SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted
/ / Definitive Proxy Statement by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
- - - -------------------------------------------------------------------------------
SAFE AID PRODUCTS INCORPORATED
- - - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
585,819,936 shares
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0- 11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): $.008 per share, average of the bid and ask on
September 9,1997.
(4) Proposed maximum aggregate value of transaction:
$4,696,600.00
(5) Total fee paid:
$937.32
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY PROXY MATERIALS
---------------------------
SAFE AID PRODUCTS INCORPORATED
--------------
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD SEPTEMBER __, 1997
--------------
TO THE STOCKHOLDERS OF SAFE AID PRODUCTS INCORPORATED:
We invite you to attend a Special Meeting of Stockholders of Safe Aid
Products Incorporated ("Safe Aid") to be held at the offices of Lazer, Aptheker,
Feldman, Rosella & Yedid, LLP, 250 Old Country Road, Melville, New York 11747 on
September __, 1997, beginning at _______, local time. The limited purpose of the
Special Meeting is to consider and vote upon the following proposals, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To consider and vote upon a proposal to amend Safe Aid's
Certificate of Incorporation to effectuate a ten-for-one reverse
stock split of Safe Aid's Common Stock.
2. To consider and vote upon a proposal to amend Safe Aid's
Certificate of Incorporation to increase the authorized common
stock to 999,999,000 shares of common stock.
3. To consider and vote upon a proposal to amend Safe Aid's
Certificate of Incorporation to change Safe Aid's name to Safe
Technologies International, Inc.
4. To consider and vote upon a proposal to approve and adopt a merger
agreement dated August 29, 1997, between Safe Aid and Intelligence
Network International, Inc. and the transactions contemplated
thereby.
5. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on August 29,
1997, are entitled to notice of and to vote at the Special Meeting or any
adjournments thereof.
<PAGE>
Whether or not you plan to attend the Special Meeting in person, you
are requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope which requires no postage if mailed in the United States. If
you attend the Special Meeting, you may vote in person if you wish, even if you
have previously returned your proxy card.
By order of the Board of Directors,
SAFE AID PRODUCTS INCORPORATED
Stanley Snyder, President
Melville, New York
Date: September __, 1997
<PAGE>
SAFE AID PRODUCTS INCORPORATED
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Safe Aid Products Incorporated, a Delaware
corporation ("Safe Aid") of proxies from the holders of Safe Aid's common stock,
par value $.00001 per share (the "Safe Aid Common Stock"), for use at the
Special Meeting of Stockholders to be held at the offices of Lazer, Aptheker,
Feldman, Rosella & Yedid, LLP on September __, 1997, beginning at ____ local
time and at all adjournments and postponements thereof (the "Special Meeting").
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is September __, 1997. Safe Aid's
principal executive offices are located at c/o Lazer, Aptheker, Feldman, Rosella
& Yedid, LLP, 225 Old Country Road, Melville, New York 11747 and its telephone
number is (516) 364-3887.
PURPOSES OF THE SPECIAL MEETING
At the Special Meeting, Safe Aid's stockholders will consider and vote
upon the following matters:
1. An amendment to Safe Aid's Certificate of Incorporation to
effectuate a ten-for-one reverse stock split of Safe Aid's Common
Stock (the "Reverse Stock Split");
2. An amendment to Safe Aid's Certificate of Incorporation to
increase the authorized common stock to 999,999,000 shares of
common stock (the "Common Stock Amendment");
3. An amendment to Safe Aid's Certificate of Incorporation to change
Safe Aid's name to Safe Technologies International, Inc. (the
"Name Change Amendment");
4. The proposed merger of Intelligence Network International, Inc., a
Florida corporation ("INI") with and into Safe Aid pursuant to the
terms and condition of the merger agreement between INI and Safe
Aid dated August 29, 1997 (the "Merger Proposal"); and
5. Such other business as may properly come before the Special
Meeting, including any adjournments or postponements thereof.
In order to consummate the Merger with INI, Safe Aid stockholders need
to adopt and approve each of the proposals presented at the Special Meeting: (i)
the Reverse Stock Split, (ii) the Common Stock Amendment, (iii) the Name Change
Amendment, and (iv) the Merger Proposal. The Merger Agreement provides that
approval of each of these proposals is a condition precedent to closing the
Merger.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance
<PAGE>
with the procedures set forth herein) will be voted FOR the Reverse Stock Split,
FOR the Common Stock Amendment, FOR the Name Change Amendment, and FOR the
Merger Proposal. In the event a stockholder specifies a different choice by
means of the enclosed proxy, his or her shares will be voted in accordance with
the specifications so made. The Board does not know of any other matters that
may be brought before the Special Meeting. In the event that any other matter
should come before the Special Meeting, the persons named in the enclosed proxy
will have discretionary authority to vote all proxies not marked to the contrary
with respect to such matters in accordance with their best judgment.
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere
in this Proxy Statement. Reference is made to, and this Summary is qualified in
its entirety by, the more detailed information contained elsewhere in this Proxy
Statement.
General
This Proxy Statement, Notice of Safe Aid Special Meeting to be held
September __, 1997, and form of proxy solicited in connection therewith are
being mailed to holders of Safe Aid Common Stock on or about September __, 1997.
Special Meeting
At the Special Meeting, holders of shares of Safe Aid Common Stock will
consider and vote upon (i) a proposal to amend Safe Aid's Certificate of
Incorporation to effectuate a ten-for-one reverse stock split (the "Reverse
Stock Split"), (ii) a proposal to amend Safe Aid's Certificate of Incorporation
to increase the authorized common stock to 999,999,000 shares of common stock
(the "Common Stock Amendment"), (iii) a proposal to amend Safe Aid's Certificate
of Incorporation to change Safe Aid's name to Safe Technologies International,
Inc. (the "Name Change Amendment"), (iv) a proposal to approve and adopt the
Merger Agreement and the transactions contemplated thereby (the "Merger
Proposal") and (v) on such other matters as may properly be submitted to a vote
at the Special Meeting.
In order to consummate the Merger with INI, Safe Aid stockholders need
to adopt and approve each of the proposals presented at the Special Meeting: (i)
the Reverse Stock Split, (ii) the Common Stock Amendment, (iii) the Name Change
Amendment, and (iv) the Merger Proposal. The Merger Agreement provides that
approval of each of these proposals is a condition precedent to the closing of
the Merger.
INI Shareholder Approval
By written consent, the shareholders of INI have approved and adopted
the Merger Agreement and the transactions contemplated thereby.
Safe Aid
Safe Aid was incorporated under Delaware law on May 21, 1987 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.
During the past several years, Safe Aid has been virtually inactive
with nominal sales and operations and has remained in its development stage.
During the past year, Safe Aid's principal
1
<PAGE>
business objective has been to find and merge with an operating company that
management believes could increase shareholder value.
Safe Aid's executive offices are located at c/o Lazer, Aptheker,
Feldman, Rosella & Yedid, LLP, 225 Old Country Road, Melville, New York 11747
and its telephone number is (516) 364- 3887.
INI
INI offers a broad range of Internet services and products through its
three wholly owned subsidiaries: (i) CyberPlan, Inc, a company which specializes
in preparing bundled software packages, (ii) Property Intelligence
International, Inc., an Internet information and content service provider and
(iii) In CyberMall, Inc., an Internet directory for upmarket products and
services. (collectively, these companies may sometimes be referred to herein as
the "Internet Companies").
INI also intends to expands its products and services into two new
industries with two recent acquisitions. On August 2, 1997, INI acquired Total
Micro Computers, Inc. ("TMC"), a wholesaler and retailer of custom designed and
assembled computer systems and related products. On August 28, 1997, INI
acquired GMG Computer Consultants, Inc. d.b.a. Precision Imaging ("GMG"), a
digital pre-press company which specializes in producing high quality full color
magazine publications and catalogs (collectively, GMG and TMC sometimes may be
referred to herein as the "Acquisition Companies."). See "Information about INI"
and "Acquisition Companies."
INI's executive offices are located at 249 Peruvian Avenue, Palm Beach,
Florida 33480 and its telephone number is (561) 659-6227.
The Merger
Prior to the closing date of the Merger (the "Closing Date"), Safe Aid
shall effect a ten-for-one reverse stock split pursuant to which its outstanding
common stock will be reduced to 70,547,720 shares. At the Effective Time, INI
shall be merged with and into Safe Aid pursuant to the terms and conditions of
the Merger Agreement. As of the Effective Time, the separate corporate existence
of INI will terminate, and each issued and outstanding share of INI Common Stock
will be converted into the right to receive one share of Safe Aid Common Stock.
