<PAGE>
JANEX INTERNATIONAL, INC.
615 Hope Road
Building One
Eatontown, New Jersey 07724
--------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
--------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
--------------
This Information Statement, which is being mailed on or about October
30,1998 to the holders of shares of the common stock, no par value (the "Common
Stock") of Janex International, Inc., a Colorado corporation (the "Company"), is
being furnished in connection with the designation by Futech Interactive
Products, Inc., an Arizona corporation (the "Purchaser"), of persons (the
"Purchaser Designees") to the Board of Directors of the Company (the "Board").
Such designation is to be made pursuant to a Stock Purchase and Sale Agreement
dated as of September 30, 1998 (the "Purchase Agreement") by and between Les
Friedland, Dan Lesnick, Howard W. Moore and Helene Z. Moore, Trustees of the
Howard W. Moore and Helene Z. Moore Revocable Trust, dated November 1, 1996,
Howard Moore Associates, Inc. Defined Benefit Plan & Trust, Howard Moore
Associates, Inc., a Nevada corporation, and Howard W. Moore (collectively,
"Sellers"), Futech Interactive Products, Inc., an Arizona corporation
("Purchaser"), and Vincent W. Goett.
Pursuant to the Purchase Agreement, Purchaser will purchase from
Sellers 5,219,046 shares of the Common Stock of the Company in consideration for
3,750,000 shares of Purchaser's Series A Preferred Stock and $750,000 in
promissory notes of Purchaser (the "Transaction"). The closing of the
Transaction will occur as soon as practicable after the fulfillment of the
conditions to closing set forth in the Purchase Agreement.
No action is required by the shareholders of the Company in connection
with the election or appointment of the Purchaser Designees to the Board.
However, Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the mailing to the Company's shareholders of the
information set forth in this Information Statement prior
<PAGE>
to a change in a majority of the Company's directors otherwise than at a meeting
of the Company's shareholders.
The principal executive office of the Purchaser is located at 2999
North 44th Street, Suite 225, Phoenix, Arizona 85018.
GENERAL
The shares of Common Stock are the only class of voting securities of
the Company outstanding. Each share of Common Stock is entitled to one vote. As
of September 30, 1998, there were 9,962,105 shares of Common Stock outstanding.
The Board of Directors of the Company currently consists of three members. Each
director holds office until his successor is elected and qualified or until his
earlier death, resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES
The Purchase Agreement provides that, after the closing of the
transactions contemplated thereby, the Company will cooperate with Purchaser in
the appointment of a new board of directors of the Company selected and/or
approved by Purchaser. Purchaser intends to appoint three directors to the board
of the Company. Such Purchaser Designees shall replace the three current
directors of the Company who shall resign.
Purchaser has informed the Company that each of the Purchaser Designees
listed below has consented to act as a director.
It is expected that the Purchaser Designees may assume office at any
time following the consummation of the transaction contemplated by the Purchase
Agreement, and that, upon assuming office, the Purchaser Designees will
thereafter constitute at least a majority of the Board.
Biographical information concerning each of the Purchaser Designees,
directors and executive officers is presented on the following pages.
PURCHASER DESIGNEES
The names, ages and positions of the Purchaser Designees are listed
below.
Name Age Position(s) with Purchaser
- --------------------------------------------------------------------------------
<PAGE>
Vincent W. Goett 35 Chairman and Chief Executive Officer,
Director.
Frederick B. Gretsch, Sr. 53 Chief Financial Officer, Corporate Secretary,
Treasurer, Director.
Charles M. Foley 41 Director.
- --------------------------------------------------------------------------------
VINCENT W. GOETT. Mr. Goett has served as Chairman and Chief Executive
of the Company since March 1995. Mr. Goett joined Futech as its Chief Operating
Officer on January 5, 1994. From August 1991 to January 1994, Mr. Goett owned
and operated Paradise International, an investment business engaged in
acquisition and joint venture activities. From September 1985 to August 1991,
Mr. Goett was President of Westplex, Inc. which effected major investments in
commercial real estate. Mr. Goett attended Arizona State University, where he
studied Business Management.
