U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000
Commission File No. 000-30069
THERMAFREEZE, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 95-452-0761
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
4430 HASKELL AVENUE, ENCINO, CA 91436
(Address of principal executive office)(City, State Zip Code)
Issuer's telephone number, including area code: (818) 784-2445
Check whether the issuer (1) filed reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months or
such shorter period that the registrant was required to file such
reports and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]
There were 22,961,522 shares of the Issuer's Common Stock outstanding
and 5,000,000 of Preferred Stock outstanding as of March 31, 2000.
Transitional Small Business disclosure Format. Yes [ ] No [X]
<PAGE 1>
INDEX
PART I. FINANCIAL INFORMATION ------------------------------- PAGE 3
ITEM 1. FINANCIAL STATEMENTS ------------------------------- PAGE 3
Balance Sheet at March 31, 2000 and December 31, 1999 -------- PAGE 3
Statement of Operation for the Periods Ending
March 31, 2000 And March 31, 1999 -------------------- PAGE 4
Statement of Cash Flows for the Periods Ending
March 31,2000 And March 31, 1999 -------------------- PAGE 5
Notes to Financial Statements -------------------------------- PAGE 6
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
PLANS OF OPERATION -------------------------------- PAGE 8
PART II. OTHER INFORMATION -------------------------------- PAGE 9
ITEM 1. LEGAL PROCEEDINGS ---------------------------------- PAGE 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ---------- PAGE 9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ---------- PAGE 9
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS -------------------- PAGE 9
ITEM 5 OTHER INFORMATION - LICENSE AGREEMENT WITH
DELIVERSAFE.COM INC. ------------------------ PAGE 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------------ PAGE 10
(A) Exhibit 1-Copy of License Agreement with
DeliverSafe.Com Inc.
(B) Reports on Form 8-K
PART III. SIGNATURES -------------------------------- PAGE 27
<PAGE 2>
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THERMAFREEZE, INC.
(A Development Stage Company)
Balance Sheet
March 31, 2000 and December 31, 1999
March 31 December 31
2000 1999
(Unaudited) (Audited)
ASSETS
Assets:
Cash $ 1,259 $ 1,503
Accounts receivable 5,105
Furniture, fixtures and equipment, net 1,010 1,090
---------- ----------
Total Assets $ 2,269 $ 7,698
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Notes Payable - Shareholders $1,162,570 $1,081,263
Accrued and other liabilities 111,027 108,158
---------- ----------
Total Liabilities 1,273,597 1,189,421
---------- ----------
Common Stock, $0.001 par value,
40,000,000 shares authorized; 22,961,522
shares issued and outstanding at 3/31/00
and 12/31/99 22,512 22,512
Preferred Stock, $0.001 par value,
10,000,000 shares authorized; 5,000,000
shares issued and outstanding at 3/31/00
and 12/31/99 5,000 5,000
Additional paid-in capital 2,106,750 2,106,750
Deficit accumulated during development stage (3,405,589) (3,315,985)
---------- ----------
Total Stockholders' Deficit (1,271,327) (1,181,723)
---------- ----------
Total Liabilities and Stockholders' Deficit $ 2,269 $ 7,698
========== ==========
The accompanying notes are an integral part of these financial
statements. The balance for December 31, 1999 were taken from the
audited financial statements at that date.
<PAGE 3>
PART I. FINANCIAL INFORMATION, ITEM 1 - FINANCIAL STATEMENTS (CONT.)
THERMAFREEZE, INC.
(A Development Stage Company)
Income Statements
For the Periods
March 31, 2000 and March 31, 1999
STATEMENT OF OPERATIONS March 31, March 31
2000 1999
(Unaudited) (Audited)
Revenue $ 15,901 $ 6,209
Research and development 55,303 56,996
General and administrative expenses 16,426 74,551
Depreciation 80 91
---------- ----------
Net deficit before other expenses (55,909) (125,430)
Other expenses - Interest 33,696 31,281
---------- ----------
Net deficit accumulated
during development stage $(89,604) $ (156,711)
========== ==========
Weighted average number of
common shares outstanding 22,961,522 22,511,522
Net (loss) per share $ (0.0039) $ (0.007)
=========== ==========
<PAGE 4>
PART I. FINANCIAL INFORMATION, ITEM 1 - FINANCIAL STATEMENTS (CONT.)
THERMAFREEZE, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Periods
March 31, 2000 and March 31, 1999
STATEMENT OF CASH FLOWS March 31, March 31
2000 1999
(Unaudited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (89,604) $(156,711)
Depreciation 80 91
(Increase)/Decrease in accounts receivable 5,105 (5,929)
Increase in other liabilities 2,869 25,159
--------- ---------
Net cash used by operating activities (81,550) (137,390)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable-shareholders 81,306 101,960
Additional paid-in capital 0 33,600
--------- ---------
Net cash provided by financing activities 81,306 135,560
--------- ---------
Beginning cash 1,503 2,283
--------- ---------
Ending cash $ 1,259 $ 453
======== =========
<PAGE 5>
PART I. FINANCIAL INFORMATION, ITEM 1 - FINANCIAL STATEMENTS (CONT.)