In the aggregate, INI shareholders will receive 585,819,936 shares of Safe Aid
Common Stock in the Merger. At the Closing, Safe Aid will also issue 49,109,500
shares of Safe Aid Common Stock to certain brokers, finders and consultants for
services rendered in the Merger transaction. After the consummation of the
Merger, the former INI shareholders will own approximately 83% of Safe Aid's
Common Stock.
Conditions to the Merger
The obligations of Safe Aid and INI to effect the Merger are subject to
certain conditions, including, among other things, (i) approval and adoption of
the Reverse Stock Split, the Common Stock Amendment, the Name Change Amendment
and the Merger Agreement by Safe Aid's
2
<PAGE>
stockholders, (ii) the accuracy of representations and warranties included in
the Merger Agreement and other customary conditions. Other than the required
approval of the Merger by the Safe Aid stockholders, substantially all of the
obligations of Safe Aid and INI to consummate the Merger may be waived or
modified by the party that is, or whose stockholders are, entitled to the
benefits thereof.
Termination of the Merger Agreement
Either INI or Safe Aid may terminate the Merger Agreement upon written
notice to the other if the closing of the Merger (the "Closing") has not
occurred by October 31, 1997, without liability to either party.
Management and Operations after the Merger
At the Effective Time, all of the existing officers and directors of
Safe Aid will resign, and the new officers and directors of Safe Aid after the
Merger will be as follows: Barbara L. Tolley, Chairman of the Board and CEO,
Michael Bhathena, Vice President and Chief Information Officer, Bradford L.
Tolley, Secretary and Treasurer, Charles N. Martus, Director, Jack W. Tolley,
Director, Franklin L. Frank, Director and Robert L. Alexander, Director.
After the Merger, new management will develop Safe Aid's New Media and
New Technology Services. New management intends to (i) expand the operations of
the Acquisition Companies by providing these companies with marketing expertise,
financial expertise and administration, (ii) integrate Internet services into
the daily operations of the Acquisition Companies and (iii) make selective
vertical or horizontal acquisitions in strategic locations of companies which
are compatible to Safe Aid's target niche profile of products and services.
3
<PAGE>
RISK FACTORS
Stockholders of Safe Aid, in considering whether to approve the Merger
Proposal should consider the following matters. These matters should be
considered in conjunction with the other information included and incorporated
by reference in this Proxy Statement.
Limited Operating History of INI
INI commenced operations on October 2, 1996 and since its inception has
had limited operations. As a result, the likelihood of success of INI's
operations must be considered in view of all the risks, expenses and delays
inherent in the establishment of a new business, including, but not limited to,
unforeseen expenses, complications and delays, the initiation of marketing
activities, the initiation of marketing activities, the uncertainty of market
acceptance of new services, intense competition from larger more established
competitors and other factors. Accordingly, there can be no assurance that the
business of INI will be successful.
Merger Consideration and Dilution
The consideration to be given to INI and Safe Aid stockholders in the
Merger has been determined by arms-length negotiations between INI and Safe Aid,
and does not have any direct relation to Safe Aid or INI's earnings, results of
operations, book value, asset value or other criteria of value. There can be no
assurances that the merger consideration represents an accurate valuation of
Safe Aid's or INI's business. If the Merger is consummated, it will result in
substantial dilution to the shareholders of Safe Aid. Pursuant to the Merger
Agreement, Safe Aid will issue 585,819,936 shares of its common stock to INI's
shareholders or approximately 83% of Safe Aid's Common Stock to be outstanding
after the Merger. The former Safe Aid stockholders will own approximately 10% of
Safe Aid Common Stock to be outstanding after the Merger and certain brokers,
consultants and finders will own approximately 7% of Safe Aid's Common Stock to
be outstanding after the Merger. See "The Proposed Merger-Brokerage and Finder's
Fees" and "The Proposed Merger-Consultant's Fees".
Developing Market; Unproven Market for INI's Services
INI's Internet Companies offer a broad selection of Internet based
products and services. The services which the Internet Companies intend to offer
have only recently begun to develop and are services which are rapidly
developing and evolving. There can be no assurance that INI's specialization in
new marketing methods and technologies will be readily accepted on a world wide
or other significant basis. Moreover, critical issues such as market resistance
to change from traditional marketing methods of conducting commerce and
exchanging information may negatively impact the pace of INI's growth.
4
<PAGE>
Acquisition Strategy
INI has experienced significant growth through acquisitions of
five-wholly owned subsidiaries doing business in the Internet and technology
related fields. After the consummation of the Merger, Safe Aid's success is
dependent, in part, upon its ability to integrate the operations of, and manage
over time, the acquired companies. There can be no assurance that Safe Aid will
successfully integrate the acquired operations of GMC or TMC into its operations
or that the anticipated benefits of the acquisitions will be achieved. The
failure to successfully integrate GMG or TMC or future acquisitions into Safe
Aid's operations would adversely affect Safe Aid's financial condition and
results of operations.
Capital Requirements
If the Merger is consummated, Safe Aid's capital requirements will be
significant, and it will be an important ongoing function and responsibility of
management to secure such necessary capital. Following the Merger, management
will seek to raise capital (if necessary) through public or private offerings of
equity or debt securities. A vital part of Safe Aid's growth will depend upon
the successful attainment of capital. Safe Aid will need capital to grow the
existing Acquisition Companies and to make additional appropriate vertical and
horizontal market industry acquisitions. There can be no assurance that any such
additional financing will be available to Safe Aid on commercially reasonable
terms, or at all. In light of Safe Aid's limited resources, its anticipated
expenses and the competitive environment in which it operates, any inability to
obtain additional financing, if required, would have a material adverse effect
on Safe Aid.
Dependence on Key Personnel
After the Merger, the success of Safe Aid will be highly dependent on
its management. Safe Aid's success will depend to a significant extent upon the
efforts and ability of its Chief Executive Officer and Chairman, Barbara Tolley,
and certain other key executives, including executives of its acquired
subsidiaries. Upon Closing, Ms. Tolley will enter into a two year employment
agreement with Safe Aid, with an option exercisable by Ms. Tolley to extend the
employment agreement for an additional year. See "Business after the Merger
Employment Agreements." The loss of the services of Ms. Tolley or other key
executives could have a material adverse effect on Safe Aid's business.
Competition
The market for companies providing Internet Services is highly
competitive and there are many new participants entering the market Many
companies offering the services provided by the Internet Companies already have
large customer bases and have greater financial capabilities than INI initially
will have. The market competition for companies providing computer sales and
services is also highly competitive and requires that companies such as this,
operate with very small profit margins.
5
<PAGE>
Possible Depressing Effect of Future Sales of Safe Aid Common Stock
Future sales of the shares of Safe Aid Common Stock to be issued in the
Merger, or the perception that such sales could occur, could adversely affect
the market price of Safe Aid Common Stock. There can be no assurance as to when,
and how many of, the shares of Safe Aid Common Stock to be issued in the Merger
will be sold and the effect such sales may have on the market price of Safe Aid
Common Stock. Such securities are subject to resale restrictions in accordance
with the Securities Act of 1933, as amended (the "Securities Act") and the
regulations promulgated thereunder. As such restrictions lapse or if such
securities are registered for sale to the public, such securities may be sold to
the public.
Forward-Looking Statements
The management of INI and Safe Aid believe that this Proxy Statement
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, including
statements regarding, among other items, (i) the business plan for Safe Aid
after the Merger and (ii) anticipated trends in the Internet and technology
related fields. These forward-looking statements are based largely on
management's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond INI and Safe Aid's control. Actual
results could differ materially from these forward-looking statements as a
result of the factors described in "Risk Factors," including, among others,
general economic conditions, the limited operating history of INI, the unproven
market for INI's services, governmental regulation and competitive factors. In
light of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this Proxy Statement will in fact
transpire.
6
<PAGE>
Special Meeting
Matters to be Considered at the Special Meeting
At the Special Meeting, holders of Safe Aid Common Stock will be asked
to consider and vote upon (i) the Reverse Stock Split, (ii) the Common Stock
Amendment, (iii) the Name Change Amendment, (iv) the Merger Proposal, and (v)
such other proposals as may be properly brought before the Special Meeting.
In order to consummate the Merger with INI, Safe Aid stockholders need
to adopt and approve each of the proposals presented at the Special Meeting: (i)
the Reverse Stock Split, (ii) the Common Stock Amendment, (iii) the Name Change
Amendment, and (iv) the Merger Proposal. The Merger Agreement provides that
approval of each of these proposals is a condition precedent to the closing the
Merger.
