UNITED STATES
SECURITIES AND EXHANCE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITES OF SMALL BUSINESS ISSURERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ADVANCED PRODUCTS GROUP, INC
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(Name of Small Business Issuer in its charter)
Delaware 75-2035917
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(State or other jurisdiction (IRS Employer Identification No.)
Of incorporation or organization)
7820 S. Holiday Drive Suite 205, Sarasota, Florida 34231
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(Address of Principal Office) (Zip Code)
Issuer's telephone number (941) 924-0007
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Securities to be registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
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Securities to be registered pursuant to Section 12(g) of the Act
Title of each class Name of each exchange on which registered
APGP Common Shares NASD OTC BB
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ITEM 1. BUSINESS DESCRIPTION
Advanced Products Group, Inc. (the "Company") is a market based
company selling soaps, hand cleaners and other related products primarily in
the automotive aftermarket. Originally formed as a Nevada Corporation on
August 27, 1998, using the name Cra-Z Soap Corp. The Company holds an
exclusive license from MastersMarketing and Development, Inc. to the
manufacture and marketvarious soaps and hand cleaners derived from the
proprietary formula held by Masters Marketing.
The original name of the hand cleaner product was Cra Z Soap.
In March of 1999, upon the development of additional cleaners
including soap and detergent products with a broader and more
retail friendly base, and the possible infringement on a name
(Craz soap) that upon more detailed research to which other
entities might lay claim, the Company elected to market the
cleaning products under a brand name of APG and the descriptive
name of the product i.e. APG Hand Cleaner, APG Laundry Detergent
etc. Currently Southeast Automotive holds a trademark on the
name Cra Z Soap and markets a hand cleaner under that name. The formulation of
that soap differs significantly from the formula
licensed to Advanced Products Group. Inc. A fact that APG has
verified through chemical analysis. Southeast continues to sell
its soap through various distribution chains including retailers
and wholesale distribution. The company is aware of the site and
views Southeast as a competitor for this market. APG is in
possession of the same formula that is owned by Jaboneria of
Ecuador and has an agreement with Southeast regarding the sale
and marketing of that product should the Company so choose to add
Cra Z Soap to its product mix.
The directors of the company, recognizing the difficulties of introducing
new cleaning products to a market already well
saturated with similar items, chose to make a change in the
Company's primary purpose. Based upon the 60 plus years of auto
parts experience of its management team, it elected to bring that expertise
to the Internet market place by developing a web site
for manufacturers of replacement auto parts to market their
products. Simultaneously the company filed articles of Amendment
on March 12, 1999 changing its name to Advanced Products Group,
Inc. as more descriptive of its change in philosophy.
Company History: Pursuant to an Agreement of Merger dated
August 28, 1998, the Company merged into Advanced Technologies
Group, Inc., a Delaware Corporation organized under the laws of
Delaware on March 25, 1987. By this Agreement of Merger
Cra-Z Soap, a Nevada Corporation, (the legal acquiree) and
Advanced Technologies Group, Inc., a Delaware Corporation,
(the legal acquirer) exchanged common stock to give the
shareholders of the legal acquiree control of the legal acquirer.
On August 23, 1998, the principals of Masters Marketing and
Development and met with the principals of Advanced Technologies
Group, Inc. to discuss the possible reverse merger of ATG, Inc.
a public shell company incorporated in Delaware and a newly formed company
Cra Z Soap, Inc. of Nevada for the purpose of manufacturing
and marketing a proprietary soap formula held by Masters. At that
time the fact that Masters was also developing other proprietary formulae, it
was therefore decided by the attendees of the meeting
to form Cra Z Soap, Inc of Nevada to hold an exclusive license to
market and manufacture both current and any new proprietary formulae
developed by Masters. That company was formed by the principals of Masters
Marketing and Development, Inc. of Tennessee and registered
on August 27, 1998 with the Department of State of Nevada. At that
same meeting which began on August 23, 1998 and ended on August 27, 1999, the
new entity Cra Z Soap, Inc of Nevada was formed as the licensee of Masters
Marketing and Development's proprietary formula. The reason for the
organization of a new company to hold a license
from MMD was to effect a merger with Advance Technologies Group, Inc without
also incurring the liabilities of Masters Marketing and Development. This
new entity, which was liability free except for
its license agreement with Masters, entered into a merger agreement
with Advanced Technologies Group, Inc, of Delaware, which merger was
subsequently registered with the Department of State of Delaware on
August 28, 1998. Prior to this merger on August 27, 1998 there had
been no relationship between either Masters Marketing and Development, Inc of
Tennessee or Cra Z Soap. Inc of Nevada, with Advanced Technologies Group,Inc.
Nor had there been any prior relationship between Masters and CraZ Soap Corp.
Masters Marketing shares approximately 6% of common ownership with Advanced
Products Group.
It is not a predecessor of Cra Z Soap, Corp. By terms of its license
agreement with Cra Z Soap, Corp. which merged into Advanced Technologies,
Masters no longer manufacturers of sells Cra Z Soap
or any soap product produced under the formula licensed to APG.
Masters continues however to develop, manufacture and sell products
not licensed to APG.
Shareholders of the legal acquiree surrendered 100% of the
outstanding shares in exchange for 1,100,000 shares of Common Stock
and 310,000 Series A Super Preferred Voting Shares of the legal acquirer. The
ratio of exchange was one share of common stock of Advanced Technologies for
each three (3) shares of stock in Cra Z Soap. The principals of Cra Z Soap,
Inc were seeking to raise sufficient capital to launch their hand cleaner
product. Management believed that the most effective method of raising
sufficient capital would be through the public markets. Advanced
Technologies was a publicly trading but inactive shell. The reverse split
threfore expedited the process of raising capital in the public forum for Cra
Z Soap.
The share exchange of a private operating company, (Cra-Z Soap, Corp) into a
non-operating public shell corporation (Advanced Technologies Group, Inc.),
with no assets or liabilities resulted in
the shareholders of the private company having actual operating control of
the combined company after the transaction, and the shareholders of the
former public shell continuing only as passive investors.
On April 28, 1998, Advanced Technologies Group, Inc, the legal acquirer,
filed a Certificate of Amendment with the Secretary of State of the State of
Delaware changing its name to Cra Z Soap, Inc. On March 12, 1999 the majority
of the shareholders voted to convert the Series A Super Preferred voting
Shares of shareholders who were neither officers or directors of Cra Z Soap;
and to cancel the outstanding Series A Super Preferred Voting Shares held by
the officers and directors of Cra Z Soap; and to change the Company's
name to Advanced Products Group,Inc. This change was registered and filed
with the State of Delaware on April 30, 1999.
At that same meeting on March 12, 1999, the directors of Advanced
Products Group, Inc. agreed to allow Masters Marketing and Development, Inc
to settle a dispute between it and Southeast Automotive over the
use of the name Cra Z Soap. Masters satisfied the directors of APG, that the
formulation of the hand cleaner known as Cra Z Soap then being sold by
Southeast was in fact not the formula used in Master's formulation of a
similar hand cleaner. APG verified this claim with
an independent chemical laboratory. Based thereupon by Masters request that
APG use a different market name for this product so as to settle a dispute
between Masters and Southeast; and the fact that APG now held license to
additional formulae, including powdered hand cleaner, laundry detergent and
other similar cleaning products based upon the original hand cleaner formula,
the directors agreed to use a different market name. The directors felt that
given the wide variety of products now available with the formula owned by
Master Marketing, that a better market approach would be brand naming, so it
elected to use APG and a descriptive name to identify its products (i.e. APG
Hand Cleaner, APG Laundry Detergent, etc.) Southeast Automotive continues to
sell a product named Cra Z Soap Hand Cleaner, through various channels
including the Internet. However, the formulation of their hand
cleaner is that of Jaboneria, a manufacturer of cleaning products located in
Equador, S.A. Advanced Products continues to have the sole and exclusive
rights to manufacture, sell and market the formula proprietary and first
developed by Masters Marketing. The decision to market that formula under a
different name was made by management to assist Masters Marketing, but more
importantly to create a unified brand name for those new products developed
from this formula in addition to solely hand cleaner.
(B) 1. The principal products of the Company are proprietary formulae for a
heavy duty hand cleaner for which it holds a license for the exclusive sale,
manufacture and distribution from Masters Marketing, a privately held
Tennessee Corporation. This product is well suited to the automotive
aftermarket as it is a strong remover of grease and grime generally
associated with mechanic type work. In addition to the hand cleaner the
Company has several other cleaning chemical products such as a car wash, oil
remover, cement cleaner, and degreaser.
While the Company has in its possession the formulae for all of the
products listed above, it has yet to manufacture any other than the hand
cleaner which represents 100% of its current revenues. APG has a
manufacturing agreement with Starco a Division of Diamond Chemical to
manufacture these products at cost plus 10%. As part of this Agreement Starco
agrees use the formulae as provided by APG and has agreed to their
confidentiality. Costco Manufacturing has been identified as a domestic
manufacturer of the bar hand cleaner as opposed to manufacturing in Mexico or
South America. Costco has seen the product and has the ability to
manufacture it. To date the Company has not required additional inventory of
the soap and therefore has not ordered any manufacturing from Costco.