THERMAFREEZE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
PART I BASIS OF PRESENTATION:
Note 1. The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been
included. It is suggested that these financial statements be read in
conjunction with the December 31, 1999 audited Financial Statements and
the notes thereto for ThermaFreeze, Inc.
The Company's financial statements present the company as a going
concern, which contemplates the realization of asset and liquidation of
liabilities in the normal course of business. Without realization of
additional capital, it would be unlikely for the Company to continue as
a going concern.
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Earning per share is computed using the weighted average number
of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
4. The cost of equipment is depreciated over the estimated useful
life of the equipment
5. The company has adopted December 31 as its fiscal year end.
Note 2. There are no inventory values reflected in the statements as
they have been expensed.
Note 3. Related Party Transactions: Stockholder's advanced additional
loans in the amount of $81,307 on Demand Notes at 12% annual interest
rate compounded monthly.
Note 4. Property and Equipment: .No new Property or Equipment was added
during this quarter ending 3/31/00.
<PAGE 6>
PART I. FINANCIAL INFORMATION, ITEM 1 - FINANCIAL STATEMENTS (CONT.)
Note 5. Income Taxes: There are no Income Taxes due as of the date
March 31, 2000. The Company will review its need for a provision for
federal income tax after each operating quarter and each period for
which a statement is issued.
Note 6. Stockholder's Equity
1. There were no preferred stocks issued in the quarter ending March
31, 2000.
2. There was issued 450,000 Shares of Common Stock in the quarter
ending March 31, 2000.
3. The Company offered a Warrant Package in 1999: Each warrant unit
contains 100,000 shares of restricted common stock and 33,334
warrants to purchase 33,334 shares of common stock at $0.15 per
share exercisable for a 2-year period from the purchase date.
During the year ended December 31, 1999, 408,342 warrants/shares
were issued. There were no warrants issued in the quarter ending
March 31, 2000.
4. There was no contribution of donated capital in the quarter
ending March 31, 2000.
Note 7. Results of the 1st quarter of 2000 operation:
1. Assets were $5,239 less due to drop in Accounts receivable.
2. Accrued and other liabilities increased $2,869.
3. Stockholders' loans increased $81,307.
4. There was 450,000 shares of common stock issued for the period
ending March 31, 2000.
5. There was no additional paid-in-capital during the period.
6. Operational loss for the period was $89,604.
7. Revenue for sales to March 31, 2000 was $ 2,901 compared to
$6,209 as of March 31, 1999. Revenue for March 31, 2000 was
increased by a non-refundable deposit on License sales in the
amount of $13,000. There were no license sales in 1999. There
will be paid $237,000 in the month of April, 2000 to complete the
first installment in accordance with the agreement between
ThermaFreeze, Inc. and DeliverSafe.Com, Inc. dated January 10,
2000. (See detail of the agreement in Item 6).
8. Operational expenses were $89,604 in 2000 compared to 1999 first
quarter of $ 156,711. This reduction of expenses in the first
quarter of the year 2000 probably will not be true for the
remaining quarters of the year 2000.
9. Based upon the weighted average number of common shares
outstanding in both period the net loss per share was $ .0039 in
2000 compared to $.007 in 1999.
<PAGE 7>
ITEM 2 - MANAGEMENT DISCUSSION & ANALYSIS OF PLAN OF OPERATION
The following discussion and analysis should be read in conjunction
with the company's Financial Statements and notes thereto included
elsewhere in this Form 10-QSB. Except for historical information
contained herein, the discussion in this Form 10-QSB contains certain
forward looking statements that involve the risks and uncertainties,
such as statements of the Company's plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-QSB should
be read as being applicable to all related forward-looking statements
wherever they appear in this Form 10-QSB. This statements include,
without limitation, statements concerning potential operations and
results of the Company and information relating to Year 2000 matters,
described below. The Company's actual results could differ materially
from those discussed herein. Factors that could cause or contribute to
such differences, include, without limitation, to those factors
discussed herein and in the Company's Form 10-SB for the year ending
12/31/99.
RECENT DEVELOPMENTS
1. On January 10, 2000, the Company signed a contract for the
exclusive license for the ThermaFreeze Patent Pending perishable
food delivery/shipping system with DeliverSafe.Com, Inc. of Los
Angeles, CA. An initial License Fee of $250,000 has been paid
with the balance of $7,750,000 to be paid from a 50/50 division
of investment receipts from a current DeliverSafe.Com Private
Placement and anticipated near term IPO. The license agreement
also requires ThermaFreeze, Inc. to transfer all food customers
and prospective food customers to DeliverSafe.Com.
2. ThermaFreeze, Inc has been approved by the U.S. Securities and
Exchange Commission (SEC) under the Securities and Exchange Act
of 1934, as amended, as a fully reporting company. Additionally,
it has been notified by the National Association of Securities
Dealers (NASD) that the "E" appended on the THFZ ticker symbol
has been removed.