Record Date; Stock Entitled to Vote; Quorum
Only stockholders of record of Safe Aid Common Stock at the close of
business on August 29, 1997 (the "Safe Aid Record Date") are entitled to receive
notice of, and to vote at, the Special Meeting. At the close of business on the
Safe Aid Record Date, Safe Aid had issued and outstanding 705,477,200 shares of
Safe Aid Common Stock. A majority of the outstanding shares of Safe Aid Common
Stock on the Safe Aid Record Date must be represented in person or by proxy at
the Special Meeting in order for a quorum to be present. Each share of Safe Aid
Common Stock issued and outstanding on the Safe Aid Record Date will entitle the
holder thereof to one vote on each proposal presented at the Special Meeting.
Shares of Safe Aid Common Stock represented at the Special Meeting by a
properly executed, dated and returned proxy will be treated as present at the
Special Meeting for purposes of determining a quorum, without regard to whether
the proxy is marked as casting a vote or abstaining. Proxies relating to "street
name" shares that are properly executed and returned by brokers will be counted
as shares present for purposes of determining the presence of a quorum, but will
not be treated as shares having voted at the Special Meeting with respect to (i)
the Reverse Stock Split, (ii) the Common Stock Amendment, (iii) the Name Change
Amendment, or (iv) the Merger Proposal if authority to vote is withheld from the
broker (a "broker non-vote").
Votes Required
The affirmative vote of the holders of a majority of the outstanding
shares of Safe Aid Common Stock is required to approve and adopt (i) the Reverse
Stock Split, (ii) the Common Stock Amendment, (iii) the Name Change Amendment,
and (iv) the Merger Proposal.
7
<PAGE>
Voting of Proxies
Proxies properly executed and returned in a timely manner will be voted
at the Special Meeting in accordance with the directions noted thereon. Proxies
which are properly executed, but for which no voting direction is indicated,
will be voted FOR the Reverse Stock Split, FOR the Common Stock Amendment, FOR
the Name Change Amendment and FOR the Merger Proposal. Abstentions will be
recorded as such by the Inspector of Elections for the Special Meeting.
Abstentions and broker non-votes (as well as any other failure to vote) will not
be considered as votes cast with respect to any of the proposals.
Revocability of Proxies
Any stockholder giving a proxy has the power to revoke it at any time
before it is voted, either by voting in person at the meeting, by written notice
to the Secretary of Safe Aid or by delivery of a later-dated proxy.
Ownership by Executive Officers and Directors
As of August 29, 1997, directors and executive officers of Safe Aid may
be deemed to be beneficial owners of shares (including shares underlying certain
options and warrants) of 195,596,000 Safe Aid Common Stock, or approximately
27.8% of the then outstanding shares of Safe Aid Common Stock.
Recommendation of the Safe Aid Board
The Safe Aid Board has unanimously approved the (i) the Reverse Stock
Split, (ii) the Common Stock Amendment, (iii) the Name Change Amendment, and
(iv) the Merger Proposal (collectively, all such proposals shall be referred to
as the "Safe Aid Proposals"). The Safe Aid Board believes that the Safe Aid
Proposals are in the best interests of Safe Aid and its stockholders and
recommends that the Safe Aid Stockholders vote FOR the Reverse Stock Split, FOR
the Common Stock Amendment, FOR the Name Change Amendment and FOR the Merger
Proposal.
8
<PAGE>
THE PROPOSED MERGER
The following summary of the material terms of the Merger Agreement is
qualified in its entirety by reference to the provisions of the Merger
Agreement, which is attached as Exhibit A to this Proxy Statement and is
incorporated by reference herein.
General
The respective Board of Directors of Safe Aid and INI, meeting
separately, each approved and adopted the Merger Agreement and the Merger and
authorized the execution and performance of the Merger Agreement. The
shareholders of INI have approved and adopted the Merger Agreement and the
Merger and authorized the execution and performance of the Merger Agreement.
Background of the Merger
The Presidents of Safe Aid and INI were introduced in July 1996, and
became aware of each other's situations and needs. Pursuant to that meeting, the
Presidents of the two entities stayed in contact and communication with each
other during the year of 1996. In early Spring 1997, the Presidents met, again,
in Florida and initiated serious conversations about the possibility of a
potential merger which could benefit both companies.
In July 1997, the parties came to an agreement as to the terms of a
potential merger. On August 18, 1997, Safe Aid and INI entered into a letter of
intent. On August 29, 1997, the parties entered into a definitive Merger
Agreement.
Reasons for the Merger; Recommendation of the Safe Aid Board
Safe Aid has been unsuccessful in effecting its original business
purpose and had virtually no active operations for the past several years. In
addition, Safe Aid has no capital available to renew active operations. As a
result, management adopted a strategy of locating an operating company to engage
in a business combination with Safe Aid that could increase shareholder value.
In considering the merits of the Merger with INI, Safe Aid's Board of
Directors gave substantial weight to its belief that marketing through the
Internet, and related fields of INI, represent a significant growth opportunity.
Management has reviewed the business plan of INI and believes that it represents
a viable business opportunity and an opportunity to increase shareholder value.
Safe Aid's Board of Directors also considered the risk factors attributable to
INI's business discussed in "Risk Factors" above, particularly INI's limited
operating history and need for additional capital and disadvantages of the
Merger, such as the substantial dilution of the existing stockholders' ownership
of Safe Aid.
9
<PAGE>
Safe Aid's Board of Directors determined that the benefits outweighed
the disadvantages and unanimously approved the terms of the Merger and
recommends that Safe Aid stockholders adopt the Merger Agreement. See "The
Proposed Merger."
Reasons for the Merger; Recommendation of the INI Board
The decision of the INI board, based upon the recommendation of Barbara
Tolley, the Chairman of the Board, was based upon INI's interest in growing and
securing market share for the private acquisition companies, as quickly as
possible, and believing that it was in the interests of INI's global expansion
plans to become part of a public company entity.
Effective Time
The Merger will become effective upon the filing of (i) a Certificate
of Merger with the Secretary of State of Delaware and (ii) Articles of Merger
with the Secretary of State of Florida (the "Effective Time"). The Effective
Time is expected to occur as promptly as practicable after the required approval
of Safe Aid stockholders at their Special Meeting, subject to the terms and
conditions contained in the Merger Agreement.
Structure of the Merger; Conversion of Shares
Prior to the Closing Date, Safe Aid shall effect a ten-for-one reverse
stock split pursuant to which its outstanding common stock will be reduced to
70,547,720 shares. At the Effective Time, INI shall be merged with and into Safe
Aid pursuant to the terms and conditions of the Merger Agreement. As of the
Effective Time, the separate corporate existence of INI will terminate, and each
issued and outstanding share of INI Common Stock will be converted into the
right to receive one share of Safe Aid Common Stock. In the aggregate, INI
shareholders will receive 585,819,936 shares of Safe Aid's Common Stock in the
Merger. At the Closing, Safe Aid will also issue 49,109,544 shares of Safe Aid
Common Stock to certain brokers, finders and consultants for services rendered
in the Merger transaction. After the consummation of the Merger, the former INI
shareholders will own approximately 83% of Safe Aid's Common Stock.
Procedure to Exchange of Certificates
As soon as is practicable after the Effective Time, Safe Aid's transfer
agent, United States Transfer of Englewood, Colorado (the "Transfer Agent") will
mail a form of transmittal letter to holders of INI Common Stock. The form of
transmittal letter will contain instruction with respect to the surrender of
certificates representing INI Common Stock.
INI STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY
AND SHOULD NOT BE FORWARDED TO THE TRANSFER AGENT UNLESS AND UNTIL THE INI
SHAREHOLDER RECEIVES A LETTER OF TRANSMITTAL FOLLOWING THE EFFECTIVE TIME.
10
<PAGE>
Governmental Approvals
Safe Aid and INI do not need to obtain any federal or state
governmental approvals in order to effectuate the Merger.
Conditions to the Merger
The obligations of INI to effect the Merger are subject to certain
conditions; including (i) approval and adoption of the Reverse Stock Split by
Safe Aid's stockholders, (ii) approval and adoption of the Common Stock
Amendment by Safe Aid's stockholders, (iii) approval and adoption of the Name
Change Amendment by Safe Aid's stockholders, (iv) approval and adoption of the
Merger Agreement by Safe Aid's stockholders, and (v) the accuracy of
representations and warranties of Safe Aid made in the Merger Agreement and
other customary conditions.