2. The Company relies heavily on traditional distribution channels through
the use of manufacturers' representatives. In addition, it
has an agreement with Telebrands, Inc. to provide infomercial and other media
advertising in the hopes of generating a wider retail distribution network.
3. Recently the Company announced the development of an Internet web site for
the sale and distribution of OEM, and Replacement auto parts,
www.Go-Autoparts.Direct.com. This site is currently under construction and a
working model can be viewed a www.Go-Advanced.com. The Company is in the
process of establishing a manufacturer's advisory committee and expects to be
live with its site in the very near future. The Company's marketing strategy
is to establish a portal site for the direct communication and purchase of
parts from participating manufacturers. The Company as such eliminates the
wholesaler from the distribution channel. It is exected that this
will provide consumers with better pricing for their auto parts needs.
4. The hand cleaner market is extremely competitive and the Company currently
holds a very small market share. The Company has expanded to the auto parts
industry because management has well over 60 combined years of experience in
that industry. The Company anticipates including its hand cleaners as part
of the accessory line it will sell over the Internet. While there is no
independent data that shows the expected growth of the auto parts industry
over the Internet, it is expected that The Internet market as a whole will
reach over a trillion dollars by 2003. While there are some 20,000 sites
havingto do with auto parts only a few retail parts. Of those only two (2)
do not require an e-mail response and none are direct to manufacturers,each of
the sites acts as a wholesaler.
5. Hand Cleaner and other cleansing chemical products are manufactured for
the Company by Agreement with Starco a Division Diamond Chemical Company and
Costco manufacturing. The availability of raw materials is excellent. The
Agreement with Starco provides for the manufacture of APG proprietary
formulae on the basis of cost plus 10%. Because of the nature of the bar soap
product Starco is unable to provide manufacture of this product. In the past
Jaboneria in Equador manufactured this product. Recently,the Company has
been notified by Masters Marketing that Jaboneria was substituting their
formula for the one provided by Masters Marketing. APG with the assistance
of the Starco management has obtained a manufacturing source, Costco
Manufacturing, Brooklyn, NY, with the capability to produce this bar hand
cleaner. The company and Costco will work from standard PO's the cost of
manufacturing will be determined on a per order basis depending on the
current cost of raw materials.
6. The Company's consumer base is large and it does not rely on one or even
a few major customers but on a broad based marketing and advertising program.
The Company's original product, Cra-Z Soap Hand Cleaner, is primarily
targeted at the automotive aftermarket to compete with products such as GoJo
and other deep cleaning detergents aimed at the professional and do it
yourself mechanic. The soap and detergent industry is $54 billion dollars in
the United States alone. The Company has carved out a subset of that market
targeting those products that are attractive to both professionals and
do-it-yourselfers, as well as the heavy-duty household and commercial
cleaning market. The primary market consists of over one million
construction contractors, 55 million do-it-yourselfers, 600,000 auto body
repair shops and 350,000 general repair shops.
Recently the Company added several new products, including a powdered and gel
formulation of the hand cleaner, a chemical additive known as Bug Z which
removes bugs from auto windshields, and a professional car wash soap, as a
compliment to the hand cleaner line. The Company aligned itself with Starco,
a division of Diamond Chemical Company, to provide various detergent products
for both commercial and retail use. Additionally, the Company continues to
work with Telebrands, a successful direct response TV marketer to
bring its consumer detergent products to market via television.
APG is experiencing difficulty in breaking to this highly competitive
market. Competition in this market is primarily limited to three major
companies, Loctite Corporation, Gojo Industries and Zep Manufacturing,
a division of National Service Industries. The Company's products, include a
heavy-duty hand cleaner in bar form and powder (anti-bacterial gel will be
added shortly) that generally out perform competitive products and is more
environmentally friendly. Its meager revenues to date indicate this. APG
essentially began its marketing of the hand cleaner as a one-product company.
It has found that both major and minor retailers of these types of products
prefer multiple product companies. To remedy this situation, the Company has
recently developed a powdered version of the hand cleaner and a laundry
detergent through its relationship with Starco. It is currently negotiating
with two medium home product chains to carry both the hand cleaner and the
laundry detergent and expects to have completed and received purchase orders
by early second quarter. Management believes that the exposure of its
products at this level will increase the interest of the major chains it has
approached in the past and thereby make the company's products more
attractive to these large chains.
7. By a license Agreement with Masters Marketing and Development, a
Tennessee Corporation, Advanced Products Group, Inc has the exclusive right
to manufacture a heavy-duty hand cleaner, which formula is proprietary to
Masters Marketing and Development, Inc.
8. The chemicals used in the Company's hand cleaner are environmentally
friendly and do not require any license from any governmental agency at this
time.
9. At the present time the Company has four (4) full time employees.
10. The Advanced Products has spent an estimated $80,000 in research and
development over the last year. Since the company has been in operation only
one year there is no estimate available for any prior years.
(C) The Company shall voluntarily provide its shareholders with an annual
report that will include audited financial statements. The public may read
and copy any materials the Company files with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, NW, Washington, DC 20549. Information
regarding the operation of the Public Reference Room may be obtained by
calling the SEC at 1-800-SEC-0330.
Item 2. MANAGEMENT'S DECISIONS AND ANALYSIS OR PLAN OF OPERATIONS:
Plan of Operation:
The Company is a developmental stage company. It has developed a
comprehensive marketing plan to launch both its cleaning products and its
Internet web site.
The Company plans to rely on marketing and sales tactics proven to
develop brand recognition and aggressive consumer support. One or more of
the following strategies, as appropriate will be used:
Television Advertising Campaign
Radio and Print Media Campaign
Distribution of samples
Nationwide Network of Independent Sales Representatives
Attendance at two major trade conventions yearly
Direct Mail Advertising
Celebrity Endorsement when appropriate
Public Relations
Advanced Products Group, Inc. has hired, Daughety Tegarden and Hensly (DTH),
one of the top PR firms in the mid-west to initiate an aggressive campaign to
promote the company and its products. It is currently working on a marketing
campaign for soap products that includes POP merchandising, as well as
packaging and print materials. DTH is also significantly involved in the
development of the Company's web site and promotional campaign to sign up
manufacturers as participants at the site. The arrangement requires
that APG pay out of pocket expenses for materials and work contracted to
other than DTH employees. The company issued 32,000 restricted shares of
stock to DTH in return for their services.
Advertising
Through Telebrands the Company is preparing to use various media to
promote its consumer products. Telebrands is one of the nation's largest
purchasers of television, radio and print media advertising and has years of
experience in the manipulation of these media to provide the most bang for
the buck. To solidify this arrangement Advanced Products issued 50,000
restricted common shares to Telebrands.
Exhibitions
The company will demonstrate its products and their capabilities in various
exhibitions. These include exhibitions in the automotive aftermarket,
janitorial and cleaning supply, and environmental industries.
Professional recognition
The company has also spent considerable time meeting leaders in the Internet
and consumer product fields in order to gain their recognition.
The Company anticipates that once it raises sufficient capital it plans to
follow a three month plan to launch its web site and its cleaning products:
<TABLE>
THREE MONTH LAUNCH PLAN
<CAPTION>
- --------------- ----------------- ----------------- ---------------
(1) (2) (3) (4)
Activity Month 1 Month 2 Month 3
- --------------- --------------- ----------------- ----------------
<S> <C> <C> <C>
Public Relations First Mailings Press Conference Press Follow-up
- ---------------------------------- ---------------- ------------------
Advertising Radio and Info- 1/3 page in 2 1/3 page in 2
mercial Hand auto trade mag. auto trade mag.
Cleaner. Info- Billboard and Billboard and
mercial Laundry transportation transportation
Detergent. $300K display of web display of web
TV airtime for site. Two TV sites. Two TV
web site spots per week. spots per week
- --------------- ----------------- ------------------ ------------------
Mailings Mailing sample Mailing sample Mailing sample
soap product. soap product. soap product.
- ---------------- ----------------- ------------------ ----------------
</TABLE>
To accomplish this task the Company has set a projected budget as set
forth in the table below:
Marketing Budget
($000)
<TABLE>
<CAPTION>
- --------------- --------------- ----------------- -----------------
(1) (2) (3) (4)
Budget Item Year 1 Year 2 Year 3
- --------------- --------------- ----------------- ----------------
<S> <C> <C> <C>
Total Salaries 87 164 171
- ---------------- -------------- ----------------- ---------------
Exhibitions 5 15 25
- ----------------- --------------- ----------------- ---------------
Public Relations 10 30 100
- ----------------- --------------- ---------------- ---------------
Advertising 1500 4000 8000
- ----------------- --------------- ---------------- ---------------
Sales Materials 15 35 45
- ------------------ ---------------- ---------------- --------------
Consultants 60 75 75
- ----------------- ---------------- ---------------- -------------
Travel 72 158 250
- ----------------- ---------------- ---------------- -------------
</TABLE>
The Company requires additional capital before it can launch any of its
proposed marketing strategies. The first step in the launch of its products
requires a capital infusion of $250,000. The Company has been diligently
been seeking additional investment banking relationships to raise this
capital, and several have expressed an interest in developing a funding
strategy that may include both public and private placement of the company's
securities. Currently the Company is in the process of developing with its
public Relations Consultants a prospectus and marketing brochure designed for
Internet trading. Several of our investment bankers are ready to take an
active role in raising sufficient working capital to fund the Internet
project and complete chemical orders as soon as the Company is able to return
to the OTC Bulletin Board upon clearing comments with the SEC.
