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 February 28, 1997 Commission File No. 33-
- - ----------------------------------- -----------------------
20064-NY
--------
SAFE AID PRODUCTS INCORPORATED
-------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Charter)
Delaware 22-2824492
- - ------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer ID. Number
incorporation or organization)
c/o Lazer, Aptheker, Feldman, Rosella & Yedid, LLP
225 Old Country Road
Melville, New York 11747-2712
-----------------------------
(Address of Principal executive offices)
(516) 364-3887
---------------------------
(Issuer's telephone number)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past ninety (90) days.
Yes __x__ No____
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practible date.
Common Stock $.00001 Par Value 702,977,200 shares
as of February 28, 1997
- - --------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (check one):
Yes __x__ No____
<PAGE>
INDEX
SAFE AID PRODUCTS INCORPORATED
PART I. FINANCIAL INFORMATION Page No.
- - ------------------------------- --------
Item 1. Financial Statements
Balance Sheets - February 28, 1997
(unaudited) and November 30, 1996 3
Statement of Stockholders' Equity
date of inception (May 21, 1987) 4-5
through February 28, 1997
Statement of Operations - three months
ended February 28, 1997 and February
29, 1996 (unaudited) and from inception
(May 21, 1987) through February 28, 1997
(unaudited) 6
Statement of Cash Flows - three months ended
February 28, 1997 and February 29, 1996
(unaudited) and from inception (May 21, 1987)
through February 28, 1997 (unaudited) 7
Notes to Financial Statements
February 28, 1997 (unaudited) 8-11
Financial Data Schedule 12
PART II. OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<CAPTION>
February 28, 1997 November 30, 1996
Unaudited
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,423 $ 4,034
------------ ------------
TOTAL CURRENT ASSETS 1,423 4,034
MACHINERY AND EQUIPMENT
Net of accumulated depreciation of $4,258 0 0
------------ ------------
TOTAL ASSETS $ 1,423 $ 4,034
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Shareholder loans $ 13,500 $ 13,500
Accrued expenses 5,457 5,293
----------- -----------
TOTAL CURRENT LIABILITIES 18,957 18,793
----------- -----------
STOCKHOLDERS' EQUITY
Common stock $.00001 par value
950,000,000 shares authorized;
702,977,200 issued and outstanding 7,030 7,030
Additional paid in capital 1,548,969 1,548,969
Deficit accumulated during development
stage (1,573,533) (1,570,758)
---------- ----------
TOTAL ( 17,534) ( 14,759)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,423 $ 4,034
============ ============
</TABLE>
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Deficit
Accumulated
Additional During Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
<S> <C> <C> <C> <C> <C>
Date of inception - May 21, 1987 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock
for cash to founders 100,000,000 1,000 9,000 0 10,000
----------- ------ --------- ---------- ---------
Balance, November 30, 1987 100,000,000 1,000 9,000 0 10,000
Issuance of common stock for
cash to outside investors from
December 1, 1987 through
February 11, 1988 350,000,000 3,500 152,014 0 155,514
Public issuance of shares for
cash, net of expenses, during
the period April 11, 1988
through June 30, 1988 150,000,000 1,500 1,212,341 0 1,213,841
Issuance of common stock for
services during August 1988 4,050,000 40 80,960 0 81,000
Issuance of common stock for
cash in connection with
exercise of warrants during
November 1988 675,000 7 13,493 0 13,500
Net loss for the year ended
November 30, 1988 0 0 0 ( 414,054) ( 414,054)
----------- ---------- --------- -------- ---------
Balance, November 30, 1988 604,725,000 6,047 1,467,808 ( 414,054) 1,059,801
Issuance of common stock for
services from December 1988
to October 1989 1,700,000 18 26,482 0 26,500
Issuance of common stock for
cash in connection with
exercise of warrants during
the year ended November 30, 1989 2,027,200 20 40,524 0 40,544
Net loss for the year ended
November 30, 1989 0 0 0 ( 561,463) ( 561,463)
----------- --------- --------- --------- ---------
Balance, November 30, 1989 608,452,200 6,085 1,534,814 ( 975,517) 565,382
(continued)
</TABLE>
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Deficit
Accumulated
Additional During Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
<S> <C> <C> <C> <C> <C>