The obligation of Safe Aid to effect the Merger are subject to certain
conditions, including (i) simultaneously with or prior to closing, INI shall
have closed acquisitions of at least two companies active in industries relating
to that of INI and reasonably acceptable to Safe Aid, and as of the Closing Date
shall have not less than $280,000 in cash or cash equivalent assets, (ii) Safe
Aid and Barbara Tolley shall have entered into an employment agreement pursuant
to which Ms. Tolley will be employed as the Chief Executive Officer and Chairman
of the Board of Safe Aid, and (iii) the accuracy of representations and
warranties of INI made in the Merger Agreement and other customary conditions.
Termination of the Merger Agreement
Either INI or Safe Aid may terminate the Merger Agreement upon written
notice to the other if the Closing of the Merger has not occurred by October 31,
1997, without liability to either party.
Federal Income Tax Consequences
For federal income tax purposes the merger of INI with and into Safe
Aid, in accordance with the terms of the Merger Agreement, will qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"). Provided that the Merger
qualities as a "reorganization" within the meaning of Section 368(a)(1)(A) of
the Code, (i) no gain or loss will be recognized by either Safe Aid or INI as a
result of the consummation of the Merger, (ii) no gain or loss will be
recognized by a shareholder of INI upon the receipt by such shareholder of
shares of Safe Aid's Common Stock in exchange for such shareholder's shares of
INI's Common Stock in accordance with the terms of the Merger Agreement, (iii)
the aggregate tax basis of the shares of Safe Aid Common Stock received by a
shareholder of INI will be the same as the aggregate tax basis of the shares of
INI Common Stock surrendered in exchange therefor reduced by the amount of any
cash received and increased by the amount of any gain recognized, and (iv) the
holding period of the shares of Safe Aid Common Stock received by an INI
shareholder in exchange for shares of INI Common Stock will include the period
during which the shares of INI
11
<PAGE>
Common Stock surrendered in exchange therefor were held, provided the shares of
INI Common Stock were held as capital assets at the Effective Time.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY. INI SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS FOR MORE SPECIFIC AND DEFINITIVE ADVICE AS TO THE FEDERAL INCOME TAX
CONSEQUENCES TO THEM OF THE CONVERSION OF THEIR SHARES OF INI COMMON STOCK
PURSUANT TO THE MERGER, AS WELL AS ADVICE AS TO THEIR APPLICATION AND EFFECT OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS AND POSSIBLE AMENDMENTS TO
SUCH LAWS.
Accounting Treatment of the Merger
It is anticipated that the Merger will be accounted for using the
"purchase" method of accounting, in accordance with generally accepted
accounting principals. Therefore, the aggregate consideration paid by Safe Aid
in connection with the Merger will be allocated to INI's assets and liabilities
based on their fair values, with any excess being treated as goodwill. The
assets, liabilities and results of operation of INI will be consolidated into
the assets, liabilities and results of operation of Safe Aid subsequent to the
Effective Time.
Resale of Safe Aid Common Stock
The shares of Safe Aid Common Stock which will be received by INI
shareholders pursuant to the Merger Agreement will be restricted securities as
defined in Rule 144 of the Securities Act. Restricted securities can be sold
into the public market pursuant to Rule 144 or pursuant to an effective
registration statement. Additionally, such sales are subject to any applicable
state securities laws.
Brokerage and Finder's Fees
In connection with the Merger, both INI and Safe Aid have incurred
obligations to pay certain brokerage and finder's fees. INI and Safe Aid will
pay for these obligations by issuing certain parties shares of Safe Aid's Common
Stock. All such issuances will be on a post-split basis.
At the Closing of the Merger, Safe Aid will pay a finder's fee to
Robert Weinberg and Norman and Bernie Moskowitz. At the Closing, Safe Aid will
issue 3,527,386 shares of its common stock to Mr. Weinberg and 3,527,386 shares
of its common stock to Norman and Bernie Moskowitz. At the Closing, INI will
issue 1,100,000 shares of INI Common Stock to Lockwood Realty, 100,000 shares of
INI Common Stock to Jay Shapiro and 106,200 shares of INI Common Stock to First
Venture, which shares will be exchanged for Safe Aid Common Stock pursuant to
the Merger.
12
<PAGE>
At the Closing of the Merger, Safe Aid will pay a finder's fee to
Private Trust Corp. Ltd., as Trustee for New Amsterdam Investment Trust (the
"Trustee"). At the Closing, Safe Aid will issue 7,054,772 shares of its common
stock to the Trustee.
Except for the above finder's fee neither INI nor Safe Aid has incurred
any liability for brokerage, finder's fees or similar charges in connection with
the Merger.
Consultant's Fees
Stanley Snyder, a President and Director of Safe Aid, and Lawrence
Feldman, Safe Aid's former counsel, have served as consultants to Safe Aid
during the Merger. As payment for their services, Safe Aid will issue 17,500,000
shares of its common stock (on a post-split basis) to each of Mr. Feldman and
Mr. Snyder at the Closing of the Merger.
13
<PAGE>
BUSINESS AFTER THE MERGER
Following the Merger, the new management of Safe Aid intends to (i)
expand the operations of the Acquisition Companies by providing these companies
with marketing expertise, financial expertise and administration, (ii) integrate
Internet services into the daily operations of the Acquisition Companies and
(iii) make selective vertical or horizontal acquisitions in strategic locations
of companies which are compatible to Safe Aid's target niche profile of products
and services.
New management will help develop marketing plans for each acquired
company, and will provide the companies with continual reviews to monitor
progress and growth. Each Acquisition Company will, pursuant to the marketing
plan, implement and be responsible for its own sales goals and projections,
sales force, sales contacts and all sales processing.
New management also intends to integrate Internet services provided by
the Internet Companies into the day to day business operations of each of the
Acquisition Companies, as well as any future business acquisition companies. The
Internet Companies have already begun creating web sites for GMG and TMC and
also have made available installation of AT &T WorldNet Internet Services for
both GMG and TMC usage. The Internet Companies have also made these services
available to the companies' own customers. Any sophisticated or in depth
Internet services, i.e. Intranets, system integration, etc., which the customers
of the Acquisition Companies might require, will be referred to the Internet
Companies.
The Internet Companies will also be responsible for the Internet
electronic commerce of the Acquisition Companies, and will be responsible for
set up and maintenance of web sites, up to the point of processing the order. As
the Acquisition Companies become more familiar with the Internet and doing
business electronically, the Internet Companies will begin to transfer more and
more of the Acquisition Companies procedures and processes (i.e. inventory,
ordering, field sales management, pricing) onto the Internet via a private
company Intranet for each company.
Management after the Merger
As of the Effective Time, all of the existing officers and directors of
Safe Aid will resign, and the new executive officers and directors of Safe Aid
after the Merger will be as follows:
Name Age Position Held with Registrant
---- --- -----------------------------
Barbara L. Tolley 60 CEO and Chairman of the Board
Charles N. Martus 74 Director
Jack W. Tolley 74 Director
Franklin L. Frank 61 Director
14
<PAGE>
Robert L. Alexander 54 Director
Bradford L. Tolley 33 Secretary and Treasurer
Michael Bhathena 29 Vice President and Chief Information
Officer
Barbara L. Tolley received her BA from Ohio State University in 1959.
She founded Westchester Ltd., Inc., in 1975, a privately held company
specializing in international marketing and advertising in which she held the
office of President until 1989. In 1990, Ms. Tolley founded one of the Internet
companies, Property Intelligence International, Inc.("PII"), an international
consulting and online real estate business service currently on the Internet.
Since 1996, Ms. Tolley has been one of the majority stockholders in Villas
International Realty, Inc., an international holiday rental agency. Ms. Tolley
has been a President and Director of INI since its inception in October 1996.
Ms. Tolley is the wife of Jack W. Tolley and the mother of Bradford L. Tolley.
Charles N. Martus is a graduate of Dartmouth College, Hanover, New
Hampshire in 1944, and attended Amos Tuck School. Mr. Martus was a principal in
a gourmet food operation in Manhattan from 1946 until 1990. During the past five
years, Mr. Martus has been retired.
Jack W. Tolley is a graduate of Dartmouth College, Hanover, New
Hampshire in 1947, and attended Cornell University in Ithaca, New York. Mr.
Tolley founded J.W. Tolley & Associates in 1953, a national marketing and
advertising agency and served as President until 1975. Mr. Tolley was a Director
and consultant to Westchester Ltd., Inc. until 1982. Mr. Tolley has been
pursuing a career as an artist and painter of Southwestern American art and as
an author of several books on Florida and immigration for foreign nationals. Mr.
