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If no record
date has been fixed by the Board of Directors, the record date for determining
the stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by the
General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Delivery made to the corporation's registered office shall be
by hand or by certified mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order
that the corporation may determine the stockholders entitled to receive
payment of any dividend or their distribution or allotment of any rights or
the stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used in respect of the right to notice
of a meeting of stockholders or a waiver thereof or to participate or vote
thereat or to consent or dissent in writing in lieu of a meeting, as the case
may be, the tem "share" or "shares" or "share of stock" or "shares of stock"
or "stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding share of stock of any
class upon which or upon whom the certificate of incorporation confers such
rights where there are two or more classes or series of the shares of stock or
upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more
than on class or series of shares of stock, one or more of which are limited
or denied such rights thereunder; provided, however, that no such right shall
vest in the event of an increase or a decrease in the authorized number of
shares of stock of any class or series which is otherwise denies voting rights
under the provisions of the certificate of incorporation, except as any
provisions of law may otherwise require.
7. STOCKHOLDER MEETINGS.
-TIME. The annual meeting shall be held on the date and at the time
fixed, form time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization
of the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the organization of the corporation, and each
successive annual meeting shall be held on a date within thirteen months after
the date of the preceding annual meeting. A special meeting shall be held on
the date and at the time fixed by the directors.
-PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from
time to time fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
-CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
-NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purpose or purposes.
The notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called. The notice of any special meeting
shall also include, or be accompanied by, any additional statements,
information, or documents prescribed by the General Corporation Law. Except
as otherwise provided by the General Corporation Law, a copy of the notice of
any meeting shall be given, personally or by mail, not less than ten days nor
more than sixty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, and directed to each
stockholder at his record address or at such other address which he may have
furnished by request in writing to the Secretary of the corporation. Notice
by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States Mail. If a meeting is adjourned to another
time, not more than thirty days hence, and/or to another place, and if an
announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting. Notice need
not be given to any stockholder who submits a written waiver of notice signed
by him before or after the time stated therein. Attendance of a stockholder
at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders need be specified in any written waiver of notice.
-STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place where
the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by this section or the books of the corporation, or
to vote at any meeting of stockholders.
-CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officer in the order of seniority and if present and
acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
-PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a
meeting. Every proxy must be signed by the stockholder or by his attorney-in-
fact. No proxy shall be voted or acted upon after three years from its date
unless such proxy provides for a longer period. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and, if, and only as long
as, it is coupled with an interest sufficient in law to support an irrevocable
power. A proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an interest in
the corporation generally.
-INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector failed to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspectors at
such meeting with strict impartiality and according to the best of his
ability. The inspectors, if any, shall determine the number of shares of
stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots, or consents, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subscription (e) of Section 231 of the general Corporation Law, the provisions
or that Section shall not apply to the corporation.
-QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
-VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote
on the election of directors. Any other action shall be authorized by a
majority of the votes cast except where the General Corporation Law prescribes
a different percentage of votes and/or a different exercise of voting power,
and except as may be otherwise prescribed by the provisions of the certificate
of incorporation and these Bylaws. In the election of directors, and for any
other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any provision of the
General Corporation Law may otherwise require, any action required by the
general Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. Action taken pursuant
to this paragraph shall be subject to the provisions of Section 228 of the
General Corporation Law.
ARTICLE II
----------
DIRECTORS
---------
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors of the corporation. The Board of Directors shall have the authority
to fix the compensation of the members thereof. The use of the phrase "whole
board" herein refers to the total number of directors which the corporation
would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen or the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of 3 persons. Thereafter the number
of directors constituting the whole board shall be at least one. Subject to
the foregoing limitation and except for the first Board of Directors, such
number may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be 3. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected
and qualified or until their earlier resignation or removal. Any director may
resign at any time upon written notice to the corporation. Thereafter,
directors who are elected at an annual meeting of stockholders, and directors
who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal. Except as the General Corporation Law may otherwise
require, in the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors and/or for the
removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of
directors for cause or without cause, may be filled by the vote of a majority
of the remaining directors then in office, although less than a quorum, or by
the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, or the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member
of a committee of directors who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of any such person at
a meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the directors need be
specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
vote of one of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly created directorships in
the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-
Chairman of the Board, if any and if present and acting, or the President, if
present and acting, or any other directors chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any
member of any such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in
the resolution of the Board, shall have any may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any power or authority the
delegation of which is prohibited by Section 141 of the General Corporation
Law, and may authorize the seal of the corporation to be affixed to all papers
which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
-----------
OFFICERS
--------
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution
of the Board of Directors choosing him, no officer other than the Chairman or
Vice-Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office
except to the extent that such resolutions may be inconsistent therewith., The
Secretary or an Assistant Secretary of the corporation shall record all of the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any office
may be moved, with or without cause, by the Board of Directors. Any vacancies
in any office may be filled by the Board of Directors.