FREDERICK B. GRETSCH, SR. Mr. Gretsch joined the Company in September
1997. He has served in various financial and marketing positions throughout his
career. Prior to joining the Company, from November 1995 to May 1996, Mr.
Gretsch was Treasurer of Cable Systems International, a copper wire and cable
manufacturing company, and from May 1996 to December 1996, he was Treasurer of
Vail Resorts, Inc., a ski resort company. From February 1992 to February 1995,
Mr. Gretsch was Director of Treasury Operations at General Dynamics, a defense
contractor. From June 1975 to December 1991, he was Vice President at Citicorp,
a major bank holding company. From October 1968 to June 1975, Mr. Gretsch was
manager of Sales Accounting and Administrator of Finance at RCA, a diversified
corporation. Mr. Gretsch received his Masters degree in Business Administration
in 1968 from Columbia University and his B.A. in Economics in 1967 from
Georgetown University.
CHARLES M. FOLEY. Mr. Foley currently serves as the President of Home,
Office & Personal Organizers, Inc., a consulting business that specializes in
accounting, financial, administrative and Y2K issues. He started this company in
1996 after having served as Futech's Chief Operating and Financial Officer from
January 1995 through February 1997 and on Futech's Board of Directors from 1997
through January of 1998. Prior to his tenure at Futech, Mr. Foley was Corporate
Controller for Paradise International Distribution Corporation, an international
and specialty markets distributor for Futech's Talking Pages from January 1995.
From 1993 to 1994, he was Corporate Controller for Hypercom, Inc., an
international manufacturer of networks and EFT terminals and systems. From 1990
to 1993, Mr. Foley served as the Financial Revenue Manager for Syntellect Inc.,
a global manufacturer of interactive voice response systems. From 1987 to 1990,
he was an Audit Supervisor for Greyhound Corporation, and from 1983 to 1987, he
was an Internal Auditor with Monsanto Company in St. Louis, Missouri. Mr. Foley
received his Masters in International Management
3
<PAGE>
from the American Graduate School of International Management in 1982 and his
B.S. in Management Science from Moorhead State University in 1979. Mr. Foley
served in the Peace Corps in Honduras, Central America, from 1980 to 1982.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The names of the current directors and executive officers of the
Company, their ages as of September 30, 1998, and certain other information
about them are set forth below. As indicated above, some of the current
directors may resign effective immediately following the purchase of Shares by
the Purchaser pursuant to the Purchase Agreement.
Name Age Position
- --------------------------------------------------------------------------------
Leslie Friedland 45 Chairman of the Board, President, Chief
Executive Officer, and Director
Daniel Lesnick 46 Executive Vice President, Chief Operating
Officer, and Director
Lance S. James 38 Vice President - Sales
Michael D. Handelman 39 Vice President and Chief Financial Officer
Alex Hughes, Jr. 72 Director
- --------------------------------------------------------------------------------
LESLIE FRIEDLAND. Mr. Friedland has been President, Chief Executive
Officer and a Director of the Company since August 4, 1997. Mr Friedland is the
owner of LFA Associates, a manufacture representative firm, which represents 18
different lines in the mid-Atlantic region. He has been president of LFA since
1992.
DANIEL LESNICK. Mr. Lesnick has been Executive Vice President and Chief
Operating Officer, since August 4, 1997. Mr. Lesnick has been a Director of the
Company since August 29, 1997. Prior to that time, Mr. Lesnick had been
Executive Vice President of Janex Corporation, a wholly owned subsidiary of
Janex International, Inc., from October 6, 1993 to January 31, 1997, at which
time he left the Company. From August 1988 to October 5, 1993, Mr. Lesnick was
Vice President and co-owner of MJL Marketing Inc. (now Janex). He was Director
of Sales and Marketing for Sunk Yong Company, a Korean corporation operating in
4
<PAGE>
a number of different industries, from February 1986 to July 1988. Previously
Mr. Lesnick held positions as Merchandising Manager with Spencer Gifts and as a
Senior Buyer with Lionel Leisure, both specialty retailers. Mr. Lesnick holds an
associate degree in marketing.
LANCE S. JAMES. Mr. James has been Vice President - Sales of Janex
since September 22, 1997. From August 1996 to September 1997, Mr. James was
national Sales Manager of SRM Company, which is a New Jersey toy manufacturer.