Tolley has been a Director of INI since October 1996. Mr. Tolley is the husband
of Barbara L. Tolley and the father of Bradford L. Tolley.
Franklin L. Frank has been Director and President of a privately held
real estate development company, based in Hicksville, New York, as well as a
stockholder in other real estate asset companies. Mr. Frank is currently
involved with mining operations in the State of Nevada. Mr. Frank has been a
Director of INI since October 1996.
Robert L. Alexander has been in management with Fortune 500 companies,
and has had start up responsibility with privately held corporations during his
career. Mr. Alexander was President of International Communications Systems
(ICS) from 1991 to 1993. He was President of United Communications Systems (USC)
from 1993-1994, a telephone reseller company in select markets. Mr. Alexander
founded his own company, Comstar International, Inc., with master distributor
contracts with GE Capital Communications Services in 1994. He was recruited by
Systems Communications, Inc. as CEO, responsible for operations of
communications companies acquired and merged into the public company. Since
April 1997 Mr. Alexander has been President of International Teledata
Corporation, responsible for its transition from a privately held company to a
public company.
15
<PAGE>
Bradford L. Tolley is a graduate of Phillips Academy in Andover,
Massachusetts in 1982, and attended Rollins College in Winter Park, Florida. He
was employed by Westchester Ltd., Inc., as an account executive from 1984 to
1989. From 1990-1992, Mr. Tolley was employed by Bilfinger & Berger's American
subsidiary, Fru-Con Corporation, both subsidiaries of Dresdner Bank in Germany.
From 1990-1992, Mr. Tolley was Vice President of PII, one of the Internet
Companies. Mr. Tolley is currently President of Tolley Investments, Inc., a
privately held company. Mr. Tolley has been the Treasurer, Secretary and a
Director of INI since October 1996. Mr. Tolley is the son of Jack W. Tolley and
Barbara L. Tolley.
Michael Bhathena holds a B.A. in Computing & Statistics and a masters
degree in computing science, from the University of Kent in Great Britain. Mr.
Bhathena served as an assistant trader and then in the finance department at the
Hong Kong & Shanghai Banking Corporation's (HSBC) City of London Offices from
1986-1988. Mr. Bhathena served as a voice and data communications executive for
the Infocheck Group, Ltd. from 1992-93, a pioneer in providing on-line credit
information to British companies. Mr. Bhathena was employed and served as
President of PII Ltd., United Kingdom an affiliate of PII, one of the Internet
Companies from 1993-1995.
Employment Agreements
Upon Closing, Barbara Tolley will enter into a two year employment
agreement with Safe Aid with an option exercisable by Ms. Tolley to extend the
employment agreement for an additional year. Ms. Tolley's compensation will be
$120,000 per year for the initial two year term. At Ms. Tolley's option, this
sum can be paid with half cash and half stock, all cash or on an accrual basis.
Ms. Tolley will be entitled to bonus compensation based on a percentage of the
annual net pre-tax profits of Safe Aid. As an officer of Safe Aid, she will be
entitled to participate in an overall group insurance plan providing health,
life and disability insurance benefits for employees of Safe Aid. The employment
agreement will also provide for the use of an automobile and/or a monthly
automobile allowance, payment of club dues and other fringe benefits
commensurate with her duties and responsibilities.
Significant Employees
Four significant employees of GMG and TMC, the Acquisition Companies,
have entered into employment agreements with their respective companies for a
one year period after the Closing of the Merger.
On August 21, 1997, Gary Bart and Dean Constantine, the President and
Vice President of GMG each entered into an employment agreement with GMG
relating to the employment of such individuals with GMG effective as of the
Closing Date of the Merger. The employment agreements contain non-competition
and confidentiality provisions and provide that Gary Bart will be the President
of GMG and that Dean Constantine will be the Vice President of GMG. Mr. Bart and
Mr. Constantine will respectively receive salaries of $84,000 and $60,000 per
annum and will be entitled to receive an annual bonus equal to the net profits
of GMG after tax for the 1997 fiscal year.
16
<PAGE>
Anthony Diaz and Gerardo Toquica each entered into an employment
agreement with TMC dated August 1, 1997, relating to the employment of such
individuals with TMC effective as of the Closing Date of the Merger. The
employment agreements contain non-competition and confidentiality provisions.
Mr. Diaz and Mr. Toquica will each receive a salary of $72,000 per annum.
The foregoing summary of the terms of the employment agreements for the
significant employees is qualified in its entirety by reference to the
provisions of these employment agreements, a copy of which can be obtained from
Safe Aid's management pursuant to the instructions contained on page 36 hereof.
<PAGE>
PRINCIPAL STOCKHOLDERS AFTER THE MERGER
The following table sets forth certain information regarding the
identity of the persons who will be the principal stockholders of Safe Aid if
the Merger is consummated. The following table sets forth the number of shares
of Safe Aid's Common Stock that will be beneficially owned by (i) each person
who will be named a director and/or executive officer of Safe Aid after the
Merger, (ii) all directors and executive officers of Safe Aid after the Merger
as a group and (iii) each shareholder who will be a beneficial owner of more
than 5% of Safe Aid's Common Stock after the Merger. In addition to the shares
issued in the Merger, this table also reflects stock to be issued immediately
prior to the Merger for capital contributions and services rendered to INI in
connection with the Merger. After the Merger, Safe Aid will have issued an
outstanding 705,477,200 shares of its common stock. An asterisk indicates
beneficial ownership of less than 1% of the outstanding Safe Aid Common Stock
after the Merger.
Name and Future Position Amount and Nature of Percentage of Shares
Beneficial Ownership
Barbara L. Tolley 1 259,595,536 36.8
Chairman and CEO
Ruth Deutsch 2 141,595,535 20.1
Shareholder
Franklin L. Frank 3 68,000,000 9.6
Director
Bradford L. Tolley 25,000,000 3.5
Treasurer and Secretary
Jack W. Tolley 4 8,060,114 1.2
Director
Michael Bhathena 11,000,000 1.6
Vice President and Chief
Information Officer
Charles N. Martus 200,000 *
Director
Robert L. Alexander 200,000 *
Director
All officers and directors 372,055,650 52.7%
as a group
1 Excludes 8,060,114 shares held by Jack W. Tolley, Barbara Tolley's husband,
and of which Ms. Tolley disclaims beneficial interest.
2 Excludes 68,000,000 shares beneficial held by Franklin L. Frank, Ms. Deutsch's
and of which Ms. Deutsch disclaims beneficial interest.
3 Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by
Mr. Frank.
4 Excludes 259,595,536 shares held by Barbara Tolley, Jack W. Tolley's wife,
and of which Mr. Tolley disclaims beneficial interest.
<PAGE>
INFORMATION ABOUT SAFE AID
Business
Safe Aid was incorporated under Delaware law on May 21, 1987 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.
During the past several years, Safe Aid has been virtually inactive
with nominal sales and operations and has remained in its development stage.
During the past year, Safe Aid's principal business objective has been to find
and merge with an operating company that management believes could increase
shareholder value.
Employees
At present, Safe Aid has one part-time clerical employee and one
officer working part-time with respect to Safe Aid's business activities.
Inasmuch as Safe Aid is not currently and does not plan to market any products
in the near future, Safe Aid does not have any sales force.
Properties
Inasmuch as there was limited activity, Safe Aid made arrangements to
have access to office and conference facilities on an as needed basis at 300
Rabro Drive, Hauppauge, New York 11788. The cost of maintaining these office
facilities was $150 per month. This arrangement was terminated during the fiscal
year ending November 30, 1995.
Legal Proceedings
There are no legal proceedings pending to which Safe Aid is subject,
nor to the knowledge of Safe Aid are any such legal proceedings threatened.
17
<PAGE>
Changes in and Disagreements with Accountants
There have been no changes in or disagreements with Safe Aid's
accountants, Scott & Guilfoyle.