Issuance of common stock for cash
in connection with exercise of
warrants during the year ended
November 30, 1990 25,000 0 500 0 500
Net loss for the year ended
November 30, 1990 0 0 0 ( 353,012) ( 353,012)
Net loss for the year ended
November 30, 1991 0 0 0 ( 108,242) ( 108,242)
Net loss for the year ended
November 30, 1992 0 0 0 ( 58,009) ( 58,009)
Issuance of common stock for
services for the year ended
November 30, 1993 500,000 5 495 0 500
Net loss for the year ended
November 30, 1993 0 0 0 ( 44,479) ( 44,479)
Issuance of common stock for
services for the year ended
November 30, 1994 94,000,000 940 13,160 0 14,100
Net loss for the year ended
November 30, 1994 0 0 0 ( 7,441) ( 7,441)
----------- -------- ------------ ------------ ---------
Balance, November 30, 1994 702,977,200 7,030 1,548,969 (1,546,700) 9,299
Net loss for the year ended
November 30, 1995 0 0 0 ( 19,049) ( 19,049)
----------- -------- ------------ ----------- ---------
Balance, November 30, 1995 702,977,200 7,030 1,548,969 (1,565,749) ( 9,750)
Net loss for the year ended
November 30, 1996 0 0 0 ( 5,009) ( 5,009)
----------- --------- ------------ ------------ ----------
Balance, November 30, 1996 702,977,200 $ 7,030 $1,548,969 $(1,570,758) $( 14,759)
Net loss for the three months ended
February 28, 1997, unaudited 0 0 0 ( 2,775) ( 2,775)
----------- --------- ------------ ------------ ----------
Balance, February 28, 1997 unadited 702,977,200 $ 7,030 $1,548,969 $(1,573,533) $( 17,534)
----------- --------- ------------ ------------ ----------
</TABLE>
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Three From Inception
Months Ended (May 21, 1987) to
February 28, February 29, February 28,
1997 1996 1997
REVENUE
<S> <C> <C> <C>
Net sales $ 0 $ 9,828 $ 237,030
License fees 0 0 10,000
Interest income 0 0 120,676
-------- -------- ---------
TOTAL REVENUES 0 9,828 367,706
-------- -------- ---------
EXPENSES
Cost of sales 0 7,589 203,463
Selling, general and
administrative 2,775 3,536 923,154
Research and development 0 0 594,618
Selling expenses 0 0 65,642
Depreciation and amortization 0 0 29,443
Loss- inventory obsolescence 0 0 124,919
------- -------- ---------
TOTAL 2,775 11,135 1,941,239
------- -------- ---------
NET LOSS $( 2,775) $( 1,307) $(1,573,533)
====== ====== =========
LOSS PER SHARE:
Net loss per share NIL NIL NIL
====== ====== ======
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 702,977,200 702,977,200 673,991,290
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
UNAUDITED
<CAPTION>
For The Three From Inception
Months Ended (May 21, 1987) to
February 28, February 29, February 28,
1997 1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $( 2,775) $( 1,307) $(1,573,533)
-------- -------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 0 0 29,443
Issuance of common stock for services 0 0 122,100
Loss on abandonment of assets 0 0 11,018
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Organization costs 0 0 ( 1,350)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 164 ( 388) 5,457
------ ------ ----------
TOTAL ADJUSTMENTS ( 2,611) ( 388) 166,668
------ ------ ----------
NET CASH USED BY OPERATING
ACTIVITIES 0 ( 1,695) (1,406,865)
------ ------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment 0 0 ( 39,111)
------ ------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 0 0 1,433,899
Loans from stockholders 0 3,500 23,500
Repayment of stockholders' loans 0 0 ( 10,000)
------ ------ ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 0 3,500 1,447,399
------ ------ ---------
INCREASE (DECREASE) IN CASH (2,611) 1,805 1,423
BEGINNING CASH BALANCE 4,034 2,191 0
------ ------ ----------
ENDING CASH BALANCE $ 1,423 $ 3,996 $ 1,423
======= ====== ==========
</TABLE>
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28,1997
UNAUDITED
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Safe Aid Products Incorporated ("the Company") was incorporated on May 21, 1987
in the State of Delaware to engage in manufacturing and marketing of a
disinfectant product for sale in dental and medical offices and hotel and motel
markets, as well as in the retail over-the counter market, and to engage in
research and development regarding nasal and transdermal delivery of aspirin and
other drugs. At present, the Company remains in its development stage. Its
activities to date consist of limited sales of disinfectant products and the
investigation of the nasal and transdermal delivery of aspirin and other drugs.