From July 1993 to August 1995, he was Vice President of Sales of Kids of
America.
MICHAEL D. HANDELMAN. Mr. Handelman has been Vice President, Chief
Financial Officer of Janex since August 1996. From October 1993 to December
1995, Mr. Handelman was Vice President, Chief Officer of LAK Acquisition
Corp.which owned the Los Angeles Kings hockey franchise. From April 1988 to
October 1993 he was a senior manager for the public accounting firm of Amsterdam
& Dressler, CPA's. Prior to that, Mr. Handelman spent 9 years with various
public accounting firms.
ALEX HUGHES, JR. Mr. Hughes has been a director of Janex since August
4, 1997. Mr. Hughes has been a consultant to Janex and MJL Marketing Inc. (now
known as Janex Corporation) since he sold the Company to Mr. Lesnick and Mr.
Friedland in August 1988.
DIRECTORS MEETINGS AND COMMITTEES
The Company does not have standing audit, nominating or compensation
committees of the Board of Directors, or committees performing similar
functions. During the year ended December 31,1998, the Board of Directors of the
Company held five (5) meetings. Each director attended at least 100% of the
meetings of the Board.
Directors who are full-time employees of the Company receive no
additional compensation for services as Directors. Directors not so employed
received no annual retainers and no fees of for each Board meeting attended.
5
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth information, as of
September 30, 1998, with respect to the beneficial ownership of the Company's
Common Stock by each person known by the Company to be the beneficial owner of
more than five percent of the outstanding Common Stock, by each of the Company's
directors, and by the officers and directors of the Company as a group:
Beneficial Owners (1) Shares Owned Beneficially Percent of Class (6)
- --------------------- ------------------------- --------------------
Security ownership of
certain beneficial owners:
Howard W. Moore 4,919,046 (3) 41.5%
2056 Bobtail Circle
Henderson, NV 89012
Security ownership of
management:
Leslie Friedland 909,994 (2) 7.7%
37 Mohawk Avenue
Oceanport, NJ 07757
Daniel Lesnick 659,994 (4) 5.6%
564 Grant Street
Newtown, PA 18940
All officers and directors as a 1,569,988 (5) 13.2%
group (two persons)
- -----------
(1) Unless otherwise indicated in the footnotes, and subject to community
property laws where applicable, each of the security holders has sole
voting and investment power with respect to the shares beneficially
owned.
(2) Includes 282,994 shares issuable upon exercise of warrants granted to
Mr. Friedland under the Friedland Warrant Agreement, which warrants are
presently exercisable. See "Certain Relationships and Related
Transactions." Such warrants will be cancelled pursuant to the Purchase
Agreement.
(3) Includes shares owned by H&M Moore Investment Group, Inc., Howard Moore
Associates, Inc., and Howard Moore as Trustee of the Howard Moore
Associates, Inc. Retirement Trust. Includes 135,000 warrants currently
exercisable at $3.25 per share. Includes 720,000 shares issuable upon
exercise of warrants granted to the Moore Trust in connection with the
Moore Revolving Loan, which are presently
6
<PAGE>
exercisable. See "Certain Relationships and Related Transactions." Such
warrants will be cancelled pursuant to the Purchase Agreement.
(4) Includes 131,994 shares issuable upon exercise of warrants granted to
Mr. Lesnick under the Lesnick Warrant Agreement, which warrants are
presently exercisable. See "Certain Relationships and Related
Transactions." Such warrants will be cancelled pursuant to the Purchase
Agreement.
(5) Includes 414,988 shares issuable pursuant to warrants which are
presently exercisable. Such warrants will be cancelled pursuant to the
Purchase Agreement.
(6) Based upon 9,962,105 shares of Common Stock issued and outstanding on
September 30, 1998 and 1,901,250 shares of Common Stock issuable
pursuant to warrants which are presently exercisable.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to compensation
paid to or accrued on behalf of the Named Executive Officers in the fiscal years
ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
Directors who are not employees of the Company receive $500 for each
directors meeting attended, and may be granted options to purchase stock in the
Company at the discretion of the Board. No fees for serving as directors of the
Company are payable to employees of the Company. Directors are reimbursed for
reasonable out-of-pocket expenses incurred in performing their functions as
directors of the Company.