Price Range of Common Stock
Safe Aid's Common Stock is traded in the over-the-counter market under
the symbol "SFAD". The following table sets forth the high and low stock closing
bid, as reported by the National Quotation Bureau, Inc., for Safe Aid's Common
Stock for the calendar periods indicated. These quotations reflect intermediate
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
Common Stock
------------
Bid Asked
Period High/Low High/Low
- - - ------ -------- --------
1997
- - - - - - - - -
1st Quarter .0136/.00705 .0137/.0073
2nd Quarter .016/.0045 .0163/.005
1996
- - - - - - - - -
1st Quarter .002/.0015 .003/.003
2nd Quarter .06/.002 .07/.003
3rd Quarter .025/.0075 .026/.0081
4th Quarter .021/.008 .024/.0085
1995
- - - - - - - - -
1st Quarter .003/.001 .007/.004
2nd Quarter .0025/.001 .007/.004
3rd Quarter .0025/.001 .05/.003
4th Quarter .0015/.001 .05/.003
On September ___, 1997, the last trading day prior to the announcement
of the proposed Merger, the closing price per share of Safe Aid's Common Stock
was $___
The approximate number of common stockholders of record of Safe Aid as
of February 5, 1996 was 1,162.
18
<PAGE>
Dividend Policy
Safe Aid has never paid cash dividends on its Common Stock. Payment of
dividends will be within the sole discretion of Safe Aid's Board of Directors
and will depend, among other factors, upon earnings, capital requirements and
the operating and financial condition of Safe Aid. At the present time, Safe
Aid's anticipated financial capital requirements are such that it intends to
follow a policy of retaining earnings in order to finance the development of its
business.
PRINCIPAL STOCKHOLDERS
Following table contains information as of August 29, 1997, as to the
beneficial ownership of shares of Common Stock of Safe Aid of all officers and
directors of Safe Aid, each person who to the knowledge of Safe Aid at that
date, was the beneficial owner of 10% or more of the outstanding shares, and all
officers and directors of Safe Aid as a group.
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
Estate of Martin J. Feldman* 63,048,000 9.0%
Officer, Director
David J. Magid* 35,678,000 5.1%
40 Woodview Drive Shareholder
Doylestown, P.A.
Robert Reiner* 72,838,456 10.4%
3 Doyle Court Shareholder
Port Jefferson, NY
Melvin M. Fritz, D.O., M.D. 0 0%
15 Dewey Street Director
Huntington, NY
Stanley Snyder 129,798,000 18.5%
One Penn Plaza Officer, Director
Suite 1503
New York, NY
Barney Melsky 2,750,000 .4%
16 Tuxedo Drive Officer, Director
Melville, NY
All Officers and Directors as a 195,596,000 27.8%
group (including Estate of
Martin J. Feldman)
19
<PAGE>
*These individuals may be deemed "parents" and "promoters" of Safe Aid under the
rules and regulations of the Securities Act by virtue of their common stock
ownership and their effort in the organization of Safe Aid.
20
<PAGE>
MANAGEMENT'S PLAN OF OPERATIONS
Safe Aid was incorporated under Delaware law on May 21, 1987 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.
During the past several years, Safe Aid has been virtually inactive
with nominal sales and operations and has remained in its development stage.
During the past year, Safe Aid's principal business objective has been to find
and merge with an operating company that management believes could increase
shareholder value.
Safe Aid's audited financial statements for its fiscal year ended
November 31, 1996 are attached hereto as Exhibit D to this Proxy Statement and
are incorporated herein by reference. Safe Aid's unaudited financial statements
for its quarters ended February 28, 1997 and May 31, 1997, respectively, are
attached as Exhibit E to this Proxy Statement and are incorporated herein by
reference.
INFORMATION ABOUT INI
Overview
INI was incorporated under Florida law on October 2, 1996. Since its
inception, INI has grown primarily through acquisition. On January 10, 1997, INI
completed an acquisition of three Internet related companies in stock for stock
exchanges. The principal shareholder of each of the Internet related companies
was Barbara Tolley. In its January 1997 acquisition, INI acquired the following
subsidiaries: CyberPlan, Inc., a Florida corporation ("CyberPlan"), Property
Intelligence International, Inc., a Florida corporation ("PII") and In
CyberMall, Inc., a Florida company ("In CyberMall").
INI intends to expand its products and services through two more recent
acquisitions. On August 2, 1997, INI acquired TMC, a wholesaler and retailer of
custom designed and assembled computer systems and related products. On August
28, 1997, INI acquired GMG, a printer and publisher of magazines and catalogues.
See "Acquisition Companies" for more detail regarding the terms and conditions
of these acquisition agreements.
Internet Related Businesses
INI's Internet related companies are (i) CyberPlan, a company which
specializes in preparing bundled software packages, (ii) PII, an Internet
information and content service provider, and (iii) In CyberMall, an Internet
Directory for upmarket products and services.
CyperPlan is a full service marketing cyberagency specializing in what
is known as New Media. This refers specifically to the Internet, computer
network technologies, CD-ROM creations, electronic commerce, Internet software
development, and web sites with Intranet development for businesses.
21
<PAGE>
CyberPlan entered into a contract with AT&T in 1996 with AT&T's
Internet WorldNet Division. The contract calls for CyberPlan to create and
develop bundled software packages, designed around the AT&T WorldNet Internet
Service, for specialized industry communications and Internet applications. The
first product, Real Estate 2001, has recently been completed and passed AT&T
testing standards, and is now ready for market launch. Real Estate 2001 features
Internet access, Internet telephone, Internet video conferencing, and important
hyperlinks/content to the real estate industry. Additional planned Internet
software packages in the developmental stages are for the legal industry,
Spanish speaking community, and Internet desktop software for children.
PII is an Internet information and content service provider,
established in 1992 in collaboration with AT&T for their business information
services to Fortune 500 companies. With the advent of the Internet phenomenon,
PII was relocated over to the Internet and is currently located on AT&T's
InterNic Web Site, as one of eighteen public access web sites.
PII delivers online to users specialized global real estate news and
information, global financial information, global properties for sale, global
property industry employment, global property events, builder products and
services, global golf course information, as well as global hotels and resort
information. PII saves significant time in locating, searching, and sorting
specific industry data for the user.
PII maintains an Internet radio station called PII RADIO which features
various real estate personalities discussing various topics of interest to the
public or to professionals serving the real estate industry.
In CyberMall is an Internet directory exclusively containing upmarket
products and services web sites which are marketing on the Internet.
Current Internet directories, over 1,000 in total, are organized by
word search and category and they accept for inclusion into their directories
every possible type and size of industry and individuals web sites. In 1994,
there were approximately 1,250 web sites online. Currently there are over
1,000,000 web sites on the Internet. Finding the information or products that
one is looking for has become a major time factor for Internet users.
In CyberMall was designed as a 'niche Directory Locator' and a time
saver for people wanting information and access to the upmarket products and
services only. In CyberMall provides this information conveniently and easily to
them. In CyberMall is known on the Internet as 'the Mall for The Rich and
Famous.'
Within the last year, In CyberMall has begun offering Internet
electronic commerce services at the web sites of small business clients who
prefer to out source this function rather than make the sizeable investment to
offer these services directly themselves.
22
<PAGE>
Relationships between the Companies
INI's Internet and New Technology Companies offers a full service of
New Media services and Internet communications, where a client is able to have a
one stop source for his brochure, Annual Report, catalog, magazine, etc. The
client can also have those quality color collateral materials easily duplicated
and reproduced electronically for other purposes, CD-ROM, laptop presentations,
or uploaded to his web site.
Clients will also have immediate access to specially designed Internet
software for their business development, and/or special assembled specifications
for their computer hardware systems and networks for their Internet desktops.
Clients' offices can easily be connected with compatible computer network
systems with high speed electronic information transfer systems and also
directly to any of the Internet Companies creating an environment of cost
savings and speed of production.
ACQUISITION COMPANIES
TMC
Description of Business. TMC operates as a wholesaler and retailer of
custom designed and assembled computer systems and related products to dealers,
corporations and schools in the Southeast United States. TMC has focused its
efforts on the education market and has built a significant presence in
Florida schools. As a result of its school presence, TMC is now realizing
additional private sales as parents interested in PC's for the home are turning
to the same company that supplies the PC's at their children's schools. In
addition to their own retail outlet they distribute to five additional retail
stores in Central Florida.
Terms of the TMC Acquisition Agreement. Pursuant to an acquisition
agreement dated June 16, 1997 and a closing agreement dated August 2, 1997
(collectively, the "TMC Acquisition Agreement"), INI acquired all the issued and
outstanding shares of TMC in exchange for the issuance of 1,062,500 shares of
INI's common stock to the TMC shareholders.