ARTICLE IV
-----------
CORPORATE SEAL
---------------
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
----------
FISCAL YEAR
------------
The fiscal year of the corporation shall be fixes, and shall be subject
to change, by the Board of Directors.
ARTICLE VI
----------
CONTROL OVER BYLAWS
-------------------
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of Medi-Hut Company, Inc., a Delaware corporation, as in effect on
the date hereof.
Dated: 2/2/98
/s/ Vincent Sanpietro
______________________________
Vincent Sanpietro, Secretary
This Lease Agreement, made the 30 day of November, 1989, Between Iorio Realty
residing or located at 1750 Cedar Bridge Avenue in the Township of Lakewood in
the County of Ocean and State of New Jersey, herein designated as the
Landlord, and Focus Medical Products residing or located 95 Newfield Avenue in
the Township of Edison in the County of Middlesex and State of New Jersey,
herein designated a the Tenant; the Landlord, the following described
premises: Industrial building on the corner of Swarthmore Avenue and Rutgers
Avenue, also known as Lot 17 Block 1609 for a term of five (5) years and Two
(2) months commencing on Approx. December 15, 1989, and ending on February 15,
1995, to be used and occupied only and for no other purpose than for the
operation of their Company (Focus Medical Products) which sells and
distributes Medical products.
Upon the following Conditions and Covenants:
1st: The Tenant covenants and agrees to pay to the Landlord, as rent for and
during the term hereof, the sum of 91,875.00 for five (5) years, payable in
the following manner: Starting March 7, 1990 - Sixty (60) monthly payments of
$1,531.25
2nd: The Tenant has examined the premises and has entered into this lease
without any representation on the part of the Landlord as to the condition
thereof. The Tenant shall take good care of the premises and shall at the
Tenant's own cost and expense, make all repairs, including painting and
decorating, and shall maintain the premises in good order and condition, wear
and tear from a reasonable use thereof, and damage by the elements not
resulting from the neglect r fault of the Tenant, excepted. The Tenant shall
neither encumber nor obstruct the sidewalks, driveways, yard, entrances,
hallways and stairs, but shall keep and maintain the same in a clean
condition, free from debris, trash, refuse, snow and ice.
3rd: In case of the destruction of or any damage to the glass int eh leased
premises, or the destruction of or damage of any kind whatsoever to the said
premises, caused by the carelessness negligence or improper conduct on the
part of the Tenant or the Tenant's agents, employees, guests, licenses,
invitees, subtenants, assignees or successors, the Tenant shall repair the
said damage or replace or restore any destroyed parts of the premises, as
speedily as possible, at the Tenant's own cost and expense.
4th: No alterations, additions or improvements shall be made, and no climate
regulating, air conditioning, cooling, heating or sprinkler systems,
television or radio antennas, heavy equipment, apparatus and fixtures, shall
be installed in or attached to the leased premises, without the written
consent of the Landlord. Unless otherwise provided herein, all such
alterations, additions or improvements and systems, when made, installed not
attached to the said premises, shall belong to and become the property of the
Landlord and shall be surrendered with the premises and as part thereof upon
the expiration or sooner termination of this lease, without hindrance,
molestation or injury.
5th: The Tenant shall not place nor allow to be placed any signs of any kind
whatsoever, upon in or about the said premises or any part thereof, except of
a design and structure and in or at such places as may be indicated and
consented to by the Landlord in writing. In case the Landlord or the
Landlord's agents, employees or representatives shall deem it necessary to
remove any such signs in order to paint or make any repairs, alterations or
improvements in or upon said premises or any part thereof, they may be so
removed, but shall be replaced at the Landlord's expense when the said
repairs, alterations or improvements shall have been completed. Any signs
permitted by the Landlord shall at all times conform with all municipal
ordinances or other laws and regulations applicable thereto.