The company is seeking to initially raise $250,000 in developmental capital.
These funds are necessary for the following:
$26,000 Purchase of software to enable auctions capabilities
$75,000-$100,000 Purchase of auto parts vendor software including parts
number database.
$15,000 Purchase network server and peripherals
$12,000 Design Web Pages and web site including registration and hosting
$50,000 Cost of money and legal and registration fees.
In addition to this initial funding the Company will seek through both
private and public placement of its securities an additional $2MM in working
capital to provide for sufficient advertising and marketing activity to
create interest and awareness of the web sites.
PLAN OF OPERATION FOR THE NEXT 12 MONTHS:
The Company hopes to satisfy it preliminary funding requirements as
described above within the next 60 days. Immediately upon raising the
$250,000 required to accomplish the items above the Company will begin to
follow the marketing plan of action described earlier in this document.
In addition, the Company is aggressively working with its manufacturing
representatives to complete an expected order from two home product chains by
December 31, 1999. Clearly the company will emphasis marketing over the next
12-month period. Earlier in the document the company has provided a table of
the expenses it anticipates in completing this task. The total capital
required to meet this plan is $1,750,000. The Company anticipates that
provided seed capital is raised revenues of $1.8 MM in chemicals and $3MM
in Internet fees and advertising via its web site. The Company believes
these projections to be both conservative and attainable. Chemical revenues
are based on a static market not expanding beyond the two home product
companies and an inventory turn of only six (6) times per year. The Internet
projections include a 15% surcharge on all transaction and an annual
participation fee of $5000. per manufacturer. Additionally, the company
anticipates that this improvement in performance will generate a more
energetic and active market for its securities making sufficient capital
available both for operations and expansion.
Invariably given the company's current financial situation, a major part
of the operations of the Company will be to organize and employ an
appropriate staff of sales, marketing and administrative personnel. Two of
the senior managers of the organization have combined 60 years of automotive
aftermarket experience. They are responsible for driving the automotive side
of the business and have a plan to visit various manufacturers who have
already expressed an interest in participating in the web site.
auto shows as well to demonstrate the company's program.
The company anticipates raising $2MM over the next 12-month period to
properly fund promotion and advertising of its products. This capital is
expected to by raised through a combination of public and private placement.
Management is confident that operations should provide approximately $2MM net
before taxes if it meets the operational projections stated earlier in this
document.
The company plans to assertively seek through merger additional products
to add to its product mix to provide needed revenues.
There are no current plans to purchase or sell any plant, property or
equipment held by the company.
Success of the company's marketing plan depends on the additional
employment of three to five new employees during the next twelve-(12) month
period. These positions include two (2) salespersons, two (2) customer
service representatives and a traffic coordinator. The anticipated increase
in wages is $87,000 fully burdened over the next 12 months.
(B) Advanced Products Group, Inc. has been in operation for one fiscal year.
The current financial condition of the company is described in detail in the
audit report attached in Part III of this document.
APG is currently in a precarious financial condition primarily due to two
major factors: (i) in adequate initial funding to launch its primary hand
cleaner product resulting in poor operational performance, (ii) a shift in
its focus from the hand cleaner to automotive replacement parts via the
Internet which has required additional research and development coupled with
insufficient capital to launch the site appropriately resulting in poor
operational performance.
The fact is that both products are viable and potentially able to provide
significant revenues for the company. The expansion of the company's
cleaning products from one to twenty-three (23) retail appropriate cleaners
exponentially increases its opportunity for success. However, the company is
finding it difficult to raise sufficient capital to develop a sales program
(e.g. brochures, pop devices etc.) for these products. In part the
difficulty arises from a lost window of opportunity early in the com
time it is taking to clear NASD and SEC regulations. APG continues to seek
additional investment banking relationships to raise the funds needed to
launch its product. It has been frustrated somewhat by its bankers
requirement to return to the OTC BB. The company is diligently working to
complete this process.
The market trend toward Internet sales bodes well for the
Company's Internet site, which could be operational ninety (90) days from
finding sufficient capital to launch. APG's approach to Internet sales is to
act as a conduit for manufacturers of auto parts and accessories. To date no
such other site exists on the net. The company has sampled a significant
number of manufacturers and has found an interest in participating if the
site becomes active. Since this is a new approach to distribution and sales
there is some hesitancy on the part of manufacturers to invest without a
working site already in operation. The company will begin with the sale of
its own automotive aftermarket products.
Not only are Internet sales obviously growing, but so is competition. The
key to success seems to be extensive site advertising and uniqueness in the
application of product. The company believes that its strategic alliance
with Telebrands gives it a truly viable advertising avenue. Since the trend
in Internet sales still leans towards traditional distribution of products,
that is wholesaler to retail consumers, the company also is confident that
its approach of manufacturer direct to retail consumer is unique and will
provide lower end prices for the consumer resulting in a successful web site
for both APG and its web site participants. In addition, by structuring the
web site as a manufacturers center it allows for APG to earn significant
advertising revenues from its participants. It should also increase
competition among the participants providing the same auto parts, thus
resulting in discounts to the end user. Given these trends management
believes that once sufficient capital is raised operations should quickly
provide a significant return for the company's investors.
For the company to succeed it will require the capital described earlier in
this document. It has current capital needs of $250,000 to complete the web
site including hardware, software and database of auto parts. Management is
unaware of any event for either an infusion of income or loss that will arise
that is unrelated to its continuing operations. Nor is the company's
business seasonal.
ITEM 3. DESCRIPTION OF PROPERTY:
(A) The Company does not own any property other than business machines,
computers and telephonic equipment. All of its equipment is in good
working order. It principal location 7820 S. Holiday Drive, Suite 205,
Sarasota, Florida is rented.
(B) At the present time the Company has no investment policy with respect to
any real estate transactions. Pursuant to the By-laws the Board of Directors
has the sole discretion for any such investment without limitation. Any
change in this regard would require the vote of the shareholders. While in
the absence of a policy at the current time, potential conflicts of interest
may arise, the company has no short-term plans for acquisition or lease of
any real property and any such lease or acquisition requires the approval of
the Board of Directors.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN FINANCIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
(A)Security Ownership of certain beneficial owners.
- ------- --------------------- ------------------ ------------------
(1) (2) (3) (4)
- ------- --------------------- ------------------ ------------------
TITLE CLASS NAME AND AMOUNT AND PERCENT OF CLASS
ADDRESS OF BENEFICIAL NATURE OF BENEFICIAL
OWNER OWNER
- ------------- ------------------- ------------------ ------------------
<S> <C> <C> <C>
Cede & Co 207,000 5.5%
Common Voting Box 222
Bowling Green Station
New York, New York Institutional
- ------------ --------------------- ------------------ -----------
Hamilton, Ltd 222,000 5.8%
Common Voting Box ss-6827
Nassau, Bahamas Institutional
- ------------- --------------------- ------------------- -----------
Castle Pines 222,000 5.8%
Common Voting Box F-42544
Freeport, Bahamas Institutional
- ------------- --------------------- ----------------- -----------
National Colonial Inc 348,000 9.2%
Common Voting Citibank Bldg 2 FL
42544
Freeport, Bahamas Institutional
- ------------ --------------------- ------------------ -----------
</TABLE>
<TABLE>
<CAPTION>
B)Security Ownership of management:
- ---------------- ----------------- ------------------- -------------
(1) (2) (3) (4)
- ---------------- ----------------- ------------------ -------------
TITLE OF CLASS NAME AND AMOUNT AND PERCENT OF CLASS
ADDRESS OFBENEFICIAL NATURE OF BENEFICIAL
OWNER OWNER
- --------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
Ronald Weprin 680,000 17.9%
Common Voting 420 Beach Rd 403 Director and
Sarasota, Fl Secretary
- -------------- ------------------ ----------------- -------------
Rus D'Agata 500,000 13.20%
Common Voting 512 Armada Rd S 5 Director and
Venice, Fl Executive VP
- ------------- ------------------ ----------------- ------------
Richard Herman 135,000 4.5%
Common Voting 734 Franklin Ave Director
Garden City, NY
- --------------- ------------------ --------------- -----------
Edward da Parma, Jr 516,167 13.6%
Common Voting 2462 85th Street President CEO
Brooklyn, NY 11214
- ---------------- ------------------- ----------------- -------------------
</TABLE>
(C) There are no arrangements that would result in a change of control of
the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
(A) The following are the Directors and Executive Officers of the Company:
Edward J. da Parma, Jr., age 50, President and CEO term of office 2 years
began serving March 12, 1999. Prior to Advanced Products Group, Inc. Mr.
da Parma served as the managing partner of Aim 4 Legal and Consulting, LLP
and has held various senior management positions with Farberware, Inc and
ACCO USA (formerly Swingline, Inc.). Mr. da Parma served as the Managing
Partner of Aim 4 Legal and Consulting from February 1993 until March 1999.