3. The Company during the quarter ending March 31, 2000 adopted a
Stock Option Plan for key employees, consultants and others.
<PAGE 8>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
There were 450,000 of Common Stock issued to Mr. Robert McGuire for
services as a Consultant to the Company.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
On January 10, 2000, the Company signed an agreement to sell a license
for the ThermaFreeze patent pending perishable food delivery/shipping
system to DeliverSafe.Com, Inc., a company organized under the laws of
the State of Delaware whose principal place of business is presently
located at 4430 Haskell Avenue, Encino, CA 91436. Please refer to
Exhibit 1 in Item 6.
<PAGE 9>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC.
AGREEMENT
AGREEMENT made this 10th day of January, 2000, by and between
THERMAFREEZE, INC., a company organized under the laws of the State of
Delaware whose principal place of business is presently located at 776-
C Lakeside Drive, Mobile, AL 36693, hereinafter referred to as
("Licensor") and DELIVERSAFE.COM INC., a company organized under the
laws of the State of Delaware whose principal place of business is
presently located at 4430 Haskell Avenue, Encino, CA 91436, hereinafter
referred to as ("Licensee").
WITNESSETH:
WHEREAS, the Licensor is the manufacturer of a product known as
ThermaFreeze ("ThermaFreeze") and is also the registered proprietor in
the USA of registered trade marks and any unregistered trade marks
("Trade Marks") all of which are more fully described in Schedule A,
attached hereto and made a part hereof;
WHEREAS, the Licensor as the registered holder has the absolute right
to license and otherwise utilize the presently existing Patents and
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
recently filed Patent Applications, all of which are more fully
described in Schedule B, attached hereto and made a part hereof;
WHEREAS, ThermaFreeze is an integral component in a method developed by
the Licensor for the packaging, shipping and delivery of perishable
food products, hereinafter referred to as the ("System"), which System
is more fully described in Schedule C, attached hereto and made a part
hereof;
WHEREAS, Licensor owns the exclusive rights to license the System
throughout the world with the sole exception of the North American
continent, defined as Canada, the 50 states of the United States,
Mexico and Central America, hereinafter referred to as the
("Territory");
WHEREAS, the Licensee desires to obtain an exclusive license to exploit
the System throughout the Territory and to use the Trade Marks, Patents
and Patent Applications in connection therewith during the term of this
Agreement;
WHEREAS, the Licensor has agreed to license the System to the Licensee
and permit Licensee to utilize the Trade Marks, Patents and Patent
Applications in connection with such license.
<PAGE 10>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
NOW, THEREFORE in consideration for the mutual promises, covenants and
considerations set forth herein, the parties hereby agree as follows;
1. PERMISSION TO USE
In consideration for the payment by the Licensee of the license fee as
set forth in Paragraph 2 and Schedule D herein and the royalties due as
set forth in Schedule E herein and subject to compliance by the
Licensee with the various terms and conditions of this Agreement, the
Licensor hereby grants to the Licensee, the sole and exclusive right to
exploit the System in the Territory during the term of this Agreement.
2. LICENSE FEE
In consideration for the grant by the Licensor to the Licensee of the
exclusive license to exploit the System throughout the Territory, the
Licensee hereby agrees to pay the sum of $100,000 upon the execution of
this Agreement, as an initial payment to secure the License and to pay
the balance of $7,900,000 per Schedule D attached hereto and made a
part hereof.
2.1. The License shall, through the term remaining of any
unpaid Licensee Fee, maintain detailed and separate written accounts
and records containing all such data and information with respect to
any and all cash receipts by the Licensee including but not limited to
capital contributions of either equity or debt or a combination thereof
as may reasonably be required to properly verify the statements of
account and license fee payments provided herein.
2.2. Any duly authorized professional agent or employee of the
Licensor shall, upon reasonable notice, have the right during normal
business hours, at the Offices of the Licensee, to examine Licensee's
records for the sole purpose of verifying the accuracy of the license
fee payments. Licensor shall be entitled, at its own expense, to make
copies of any relevant records for such purpose or generally to verify
compliance with other provisions of this Agreement.
2.3. The Licensee agrees to cooperate with the Licensor and/or
its representatives in providing all such further information as may be
necessary or proper to enable the amount of license fee or payments
under this Agreement to be ascertained.
2.4. The Licensee shall pay all of the Licensor's costs of any
examination where such examination reveals an underpayment of license
fees by the Licensee of 10% of the total amount of license fee actually
due for the period in question.
<PAGE 11>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
3. ROYALTIES
In consideration for the rights granted to the Licensee herein, the
Licensee shall pay to the Licensor throughout the term of this
Agreement, a royalty at the rate more fully described on Schedule E
attached hereto and made a part hereof.
3.1. Within 30 days of the last day of September, December,
March and June throughout the term of this Agreement, the Licensee
shall deliver to the Licensor, a detailed statement of account,
certified as correct by a director of the Licensee, which statement
shall set out the details of all goods sold or otherwise disposed of
during the preceding quarterly period, the sales value thereof and the
royalty accrued during such period and verified by commercial invoices,
corresponding packing slips and bills of lading.