6th: The Tenant shall pay when due all the rents or charges for water or
other utilities used by the Tenant, which are or may be assessed or imposed
upon the leaned premises or which are or may be charged to the Landlord by the
suppliers thereof during the tem hereof, and if not paid, such rents or
charges shall be added to and become payable as additional rent with the
installment of rent next due within 30 days of demand therefor, whichever
occurs sooner.
7th: The Tenant shall promptly comply with all laws, ordinances, rules,
regulations, requirements and directives of the Federal, State and Municipal
Governments or Public Authorities and of all their departments, bureaus and
subdivisions, applicable to and affecting the said premises, their use and
occupancy, for the correction, prevention and abatement of nuisances,
violations or other grievances in, upon or connected with the said premises,
during the term hereof; and shall promptly comply with all orders,
regulations, requirements and directives of the Board of Fire Underwriters or
similar authority and of any insurance companies which have issued or are
about to issue policies of insurance covering the said premises and its
contents, for the prevention of fire or other casualty, damage or injury, at
the Tenant's own cost and expense.
8th: The Tenant, at Tenant's own cost and expense, shall obtain or provide
and keep in full force for the benefit of the Landlord, during the term
hereof, general public liability insurance, insuring the Landlord against any
and all liability or claims of liability arising out of, occasioned by or
resulting from any accident or otherwise in or about the leased premises, for
injuries to any person or persons, for limits of not less than $1,000,000.00
or injuries to one person and $ for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than $1,000,000.00 The policy
or policies of insurance shall be of a company or companies authorized to do
business in this State and shall be delivered to the Landlord, together with
evidence of the payment of the premiums therefor, not less than fifteen days
prior to the commencement of the term hereof or of the date when the Tenant
shall enter into possession, whichever occurs sooner. At least fifteen days
prior to the expiration or termination date of any policy; the Tenant shall
deliver a renewal or replacement policy with proof of the payment of the
premium therefor. The Tenant also agrees to and shall save, hold and keep
harmless and indemnify the Landlord from and for any and all payments,
expenses, costs, attorney fees and from and for any all claims and liability
for losses or damage to property or injuries to persons occasioned wholly or
in part by or resulting from any acts or omissions by the Tenant or the
Tenant's agents, employees, guests, licenses, invitees, subtenants, assignees
or successors, or for any cause or reason whatsoever arising out of or by
reason of the occupancy by the Tenant and the conduct of the Tenants business.
9th: The Tenant shall not, without the written consent of the landlord,
assign, mortgage or hypothecate this lease, nor sublet or sublease the
premises or any part thereof.
10th: The Tenant shall not occupy or use the leased premises or any part
thereof, nor permit or suffer the same to be occupied or used for any purposes
other than as herein limited, nor for any purpose deemed unlawful,
disreputable, or extrahazardous, on account of fire or other casualty.
11th: This lease shall not be a lien against the said premises in respect
to any mortgages that may hereafter be placed upon said premises. The
recording of such mortgage or mortgages shall have preference and precedence
and be superior and prior in lien to this lease, irrespective of the date of
recording and the Tenant agrees to execute any instruments, without cost,
which may be deemed necessary or desirable, to further effect the
subordination of this lease to any such mortgage or mortgages. A refusal by
the Tenant to execute such instruments shall entitle the Landlord to the
option of canceling this lease, and the term hereof is hereby expressly
limited accordingly.
12th: If the land and premises leased herein, or of which the leased
premises are a part, or any portion thereof, shall be taken under eminent
domain or condemnation proceedings or actions, the Landlord shall grant an
option to purchase and or shall sell and convey the said premises or any
portion thereof, to the governmental or other public authority, agency, body
or public utility, seeking to take said land and premises or any portion
thereof, then this lease, at the option of the Landlord, shall terminate, and
the term hereof shall end as of such date as the Landlord shall fix by notice
in writing; and the Tenant shall have no claim or right to claim or be
entitled to any portion of any amount which may be awarded as damages or paid
as the result of such condemnation proceedings or paid as the purchase price
for such option, assigned to the Landlord. The Tenant agrees to execute and
deliver any instruments, at the expense of the Landlord, as may be deemed
necessary or required to expedite any condemnation proceedings or to
effectuate a proper transfer of title to such government or other public
authority, agency, body or public utility seeking to take or acquire the said
lands and premises or any portion thereof. The Tenant covenants and agrees to
vacate the said premises, remove all the Tenant's personal property therefrom
and deliver up peaceable possession thereof to the Landlord or to such other
party designated by the Landlord in the aforementioned notice. Failure by the
Tenant to comply with any provisions in this clause shall subject the Tenant
to such costs, expenses, damages and losses as the Landlord may incur by
reason of the Tenant's breach hereof.