Aim 4 Legal and Consulting provided TQM management training, personnel
assement, organizational development and legal representation in the area of
employment law to such clients as National Westminster Bank (now Fleet Bank),
Castlemere, Inc., Siemens and others.
Ronald Weprin, age 57, Secretary/ Treasurer, term of office 2 years, began
serving August 29, 1998. Prior to taking a leadership position with APG, Mr.
Weprin was a partner in Masters Marketing and Development. Masters developed
a proprietary formula for a heavy-duty hand cleaner, which licensed Cra-Z
Soap Inc, which in turn merged with Advanced Technologies Group, Inc.to give
birth to what eventually became Advanced Products Group,
Inc. Mr. Weprin brings over 30 years of auto aftermarket experience to the
Company. He began his career in his family's auto parts business, and later
as VP for Marketing for Al Automotive. Mr. Weprin also serves as a Director
of the Company. Mr. Weprin joined Masters Marketing and Development, Inc. in
the January of 1994 and remained an officer and director of that company
until September 1998 when he joined Cra Z Products, Inc. which subsequently
changed its name to Advanced Products Group, Inc. Prior to coming to Masters
Marketing and Development, Inc., Mr. Weprin was the principal owner of Tweeks
Ltd. an auto parts and accessories wholesaler in Indianapolis, Indiana.
Rus D'Agata, age 56, Director and VP Administration, term of office 2 years
began serving on August 29, 1998. . He has enjoyed a successful career in
the automotive aftermarket working for the automotive divisions of Congoleum
Corporation and Al Automotive. He successfully led these divisions to
increased sales and profitability. In 1989, Mr. D'Agata formed his own
consulting firm that specialized in the oil and gas industry. Among the
clients Mr. D'Agata's firm provided management consulting to Shell, A
ta left his consulting firm in February of 1994to become Sales Manager for
Masters Marketing and Development, Inc. and remained in that position until
August of 1998
Richard Herman, age 42, Director previously held the position of President
and CEO from August 29, 1998 to March 12, 1999 term as director is 2 years
began serving March 12, 1999. Mr. Herman brings entrepreneurial experience to
the Company. He owned and operated Marl Wash and Dry Cleaning and later he
established a successful auto body and repair business. He sold this business
to finance the research and development required for Masters Marketing in
1990 to develop its hand-cleaner product. Mr. Herman remains the President
of Masters Marketing and serves as VP of Sales to the Company.
(B) There are no key employees at this time other than those serving in the
official capacities above.
(C) There are no family relationships among any of the directors, executive
officers or any person nominated or chosen to be a director
or executive officer.
(D) 1. There are no legal proceedings, pending or completed against the
Company, its directors, executive officers, or of any business that any such
person was a general partner or executive officer.
2. None of the directors or executive officers has been convicted of any
criminal offense (excluding traffic violations and other minor offenses) nor
are any such proceedings pending in any court of competent jurisdiction.
3. No executive officer or director has been the subject of any judgment or
decree by any court of competent jurisdiction revoking, suspending or
enjoining any such executive officer or director of the Company or otherwise
limiting in any way the participation of such person in the total involvement
of business, securities or banking activities.
4. No executive officer or director has been found by any court of competent
jurisdiction to have violated a federal securities or commodities law,
including any such finding by the Commission or Commodity Futures Trading
Commission.
<TABLE>
<CAPTION>
ITEM 6. EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -------------------------------------- --------------------------------
LONG TERM COMPENSATION
- ---------------------------- --------------- ---------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- --------- -------- ------ ----- ------------ -------- ------- ------- --
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- ----- ---- -------------- ---- ---------- ------ ---------- ------ -----
NAME AND YEAR SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES
PRINCIPAL COMPENSATION STOCK UNDERLYING LTIP ALL OTHER
POSITION ($) ($) AWARDS OPTIONS/ PAYOUTS
($) SAR"S ($)
- ------- ------ ------ ---- --------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CEO
Edward
Da Parma 1999 -0- -0- -0- 500,000 -0- -0- -0-
- ------- ------ ------ ------ ---------- --------- --------------
Secretary
Treasurer 1998 -0- -0- -0- -0- none -0- -0-
Ronald 1999 -0- -0- -0- 400,000 none -0- -0-
Weprin
- ------- ------- ------ -------- --------- -------- --------- ------- -------
Executive
VP 1998 -0- -0- -0- none -0- -0- -0-
Rus 1999 -0- -0- -0- 420,000 none -0- -0-
D'Agata
- -------------- ------ -------- ---------- -------- -------
VP Sales
Richard 1998 -0- -0- -0- none -0- -0- -0-
Herman 1999 -0- -0- -0- none -0- -0- -0-
- ------- ------- ------- ------- ------- -------- --------
</TABLE>
The officers and directors of the company have served without compensation.
Currently no arrangements, agreements, contracts or promises exist for the
purpose of providing compensation in any form to the Officers and Directors
named above other than the restricted shares above. Each of the above
with the exception of Mr. da Parma are employed full time and expend
all of their efforts and energies in the
anagement of the Company. Mr. da Parma continues to have responsibilities
to Aim 4 Legal and Consulting, LLP in solely in terms of management and
organizational issues. As such he devotes approximately 80% of his time to
APG and 20% to Aim 4. Mr. da Parma anticipates completing the transfer of
his partnership responsibilities by mid spring 2000 and will then devote 100%
of his working time to APG.
The officers and directors will begin to collect modest salaries, not to
exceed $36,000 per year as soon as interim funding is established. Other
compensation issues and increases will be dependent on operational results of
the cleaning and Internet site.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A) There have been no transactions or proposed transactions to which the
company was or is to be a party, in which any of its officers,
directors, nominees had a direct or indirect material interest.
(B) The company has not issued, either directly or indirectly, anything of
value to any promoter, including shares, money, property, assets,
contracts or options of any kind.
ITEM 8. DESCRIPTION OF SECURITIES
(A) 1. The Company is shares are common equity shares with no dividend or
preemption rights and voting rights of one vote per share. Currently the
Company is not engaged in the public or private placement of its securities
2. The Company also has authorized a Series C Preferred share with a coupon
of 6%, a redemption value of $10.00, a face value of $10.00 with voting
rights of 2votes per share and a conversion of 2 common shares for each
share after one year. There are no issued and outstanding shares of Series C
Preferred Stock.
(B) The Company has no debt securities.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder's Matters
The Company's stock is being traded on the NASD OTC Bulletin Board since
September 28, 1998. The following represents the high and low prices for
each quarter therefrom:
<TABLE>
<CAPTION>
High/Low Performance by Quarter
- ----------- -------------- --------------- ------------ ------------
(1) (2) (3) (4) (5)
- ----------- ------------- --------------- ------------ ------------
Quarter December March June September
- ---------- ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
High 7 7 16.129 * 15
- --------- ------------- --------------- ----------- -----------
Low 5.25 4.67 13 * 3.25
- -------- ------------- --------------- ----------- -----------
</TABLE>
*In April the Company reduced the number of issued and outstanding shares by
declaring a split of one share for each three (3) shares held in the company.
The result was an increase in the price per share for the quarter beginning
April 1999.
B) There are approximately 700 shareholders of common voting stock, and no
holders of Series C Preferred shares.
(C) There have been no dividends declared on the common equities of the
Company. The stock is not restricted in any way as to limit the ability to
pay dividends on common equity now or in the future.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings, judicial or administrative, pending against
the Company.
Item 3. Changes in and Disagreements with Accountants
There are no disagreements between the Company's independent accountants nor
has there been a change in the independent account chosen by the Company.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On April 1, 1999 the Company filed a Form D Notice of Sale of Securities
Pursuant to Regulation D with the Securities and Exchange Commission under
rule 504 of the Act. The securities sold were common shares and the
aggregate dollars sold was $418,545 to three accredited investors, Colonial
National, Ltd., Hamilton, Ltd. and Castle Pines, Inc. No officer director or
affiliate received any payment from these funds. All proceeds have been used
to pay indebtedness to others.
The price per share of this transaction was $.25 per share for which the
Company received three promissory notes from the investors listed above. The
Company received $85,000 which was used to reduce it accounts payable. The
"others" above refer to entities such as the Telephone Company, utility
companies, rent on its office space, shipping, postage etc. None of such
entities are an affiliate of the Company.
There are no other unregistered sales of any company securities during the
last year. The Company has been extant for one year. The issuance of 1.1
million shares of common stock and 310,000 shares of Series A Super Preferred
Voting Shares to the former shareholders of Craz Soap, Corp. by Advanced
Technologies Group, Inc., was in exchange for 100% ownership in Craz Soap,
Corp. The ratio of exchange to effect the merger was one share of Advanced
Technologies Group for three shares of Cra Z Soap, Corp.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There is nothing in the Company charter, by-laws, contracts or other
agreements or arrangements that would insure or indemnify a controlling
person, director or officer of the Company as to his or her liability in that
capacity.