3.2. Payment in full of the royalty shall be paid to Licensor as
specified in Schedule E.
3.3. All sums payable by the Licensee to the Licensor hereunder,
shall be paid in full in US currency or irrevocable letter of credit,
without set off or counterclaim. In the event that the Licensee is
compelled by law to make any deduction or withholding from any payment
to the Licensor then the Licensee shall promptly send to the Licensor
an official receipt evidencing such deductions together with such other
documentation as the Licensor may require in making submissions to any
revenue authorities. The parties shall cooperate in all reasonable
respects necessary to take advantage of any double taxation agreements
as may be available.
3.4. For the purposes of calculating the royalty, the sales value
of the goods and materials shall be the FOB price at the distribution
location(s) of the Licensee.
3.5. The Licensee shall, through the term of this Agreement and
for a period of 5 years thereafter, maintain detailed and separate
written accounts and records containing all such data and information
with respect to its sale of goods and materials as may reasonably be
required to properly verify the statements of account and royalty
payments provided for herein.
3.6. Any duly authorized professional agent or employee of the
Licensor shall, upon reasonable notice, have the right during normal
business hours, at the Offices of the Licensee, to examine Licensee's
records for the sole purpose of verifying the accuracy of the royalty
payments. Licensor shall be entitled, at its own expense, to make
copies of any relevant records for such purpose or generally to verify
compliance with other provisions of this Agreement.
<PAGE 12>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
3.7. The Licensee agrees to cooperate with the Licensor and/or
its representatives in providing all such further information as may be
necessary or proper to enable the amount of royalties or payments under
this Agreement to be ascertained.
3.8. The Licensee shall pay all of the Licensor's costs of any
examination where such examination reveals an underpayment of royalties
by the Licensee of 10% of the total amount of royalties actually due
for the period in question.
3.9. For the purposes of calculating royalty payments due
hereunder, all goods and materials shall be deemed to have been
purchased upon the issuance of a bill of lading or other similar
evidence of shipment, FOB the Licensee's facility(ies) in various
location(s) outside of North America.
4. MINIMUM ROYALTIES
The Licensee shall be responsible to pay the Licensor a minimum Royalty
as more fully described in Schedule F, attached hereto and made a part
hereof. The Licensee shall be obligated to make a minimum royalty
payment only in the event that the royalty payment due as described in
Schedule E, is less than the minimum royalty payment due. Such minimum
payment, if made, shall be the difference between the minimum royalty
due and the actual amount of royalty paid in accordance with Schedule
E.
4.1. The obligation of the Licensee to pay the minimum royalty
described in Schedule F, shall commence on the first of the month
following the delivery to the Licensee of a fully operational
Hydrafreezer.
4.2 . In the event that the Licensee fails or is otherwise
unable or unwilling to pay the minimum royalty to Licensor when due,
the Licensor may, at its sole option, elect to convert this license to
a non-exclusive license and thereby have the right to appoint one or
more non-exclusive licensees to exploit the System throughout the
Territory.
5. TERM
Subject to the mutual compliance with the various terms and
conditions set forth herein, this Agreement shall commence on the date
hereof for a term of 20 years or the expiration, subject to renewal, of
the most recently issued patent as described on Schedule B, whichever
is earlier.
<PAGE 13>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
6. STANDARDS OF QUALITY AND PRODUCTION
The exclusive license from the Licensor to the Licensee and the
accompanying right to use the Trade Marks, Patents and Patent
Applications in connection with the marketing of the System, is granted
subject to (i) the Licensee's purchase of all of the goods which shall
be solely manufactured and or acquired by the Licensor for sale to the
Licensee to insure compliance with all specifications and directions
regarding the use of the System such that the standard of quality of
the goods and materials sold in the Territory shall be maintained, or
(ii) that all goods and materials manufactured or supplied by
manufacturers other than the Licensor are previously approved in
writing by the Licensor to be in compliance with said specifications
and directions for optimal performance of the System.
6.1. Any defect in the goods and materials shall be handled in
accordance with the policies of the Licensor as provided to Licensee.
6.2. Beginning 3 months from the date hereof, Licensor hereby
agrees to fill all of the Licensee's orders for goods and materials
prior to servicing its other customers, up to a maximum of 1,000 rolls
per month.
7. RIGHTS RESERVED TO THE LICENSOR
Nothing in this Agreement shall restrict the right of the Licensor from
exploiting the Trade Marks, Patents and Patent Applications employed in
the System for non-food packaging, shipping and deliveries.
8. TITLES AND GOODWILL OF TRADE MARKS, PATENTS AND PATENT APPLICATIONS
The Licensee recognizes that the Licensor is the owner and or has the
right to use the Trade Marks, Patents and Patent Applications and
agrees that the Trade Marks, Patents and Patent Applications shall
remain vested in the Licensor or its successors in title both during
the term of this Agreement and thereafter.