The Company's financial statements have been prepared on a going concern basis
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The Company reported net
losses of $5,089 and $19,049 for the fiscal years ended November 30, 1996 and
1995, respectively. The continuation of the Company is dependent upon obtaining
additional capital or financing and the eventual achievement of sustained
profitable operations. To obtain these objectives, management is pursuing a
number of options, including continued efforts towards the licensing of patents
related to the nasal and transdermal delivery of aspirin and other drugs. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The financial data for the three months ended February 28, 1997 and February 29,
1996 is unaudited, but includes all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of the management, necessary
for a fair presentation of the results of operations for such periods.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates and assumptions.
Depreciation of machinery and equipment is computed under an accelerated method
over five year estimated useful lives of the related assets.
Net Loss Per Share
Net loss per average common and common equivalent share has been computed on the
basis of the weighted average number of common shares and equivalents
outstanding during the respective periods. The effects on loss per share
resulting from the assumed issuance of reserved shares and the assumed exercise
of warrants in all periods presented are antidilutive and, therefore, not
included in the calculations.
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28,1997
UNAUDITED
NOTE 2 - INCOME TAXES
No provision has been made in the accompanying financial statements for income
taxes payable because of the Company's operating loss from operations. At
November 30, 1996, the Company has approximately $1,553,000 of operating loss
carryforwards for financial reporting and income tax purposes that expire
through the year 2011. Additionally, the Company has approximately $44,000 of
research and development credits available to offset future income taxes through
the year 2005.
NOTE 3: STOCKHOLDERS' EQUITY
The Articles of Incorporation provide for the authorization of 950,000,000
shares of common stock at $.00001 par value. Original capital contributed was
$10,000 in payment for the issuance of 100,000,000 shares of common stock.
During the period from December 1, 1987 through February 11, 1988, an additional
350,000,000 shares were issued for an aggregate consideration of $155,514.
In June of 1988, the Company completed a sale of 150,000 units to the public at
a price of $10 per unit. The Company received proceeds in the amount of
$1,213,841, net of commissions and expenses to the underwriter, legal,
accounting and other expenses related to the public offering in the amount of
$286,159. Each unit consisted of 1,000 shares of common stock, $.00001 par
value, and 500 redeemable common stock warrants designated redeemable Warrant
"A". Each redeemable Warrant "A" would upon exercise, entitle the holder to
purchase one share of common stock for $.02 per share and to receive one
redeemable Class "B" Common Stock purchase warrant. Each redeemable Class "B"
Common Stock purchase warrant would, upon exercise, entitle the holder to
purchase one share of common stock for $.05 per share. These exercise periods of
both Class "A: and Class "B" warrants have been extended by the Board of
Directors through January 9, 1998. At February 28, 1997, 147,272,800 shares of
common stock are reserved in connection with such warrants.
The shares of common stock and common stock purchase warrants were immediately
detachable from the units upon closing of the public offering and are, to the
extent a market exists, therefore, traded separately from the common stock.
In August 1988, 4,050,000 shares of common stock were issued to certain
consultants of the Company as compensation for their services rendered. These
shares have been valued by the Company at $.02 per share. The Company recorded
these shares as research and development expense.
During November 1988, 675,000 redeemable Class "A" Common Stock purchase
warrants were exercised at a price of $.02 per share. The Company received
proceeds of $13,500 upon the exercise of these warrants.
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28,1997
UNAUDITED
NOTE 3: STOCKHOLDERS' EQUITY (continued)
In December 1988, 750,000 shares of common stock were issued to an unrelated
company as an inducement to enter into a license agreement at $.02 per share.
The Company recorded these shares as research and development expense.