Part III
Financial Statements
June 30, 1999 &
December 31, 1998
Independent Auditors Report
Board of Directors
Advanced Products Group, Inc.
(A Development Stage Company)
I have audited the accompanying balance sheets of Advanced Products Group,
Inc., as of June 30, 1999 and December 31, 1998, and the related statements
of operations, stockholders equity, and cash flows for the period accumulated
from August 27, 1998 (Inception) to June 30, 1999 and the period January 1,
1999 to June 30, 1999 and the period August 27,1998 to December 31, 1998.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatements. 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 the significant estimates made by management, as well as evaluating
the overall financial statements presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of Advanced Products Group, Inc.,
as of June 30, 1999 and December 31, 1998, and the results of its operations
and its cash flows for the accumulated from August 27, 1998 (Inception) to
June 30, 1999 and the period January 1, 1999 to June 30, 1999 and the period
August 27, 1998 to December 31, 1998,in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #5 to the financial
statements, the Company has an accumulated deficit and a negative net worth
at June 30, 1999 and December 31, 1998. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also
discussed in Note #5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
August 30, 1999
<TABLE> Advanced Products Group, Inc.
<CAPTION> (A Development Stage Company)
Balance Sheets
June 30 , 1999 and December 31, 1998
June December
30, 1999 31, 1998
Assets
<S> <C> <C>
Current Assets
Cash in Bank $710 $ 31,770
Accounts Receivable 127 8,357
Interest Receivable 2,215 -0-
Inventory -0- 1,343
Prepaid Expenses -0- 1,400
Total Current Assets 3,052 42,870
Other Assets
License 1,332,000 1,332,000
Less Amortization ( 55,000) ( 22,200)
Total Other Assets 1,276,500 1,309,800
Total Assets 1,279,552 1,352,800
</TABLE>
Advanced Products Group, Inc.
<TABLE> (A Development Stage Company)
<CAPTION> Balance Sheets -Continued-
June 30 , 1999 and December 31, 1998
June December
30, 1999 31, 1998
Liabilities & Stockholders' Equity
Current Liabilities
<S> <C> <C>
Accounts Payable 10,912 8,012
Accrued Expenses 5,980 221
Loans Payable -0- 60,970
License Fee Payable - Current Portion 159,840 159,840
Total Current Liabilities 176,732 229,043
Long Term Liabilities
License Fees Payable 1,135,672 1,158,168
Stockholders' Equity
Preferred Stock; 1,000,000 Shares Authorized
at $0.001 Par Value No Shares & 99,327 Shares
Issued & Outstanding Retroactively Restated -0- 100
Common Stock; 40,000,000 Shares Authorized
at $0.001 Par Value 3,060,590 Shares
& 1,675,952 Shares Issued & Outstanding
Retroactively Restated 3,061 1,675
Paid In Capital 551,273 34,584
Outstanding Notes Receivable
for Sale of Shares Issued ( 403,410) -0-
Accumulated in the Development
Stage ( 183,776) ( 70,900)
Total Stockholders' Equity ( 32,852) ( 34,541)
Total Liabilities & Stockholders'
Equity $ 1,279,552 $ 1,352,670
</TABLE>
<TABLE>
<CAPTION> Advanced Products Group, Inc.
(A Development Stage Company)
Statements of Operations
Accumulated from August 27, 1998 (Inception) to June 30, 1999
and the Period January 1, 1999 to June 30, 1999
and the Period August 27, 1998 to December 31, 1998
June December
Accumulated 30, 1999 31, 1998
Revenues
<S> <C> <C> <C>
Sales $ 14,336 $ 5,830 $ 8,506
Cost of Sale 3,090 1,343 1,747
Gross Profit 11,246 4,487 6,759
Operating Expenses
Amortization 55,500 33,300 22,200
Interest 66,800 40,080 26,720
Travel 32,072 17,884 14,188
Telephone 12,844 9,551 3,293
Rent 5,262 4,562 700
Professional Fees 5,217 3,621 1,596
Advertising 8,760 1,267 7,493
General & Administrative Expenses 11,240 9,771 1,469
Total Operating Expenses 197,695 120,036 77,659
Other Income
Interest 2,673 2,673 -0-
Net Loss ($ 183,776) ($ 112,876) ($ 70,900)
Loss Per Share ($ .05) ($ .06)
Weighted Average Shares Outstanding 2,364,502 1,036,900
</TABLE>
<TABLE>
<CAPTION>
Advanced Products Group, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From August 27, 1998 (Inception) to June 30, 1999
Common Preferred Paid In Accumulated
Shares Amount Shares Amount Capital Deficit
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance
August 27, 1998
(Inception) $ -0- $ -0- -0- $-0- $ -0- $ -0-
Shares held by
Shareholders
of Advanced
Technology
Group, Inc.
Retroactively
Restated 1,117,863 1,118 -0- -0- 2,236 -0-
Shares Issued to
Acquire
Shares
Outstanding of
Cra-Z Soap, Corp.,
Retroactively
Restated 417,332 417 103,517 104 835 -0-
Shares Issued
to Convert
Series A
Preferred to
Common Shares
Retroactively
Restated 83,807 84 ( 4,190 ( 4) 247 -0-
Shares Issued
for Cash at
$15.00 Per Share
Retroactively
Restated 200 -0- -0- -0- 3,003 -0-
Shares issued
for Cash at
$3.00 Per Share
Retroactively
Restated 167 -0- -0- -0- 501 -0-
Shares Issued
for Cash at
$0.60 Per Share
Retroactively
Restated 25,000 25 -0- -0- 14,975 -0-
Shares Issued
for Cash at
$1.50 Per Share
Retroactively
Restated 6,667 7 -0- -0- 9,973 -0-
</TABLE>
<TABLE>
<CAPTION> Advanced Products Group, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity -Continued-
From August 27, 1998 (Inception) to June 30, 1999
Common Preferred Paid In Accumulated
Shares Amount Shares Amount Capital Deficit
<S> <C> <C> <C> <C> <C> <C>
Shares Issued
for Service
at $0.003 Per Share
Retroactively
Restated 24,583 24 -0- -0- 714 -0-
Shares Issued
for Service
at $6.00 Per Share
Retroactively
Restated 333 -0- -0- -0- 2,100 -0-
Net Loss for
Period Ended
December 31, 1998 ( 70,900)
Balance,
December 31, 1998 1,675,952 1,675 99,327 100 34,584 ( 70,900)
Shares Issued
to Convert
Series A
Preferred to
Common Shares
Retroactively
Restated 390,333 390 ( 19,516) ( 20) 20 -0-
Shares issued
for Services
at $8.00 Per Share
Retroactively
Restated 66 1 -0- -0- 581 -0-
Shares Issued
for Services
at $0.60 Per Share
Retroactively
Restated 8,333 8 -0- -0- 4,992 -0-
Shares Issued
for Services
at $0.003 Per Share
Retroactively
Restated 275,833 276 -0- -0- 552 -0-
Shares Issued
for Note
Receivable
on Option to
Acquire Common
Stock at
$0.001 for $.003 Per Share
Retroactively
Restated 33,333 33 -0- -0- 67 -0-
</TABLE>
<TABLE>
<CAPTION>
Advanced Products Group, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity -Continued-
From August 27, 1998 (Inception) to June 30, 1999
Common Preferred Paid In Accumulated
Shares Amount Shares Amount Capital Deficit
<S> <C> <C> <C> <C> <C> <C>
Shares Issued
for Notes
Receivable at $0.75 Per
Share Retroactively
Restated 666,666 667 -0- -0- 499,333 -0-
Shares Issued
for Services
at $14.53 Per Share 74 1 -0- -0- 1,074 -0-
Shares Issued
for Cash
at $1.00 Per Share 10,000 10 -0- -0- 9,990 -0-
Series A
Preferred Shares
Returned & Canceled -0- -0- ( 79,811) ( 80) 80 -0-
Loss for Period Ended
June 30, 1999 ( 112,876)
Balance,
June 30, 1999 3,060,590 $3,061 -0- $ -0- $ 551,273 ($183,776)
</TABLE>
<TABLE> Advanced Products Group, Inc.
(A Development Stage Company)
<CAPTION> Statement of Cash Flows
Accumulated from August 27, 1998 (Inception) to June 30, 1999
and the Period January 1, 1999 to June 30, 1999
and the Period August 27, 1998 to December 31, 1998
June December
Accumulated 30, 1999 31, 1998
Cash Flows from Operating Activities
<S> <C> <C> <C>
Net Loss ( 183,776) ($112,876) ($70,900)
Adjustment to Reconcile Net Loss to Cash
Amortization 55,500 33,300 22,200
Non Cash Expenses 10,750 2,873 7,877
Rounding -0- 2 ( 2 )
Changes in Operating Assets & Liabilities
(Increase) Decrease in Accounts Receivable( 127) 8,230 ( 8,357)
(Increase) Decrease in Interest Receivable( 2,215) (2,215) -0-
(Increase) Decrease in Inventory -0- 1,343 ( 1,343)
(Increase) Decrease in Prepaid Expenses -0- 1,400 ( 1,400)
Increase in Accounts Payable 10,912 2,900 8,012
Increase in Accrued Expenses 5,980 5,759 221
Net Cash by Operating Activities (102,976) (59,284) ( 43,692)
Cash Flows from Investing Activities
Payments on License ( 36,488) ( 22,496) ( 13,992)
Cash Flows from Financing Activities
Proceeds from Sale of Common Stock 140,174 111,690 28,484
Increase in Loan Payable -0- ( 60,970) 60,970
Net Cash Provided by Financing Activities 140,174 50,720 89,454
Increase (Decrease) in Cash & Cash Equivalents 710 ( 31,060) 31,770
Cash & Cash Equivalents at Beginning of Period -0- 31,770 -0-
Cash & Cash Equivalents at End of Period $ 710 $ 710 $ 31,770
</TABLE>
Advanced Products Group, Inc.