COMPENSATION OF OFFICERS AND KEY EMPLOYEES
The following table sets forth the compensation paid or to be paid by
the Company with respect to the fiscal year ended December 31, 1997, to the
executive officers whose total annual salary and bonus exceeded $100,000(1):
- --------------------------------------------------------------------------------
ANNUAL COMPENSATION (1) LONG TERM
COMPENSATION
--------------------------------
OTHER AWARDS
NAME & PRINCIPAL ANNUAL OPTIONS
POSITION YEAR SALARY BONUS COM- (SHARES)
PENSATION(2)
========================== ====== ========== ======= ============== ============
Sheldon F. Morick 1997 $131,575 $ - $ 7,709 $ -
Chairman of the Board, 1996 228,250 - 7,709 -
Chief Executive Officer, 1995 241,250 - 13,017 100,000(3)
7
<PAGE>
President and Director(4)
- -------------------------- ------ ---------- ------- -------------- ------------
Michael D. Handelman 1997 $112,199 $ - $ 7,149 $ -
Chief Financial Officer 1996 57,500 - 3,025 25,000
and Vice President
========================== ====== ========== ======= ============== ============
(1) Compensation under Company employee benefit plans, to which all
employees of the Company are eligible, is not included in the table.
(2) Includes car allowances, Company paid vehicles and Company paid
health/life/disability insurance
(3) These options were not issued under the Company's 1991 Non-Statutory
Stock Option Plan ("Plan") as that Plan was terminated on June 8, 1994.
These options have expired.
(4) Resigned as Officer and Director on August 4, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
December 31, 1997, to persons named in the Summary Compensation Table:
<TABLE>
<CAPTION>
===============================================================================================
Option Grants in Last Fiscal Year
Individual Grants in Fiscal 1997
===============================================================================================
Name Number of Securities % of Total Options Exercise or Base Expiration
Underlying Options Granted to Price ($/sh) Date
Granted Employees in
Fiscal Year
- --------------------- ---------------------- -------------------- ------------------ ----------
<S> <C> <C> <C> <C>
Sheldon F. Morick -0- -0- -
CEO
- --------------------- ---------------------- -------------------- ------------------ ----------
Michael D. Handelman -0- -0- -
CFO
===============================================================================================
</TABLE>
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides certain information concerning each
exercise of stock options during the fiscal year ended December 31, 1997, and
the value of unexercised options at December 31, 1997, to persons named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
=========================================================================================================
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
=========================================================================================================
Name Shares Acquired Value Realized Number of Securities Value of Unexercisable
on Exercise Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End
Exercisable/
Unexercisable
Exercisable/Total
- --------------------- ----------------- ---------------- ------------------------ -----------------------
<S> <C> <C> <C> <C>
Sheldon F. Morick - - 0/0 $-/-
CEO
- --------------------- ----------------- ---------------- ------------------------ -----------------------
Michael D. Handelman - - 12,500/25,000 $-/-
CFO
=========================================================================================================
</TABLE>
EMPLOYMENT ARRANGEMENTS
The Board of Directors and Leslie Friedland have agreed that Mr.
Friedland will not be compensated for his services for the period August 4, 1997
to December 31, 1998.
The Board of Directors has provided for compensation for Daniel
Lesnick, Executive Vice President of Janex, commencing January 1, 1998, at a
salary of $8,667 per month plus $552 per month of taxable benefits (a total of
$110,624 on an annualized basis), beginning January 1, 1998. For the period from
August 4, 1997 through December 31, 1997, the Board of Directors and Mr. Lesnick
agreed that Mr. Lesnick would not be compensated for his services.
The Board of Directors has provided for compensation for Lance James,
Vice President - Sales of Janex, at a salary of $6,250 per month plus $952 per
month of taxable benefits (a total of $86,424 on an annualized basis). Mr.
James' employment commenced on September 22, 1997.
9
<PAGE>
The Board of Directors has provided for compensation for Michael D.
Handelman, Chief Financial Officer, at a salary of $8,625 per month.