13th: In case of fire or other casualty, the Tenant shall give immediate
notice to the Landlord. If the premises shall be partially damaged by fire,
the elements or other casualty, the Landlord shall repair the same as speedily
as practicable, but the Tenant's obligation to pay the rent hereunder shall
not cease. If, in the opinion of the Landlord, the premises be so extensively
and substantially damaged as to require practically a rebuilding thereof, then
the rent shall be paid up to the time of such destruction and then and from
thenceforth this lease shall come to an end. In no event however, shall the
provisions of this clause become effective or be applicable, if the fire or
other casualty and damage shall be the result of the carelessness, negligence
or improper conduct of the Tenant or the Tenant's agents, employees, guests,
licensees, invitees, subtenants, assignees or successors. In such case, the
Tenant's liability for the payment of the rent and the performance of all the
covenants, conditions and terms hereof on the Tenant's part to be performed
shall continue and the Tenant shall be liable to the Landlord for the damage
and loss suffered by the Landlord. If the Tenant shall have been insured
against any of the risks herein covered, then the proceeds of such insurance
shall be paid over to the Landlord to the extent of the Landlord's costs and
expenses to make the repairs hereunder, and such insurance carriers shall have
no recourse against the Landlord for reimbursement.
14th: If the Tenant shall fail or refuse to comply with and perform any
conditions and covenants of the within lease, the Landlord may, if the
Landlord so elects, carry of and perform any conditions and covenants, at the
cost and expense of the Tenant, and the said cost and expense shall be payable
on demand, or at the option of the Landlord shall be added to the installment
of rent due immediately thereafter but in no case later than one month after
such demand, whichever occurs sooner, and shall be due and payable as such.
This remedy shall be in addition to such other remedies as the Landlord may
have hereunder by reason of the breach by the Tenant of any of the covenants
and conditions in this lease contained.
15th: The Tenant agrees that the Landlord and the Landlord's agents,
employees or other representatives, shall have the right to enter into and
upon the said premises or any part thereof, at all reasonable hours, for the
purpose of examining the same or making such repairs or alterations therein as
may be necessary for the safety and preservation thereof. This clause shall
not be deemed to be a covenant by the Landlord nor be construed to create an
obligation on the part of the Landlord to make such inspection or repairs.
16th: The Tenant agrees to permit the Landlord and the Landlord's's
agents, employees or other representatives to show the premises to persons
wishing to rent or purchase the same, and Tenant agrees that on and after next
proceeding the expiration of the term hereof, the Landlord or the Landlord's's
agents, employees or other representative to shall have the right to place
notices on the front of said premises or any part thereof, offering the
premises for rent or for sale; and the Tenant hereby agrees to permit the same
to remain there on without hindrance or molestation.
17th: If for any reason it shall be impossible to obtain fire and other
hazard insurance on the buildings and improvements on the leased premises, in
an amount and in the form and in insurance companies acceptable to the
Landlord, the Landlord may, if the Landlord so elects at any time thereafter,
terminate this lease and the term hereof, upon giving to the Tenant fifteen
days notice in writing of the Landlord's intention so to do, and upon the
giving of such notice, this lease and the term thereof shall terminate. If by
reason of the use to which the premises are put by the Tenant or character of
or the manner in which the Tenant's business is carried on, the insurance
rates for fire and other hazards shall be increased. Such payment shall be
paid with the next installment of rent but in no case later than one month
after such demand whichever occur's sooner.
18th: Any equipment, fixtures, goods or other property of the Tenant, not
removed by the Tenant upon the termination of this lease, or upon any
quitting, vacating or abandonment of the premises by the Tenant, or upon the
Tenant's eviction, shall be considered as abandoned and Landlord shall have
the right, without any notice to the Tenant to sell otherwise dispose of the
same, at the expense of the Tenant, and shall not be accountable to the Tenant
for any part of the proceeds of such sale, if any.