In March 1989, 200,000 shares of common stock were issued to an unrelated party
as compensation for services rendered to the Company. These shares have been
valued by the Company at $.02 per share. The Company recorded these shares as
public relations expense.
In October 1989, 750,000 shares of common stock were issued to unrelated parties
as compensation for services rendered to the Company. These shares have been
valued by the Company at $.01 per share. The Company recorded these shares as
consulting and research and development expense.
During the years ended November 30, 1989 and 1990, 2,027,200 and 25,000
redeemable Class "A" Common Stock purchase warrants were exercised at a price of
$.02 per share, respectively. The Company received proceeds of $40,544 and $500
upon the exercise of these warrants, respectively.
On January 8, 1993, the Company issued 500,000 shares of the Company's common
stock in consideration of consulting services. The shares were valued at $.001
per share.
In January and February of 1994, 94,000,000 shares of common stock were issued
to certain officers and consultants of the Company and to one of the Company's
law firms as compensation for their services rendered and to induce them to
continue to provide their services to the Company. These shares have been valued
by the Company at $.00015 per share and the Company recorded these shares as
general and administrative expenses during the year ended November 30, 1994.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
On February 27, 1997, the Company entered into a joint venture with CC Plus, a
Spanish corporation. The purpose of the joint venture is to establish the
worldwide development, production and marketing of nasally administered aspirin
(the "Product"), as well as research and develop the ability to use the Product
in connection with the nasal administration of other medications or natural
substances. The term of the joint venture is ten (10) years, commencing February
27, 1997 and shall be automatically renewed for periods of ten (10) years unless
otherwise terminated in accordance with the terms of the Agreement. However,
during the initial term, the Company holds the exclusive right to terminate the
joint venture in the event that the total sales of the Product are less than
1,500,000 units during the initial thirty months of the term of joint venture.
The Company and CC Plus shall share the earnings of the joint venture in equal
shares of fifty (50%) percent each. However, the Company's share in the earnings
of the joint venture shall not be less than five (5%) percent of the gross sales
of the joint venture. As a condition to the joint venture, CC Plus shall expend
no less than $500,000.00 towards the development and marketing of the Product.
The initial name of the joint venture is "CC Plus-Safe Aid Joint Venture."
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28,1997
UNAUDITED
NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)
On July 25, 1994, the Company entered into a license agreement with CMR Group,
Inc. ("CMR") in which the Company granted to CMR an exclusive license to develop
and market the Company's patent rights relating to TCGU or bleaching products.
In consideration for granting CMR this license, the Company received a license
fee of $10,000 in 1994 and will receive royalties of 10% of the net revenue from
all sales of products containing TCGU until the Company receives $1,000,000, and
7% of the net revenue from such sales thereafter.
There were no royalties earned pursuant to this agreement during the year ended
November 30, 1996 or the three months ended February 28, 1997.
On January 25, 1988, the Company entered into a research agreement with the
University of Kentucky Research Foundation (UKRF). Pursuant to the terms of the
agreement, the Company offered a grant in the amount of $100,000 per year, in
exchange for specific research to be performed by UKRF. The Company paid
$100,000 for the year ended November 30, 1988 and $75,000 for the year ended
November 30, 1989. No grants were offered subsequent to 1989. All inventions or
discoveries pursuant to the research agreement shall be owned by UKRF. UKRF has
granted an option to the Company for the exclusive license of any such invention
or discoveries. Upon exercising its option, the Company shall pay a license fee
up to $10,000. Certain members of the Company's Advisory Board are professors at
the University of Kentucky. On August 30, 1988 the Company exercised its option
with respect to certain patent rights. Additionally, the Company shall pay
annual royalties during the term of the agreement based upon annual direct and
indirect net sales as follows:
i. 2.0% royalty on all direct sales.
ii. For all indirect sales for which the Company receives a royalty,
1/3 of such royalty is to be paid to UKRF. This royalty payment cannot
be less than 1% or more than 2% of such indirect sales.
iii. For all indirect sales for which the Company receives a license fee,
20% of such license fee is to be paid to UKRF.
There has been no activity with respect to this agreement during the year ended
November 30, 1996 or the three months ended February 28, 1997.