In August 1995, the Company established a 401K Profit Sharing Plan
("401K") for the benefit of the employees of the Company. Under the provisions
of the 401K, employees may make contributions on a tax deferred basis to their
401K account, up to the legal limits provided for by United States income tax
regulations. The Company, at its discretion, may contribute a portion of the
Company's profits to the 401K. Such contributions are allocated between members
of the 401K based on a pre-stated formula. Employer contributions vest with 401K
participants at the rate of 20% per year, beginning in year two and ending in
year six of employment. For the year ended December 31, 1997, the Company did
not make a contribution to the 401K.
The Company has a health insurance plan, which covers all employees in
a non-discriminatory manner. With the exception of the health insurance plan and
the 401K, the Company has no insurance or medical reimbursement plans covering
its officers or directors, nor do they contemplate implementing any such plans
at this time.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons.
Based solely on the Company's review of forms furnished to the Company,
the Company believes that all filing requirements applicable to the Company's
executive officers, directors, and more than 10% shareholders were complied
with, except that an Initial Statement of Beneficial Ownership of Securities for
Howard W. Moore, a more than 10% shareholder, was not timely filed when Mr.
Moore's beneficial ownership exceeded 10% in May 1996. The filing was made on
January 27, 1997. Mr. Moore advised the Company that the failure to timely file
was inadvertent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has engaged the services of a manufacturers representative
firm, Les Friedland Associates ("LFA"), to represent the Company to customers
located in the states of New York, New Jersey, Connecticut and Pennsylvania. LFA
represents the Company to
10
<PAGE>
three of its largest customers, Toys R Us, Wal-Mart and Kmart. The principal
owner and operator of LFA, Mr. Leslie Friedland, is one of the former owners of
Janex, and currently owns 627,000 shares of the Company's stock. See "Common
Stock Ownership of Certain Beneficial Owners and Management." Under the terms of
the representative agreement ("LFA Agreement"), LFA was to be paid a commission
of 4.25% on all sales that it generates within its territory. Effective April 1,
1995, LFA and the Company agreed to reduce the commission rate under the LFA
Agreement to 4%. The terms and conditions of the representative agreement are
standard in the industry, and the agreement is cancelable at any time with 30
days notice. Pursuant to the LFA agreement, LFA was paid, or will be paid,
$98,166 for the year ended December 31, 1997 and was paid, or will be paid,
$113,675 for the year ended December 31, 1996. Further, the Company rented
showroom space from LFA during a major industry trade show in 1997, for which
the Company paid $26,000. The rate charged by LFA for the showroom rental is
competitive with other showroom space rental rates during the show period.
On June 28, 1996, the Company and Leslie Friedland entered into an
agreement whereby the due date on the Company's note held by Mr. Friedland was
extended to February 1,1998. Additionally the Company owed Mr. Friedland
$115,000 for commissions as of December 31, 1995, which Mr. Friedland also
extended to December 31, 1997. In connection with such extension agreement, the
Company granted warrants to Mr. Friedland to acquire up to 282,994 shares of the
Company's Common Stock (restricted), with certain "piggy-back" registration
rights. These warrants have an exercise price of $1.45 and expire on June 28,
2000. The warrants vest in six-month increments over the term of the loan,
commencing on June 28, 1996. All of the warrants are now vested and exercisable.
On June 28, 1996, the Company and Daniel Lesnick, Executive Vice
President of Janex, entered into an agreement whereby the due date on the
Company's note held by Mr. Lesnick was extended to February 1, 1998. In
connection with such extension agreement, the Company granted warrants to Mr.
Lesnick to acquire up to 131,994 shares of the Company's Common Stock
(restricted), with certain "piggy-back" registration rights. These warrants have
an exercise price of $1.45 and expire on June 28, 2000. The warrants vest in
6-month increments over the term of the loan, commencing on June 28, 1996. All
of the warrants are now vested and exercisable.