8.1. Any goodwill derived by the Licensee by reason of the use
of the System and each of the Trade Marks, Patents and Patent
Applications shall accrue to the Licensor whether arising at common law
or otherwise and the Licensor or its successors in title may request an
assignment thereof at no expense to the Licensee.
The Licensee shall not apply any of the Trade Marks, Patents or Patent
Applications to any goods, materials or systems that infringe or are
likely to infringe upon the intellectual property rights of any third
party in the Territory.
<PAGE 14>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
9. PROTECTION OF TRADE MARKS, PATENTS AND PATENT APPLICATIONS
The Licensee hereby undertakes to the Licensor as follows:
9.1. At all times during the term of this Agreement and after
the termination thereof, to acknowledge the ownership of the Licensor
in the Trade Marks, Patents and Patent Applications and not claim the
ownership thereof.
9.2. Not without the express prior written consent of the
Licensor to assign, charge, lease, sub-license or in any way make over
such rights and/or benefits or any of them as are conferred upon or
accepted by the Licensee in this Agreement except as may be provided in
Paragraph 15 herein.
9.3. To observe all laws of the Territory as to the marketing,
packaging, shipping, delivery, advertising, promotion, distribution,
sale or use of the System.
9.4. To indemnify and hold harmless the Licensor against all
claims and damages of whatever nature as may be brought or made against
the Licensee or the Licensor (whether separately or as joint
defendants) in respect of any failure on the part of the Licensee to
observe any of the laws of the Territory relating to the marketing,
packaging, shipping, delivery, advertising, promotion, distribution,
sale or use of the System.
9.5. Further to indemnify and hold harmless the Licensor against
all claims in respect of any injury to any person or damage to property
as may arise from the packaging, shipping and delivery of the System.
9.6. To observe and accept the following restrictions and
obligations:
(a) Not to be concerned in the filing of any patents or in the
registration of any trade marks in any way resembling or colorably
similar to the Trade Marks, Patents and Patent Applications in
connection with the use of the System.
(b) To use the Trade Marks, Patents and Patent Applications
exclusively in connection with the use of the System and to apply the
Trade Marks, Patents and Patent Applications in the manner approved by
the Licensor to all such goods and materials without exception.
(c) Not without the prior written consent of the Licensor, to
apply to the System or any components thereof, any marks other than the
Trade Marks, Patents and Patent Applications as described herein and
neither to alter nor deface the Trade Marks, Patents and Patent
Applications in any manner whatsoever.
<PAGE 15>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
(d) Not to use in connection with the sale of the System any
Trade Marks, Patents or Patent Applications which in any way resembles
the actual Trade Marks, Patents and Patent Applications applied to the
System or its packaging or presentation for sale.
(e) If reasonably requested by the Licensor at Licensor's
expense, from time to time, to include in its advertisements, both
print and media, and on the goods and materials or the labels or
containers used in connection with the sale of the System, a notice to
the effect that the Trade Marks, Patents and Patent Applications and
each of them are the Trade Marks, Patents and Patent Applications of,
or otherwise controlled by, the Licensor or its successors in title.
9.7. To Warrant that:
(a) To the best of the knowledge, information and belief of the
Licensee, the use of the Trade Marks, Patents and Patent Applications
in connection with the System to be marketed by the Licensee in the
Territory will not infringe the rights of any third party and the
Licensee has the power to enter into this Agreement without infringing
upon any existing laws or agreements.
(b) All information furnished by the Licensee to the Licensor in
connection with this Agreement was and remains true, accurate and
complete in all material respects and there is no other fact or
circumstance known to the Licensee relating to this Agreement or its
affairs which has not been disclosed to the Licensor, the omission of
which would make any of such information misleading.
10.INFRINGEMENT OF TRADE MARKS, PATENTS AND PATENT APPLICATIONS
10.1. The Licensee shall immediately give written notice to the
Licensor of any infringement or threatened infringement of any Trade
Mark, Patent or Patent Application, which comes to the Licensor's
attention. The Licensee shall (at the Licensor's cost and expense)
give such assistance as may be requested by the Licensor to assist the
Licensor in the prevention of any such infringement but the Licensee
shall not institute any legal proceedings or issue any warnings or in
any way attempt to prevent the alleged infringement without the
Licensor's prior written consent.
10.2. The Licensee shall further inform the Licensor of any
allegation of infringement of Trade Marks, Patents and Patent
Applications or any alleged act of passing off in the sale of the
System that may be made by any third party within the Territory but the
Licensee shall not take any further action in respect of such
allegation.
<PAGE 16>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
10.3. Nothing in this Agreement shall have the effect of
requiring the Licensor to institute any legal proceedings in respect to
the Trade Marks, Patents and Patent Applications.
11. INTELLECTUAL PROPERTY RIGHTS
Notwithstanding any other provision of this Agreement, the Licensee
hereby acknowledges in the Licensor, exclusive, irrevocable, worldwide,
transferable and royalty free right and license (including the right to
grant sub-licenses) of all rights (including intellectual property
rights) that the Licensor may have in the design and/or shape of the
System.