A Development Stage Company)
Notes to Financial Statements
NOTE #1 - Corporate History
Advanced Products Group, Inc., (the Company), is a market based company
selling soaps, hand cleaners and other related products. Originally formed
as a Nevada Corporation on August 27, 1998, using the name
Cra-Z Soap Corp. The Company filed Articles of Amendment on March 12, 1999,
and changed its name to Advanced Products Group, Inc.
Pursuant to an Agreement of Merger dated August 28, 1998, the Company merged
into Advanced Technologies Group, Inc., a Delaware Corporation organized
under the laws of the state of Delaware on March 25, 1987.
The Company is considered to be a development stage company.
NOTE #2 - Significant Accounting Policies
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period when
the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be computed
by including contingently issuable shares with the weighted average shares
outstanding during the period. When inclusion of the contingently issuable
shares would have an antidilutive effect upon earnings per share no diluted
earnings per share shall be presented.
E. Consolidation Policies: The accompanying consolidated financial
statements include the accounts of the company and its majority - owned
subsidiary. Intercompany transactions and balances have been eliminated
in consolidation.
F. Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the lesser of the length of the lease of the
related assets of the estimated lives of the assets. Depreciation and
amortization is computed on the straight line method.
NOTE #3 - Reverse Takeover and Recapitalization
Pursuant to an Agreement of Merger dated August 27, 1998, Cra-Z-Soap Corp.,
a Nevada Corporation, (the legal acquiree) and Advanced Technologies Group,
Inc., a Delaware Corporation, (the legal acquirer)
exchanged common stock to give the shareholders of the legal acquiree control
of the legal acquirer.
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #3 - Reverse Takeover and Recapitalization -Continued-
Shareholders of the legal acquiree surrendered 100% of the outstanding shares
in exchange for 1,100,000Shares of Common Stock and 310,550 Series A Super
Preferred Voting Shares of the legal acquirer.
On April 30, 1999, Advanced Technologies Group, Inc., the legal acquirer,
filed a Certificate of Amendment with the Secretary of State of the state of
Delaware changing its name to Advanced Products Group, Inc.
The share exchange of a private operating Company, (Cra-Z- Soap Corp.) into
a non-operating public shell corporation (Advanced Technologies Group, Inc.),
with no assets or liabilities resulted in the shareholders of the
private company having actual operating control of the combined company after
the transaction, and the shareholders of the former public shell continuing
only as passive investors.
This transaction is considered to be a capital transaction in substance,
rather than a business combination. That is,the transaction is equivalent to
the issuance of stock by the private companyfor the net monetary assets of
the shell corporation, accompanied by a recapitalization. The accounting is
identicalto that resulting from a reverse acquisition, except no goodwill or
other intangible is recorded.
APB No., 16, paragraph 70 states that, Presumptive evidence of the acquiring
corporation in combinations effected by an exchange of stock is obtained by
identifying the former common stockholder interest of a
combined company which either retains or receives the larger portion of the
voting rights of the combined corporation. That corporation should be
treated as the acquirer unless other evidence clearly indicates that
another corporation is the acquirer.
Staff accounting Bulletin Topic 2A affirms the above principle and gives
guidelines that the post reverse acquisition comparative historical financial
statements furnished for the legal acquirer should be those of the legal
acquiree.
In accordance with this guideline the outstanding shares of Cra-Z Soap
Products Corp., have been retroactively restated on the Balance Sheet, and
the Statement of Stockholders' Equity to give effect
to the three shares for one share exchange. The retroactively restated
shares have been used in the Computations for Earnings (Losses) Per Share to
preserve comparability of those figures.
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #4 - Income Taxes
The Company has adopted FASB 109 to account for income taxes. The Company
currently has no issues that create timing differences that would mandate
deferred tax expense. Net operating losses would create possible tax assets
in future years. Due to the uncertainty as to the utilization of net
operating loss carryforwards an evaluation allowance has been made to the
extent of any tax benefit that net operating losses may generate.
The Company has incurred losses that can be carried forward to offset future
earnings if conditions of the Internal revenue Codes are met. These losses
are as follows:
Year of Loss Amount Expiration Date
1998 $ 101,226 2018
1999
Current Tax Asset Value of Net Operating Loss Carryforwards
at Current Prevailing Federal Tax Rate $ 34,416
Evaluation Allowance ( 34,416)
Net Tax Asset $ -0-
Current Income Tax Expense -0-
Deferred Income Tax Benefit -0-
NOTE #5 - Going Concern
The accompanying financial statements of Advanced Products Group, Inc., have
been prepared on a going concern basis, which contemplates profitable
operations and the satisfaction of liabilities in the normal course of
business. There are uncertainties that raise substantial doubt about the
ability of the Company to continue as a going concern. As shown in the
statements of operations the Company has not achieved profitable operations
and as of June 30, 1999, the Company has insufficient working capital.
Management has obtained an agreement with an investment banking concern in
New York to use a Private Placement Memorandum of 500,000 shares of common
stock at $2.00 per share to raise additional capital This Agreement is
contingent upon the Company clearing comments in its current filing with the
Securities and Exchange Commission.
The Company is negotiating with other mergers with other privately held
companies that would bring assets,sales and marketing strategies to the
Company. These negotiations also are contingent upon the Company
completing its current registration process with the SEC.
In addition, negotiations continue with a major supermarket wholesaler for
the soap products.
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #6 - License Agreement
On August 27, 1998, Cra-Z Soap Corp., (the Licensor) entered into an
Agreement with Masters Marketing and Development, Inc., a Tennessee
Corporation (the Licensor). Pursuant to the Agreement
the Licensor granted to the Licensee property that is identified as all
formulas, patents, applications for patents, trade secrets, improvements,
technology or technological products, intellectual properties, know-how
ideas, methods, processes and concepts, and devices ("formulas"), whether
now existing or hereafterconceived , developed or acquired by Licensor
relating to the product known as Cra-Z Soap or any similar product or any
application of the formulas to any product or commercialization thereof
Two officers of Advanced Products Group, Inc., jointly owning 7.9% of
Advanced Products Group,
Inc's outstanding common shares also own 42% each of Masters Marketing and
Development, Inc.
A royalty of ten percent (10%) of the Adjusted Gross Sales price of any
Products sold by Licensee or its Affiliates for which Licensee receives
payment of Twenty Thousand Dollars U.S. ($20,000) (the "monthly minimum"),
whichever is greater ("Royalties"). "Adjusted Gross Sales Price" shall mean
the gross sales price of any Products sold less returns and reasonable actual
discounts or rebates. At such time as the total amount of Royalties paid
reaches a sum equal to or exceeding two million dollars U.S.
($2,000,000), the percentage of Adjusted Gross Sales paid as royalty as
defined above shall change from ten percent (10%) to three percent (3%) with
no monthly minimum.
The Company has capitalized the License Agreement at the present value of
$2,000,000 using a risk free rate of 5% over the term of 100 months, (eight
and one third years) that the Company is required to pay $20,000 per month.
The present value of the license is $1,332,000. The discount factor of
$668,000 is considered to be the interest factor and is absorbed into the
operating expense as interest expense using the straight line method at
$6,680. The interest expense is recognized as expense each month without
respect to when the Company pays the required license fees. If the Company
fails to make the license payment timely then expense is recognized and the
license fees payable is increased.
The Company will amortize the license fee recognized as an asset over the
initial term of the license which is twenty years.
The Company will be required to make debt service payments and recognize
expenses pertaining to the license as follows;
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #6 - License Agreement -Continued-
<TABLE>
<CAPTION>
License
License Principal Interest Amortization
Year Payment Reduction Factor
<S> <C> <C> <C>
1998 $ 80,000 $ 53,280 $ 26,720 $ 22,200
1999 240,000 159,840 80,160 66,600
2000 240,000 159,840 80,160 66,600
2001 240,000 159,840 80,160 66,600
2002 240,000 159,840 80,160 66,600
2003 240,000 159,840 80,160 66,600
Thereafter 720,000 479,520 240,480 1,644,800
Total $ 2,000,000 1,332,000 668,000 2,000,000
NOTE #7 - Stockholders' Equity
The Company is authorized to issue 40,000,000 shares of common stock with a
par value of $0.00 per share.
The Company is authorized to issued 1,000,000 Shares of Series A Super
Preferred Voting Shares.