The Company utilizes the services of a public warehouse facility,
Hollins Distributors, in Baltimore, Maryland. The warehouse facility charges the
Company a fee based on the amount of goods received and the amount of goods
shipped. The rates charged by Hollins Distributors are competitive with those of
other public warehouses, and the relationship can be terminated annually upon 60
days written notification. Hollins Distributors is owned by Mr. Howard
Friedland, the father of Mr. Leslie Friedland. Hollins Distributors was paid
11
<PAGE>
$20,911 for the year ended December 31, 1997 and was paid $62,652 for the year
ended December 31, 1996.
Howard W. Moore, was formerly the father-in-law of Mr. Leslie
Friedland. Mr. Moore has an informal oral arrangement with Janex whereby Mr.
Moore guarantees a $225,000 letter of credit from Janex to one of its licensors.
The letter of credit expires on November 30, 1998. There is no provision
requiring Mr. Moore to continue his guarantee beyond the expiration date. Howard
Moore Associates Inc. ("HMA"), of which Mr. Moore is the sole shareholder and
President, has a Royalty Agreement with Janex whereby HMA receives a commission
of 1% of the net revenue received by Janex from sales of products using a
certain company's trademark and certain licensed characters. Under the royalty
Agreement, HMA was paid, or will be paid, $8,038 for the year ended December 31,
1997 and was paid $19,499 for the year ended December 31, 1996.
Mr. Moore is also the Trustee of the Howard Moore Associates, Inc.
Retirement Trust ("Trust") and is the President and sole shareholder of H&M
Moore Investment Group, Inc. ("H&M"). Mr. Moore may be deemed to be the
beneficial owner of all the shares of Common Stock and warrants, owned by HMA,
the Trust and H&M. On or about May 17, 1994, the Company raised $494,100 in a
private placement. In connection with the private placement, the Company offered
units ("Units") consisting of one share of Common Stock and a warrant to acquire
one share of Common Stock for every two Units purchased. Consequently, the
following shares of Common Stock and warrants were issued:
Purchaser Common Stock Warrants
- ----------------------------------------- -------------- ----------
H&M Moore Investment Group, Inc. 206,600 103,300
Howard Moore, as Trustee of the Howard
Moore Associates, Inc. Retirement Trust 63,400 31,700
The Units were sold at a purchase price of $1.83 each, which was the
average of the closing bid and ask prices for the shares of Common Stock as
quoted on NASDAQ for the ten trading days prior to the date of the sale. The
warrants have an exercise price of $3.25 per share and expire on May 17, 2000.
HMA, in connection with consulting services previously rendered to the
Company, was previously granted options to acquire 115,000 shares of the
Company's Common Stock, 75,000 options were granted at an exercise price of
$1.00, and 40,000 options were granted at an exercise price of $1.50. On or
about May 17, 1994, HMA exercised the options and acquired 115,000 shares of
Common Stock, for gross proceeds to the Company of $135,000.
12
<PAGE>
On April 19, 1996, the Company entered into a Revolving Loan Agreement
("Revolving Loan Agreement") with the Moore Trust. Under the terms of the
Revolving Loan Agreement, the Moore Trust agreed to loan to the Company, on a
revolving basis, up to $900,000, at 9-1/2% per annum on the outstanding balance,
during the period April 19, 1996 through September 19, 1998. The loan is secured
by all of the assets of Janex (subject to the prior lien of the Company's bank
lender) and is guaranteed by Janex International. In connection with the loan,
the Company entered into a Warrant Agreement with the Lender, providing for the
issuance of up to 900,000 warrants to acquire 900,000 shares of the Janex
International Common Stock (restricted), with certain "piggy-back" registration
rights. These warrants have an exercise price of $1.45 and expire on April 19,
1996. All of the warrants are now vested and exercisable.
Michael Moore is the son of Howard Moore. On March 19, 1995, the
Company entered into a license agreement with a Michael Moore under which the
Company licensed two product concepts which have since been incorporated into
the Company's product line. The Company is obligated under the agreement to pay
a royalty of 3% of the gross sales of products incorporating these concepts. The
Company can terminate the agreement at any time with 60 days notice, otherwise
the agreement will terminate at such time as the Company ceases to sell and
market products incorporating the concepts for a period of twelve months. Under
the agreement, Michael Moore was paid royalties of $445 for the year ended
December 31, 1996, and was paid royalties of $0 for the year ended December 31,
1997.
13