11.1. Any new designs, improvements, whether or not the subject
of patents or patent applications, developed by the Licensor during the
term of this Agreement, shall be subject to the license granted to the
Licensee under this Agreement.
12. PROMOTION OF THE SYSTEM
The Licensee shall at all times use Its best efforts to promote and
extend the sales and use of the System in the Territory and in
particular,
12.1. Shall spend in each year in the Territory, a reasonable
amount on advertising and promoting the System;
12.2. Shall provide the Licensor with copies of its up-to-date
price lists and customer lists from time to time for the System;
12.3. Licensee shall be responsible for the production and
associated expenses for a catalog describing the use and benefits of
the System;
12.4. Licensee has total responsibility for any expenses involved
in any trade shows, sales meetings and other similar events involved in
the promotion and sale of the System.
13. REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
The Licensor, hereby represents and warrants to the Licensee that:
13.1. It will not seek to execute any other license agreements
with other potential licensees that may be competitive to the Licensee
provided only that the Licensee remain in full compliance with the
terms and conditions of this Agreement.
13.2. It will defend the existing Trade Marks, Patents and Patent
Applications, as well as other filings that may be made during the term
of this Agreement, against any and all claims by third parties and will
reimburse and indemnify the Licensee against any and all expenses it
may suffer by virtue of such claims.
<PAGE 17>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
13.3. It will give priority, beginning 3 months from the date of
this Agreement, to the needs of the Licensee up to a maximum of 1,000
rolls per month.
13.4. It will not contact or interact in any way with Licensee's
customers unless requested to do so.
13.5. It will sell the System to the Licensee at the lowest
published price at the time of the sale.
13.6. It will provide extensive research, development and
training assistance to the Licensee, its employees and customers,
including but not limited to assisting in client presentations,
providing technical information, test data and the like, performing
testing and demonstrations of the Systems' use for specific situations
and conditions, answering questions of Licensee's customers with a
special hot line to be established, and, if warranted, the creation of
regional testing centers to aid the Licensee in the marketing and
promotion of the System and generally to make available to the Licensee
and its customers the accumulated know how, experience and technical
expertise of the Licensor.
13.7. It will stand behind the quality, safety and fitness for
use of the System and all components thereof.
13.8. It will secure the appropriate insurance coverage in
sufficient amounts to protect the Licensee and its customers from any
foreseeable damages and or injuries resulting from the use of the
System.
13.9. It has the full corporate power and authority to enter into
this Agreement and it has the full right, title and interest in and to
the System and all components thereof that form the basis of the
exclusive license.
14. REPRESENTATIONS AND WARRANTIES OF THE LICENSEE
The Licensee, hereby represents and warrants to the Licensor that:
14.1. It will allow full access to Licensor and its duly
authorized agents and representatives for the purpose of examining the
relevant books of account to verify the accuracy of the royalty
payments due hereunder.
14.2. It will make all royalty payments due to the Licensor on a
timely basis and will generally remain in compliance with all of the
terms and conditions of this Agreement.
14.3. It will immediately disclose any potential or actual
improvements to the System or any component thereof to the Licensor.
<PAGE 18>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
14.4. It will provide to the Licensor prior to its public
dissemination, any and all marketing, advertising, promotional or
technical materials for Licensor's approval.
14.5. It will use its best efforts and abilities to promote the
sales and marketing of the System throughout the Territory.
14.6. It will neither assign, sublease nor otherwise transfer the
rights and obligations of this Agreement to any third party without the
prior written consent of the Licensor.
14.7. It will keep confidential all of the technical information,
know how, trade secrets and the like and only disclose such information
in connection with the sale of the Systems in the Territory and within
the spirit of this Agreement.
14.8. It will comply with proper business practices in all of
its sales practices, including advertising, marketing, promotional,
billing and service in connection with the exploitation of the
exclusive license.
14.9. It will seek to hire, as soon as practicable, qualified
managerial, sales, marketing, technical and financial personnel to
properly and efficiently conduct its business.
14.10. It will require that all of its technical, sales and
marketing personnel receive the appropriate training offered by the
Licensor prior to the commencement of any sales and marketing efforts.
14.11. It has the full corporate power and authority to enter
into this Agreement with the Licensor and nothing contained herein will
violate any existing agreement to which the Licensee is a party.
14.12. It will secure the appropriate insurance coverage in
sufficient amounts to protect the Licensee, its customers and the
Licensor, from any and all claims, causes of action, damages and or
injuries resulting from the use of the System in the Territory.
15. PROTECTION OF LICENSE RIGHTS
It is the intention of the parties hereto, that the right of the
Licensee to exploit the System in the Territory, provided Licensee
remains in compliance with this Agreement, shall survive the inability
of the Licensor, for whatever reason, to comply with its obligations
hereunder. Therefore:
15.1. To ensure Licensee's free and unfettered right to exploit
the System, the Licensor will, at its expense, immediately upon the
execution of this Agreement, record the Agreement in the U.S. Patent
Trademark Office as notice to all third parties of Licensee's exclusive
rights hereunder.