Pursuant to the Agreement of Merger 103,517 Series A Super Preferred Voting
Shares, retroactively restated have the following characteristics;
A. Voting Rights: The holder of each share of the Shares shall have the right
to cast twenty (20) votes per Share held on any and all matters presented for
shareholder consideration.
Each holder of common shares may cash one (1) vote per common share held
on any and all matters presented for shareholder consideration.
B. Preference: Holders of the Shares shall be preferred over holders of
common shares for payment of dividends or in any distribution to shareholders
resulting from liquidation of the issuer.
C. Face Value and Redemption Value: The Shares have a face value of $1.00
each. The Shares may be redeemed by the issuer prior to any conversion
thereof any time after two (2) years from date of issuance for $1.00 each at
the option of the issuer.
D. Dividends: The Shares earn a non-cumulative dividend of three percent (3%)
annually based upon the Shares face value and redemption value. Dividends
shall be paid from earnings of the issuer, if any.
E. Conversion: The Shares may be converted into restricted common shares at
any time commencing two (2) years after date of issuance. Each Series A
Preferred Voting Share may be converted into twenty (20) restricted common
shares. The holding periods of any restricted common shares issued as a
result of conversion for purposes of Rule 144, or any subsection thereof, as
promulgated by the Securities & Exchange Commission, shall commence upon the
date of issuance of any such Series converted.
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #7 - Stockholders' Equity -Continued-
F. Series C Preferred Shares; The Company offers a Series C Preferred Share
with a coupon of 6%, a redemption value of $10.00, a face value of $10.00
with voting rights of 2 votes per share and a conversion of 2 common shares
for each share after one year from issue. There are no Series C Preferred
Shares issued.
On March 12, 1999, at a Special Meeting, Shareholders authorized a one for
three split of the issued and outstanding shares of common and preferred
stock. Retroactive restatement has been made to the financial statements.
The remaining preferred shares outstanding were returned to the Company at no
cost and were canceled.
The Company issued 24,916 shares of common stock for services valued at
$2,838 in 1998 and 317,639 shares for services valued at $7,585 in 1999.
The Company issued shareholders of Advanced Technologies Group, Inc., options
to acquire up to 666,667 post split shares of common stock at $0.75 per share
In 1999, the Shareholders exercised the options and the Company issued
666,667 shares of common stock for Notes Receivable of $500,000.
At June 30, 1999, the Company had received $96,690 from one of the note
holders.
NOTE #8 - Notes Receivable
The Company has three short term notes receivables as follows:
Note #1- From a Business Entity, Note of $166,667 dated April 1, 1999
Due March 31, 2000, Interest at .025% Per Annum $166,667
Note #2- From a Business Entity, Note of 166,667 dated April 1, 1999
Due March 31, 2000, Interest at .025% per annum 166,667
Note #3- From a Business Entity, Note of 166,667 dated April 1, 1999
Due March 31, 2000, Interest at 0.25% Per Annum 69,976
Total $403,310
==============
The Company issued 666,667 shares of common stock for the notes receivable.
Generally accepted accounting principle require that note receivable for
stock issued be offset against the equity increased from the original sale.
Advanced Products Group, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE #9 - Deficit Accumulated in the Development Stage
Subsequent to the Agreement of Merger the surviving entity is considered to
be a development stage company. Deficits accumulated are as follows;
Period Amount
From August 27, 1998, (Inception) to December 31, 1998 $ 101,226
From January 1, 1999 to June 30, 1999 160,493
Total $ 261,719
NOTE #10 - New Technical Pronouncements
In February 1997, SFAS No. 129, "Disclosure of Information about Capital
Structure" was issued effective for periods ending after December 31, 1997.
The Company has adopted the disclosure provisions of SFAS No. 129 effective
with the fiscal year ended December 31, 1998.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued
effective for fiscal years beginning after December 31, 1997, with earlier
application permitted. The Company has elected to adopt SFAS No. 130
effective with the fiscal year ended December 31, 1998. Adoption of SFAS No.
130 is not expected to have a material impact on the Company's financial
statements.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" was issued for fiscal year beginning after December 31,
1997, with earlier application permitted. The Company has elected to adopt
SFAS No. 131, effective with the fiscal years ended December 31, 1998.
Adoption of SFAS No. 131 is not expected to have a material impact on the
Company's financial statements.
Signatures
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Advanced Products Group, Inc.
-----------------------------------
(Registrant)
Date: February 9, 2000 By: /s/ Edward J. da Parma, Jr.
----------------------------------
Edward J. da Parma, Jr., President
PART IV INDEX OF EXHIBITS
EXHIBIT # DESCRIPTION
2 CORPORATE BY-LAWS
3 STOCK CERTIFICATE
3.a AMENDED ARTICLES OF INCORPORATION
6.a LICENSE AGREEMENT BETWEEN MASTERS
MARKETING AND CRA Z SOAP, INC.
ADDITIONAL EXHIBIBTS
A. MERGER AGREEMENT BETWEEN CRA Z SOAP, CORP
AND ADVANCED TECHNOLOGIES GROUP, INC.
B. FORM D
C. AGREEMENT BETWEEN STARCO AND CRAZ PRODUCTS
D. LETTER OF AGREEMENT TELEBRANDS
</TABLE>
EXHIBIT C
AGREEMENT
THIS AGREEMENT IS ENTERED into this 1st day of July, 1998 by and between
CRA Z Products, Inc., with principal offices at 7820 S Holiday Drive, Suite
205, Sarasota, Florida 34321 (hereinafter referred to as "CRA Z"), and
STARCO Chemical, Inc., with principal offices at Union Ave and DuBois Street,
East Rutherford, New Jersey 07073 (hereinafter referred to as "STARCO" or the
"Manufacturer").
RECITALS
WHEREAS, CRA Z Products Inc. is a corporation organized under the laws of the
State of Delaware with its principal offices in Sarasota, Florida; and
WHEREAS, CRA Z through its Board of Directors is desirous of entering into an
agreement with STARCO Chemical Inc. for the manufacture of certain products
of which CRA Z is the proprietary of the formulae required to produce such
products; and
WHEREAS, STARCO is a corporation domiciled in the State of New Jersey with
principal offices in East Rutherford, New Jersey; and
WHEREAS, STARCO through its Board of Directors is desirous of entering into
an agreement with CRA Z Products, Inc. for the manufacture of certain
products bearing the trade name CRA Z; and
WHEREAS, STARCO agrees that the formula for such products are proprietary to
CRA Z Products, Inc., and as such STARCO agrees that it will not duplicate
any such formula provided in any form by CRA Z Products, Inc, and
NOW, THEREFORE, in consideration of the foregoing, the promises, mutual
covenants and agreements of the parties hereinafter contained and other good
and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
MANUFACTURE
STARCO agrees to manufacture certain products on behalf of CRA Z strictly
following the formulary and quality guidelines of CRA Z. STARCO further
agrees that the list of said products as found in Schedule A of this
agreement shall be produced at the lowest cost available to STARCO while
maintaining any such formulary or quality standards as required by CRA Z.
CRA Z shall provide to STARCO sufficient lead-time so as to allow for the
efficient manufacture of any CRA Z product. STARCO agrees that it shall
diligently notify CRA Z of the lead times required for each manufacturing
order received by CRA Z and barring events of force- major or acts of god
shall deliver any such products within the agreed upon time period.
ARTICLE II
QUALITY CONTROL AND INSPECTION
The parties agree that they will mutually determine quality standards and
that all products manufactured under this Agreement shall be subject to
quality inspection by CRA Z. The parties further agree that it is their
intention to be partners in any production and that it is in their mutual
best interest to maintain appropriate quality levels for each product.
CRA Z may reject any production that fails to meet a minimum of 85% pass rate
of any inspection performed by CRA Z Products itself, its agents or by
employees responsible for the testing of quality control in the employ of
STARCO.
STARCO agrees to make any inspection reports for any such products available
to CRA Z upon reasonable notice and at reasonable times and places.
ARTICLE III
TERMS OF PAYMENT AND DELIVERY
The parties agree that payment of manufacturing costs shall be discounted at
TEN PERCENT (10%) of the lowest published price per product as described in
Schedule B of this Agreement. All payments are net THIRTY (30) DAYS of
delivery, provided CRA Z meets STARCO credit requirements. The parties
further agree that minimum requirement for manufacture shall be ONE (1)
pallet.
The parties agree and mutually understand that from time to time it may
become necessary to produce a "short run" for the purpose of sampling and
promotion. The parties agree that the additional cost to the Manufacturer
for any such short run and its packaging shall be passed on to CRA Z Products.
CRA Z shall provide STARCO with a Purchase Order for each manufacturing run.
Said PO shall include name, address and delivery instructions. CRA Z shall
endeavor to provide to STARCO a master Purchase Order with a rolling horizon
so as to insure the economic procurement of raw materials and an efficient
manufacturing schedule. The parties agree that in so much as it is feasible,
based upon CRA Z production requirements and STARCO production abilities and
scheduling, that all Purchase Orders are to be manufactured in Just In Time
fashion and drop- shipped directly to CRA Z customers. It is
mutually agreed between the parties that each will strive to manage inventory
in such fashion consistent with Just in Time scheduling and consistent with
the prompt delivery of product to the customer.