19th: If the should occur any default on the part of the Tenant in the
performance of any conditions and covenants herein contained, or if during the
term hereof the premises or any part thereof shall be or become abandoned or
deserted, vacated or vacant, or should the Tenant be evicted by summary
proceedings or otherwise, the Landlord, in addition to any other remedies
herein contained or as may be permitted by law, may either by force of
otherwise, without bing liable for prosecution therefor, or for damages, re-
enter the said premises and the same have and again possess and enjoy; and as
agent for the Tenant of other wise, re-let the premises and receive the rents
therefor and apply the same, first to the payment of such expenses, reasonable
attorney fees and costs, as the Landlord may have been put to in re-entering
the repossessing the same and in making such repairs and alterations as may be
necessary; and second to the payment of the rents due hereunder. The Tenant
shall remain liable for such rents as may be in arrears and also the rents as
may accrue subsequent to the re-entry by the Landlord, to the extent t of the
difference between the rents reserved hereunder and the rents, if any,
received by the Landlord during the remainder of the unexpired tem hereof,
after deducting the a fore mentioned expenses, fees and costs; the same to be
paid as such deficiencies arise and are ascertained each month.
20th: Upon the occurrence of any of the contingencies set forth in the
proceeding clause, or should the Tenant be adjudicated a bankrupt, insolvent
or placed in receivership, or should proceedings be instituted by or against
the Tenant for bankruptcy, insolvency, receivership, agreement of composition
or assignment for the benefit of creditors, or if this lease or the estate of
the Tenant hereunder shall pass to another by virtue of any court proceedings,
writ of execution, levy, sale, or by operation of law, the Landlord may, if
the Landlord so elects, at any time thereafter, terminate this lease and the
term hereof, upon giving to the Tenant or to any trustee, receiver , assignee
or other person in charge of or acting as custodian of the assets or property
of the Tenant, five days notice in writing, of the Landlord's intention so to
do. Upon the giving of such notice, this lease and the term hereof shall end
on the date fixed in such notice, this lease and the term hereof shall end on
the date fixed in such notice, this lease and the term hereof shall end on the
date fixed in such notice as if the aid date was the date originally fixed in
this lease for the expiration hereof; and the Landlord shall have the right to
remove all persons, goods, fixtures and chattels therefrom, by force
otherwise, without liability for damages.
21st: The Landlord shall not be liable for any damage or injury which may be
sustained by the Tenant or any other person, as a consequence of the failure,
breakage, leakage or obstruction of the water, plumbing, steam, sewer, waste
or soil pipes, roof, drains, leaders, gutters, valleys, down spouts or the
like or of the electrical, gas, power, conveyor, refrigeration, sprinkler,
air-conditioning or heating systems, elevators or hoisting equipment; or by
reason of the elements; or resulting from the carelessness, negligence
improper conduct on the part of any other Tenant or of the Landlord or the
Landlord's or this or any other Tenant's agents, employees, guests, licensees,
invitees, subtenants, assignees or successors; or attributable to any
interference with, interruption of our failure, beyond the control of the
landlord, of any services to be furnished or supplied by the Landlord.
22nd: The various rights, remedies, options and elections of the Landlord,
expressed herein, are cumulative, and the failure of the Landlord to enforce
strict performance by the Tenant of the conditions and covenants of this lease
or to exercise any election or option or to resort or have recourse to any
remedy herein conferred or the acceptance by the Landlord of any installment
of rent after any breach by the Tenant in any <THE PAGE IS CUT OFF HERE>
23rd: This lease and the obligation of the Tenant to pay the rent hereunder
and to comply with the covenants and conditions hereof, shall not be affected,
curtailed, impaired or excused because of the Landlord's inability to supply
any service or material called for herein, by reason of any rule, order,
regulation or preemption by any governmental entity, authority, department,
agency or subdivision or for any delay which may arise by reason of
negotiations for the adjustment of any fire or other casualty loss or because
of strikes or other labor trouble or for cause beyond the control of the
Landlord.
24th: The terms, conditions, covenants and provisions of this lease shall be
deemed to be severable. If any clause or provision herein contained shall be
adjudged to be invalid or unenforceable by a court of competent jurisdiction
or by operation of any applicable law, kt shall not affect the validity of any
other clause or provision herein, but such other clauses or provisions shall
remain in full force and effect.
25th: All notices required under the terms of this lease shall be given and
shall be complete by mailing such notices by certified or registered mail,
return receipt requested, to the address of the parties as shown at the head
of this lease, or to such other address as may be designated in writing, which
notice of change of address shall be given in the same manner.
26th: The Landlord covenants and represents that the Landlord is the owner of
the premises herein leased and had the right and authority to enter into,
execute and deliver this lease; and does further covenant that the Tenant on
paying the rent and performing the conditions and covenants herein contained,
shall and may peaceably and quietly
have, hold and enjoy the leased premises for the term aforementioned.