<PAGE 19>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
15.2. Licensee shall have the right, at its expense, to file
with any state or local government agency or authority, where and if
appropriate, notice of its interest in and to the System as the
exclusive Licensee and its rights to utilize the existing and any
future Patents, Patent Applications, Trade Marks and Trade Names, know
how, trade secrets, technical expertise and the like, to continue its
business in the event that the Licensor is in default of this
Agreement.
15.3. In the event that the Licensor is either unable or
unwilling to fulfill its obligations hereunder to deliver the System or
any component thereof for sale by the Licensee in the Territory, the
Licensee shall have the right to utilize the present and any future
Patents, Patent Applications, Trade Marks and Trade Names and the know
how, trade secrets and technical expertise that form the basis of this
license, to pursue its business in the Territory, including, but not
limited to, the right to build or cause the construction of the
machinery necessary to create and market the System in accordance with
this Agreement.
16. TERMINATION
As previously set forth herein in Paragraph 5, this Agreement shall
have a term of 20 years from the date hereof or the expiration date of
the most recently filed patent application, whichever is sooner. This
Agreement, however, may be terminated by either party prior to its
expiration, upon the following terms and conditions:
16.1. Should the Licensee fail to pay any royalties due, within
the specific time for payment and any extension thereof, then the
Licensor, by written notice to Licensee, shall be entitled either to
cancel the License in its entirety or terminate the exclusive nature of
this License and Licensor would then have the absolute right to appoint
one or more non-exclusive Licensees within the Territory.
16.2. Should the Licensee be convicted of engaging in any
fraudulent or deceptive practices in the sales and marketing of the
System throughout the Territory or any crime that would materially and
negatively impact on its ability to sell and market the System, the
Licensor shall have the option of terminating the License or revoking
its exclusivity such that it will be able to appoint other non-
exclusive licensees in the Territory.
16.3. Should there be a change in the ownership or control of the
Licensee such that the Licensee would thereafter be owned or controlled
by a party selling products in the Territory that compete, directly or
indirectly, with the System.
<PAGE 20>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
16.4. If either party should be in breach of any provision of
this Agreement and shall fail to remedy the same within 30 days after
notice in writing of the default from the other party, or shall have a
winding-up order made against it or have a receiver or administrator
appointed or seek the protection of the Federal Bankruptcy statutes,
the other party shall have the right to terminate this Agreement
forthwith, upon written notice.
16.5. The failure by either party to terminate this Agreement on
account of any default or breach by the other shall not be taken to
constitute a consent to or waive of the same or any other default or
breach by the other.
17. EFFECT OF TERMINATION
On termination of this Agreement whether by breach or by expiration of
the term, the Licensee shall:
17.1. During the 6 month period following termination, make
delivery of all orders for the System unfulfilled at the date of
termination and then sell all such goods and materials in the Territory
at prices not materially lower than those charged immediately prior to
the date of termination and the Licensee shall continue to account to
the Licensor for royalties and at the end of such period, the Licensor
shall be entitled to purchase from the Licensee, any and all unsold
goods.
17.2. As soon as practicable, cause all entries in published
material such as telephone, street or other directories to be removed
and shall cause all stationery, advertisements, signs on buildings or
vehicles and the like to be changed or expunged so as to eliminate any
reference to the Licen5or, its Trade Marks, Patents and Patent
Applications.
17.3. Not use the Trade Marks, Patents, Patent Application or any
trading style or trade name or the like of the Licensor for goods,
which are similar to or so nearly resemble the Trade Marks, Patents and
Patent Applications, or any of them as would or might be likely to
cause confusion or deception with the Licensor's System.
17.4. Termination of this Agreement shall not act so as to
prejudice the rights of either party against the other as shall have
accrued at the date hereof.
18. CONFIDENTIALITY
Each of the parties hereby agrees and undertakes with the other to
observe strict confidentiality as to the affairs of the other as may
come to its knowledge in the course of this Agreement and to keep such
information safe and protected against theft, damage, loss or access by
unauthorized persons. The provisions of this Paragraph shall survive
the termination of this Agreement.
<PAGE 21>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
19. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada and it is irrevocably agreed that the
Courts of Nevada are to have jurisdiction to settle any disputes which
may arise out of or in connection with this Agreement.
20. COMMUNICATIONS
All notices and other communications required to be served hereunder
shall be in writing and sent by registered mail, next day delivery or
facsimile transmission, to the registered office or principal place of
business of the party intended to receive any such communication and
shall be deemed to have been so served on the fifth day after proof of
posting (where sent by registered mail) and on the next working day
(where sent by facsimile or next day delivery).
If to the Licensor:
Joseph Murray, President
THERMAFREEZE, Inc.
776-C Lakeside Drive
Mobile, AL 36693
If to the Licensee:
Robert McGuire, Chairman and CEO
DeliverSafe.Com Inc.
4430 Haskell Avenue
Encino, California 91436
21. SCOPE OF AGREEMENT
This embodies the entire understanding of the parties hereto and:
21.1. All or any promises, representations, warranties,
understandings or implications thereof arising from any statements
whether oral or in writing as may have been made by either party or its
representatives prior to the signing hereof shall have no force or
effect.