The TMC acquisition is subject to reversal if the merger of INI with
and into Safe Aid is not closed on or before November 1, 1997. The TMC
Acquisition Agreement provides the shareholders of TMC with a guarantee of their
share price. If Safe Aid's Common Stock is trading at a price of less than $.40
per share upon the date one year after the Effective Time, Safe Aid will either
issue additional Safe Aid Common Stock so that the total value of Safe Aid
Common Stock issued to the TMC shareholders is $425,000, or pay to the TMC
shareholders in cash the difference between the value of the 1,062,500 shares
issued to the TMC shareholders and $425,000, as determined by Safe Aid.
The foregoing summary of the terms of the TMC Acquisition Agreement is
qualified in its entirety by reference to the provisions of the TMC Acquisition
Agreement, a copy of which can be obtained from Safe Aid's management pursuant
to the instructions provided on page 36 hereof.
23
<PAGE>
GMG
Description of Business. GMG is a digital pre-press company which
specializes in producing high quality full color magazine publications and
catalogs.
GMG assists in the publication of magazines by working with publishers,
advertising agencies and companies which are placing advertisements in the
publication. GMG receives the editorial content of the magazine from the
publisher and combines it on a computer with the advertising material which it
receives directly from the advertisers. Once the magazine content has been put
together, the computer is used to enhance the image quality of the magazine and
ensure there are no mistakes. The entire magazine is then produced on color
separated film that is sent to the printer.
GMG's high quality work in this field was recognized when The Boca
Raton Magazine recently won "1996 Best Produced Magazine" award. The award has
been a springboard to prestigious new accounts that have been won by GMG in
1997.
GMG also works on jewelry catalogs, which require the highest quality
work and are priced accordingly. GMG ensures that the product pictures are
scanned into a computer flawlessly and the full capabilities of GMG's computer
systems and its software are used to produce the highest quality output. Color
separations are then produced on film to be sent to the printer.
Terms of the Acquisition Agreement. Pursuant to an acquisition
agreement dated July 22, 1997 and a closing agreement dated August 28, 1997
(collectively, the "GMG Acquisition Agreement"), INI acquired all the issued and
outstanding shares of GMG in exchange for 14,000,000 shares of INI's common
stock to the GMG shareholders.
The GMG acquisition is subject to reversal if the merger of INI with
and into Safe Aid is not closed on or before November 1, 1997. The GMG
Acquisition Agreement provides the shareholders of GMG with a right of reversion
if Safe Aid's Common Stock is trading at a price lower than $.10 per share upon
the date one year from the Effective Time. If GMG's shareholders elect the right
of reversion, Safe Aid will be required to return to the GMG shareholders all of
their GMG stock, contingent upon the following terms: (i) GMG's former
shareholders must return all Safe Aid Common Stock held by them, a minimum of
10,000,000 shares, (ii) any monies which Safe Aid might have advanced to GMG as
working capital will be repaid per the terms which were established at the time
of funding by Safe Aid and (iii) Safe Aid shall be released from any lease
facility equipment guarantees which it made on behalf of GMG.
The foregoing summary of the terms of the TMC Acquisition Agreement is
qualified in its entirety by reference to the provisions of the TMC Acquisition
Agreement, a copy of which can be obtained from Safe Aid's management pursuant
to the instructions contained on page 36 hereof.
24
<PAGE>
Employees
As of September 1, 1997, INI employed 18 persons, including employees
of GMG and TMC, which are operating as wholly-owned subsidiaries.
Property
INI leases executive offices located at 249 Peruvian Avenue, Palm
Beach, Florida. TMC and GMG each lease office space in Tampa and North Miami,
respectively.
Legal Proceedings
INI is not a party to any material litigation presently pending nor, to
the best knowledge of INI, have any such proceedings been threatened. Similarly,
TMC and GMG are not parties to any material litigation presently pending nor, to
the best of their knowledge, have any such proceedings been
threatened.
Market Price and Dividends on Common Stock
INI is a privately-owned corporation; therefore there is no public
market price available with respect to INI's Common Stock. Since its inception,
INI has not paid any dividends with respect to INI's Common Stock.
On September 6, 1997, INI had 15 stockholders.
MANAGEMENT'S PLAN OF OPERATIONS
Organization and Development Stage Activities
INI was incorporated under Florida law on October 2, 1996. INI intends
to become known as a company that provides a wide range of New Media and New
Technology Services. Since its inception, INI's activities has been primarily
related to (i) acquiring the Internet Companies, (ii) negotiating and executing
the Merger Agreement with Safe Aid, (iii) acquiring the Acquisition Companies
and (iv) searching for additional acquisition companies.
On January 10, 1997, INI acquired CyberPlan, PII and In CyberMall in
stock-for-stock exchanges. The principal shareholder of each of these companies
was Barbara Tolley, the CEO and Chairman of INI. On August 29, 1997, INI entered
into the Merger Agreement with Safe Aid. Consummation of the Merger is subject
to the approval of Safe Aid stockholders at the Special Meeting and other
customary conditions. Pursuant to the Merger Agreement, an aggregate of
585,819,936 shares of Safe Aid Common Stock will be issued in exchange for all
of the issued and outstanding shares of INI. Safe Aid will also issue 49,109,544
shares of Safe Aid Common Stock to certain brokers, finders and consultants for
services rendered in the Merger transaction.
25
<PAGE>
On August 2, 1997, INI acquired TMC, a wholesaler and retailer of
custom designed and assembled computer systems and related products, in a stock
for stock exchange, subject to the closing of the Merger by November 1, 1997. On
August 28, 1997, INI acquired GMG, a digital pre-press company, in a stock for
stock exchange, subject to the closing of the Merger by November 1, 1997.
Results of Operations
Since its inception, INI has been engaged in organizational activities
and has had no sales. Its operating expenses from January 1, 1997 through June
30, 1997 have been approximately $61,857. These operating expenses have
consisted primarily of the following: office expenses, salaries, travel, legal,
accounting, consulting fees, licensing and supplies.
Liquidity and Capital Resources
INI has financed its operations and acquisitions primarily with sales
of its common stock and capital contributions from its shareholders. Since its
inception, INI has raised approximately $520,000 through sales of its common
stock in private transactions. These transactions have included sales to third
parties for cash, as well as issuances of common stock to third parties in lieu
of compensation and fees. Net cash used in operating expenses since INI's
inception was approximately $61,857.
INI has completed five acquisitions since its formation, and intends to
continue to achieve growth through acquisitions. To pursue its acquisition
strategy, INI may incur short-term or long-term borrowings and/or issue
additional shares of its common stock or other securities. Except for the
Merger, INI has no current plans or commitments for any other acquisitions.
INI believes that its current cash reserves will allow INI to continue
to meets its expected operating expenses for at least six months following the
date of this Proxy Statement. INI believes that its future working capital
requirements will be satisfied from net income, future borrowings and/or sales
by INI of additional securities. Additionally, to achieve INI's acquisition
strategy, INI may be required to seek additional financing and/or issue
additional shares of common stock or other securities. If INI is unable to
obtain adequate financing, it may be required to curtail its acquisitions plans.
No additional funding for any of these purposes has been committed to date.
26
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of INI's Common Stock as of September 6, 1997, with respect
to (i) each of INI's directors and executive officer, (ii) all directors and
officers of INI as a group and (iii) each person known by INI to own
beneficially more than 5% of INI's Common Stock. An asterisk indicates
beneficial ownership of less than 1% of the outstanding INI Common Stock. Except
as otherwise indicated, each of the shareholders listed below has sole voting
and investment power over the shares beneficially owned and the address of each
beneficial owner is c/o INI, 249 Peruvian Avenue, Palm Beach, Florida 33480. As
of September 5, 1997, there were issued and outstanding 584,513,686 shares of
common stock of INI.
Name and address of Beneficial Amount and Nature of Percentage of Shares
Owner Beneficial Ownership
Barbara L. Tolley 1 259,595,536 44.4
Ruth Deutsch 2 141,595,535 24.2
Franklin L. Frank 3 68,000,000 11.6
Bradford L. Tolley 25,000,000 4.3
Jack W. Tolley 4 8,060,114 1.4
All officers and directors 36,0655,650 61.7
as a group
- - - --------
1 Excludes 8,060,114 shares held by Jack W. Tolley, Barbara Tolley's
husband, and of which Ms. Tolley disclaims beneficial interest.
2 Excludes 68,000,000 shares beneficially held by Franklin L. Frank,
Ms. Deutsch's husband, and of which Ms. Deutsch disclaims beneficial interest.
3 Includes 34,000,000 shares held by LVDB, Inc., a corporation
controlled by Mr. Frank. Excludes 141,595,535 shares held by Ms. Deutsch, Mr.
Frank's wife, and of which Mr. Frank disclaims beneficial interest.