27th: This lease contains the entire contract between the parties. No
representative, agent or employee of the Landlord has been authorized to make
any representations or promises with reference to the within letting or to
vary, alter or modify the terms hereof. No additions, changes or
modifications, renewals or extensions hereof, shall be binding unless reduced
to writing and signed by the Landlord and the Tenant.
28th: If in any calendar year during the term and of any renewal or extension
of the term hereof, the annual municipal taxes assessed against the land and
improvements lease hereunder of which the premises herein leased are a part,
shall be greater than the municipal taxes assessed against the said lands and
improvements for the calendar year 19 , which is hereby designated as
the base year, then, in addition to the rent herein fixed, the Tenant agrees
to pay a sum equal to of the amount by which said tax exceeds
the annual tax for the base year, inclusive of any increase during any such
calendar year. The said sum shall be considered as additional rent and shall
be paid in as many equal installments as there are months remaining in the
calendar year in which said taxes exceed the taxes of the base year, on the
first day of each month in advance, during the remaining months of that year.
If the term hereof shall commence after the first day of January or shall
terminate prior to the last day of December in any year, then such additional
rent resulting from a tax increase shall be proportionately adjusted for the
fraction of the calendar year involved.
29th: If any mechanics' or other liens shall be created or filed against the
leased premises by reason of labor performed or materials furnished for the
tenant in the erection, construction, completion, alteration, repair of
addition to any building or improvement, the Tenant shall upon demand, at the
Tenant's own cost and expense, cause such lien or liens to be satisfied and
discharged of record together with any Notices of Intention that may have been
filed. Failure so to do, shall entitle the Landlord to resort to such
remedies as are provided herein in the case of any default of this lease, in
addition to such as are permitted by law.
30th: The Tenant waives all rights of recovery against the Landlord or
Landlord's agents, employees or their representatives, for any loss, damages
or injury of any nature whatsoever to property or persons for which the Tenant
is insured. The Tenant shall obtain from Tenant's insurance carriers and will
deliver to the Landlord, waivers of the subrogation rights under the
respective policies.
31st: The Tenant has this day deposited with the Landlord the sum of
$1,531.25 as security for the payment of the rent hereunder and the full and
faithful performance by the Tenant of the covenants and conditions on the part
of the tenant to be performed. Said sum shall be returned to the Tenant,
without interest, after the expiration of the term hereof, provided that the
Tenant has fully and faithfully performed all such covenants and conditions
and it not in arrears in rent. During the term hereof, the Landlord may, if
the Landlord so elects, have recourse to such security, to make good any
default by the Tenant, in which event the Tenant shall, on demand, promptly
restore said security to its original amount. Liability to repay said
security to the Tenant shall run with the reversion and title to said
premises, whether any change in ownership thereof be by voluntary alienation
or as the result of judicial sale, foreclosure or other proceedings, or the
exercise of a right of taking or entry by any mortgagee. The Landlord shall
assign or transfer said security, for the benefit of the Tenant, to any
subsequent owner or holder of the reversion or title to said premises, in
which case the assignee shall become liable for the repayment thereof as
herein provided, and the assignor shall be deemed to be released by the Tenant
from all liability to return such security. This provision shall be
applicable to every alienation or change in title and shall in no wise be
deemed to permit the Landlord to retain the security after termination of the
Landlord's ownership of the reversion or title. The Tenant shall not
mortgage, encumber or assign said security without the written consent of the
Landlord.
See Attached Riders # 1, 2, 3, and 4
The Landlord may purse the relief or remedy sought in any invalid clause,
by conforming the said clause with the provision of the statutes or the
regulations of an governmental agency in such case made and provided as if the
particular provisions of the applicable statutes or regulations were set forth
herein at length.
In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or singular number
is intended to include the appropriate gender or number as the text of the
within instrument may require. All the terms, coenants and conditions herein
contained shall inure to the benefit of and shall bind the respective parties
hereto, and their heirs, executiors, administrators, personal or legal
represenatives, successors and assigns.
In Witness Whereof, the parties hereto have hereunto set their hands and
seals, or caused these presents to be signed by their proper corporate
officers and their proper corporate seal to be hereto affixed, the day and
year first above written.