On January 25, 1988, the Company entered into a license agreement with UKRF in
connection with the right to use certain information and patents concerning the
derivation of aspirin. The agreement also required a non-refundable license
issue fee of $5,000 upon execution. Additionally, the Company shall pay a
royalty in an amount equal to 2% of the net sales of the licensed product as
defined in the agreement. There has been no activity with respect to this
agreement during the year ended November 30, 1996 or the three months ended
February 28, 1997.
<PAGE>
PART II. OTHER INFORMATION
--------------------------
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits
--------
10.10 - Joint Venture Agreement between CC Plus
and Safe Aid Products Incorporated dated February 27, 1997.
(b) Reports
-------
A Form 8-K dated February 19, 1997 was filed in
order to report the extension of the time period, until January 9, 1998, during
which the Company's warrants may be exercised.
A Form 8-K dated March 3, 1997 was filed in order
to report that the Corporation entered into a joint venture with CC Plus, a
Spanish corporation, on February 27, 1997. A copy is annexed hereto as Exhibit
10.10.
13
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SAFE AID PRODUCTS INCORPORATED
/s/ Stanley Snyder
------------------------
Stanley Snyder, President
Dated: April 15, 1997
14
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EXHIBIT 10.10
15
<PAGE>
Joint Venture Agreement
-----------------------
Dated this 27th day of February of the year nineteen hundred and ninety-seven,
between CC PLUS, a corporation established in accordance with the laws of Spain,
represented by Mr. Jose Manuel Ramierez, Spanish, domiciled in Spain, vallgent
Street, number 52, Palmas de Mallorca 07013, Baleares, Spain hereinafter "Plus",
and the corporation SAFE AID PRODUCTS INCORPORATED, corporation established in
accordance with the laws of the United States of America, corporation which main
line of business is the developing pharmaceutical products, represented by Mr.
Lawrence Feldman, both having an office at 225 Old Country Road, Melville, New
York, hereinafter "Safe", both declare that they hereby enter into a joint
venture agreement which shall be governed by the provisions contained in this
instrument herein and, to complement same, by the legal rules applicable to it.
WHEREAS:
1. Plus is a corporation engaged in the marketing of products,
for itself or representing others, worldwide, specifically in
Europe and Latin America;
2. That Safe is the licensee, worldwide, of all industrial
property rights over a mechanism to nasally administer aspirin and
other medications;
3. That the aforementioned license is currently legally in
force, not affected by objections of any type whatsoever, lawsuits
or other facts which could make it expire and shall be in force
while this agreement is effective;
4. That as of recorded in the letter of intent dated January 17, 1997,
Plus and Safe agreed, subject to certain conditions, to establish a joint
venture for the worldwide production and marketing of the mechanisms to
administer medications via the nose hereinafter the "Product". Attachment A of
this agreement contains a brief description of the Product and a listing of the
patents and licenses protecting such Product.
5. That the conditions indicated in the letter of intent have
been performed to the satisfaction of both parties. Accordingly;
THE PARTIES AGREE ON THE FOLLOWING:
CLAUSE ONE: Safe and Plus hereby enter into a joint venture for the worldwide
manufacturing, production and marketing of the Product known as "CC Plus-Safe
Aid Joint Venture" hereinafter the "joint venture".
Considering that the Product is basically a nasal mechanism to administer
aspirin, the parties agree additionally, to enter into
16
<PAGE>
a joint venture to jointly expand the scope of the use of the Product in such
manner that the latter may be used in the application of other medications
and/or natural substances.
The aforementioned joint venture shall be effected in the terms and conditions
indicated in this agreement.
CLAUSE TWO: Plus shall undertake the obligation of manufacturing the Product,
which shall be subsequently distributed and marketing in an exclusive fashion or
through the means indicated below. In any event, Plus shall have the exclusive
right to license or commission the manufacturing and distribution of the Product
to third parties, subject to the written approval of Safe.
Plus may engage on behalf of the joint venture any parent, subsidiary or
affiliate of Plus or any other entity related to Plus with regard to any
distribution or manufacture of the Product or any other business of the joint
venture, provided Safe so agreed in writing.
CLAUSE THREE: Safe undertakes to provide all the background information,
formulae, information, know-how, support, cooperation and/or assistance that
Plus may require and that Safe may possess for the manufacturing of the Product.