The parties further agree and understand that delivery of the product to CRA
Z customer on time and within the time periods established in any Purchase
Order is critical. CRA Z warrants that it will provide STARCO with
sufficient notice so to insure appropriate lead-time to satisfy this
requirement. STARCO agrees and warrants that it shall be liable to CRA Z for
any shipment which fails to meet its required delivery date for any reason
under the control of the manufacturer, including but not limited to, trucking
scheduling, work stoppage, inventory of raw materials, etc. The parties
agree that CRA Z shall be entitled to damages for any such delay within the
manufacturer's control based upon the damages suffered by the CRA Z imposed
by its customer on account of any delay. The parties agree that in any such
event CRA Z shall at a minimum be entitled to an abatement of any such
invoice for the manufacture of the delayed product.
ARTICLE IV
PROPRIETARY NATURE OF PRODUCTS
The parties agree that the formulae for the products listed in Schedule A to
this Agreement are the sole property of CRA Z. These products are
proprietary to CRA Z regardless of their similarity to any other products
produced by STARCO, therefore, STARCO agrees not duplicate, publish, or
divulge in any manner or form said formulae. STARCO further agrees that it
shall not market, sell, advertise or cause to be marketed, sold, advertised,
or in any other way offer to wholesale or retail any product, whether
manufactured by STARCO, its parent or affiliates, containing said proprietary
formula in any packaging other than packaging approved by CRA Z and bearing
the CRA Z Products, Inc name.
ARTICLE V
TERM OF THIS AGREEMENT
The parties agree that the term of this Agreement shall be for an unlimited
period.
The parties further warrant, covenant and agree that this Agreement shall
automatically renew unless either of the parties defaults in its obligations
to the other. In the event of default, the presumptive aggrieved party may
terminate this agreement in writing pursuant to the paragraph entitled NOTICE
of their intention to terminate no less than NINETY (90) Days prior to the
termination of this Agreement
Either party may terminate this Agreement for default upon written notice as
stated above solely in the event of the following:
a. the filing of bankruptcy by either party as a Debtor
b. the application for appointment of a receiver
c. the making of a general assignment for the benefit of either party's
creditors
d. the insolvency of either party
e. the misrepresentation by either party to the other party for the purpose
of obtaining this Agreement.
f. Failure of either party to perform any of its obligations and
responsibilities under this Agreement, including but not limited to a
failure to make required payments in a timely fashion, failure to meet
production and delivery schedules, etc.
ARTICLE VI
LEGAL INERPRETATION
The parties agree that this Agreement shall be interpreted under the laws of
the State of Delaware. Any provision herein found to be inconsistent or
unenforceable under state, federal or local law shall not effect the
remaining provisions hereof which shall remain in full force and effect.
ARTICLE VII
DEFAULT
The parties covenant and agree that if in the event it is alleged by either
party that other has failed to perform, or there has been a lack of
performance or that there has been a breach by the other, then the party
aggrieved shall notify the other party, in writing by certified mail, return
receipt requested, of the default or breach or lack of performance, and the
other party shall have ten (10) days, after receipt of such written notice,
to cure such default, breach or lack of performance. In the event the party
fails to cure such default, or otherwise as the case may be, the aggrieved
party may, after the expiration of such ten (10) day period of time, submit
any alleged default, breach or lack of performance to arbitration with either
the American Arbitration Association or the National Association of Mediators
to enforce any right with respect to any of the terms ofthis Agreement. No
notice shall be required prior to the commencement of any arbitration
proceeding for any violation of any provision herein except that any notice
required by the American Arbitration Association or National Association of
Mediators for the selection of arbiters shall be served by the presumptively
aggrieved party on the defaulting party.
The parties further covenant and represent to each other that if such
proceedings are commenced, the decision of the arbiter shall be final. If by
reason of the actions of the defaulting party, the presumptive
aggrieved party is successful in any such proceeding, the parties agree
that the defaulting party shall become liable to the aggrieved paraty for
all costs including reasonable attorney's fees in bringing any such
proceeding.
It is understood and agreed that in the event any such proceeding is
commenced and after said commencement thereof and before Judgment is or can
be entered, the defaulting party shall comply with such term or condition of
this Agreement, the proceeding instituted shall be deemed to have resulted in
a favorable Judgment, Order or Decree for the aggrieved party, and the
defaulting party shall be liable for all costs, including reasonable
attorney's fees, of the proceeding. The provisions of this paragraph shall be
in addition to, and without prejudice, to any other rights or remedies to
which the aggrieved party may be entitled.
ARTICLE VII
FULL DISCLOSURE
The parties acknowledge that they are entering this Agreement freely and
voluntarily; that each has full and complete authority to enter into this
Agreement; that they have had full and complete opportunity to ascertain and
weigh, to their complete satisfaction, all of the facts and circumstances
likely to influence their judgment; that they have sought and obtained legal
advice independently of each other to the extent that each has determined to
be appropriate and in the best interest of the corporations they represent;
and that they have obtained to the extent required approval by their
corporate by-laws of the Board of Directors of their respective corporations.
ARTICLE VIII
ENTIRE UNDERSTANDING
The parties have incorporated into this Agreement their entire understanding.
No oral statements or prior writings shall have any force or effect for any
purpose whatsoever if inconsistent with the terms of this Agreement. Neither
party has relied upon any representations; promises, warranties, covenants or
undertakings other than those expressly set forth herein.
ARTICLE IX
MODIFICATION AND WAIVER
Neither this Agreement nor any provisions thereof shall be modified or
amended or be deemed to be modified or amended, except by an Agreement in
writing duly subscripted and acknowledged with the same formality as this
Agreement. Any waiver by either party of any provision of this Agreement, or
of any right or option hereunder shall not be deemed a continuing waiver and
shall not prevent or estop such party from thereafter enforcing such
provision, right or option and the failure of either party to insist
more instances upon the strict performance of any of the terms of this
Agreement by the other party shall not be construed as a waiver or
relinquishment for the future of any such term or provision, but the same
shall continue in full force and effect.
ARTICLE X
HEADINGS AND PRONOUNS
The headings in this Agreement are inserted for convenience only and are not
to be considered in construction of the provisions hereof.
The neuter gender shall be deemed to include the masculine and the feminine
wherever necessary or appropriate the masculine to include the feminine,
the feminine to include the masculine, the singular the plural and the plural
to include the singular.
ARTICLE XI
SEPERABILITY AND INDEPENT COVENANTS
Each of the respective rights and obligations of the parties herein shall be
deemed independent and may be enforced independently irrespective of the
other rights and obligations set forth herein.
ARTICLE XII
NOTICE
Any and all notices, communications, options, objections, elections and other
writings required to be given or given hereunder shall be sent via personal
delivery, reputable overnight delivery service, or certified mail, return
receipt requested, to the other party at the address stated hereinabove, or
at such other address as may be designated by such other party by written
notice pursuant to notice in this paragraph.
ARTICLE XIII
BINDING
This Agreement shall be binding upon, and shall inure to the benefit of the
parties hereto and their respective legal representatives, successors and
assigns
IN WITNESS WHEREOF, the parties have hereunto set their respective hands and
seals the day and year first written above.
For CRA Z Products, Inc.
AFFIX CORPORATE SEAL
/s/ Richard Herman
.
RICHARD HERMAN, PRESIDENT
For STARCO Chemical, Inc.
AFFIX CORPORATE SEAL
/s/ Alex Lawrence
ALEX LAWRENCE, EXECUTIVE VICE-PRESIDENT
EXHIBIT D
7820 S. Holiday Drive
Ste 205
Sarasota, Florida 34231
Telephone (941) 748-2821
Fax (941) 748-2921
CRAZ PRODUCTS, INC.
October 28, 1998
Anand Khubani
Telebrands
81 Two Bridges Road
Fairfield, New Jersey 07004
VIA FAX AND REGULAR MAIL
Dear Andy:
This letter is to confirm our understanding of the Agreement we
discussed at your offices.
For a consideration of 65000 shares of common stock in CRA Z PRODUCTS,
INC.,Telebrands will provide a "test" for CRAZ Soap using airtime on HSN.
Any profits from this project will first be applied to cover the production
expenses and costs incurred by Telebrands for this project. After the
recovery of these costs any remaining profits will belong to CRA Z Products.
The test will consist of a sufficient number of spots to accurately assess
the marketability of this product. However, the number of spots will not
be less than 50, unless fewer indicate a successful market.
In addition, CRAZ agrees to issue the shares as follows: 15000 shares in
the name of Anand Khubani and the balance (50000) shares in the name of
Telebrands. These shares are in consideration for the test only and upon
determination by Telebrands to proceed with a marketing and sales program for
CRA Z Products, the parties will negotiate appropriate terms and
consideration for this activity.
Rick Herman will be in New York until Sunday, and can be reached on his
cell phone at (941) 730-0248 and again at the numbers above next week. We
thank you and A.J. for your hospitality today and for your interest in
promoting our product. We are confident that this is just the beginning of a
mutually profitable relationship.
Sincerely,
/s/ Edward J. da Parma
Edward J. da Parma, Jr
Craz Soap it Cleans like Crazy.................