Signed, Sealed and Delivered
in the presence of or Attested by
<signature of Landlord appears here>
- ------------------------------------
Landlord
/s/ Vincent Sanpietro
- ------------------------------------
Tenant
LEASE ADDENDUM
December 12, 1997
Assignment of Lease dated November 30, 1989 between Iorio Realty (Landlord)
and Focus Medical Products (Tenant).
It is understood that the Landlord is Stamos & Sommers L.L.C. and the Tenant
is Medi-Hut Co., Inc. for the 3,500 sq. ft. of space in the building located
at 1935 Swarthmore Ave, Lakewood, NJ.
/s/ Joseph Sanpietro
____________________________
Joseph Sanpietro, Tenant
Pres. of Medi-Hut Co., Inc.
/s/ Vincent Sanpietro
_____________________________
Vincent Sanpietro, Tenant
Secretary of Medi-Hut Co., Inc.
/s/ Karen M. Sommers
______________________________
Karen M. Sommers
Managing Partner of
Stamos & Sommers, L.L.C.
Iorio Realty
1750 CEDAR BRIDGE ROAD
LAKEWOOD, NEW JERSEY 08701
(201) 364-4588
Rider #1
Focus Medical Products, Inc.
95 Newfield Avenue
Raritan Center
Edison, New Jersey 08837
1. 3,500 s/f total area with 550 to 700 s/f office.
2. $5.25 per s/f all common area expenses are included.
3. First Two (2) months free.
4. One (1) month deposit.
5. Occupancy approximately December 15, 1989.
6. Upgrade ceiling in Two (2) private officers.
7. If you want a deck and stairs above offices, you will pay for it
separately. I will provide space in my building located at 1750 Cedar Bridge
Avenue, Lakewood New Jersey for the storage of their inventory until the new
space is ready for occupancy.
<Initials of Landlord and Tenant appear here>
Iorio Realty
1750 CEDAR BRIDGE ROAD
LAKEWOOD, NEW JERSEY 08701
(201) 364-4588
Focus Medical Products, Inc.
Rider #2
October 25, 1989
BREAKDOWN - REAL ESTATE TAXES
-----------------------------
1st Yr. - Land Only - 3,500 s/f x .022= $77.00 ($6.42 per month)
2nd Yr.- Land/20% building - 3,500 s/f x .211 = $738.50 (61.54 per month)
3rd Yr.- Land/40% building - 3,500 s/f x .400 = $1,400.00 ($116.67 per month)
4th Yr.- Land/60% building - 3,500 s/f x .588 = $2,0580.00 ($171.50 per month)
5th Yr.- Land/80% building - 3,500 s/f x .966 = $3,381.00 ($281.75 per month)
BREAKDOWN - INSURANCE COSTS
----------------------------
Insurance cost is one flat rate of $437.50 per year
BREAKDOWN - LANDSCAPING COST
-----------------------------
3,500 s/f @ .06 per s/f = $210.00
BREAKDOWN - SNOW REMOVAL
------------------------
$80.00 charge each time snow is removed. Each tenant will be charged
accordingly.
Tenants Pro Rata share of the building is 10.714%
<Initials of Tenant and Landlord appear here>
Focus Medical Products
Rider #3
Iorio Realty
Lot 17, Block 1609
1. Tenant shall pay to Landlord as additional rent, its pro rata share of
Real Estate Taxes, sewer, general liability and fire insurance.
2. Landlord guarantees as of this date that there is no ECRA problem at this
location.
3. This Lease is contingent upon Landlord obtaining a Certificate of
Occupancy for the Tenant. In the event Landlord is unable to do so, this
Lease shall become null and void.
4. Landlord shall be responsible for all structural repairs, including
repairs to the roof, roof drains, sewerage system, and all electric and
plumbing systems common to the entire leases building. Landlord agrees to
expeditiously make all such repairs and to take all reasonable steps necessary
to accomplish same. All electrical and plumbing repairs, which are with in
the demised premises are the responsibility of the tenant. If the tenant
notifies the Landlord of problem that he is responsible for and the Landlord
does not respond in a reasonable amount of time, the tenant may make such
repairs and deduct the cost of the next months rent.
5. The rent shall be due on the first day of each and every month. If the
rent is not paid by the Fifth (5th) day of any month, Tenant shall be deemed
to be in default pursuant to the terms of the Lease agreement. In addition,
tenant shall be liable for an 8% late fee.
6. Any changes to the leased premises contemplated by the tenant, will
require approval in writing from the Landlord before commencement.
7. When the tenant vacates the premises, they shall leave the demised
premises in generally good condition, except for normal wear and tear.