CLAUSE FOUR: Safe and Plus agree that the earnings resulting from this joint
venture shall be jointly distributed in equal shares (50% each), except that in
no event shall Safe's share in the earnings be less than 5% of the gross sales
amount. The parties agree that for purposes of the aforementioned, earning shall
mean the sale price of the Product less deductible costs, as provided in clause
five herein.
Plus and Safe shall determine the sales price of the Product to third parties
and/or sub-distributors, if any, according to market information and
circumstances existing in each country in which the Product is marketed.
The earnings generated by this agreement shall be distributed by the parties
quarterly.
CLAUSE FIVE: For purposes of this agreement, deductible costs
shall be the following:
a. The direct costs of manufacturing and distribution of the Product (including
but not limited to labor, material, transportation, marketing, advertising,
taxes, other than income taxes, discounts allowed in an amount customary to the
trade, tariff duties and liability insurance);
b. The costs of goods sold in connection with the Product.
17
<PAGE>
CLAUSE SIX: Plus shall have the exclusive right to market, sell
and distribute the Product worldwide, subject to the terms of this
agreement.
Plus shall be entitled to use, in order to market the Product, the distribution
systems it considers appropriate, whether using it own channels and/or those of
affiliated companies and/or through the designation of local sub-distributors
and/or granting licenses to specialized third parties. Plus and/or the
sub-distributors and/or licensees shall be responsible for and bear the costs of
obtaining any patent and/or health and/or administrative permits which may be
required in each country, for purposes of marketing and distributing the
Product. Said costs shall be deemed to be a deductible cost pursuant to clause
five.
The parties hereby expressly acknowledge that Plus and Safe shall make their
best efforts to bring the Product to market in the United States of America the
European Economic Community and other countries.
Plus shall expend the minimum amount of US $500,000 to bring the Product to
market.
CLAUSE SEVEN: In the event expansion of the scope of application of the Product,
to use with other medications and/or natural substances, results in obtaining
new industrial and/or intellectual patents, such patents shall be registered in
the name of both parties and/or a joint company of the parties.
CLAUSE EIGHT: The parties agree that all elements of intellectual property
developed after the date of this agreement and relating to the Product which may
require registration during and due to the execution of this agreement, such as
patents and trademarks, shall be registered in favor of Safe and Plus in equal
shares.
CLAUSE NINE: This agreement shall be effective for ten years as of the date
hereof, term which shall be tacitly, successively and automatically renewed for
periods of 10 years each, except if any of the parties gives notice to the other
of its desire to not continue with such agreement. In the latter event, notice
shall be given in writing and with at least 1 year in advance relative to the
termination date of the period in force.
Safe shall have the exclusive right to terminate this agreement in the event the
total sales of Product by the joint venture is less than 1,500,000 units during
the first thirty months from the date of this agreement.
CLAUSE TEN: Considering the nature of the agreement hereof, the parties agree
that Safe shall only be entitled to have commercial relations connected with the
Product and/or sub-products of same with Plus, and that the former shall not be
entitled to sell,
18
<PAGE>
assign, donate or transfer Products and/or patents indicated in Attachment A, by
any means whatsoever, to third parties while this agreement is in force. In
turn, Plus undertakes to not manufacture, exploit, sell, distribute or market,
either directly or indirectly, products which may be considered alternative
and/or competitors of the Product or any other product which is or may be
manufactured or marketed hereunder, while this agreement is in force and for an
additional period of three years if this agreement is terminated by Plus or one
year if it is terminated by Safe or expires.
CLAUSE ELEVEN: The parties do hereby mutually undertake to maintain strict
confidentiality with respect to all information of a scientific, technical,
financial and commercial nature, relating to industrial property, patents,
trademarks, industrial models, industrial or commercial secrets, commercial
strategies, records of any type whatsoever, etcetera, to which they have access
by virtue of the agreement hereof. The parties undertake, similarly, to impose -
even contractually - this same duty of confidentiality to persons who, as
partners, external advisors or in any other capacity, relate with them, adopting
for these purposes reasonable security measures.