21.2. The invalidity or unenforceability for any reason of any
part of this Agreement shall not prejudice the continuance in force of
the remainder.
<PAGE 22>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
21.3. Nothing in this Agreement shall constitute or be deemed to
constitute any form of partnership or joint venture between the parties
or be deemed to constitute the Licensee as the agent of the Licensor
for any purpose whatsoever.
21.4. This Agreement constitutes the entire understanding between
the parties and may only be modified or amended by a signed written
instrument executed by both parties. Any Agreement or amendment
thereof shall be binding upon the successors and or assigns of the
parties.
21.5. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by the hands of their duly authorized representatives the day
and year first hereinabove written.
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
THERMAFREEZE, INCORPORATED
By: /s/ Joseph Murray /s/Thomas Pryor
------------------------------ -----------------------
JOSEPH MURRAY, PRESIDENT THOMAS PRYOR, WITNESS
DELIVERSAFE.COM INC.
By: /s/ Robert McGuire /s/Estrella L. Sison
-------------------------------- -----------------------
ROBERT MCGUIRE, CHAIRMAN AND CEO ESTRELLA SISON, WITNESS
<PAGE 23>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
SCHEDULE A
Trade Marks and Trade Names
The Licensor owns or controls the following Trade Marks and Trade
Names:
ThermaFreeze
ThermaBarrier
ThermaPack
ThermaSorb
ThermaPress
ThermaFreeze Comfort Cool
ThermaFreeze Chiller Packs
ThermaFreeze Cool Pads
ThermaFreeze Cooler Packs
DeliverSafe
DeliverSafe.Com
<PAGE 24>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
SCHEDULE B
PATENTS and PATENT APPLICATIONS
The Licensor owns or controls the following issued Patents and Patent
Applications:
(1) ThermaFreeze Production Machine - Design Patent - Semi-automated
high capacity production of Dry ThermaFreeze - Patent Number
5,628,845 - Issued on May 13,1997
(2) HydraFreezer Process Machine - Design Patent - Machine to process
ThermaFreeze Refrigerant at point of use. Automatically hydrates in
water and freezes for immediate use - Patent Number 5,966,962 -
Issued on October 19, 1999
(3) Improved ThermaFreeze Refrigerant - Design Patent - Improved
performance ThermaFreeze - Patent Pending as of May 15, 1998
(4) DeliverSafe.Com System - Design/Business Model Patent - Perishable
Foods Delivery System - Patent Pending as of August 3, 1999
SCHEDULE C
THE SYSTEM
The System which is the subject of the exclusive license within the
Territory granted by the Licensor to the Licensee herein, shall include
the packaging, shipping and delivery of any and all foods and food
products the packaging, shipping and delivery of which can be initiated
by any method, for any use and for any end user
<PAGE 25>
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
SCHEDULE D
LICENSE FEE
The Licensee agrees to a License Fee of Eight Million Dollars
($8,000,000) to be paid as follows: $100,000 upon the execution of
this agreement and $150,000 within the first six (6) months following
the execution of this agreement. The balance of $7,750,000 is to be
paid by the Licensee at the rate of forty percent (40%) of any cash
receipts by the Licensee including but not limited to capital
contributions of either equity or debt or a combination thereof. There
is no maximum time allowed for payment of the $7,750,000 License Fee
balance providing ten percent (10%) of any and all cash receipts are
paid by the Licensee to the Licensor within fifteen (15) days of
receipt by the Licensee.
All payments or other notifications are to be in conformance with
Section 20 of this Agreement.
SCHEDULE E
ROYALTY PARTIES
The Licensee shall be obligated to pay royalties to the Licensor in
connection with the exploitation of the System in the Territory as
follows:
Licensee shall pay royalties to the Licensor at the rate of 2.5% of
gross sales of the System on the first $5,000,000 and thereafter, at
the rate of 5% of all gross sales in excess thereof.
Such royalty payments shall be calculated quarterly and paid 30 days
following the end of each quarter.
SCHEDULE F
MINIMUM ROYALTY
The Licensee shall be obligated to pay a minimum royalty to the
Licensor only after delivery and installation of a Hydrafreezer. Such
minimum royalty payment shall be at the rate of $10,000 per month for
the first 12 months with an increase of 10% annually thereafter.
EXHIBIT 1. LICENSE AGREEMENT WITH DELIVERSAFE.COM INC. (C0NT.)
Such minimum royalty shall be calculated on a quarterly basis and
payable 30 days following the end of each calendar quarter.
<page 26>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K (CONT.)
(B) REPORTS ON FORM 8-K
None.
PART III. SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON BEHALF OF
THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
THERMAFREEZE, INC.
- -----------------
Date: May 17, 2000
By:/s/ Joseph Murray
----------------------
JOSEPH MURRAY, President
By: /s/ Thomas Pryor
-----------------------
THOMAS PRYOR, CPA
<Page 27>
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