8. Tenant is responsible upon vacating the leased premises to obtain ECRA
approvals. This shall include tenant being responsible for any clean up
necessary due to tenant activities at said leased premises.
9. Tenant agrees that in the event tenant causes the liability insurance to
increase as a result of the use of the premises, it shall be totally
responsible for the additional premium caused solely by its operation.
10. Tenant will have a Five (5) year renewal option, with all the terms and
conditions of the present Lease to remain in effect, except the per square
foot price; which will be increased to 10% or CIP whichever is greater for the
additional Five years. This option will only be granted if tenant adhered to
all the terms and conditions of this Lease for the Five year period.
11. Tenant will have their own gas and electric meters for their utilities.
12. Trash removal is the responsibility of the tenant.
13. If the tenant does not adhere to all the terms and conditions of this
lease, the Landlord will notify him by telephone or in writing of his default
or negligence and he will have Five days to correct such.
<Initials of Landlord and Tenant appear here>
Focus Medical Products
Rider 4
A. Add to paragraph 8 and 21 that the Landlord will be responsible for its
own negligence and that of its servants, agents, employees and contractors.
B. Where ever the Landlord's consent is required in the Lease, Landlord will
not withhold consent unreasonably.
C. Add to paragraph 12 if tenant files a claim of reaction, it cannot exceed
$3,000.00
D. Paragraph 13 should provide that in the event of a substantial casualty
wherein Tenant's business is interrupted, there shall be a proration of rent
if Tenant can not fully operate its business as a result of same. This
paragraph should also provide that Landlord will promptly makes its election
to rebuild or terminate the Lease in the event of a total destruction of
premises.
<Initials of Landlord and Tenant appear here>
January 28, 1995
Mr. and Mrs. Arthur Sommers
PO Box 120 Allenwood, N.J. 08720
Dear Mr. and Mrs. Sommers;
This letter is to notify you that we are choosing to exercise the "Option to
Renew" as stated in the Lease Agreement between Iorio Realty (Landlord) and
Focus Medical Products (Tenant) dated November 30, 1989. This Lease was
assigned to Arthur and Karen Sommers and George and Constance Stamos when they
purchased the building located at 1935 Swarthmore Ave., Lakewood, N.J.
This Option Period shall begin on February 16, 1995 and extend to February 15,
2000 with all of the terms and conditions of the original Lease except that
the rent shall increase ten percent and the tenant shall have the right to
cancel the Lease within 90 days written notice to the Landlord sent by
Certified Mail.
/s/ Joseph Sanpietro Date: 2-8-95
- --------------------------------------
Joseph Sanpietro Tenant
/s/ Vincent Sanpietro Date: 2-8-95
- --------------------------------------
Vincent Sanpietro Tenant
/s/ Arthur Sommers Date:
- --------------------------------------
Landlord
/s/ Karen Sommers Date:
- --------------------------------------
Karen Sommers Landlord
Date:
- --------------------------------------
George Stamos Landlord
Date:
- --------------------------------------
Constance Stamos Landlord
Medi-Hut Company, Inc.
Statement re Computation of Earnings Per Share
Years Ended October 31
1998 1997
------------- --------------
Average shares outstanding 5,849,838 1,699,549
Net income (loss) (12,380) 6,592
Earnings (loss) per share ( .002) .004
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 8-MOS YEAR
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1998
<PERIOD-START> NOV-01-1998 NOV-01-1997
<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> 351,232 416,048
<PP&E> 27,316 27,316
<DEPRECIATION> 27,316 27,053
<TOTAL-ASSETS> 379,957 445,368
<CURRENT-LIABILITIES> 104,421 83,506
<BONDS> 0 0
0 0
0 0
<COMMON> 8,023 8,023
<OTHER-SE> 267,513 353,839
<TOTAL-LIABILITY-AND-EQUITY> 379,957 445,368
<SALES> 489,836 779,537
<TOTAL-REVENUES> 489,836 781,663
<CGS> 352,273 552,173
<TOTAL-COSTS> 218,642 237,495
<OTHER-EXPENSES> 895 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,785 4,000
<INCOME-PRETAX> (84,760) (12,005)
<INCOME-TAX> 0 325
<INCOME-CONTINUING> (84,760) (12,330)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (84,760) (12,330)
<EPS-BASIC> (.011) (.002)
<EPS-DILUTED> (.011) (.002)
</TABLE>