CLAUSE TWELVE: The parties do hereby expressly acknowledge that there is no
relationship among them other than that of independent contracting parties;
thus, none of the parties may assume powers of representation or agency for the
other party. Accordingly, none of the parties may, directly or indirectly, carry
on businesses or enter into agreements with third parties on behalf of the
other, or assume obligations on their own account.
CLAUSE THIRTEEN: Plus binds itself to observe all production
standards established by Safe.
CLAUSE FOURTEEN: Safe shall be entitled to supervise, periodically and
regularly, the manufacturing process of Plus, and the latter shall award Safe
free access to the place where said manufacturing takes place, as often as
required. In any event, Safe shall ensure that it shall not cause interruptions
and/or disturbances in the productive and/or commercial activities of Plus.
During the term of this agreement, Plus shall maintain, on behalf of the joint
venture, separate bank accounts and complete and accurate books and records
(including, but not limited to, invoices, correspondence, banking and financial
records covering all transactions relating to the manufacture and marketing of
the Product and business of the joint venture). All funds receive and held by
Plus on behalf of the joint venture shall be deemed trust funds.
19
<PAGE>
In addition, Plus shall furnish Safe with quarterly financial statements for the
joint venture, including without limitation, detailed profit and loss
statements.
Safe and its duly authorized representatives shall have the right, upon at least
five business days notice to examine and copy at Plus offices during business
hours all the said books and records and all other documents and materials in
the possession or under the control of Plus and its parents, subsidiaries,
affiliates and related entities relating to or connected with the subject matter
of this agreement.
CLAUSE FIFTEEN: This agreement shall be governed by the conditions agreed herein
and the respective Attachments, which are an integral part of the agreement and,
to complement the same, by the laws governing similar business relations to
those referred to in this instrument in the State of New York, United States of
America.
Notwithstanding other provisions in this instrument, during the term of same,
this instrument herein as well as its attachments may be modified by agreement
between the parties. Any modification to this agreement or to its attachments
whatsoever shall be made in writing and signed by both parties. The parties
shall be able to periodically review this agreement and its attachments with the
purpose of improving, simplifying, regulating and adapting its provisions.
CLAUSE SIXTEEN: The mere circumstance that occasionally, or during a certain
period of time, actions which may imply a failure to observe this agreement are
accepted or tolerated, or in the event that any of the parties does not exercise
the rights granted to it by this agreement, whether those established constitute
acts of mere tolerance of the party and may not be interpreted or relied upon as
a tacit modification of this agreement, and it shall neither deprive the party
of the power to use such rights regarding future events, if considered
appropriate.
CLAUSE SEVENTEEN: This agreement shall be applied and interpreted in good faith
and in a manner that best fits the interests of both parties sought when
entering into this agreement.
CLAUSE EIGHTEEN: None of the parties shall be able to assign, sell or transfer,
by any instrument whatsoever, its interest in this agreement, without having the
prior written authorization of its counterpart.
CLAUSE NINETEEN: Any doubt or difficulty arising between the parties regarding
the existence, non-existence, validity, invalidity, performance or default,
interpretation, application or rescission of this agreement, or due to any other
reason or circumstance related directly or indirectly with it, and with
20
<PAGE>
those agreements which shall be executed as a result of this agreement, shall be
resolved without a lawsuit by the American Arbitration Association located in
the city of New York, state of New York, pursuant to the rules and regulations
of the aforementioned association.
CLAUSE TWENTY: For all legal purposes derived from this agreement, the parties
establish their special domicile in the city and state of New York and submit
themselves to the laws in force in said city and state.
Safe Aid Products Incorporated
By: /s/ Lawrence Feldman
-------------------------------
Lawrence Feldman,
Corporate Agent
CC Plus
By: /s/ Jose Manuel Ramirez
--------------------------------
Jose Manuel Ramirez, CEO
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SAFE AID
PRODUCTS INCORPORATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED FEBRUARY
28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-28-1997
<CASH> 1,423
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,423
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,423
<CURRENT-LIABILITIES> 18,957
<BONDS> 0
0
0
<COMMON> 7,030
<OTHER-SE> (24,564)
<TOTAL-LIABILITY-AND-EQUITY> 1,423
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,775
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,775)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,775)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