4 Excludes 259,595,536 shares held by Barbara Tolley, Jack W. Tolley's
wife, and of which Mr. Tolley disclaims beneficial interest.
27
<PAGE>
PROPOSALS TO THE SAFE AID STOCKHOLDERS
The Safe Aid Board of Directors unanimously approved each of the
following proposals effective as of August 29, 1997, for presentation to Safe
Aid's stockholders. In order for Safe Aid to consummate the Merger, its
stockholders need to approve and adopt each of the proposals presented at the
Special Meeting.
PROPOSAL 1. REVERSE STOCK SPLIT
The Board of Directors of Safe Aid has adopted, subject to stockholder
approval, an amendment to its Certificate of Incorporation to effect a reverse
stock split pursuant to which each ten shares of Safe Aid Common Stock ("Old
Common Stock") will become one share of Safe Aid's then outstanding common stock
("New Common Stock").
Purpose and Effects of the Reverse Stock Split
In the Merger Agreement, Safe Aid covenants that it will effect a
ten-for-one reverse stock split prior to the Closing of the Merger. As of the
Safe Aid Record Date, 705,477,720 shares of Safe Aid Common Stock were issued
and outstanding. The ten-for-one Reverse Stock Split would reduce the number of
issued and outstanding shares of Safe Aid Common Stock to 70,547,720 shares,
with no change in the par value of Safe Aid Common Stock.
If the Reverse Stock Split is approved by the stockholders, the Reverse
Stock Split will become effective at such time as Safe Aid files a
Certificate of Amendment with the Secretary of State of Delaware (the "Delaware
Secretary of State"). Safe Aid will not file a Certificate of Amendment with the
Delaware Secretary of State unless the Safe Aid stockholders approve each of the
Safe Aid Proposals described in this Proxy Statement. Exhibit B contains the
full text of the amendment that will be filed with the Delaware Secretary of
State if INI's stockholders approve the Reverse Stock Split, the Common Stock
Amendment and the Name Change Amendment.
Upon the filing of the Certificate of Amendment, all of the Old Common
Stock will be converted into New Common Stock as set forth in the Certificate of
Amendment. From and after the Effective Time, certificates representing shares
of Old Common Stock shall be deemed to represent only the right to receive
shares of New Common Stock to which an individual stockholder is entitled.
As soon as practicable after the Effective Date, Safe Aid will request
all stockholders to return their stock certificates representing issued shares
of Old Common Stock outstanding at the Effective Time ("Old Certificates") in
exchange for certificates representing the number of whole shares of New Common
Stock into which the shares of Common Stock have been converted ("New
Certificates") as a result of the Reverse Stock Split. No certificates
representing fractional share
28
<PAGE>
interests in the New Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to vote, or to any rights of a
stockholder of Safe Aid. Any fractional share interest will result in the
adjustment of the number of shares upward or downward to the nearest whole
share. Each stockholder will receive a letter of transmittal from the Transfer
Agent containing instructions on how to exchange certificates. In order to
receive New Certificates, stockholders must surrender their Old Certificates
pursuant to the Transfer Agent's instructions, together with the properly
executed and completed letter of transmittal and such evidence of ownership of
such shares as Safe Aid may require.
STOCKHOLDERS SHOULD NOT SUBMIT THEIR OLD CERTIFICATES TO THE TRANSFER
AGENT UNTIL THEY RECEIVE THESE INSTRUCTIONS.
Beginning at the Effective Time, each Old Certificate will, until
surrendered and exchanged as described above, will be deemed for all corporate
purposes to evidence ownership of the whole number of shares of common stock
into which the shares evidenced by such Old Certificate have been converted.
The affirmative vote of the holders of a majority of Safe Aid's Common
Stock is required to approve and adopt the Reverse Stock Split.
The Safe Aid Board Recommends a Vote in Favor of the Reverse Stock
Split.
PROPOSAL 2. INCREASING AUTHORIZED COMMON STOCK
The Board of Directors of Safe Aid has adopted, subject to stockholder
approval, an amendment to its Certificate of Incorporation to increase the
number of authorized shares of common stock, par value $.00001 per share, from
950,000,000 to 999,999,000 shares. The Common Stock Amendment will not be filed
with the Delaware Secretary of State unless the Safe Aid stockholders approve
each of the Safe Aid Proposals described in this Proxy Statement.
The Common Stock Amendment provides for authorization of 49,999,000
additional shares of Safe Aid Common Stock. After the Reverse Stock Split and
the Merger are effectuated, 705,477,200 shares of Safe Aid Common Stock will be
issued and outstanding. In addition, at the time Safe Aid will have reserved
14,727,280 shares for issuance upon the exercise of certain outstanding
warrants.
If the Common Stock Amendment is adopted and the Certificate of
Amendment is filed with the Delaware Secretary of State, the first paragraph of
Article 4 of Safe Aid's Certificate of Incorporation shall be as follows:
"The total number of shares of stock which the Corporation
shall have the authority to issue is Nine Hundred Ninety Nine
Million Nine Hundred Ninety Nine Thousand (999,999,000)
shares, par value
29
<PAGE>
$.00001 per share. All such shares are of one class and are
shares of Common Stock."
The Board of Directors of Safe Aid believes that it is desirable to
have additional authorized shares of common stock available for possible future
financings, acquisition transactions and other general corporate purposes.
Having such additional authorized shares of common stock available for issuance
in the future would give Safe Aid greater flexibility and may allow such shares
to be issued without the expense and delay of a special stockholders meeting.
Although such issuance of additional shares in respect of future acquisitions
and financings would dilute existing stockholders, management believes that such
transactions would increase the value of Safe Aid to its stockholders.
The affirmative vote of the holders of a majority of Safe Aid's Common
Stock is required to approve and adopt the Common Stock Amendment.
The Safe Aid Board recommends a vote in favor of the Common Stock
Amendment.
PROPOSAL 3. NAME CHANGE
The Board of Directors of Safe Aid has adopted, subject to stockholder
approval, an amendment to its Certificate of Incorporation to change its name to
"Safe Technologies International, Inc." The Name Change Amendment will not be
filed with the Delaware Secretary of State unless the stockholders approve each
of the Safe Aid Proposals.
One of the conditions of the Merger Agreement is that Safe Aid change
its name to "Safe Technologies International, Inc.," which management believes
is more descriptive of Safe Aid's new combined business activities.
The following is the text of the proposed amendment to Article 1 of
Safe Aid's Certificate of Incorporation:
"The name of this corporation shall be Safe Technologies International,
Inc."
The affirmative vote of the holders of a majority of Safe Aid's Common
Stock is required to approve and adopt the Name Change Amendment.
The Safe Aid Board recommends a vote in favor of the Name Change
Amendment.
30
<PAGE>
PROPOSAL 4. Merger Proposal
The Board of Directors of Safe Aid has unanimously approved and adopted
the Merger Agreement and the Merger and has determined that the Merger is in the
best interests of, and is on terms that are fair to, Safe Aid and its
stockholders and unanimously recommends that Safe Aid stockholders vote in favor
of the approval and adoption of the Merger Agreement and the Merger. The
determination of the Safe Aid Board was based upon consideration of a number of
factors described in the "Proposed Merger - Reasons for the Merger;
Recommendations of the Safe Aid Board".
The affirmative vote of the holders of a majority of Safe Aid's Common
Stock is required to approve and adopt the Merger Proposal.
The Safe Aid Board recommends a vote in favor of the Merger Proposal.
DESCRIPTION OF SAFE AID'S CAPITAL STOCK
The following description of Safe Aid's securities does not purport to
be complete and is subject in all respects to applicable Delaware law and to the
provisions of Safe Aid's Certificate of Incorporation.
General
The Certificate of Incorporation of Safe Aid authorizes 950,000,000
shares of Common Stock, $.00001 par value per share.
Common Stock
Safe Aid currently has outstanding 705,477,200 shares of common stock.
Holders of Safe Aid's Common Stock are entitled to cast one vote for each share
held of record on all matters submitted to a vote of holders of Safe Aid's
Common Stock, including the election of directors. There is no right to cumulate
votes for the election of directors. Stockholders holding a majority of the
voting power of the capital stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a quorum at any
meeting of Safe Aid's stockholders, and the vote by the holders of a majority of
such outstanding shares is required to effect certain fundamental corporate
changes such as liquidation, merger or amendment of Safe Aid's Certificate of
Incorporation.
31
<PAGE>
Holders of Safe Aid's Common Stock are entitled to receive dividends
pro rata based on the number of shares held, when, as and if declared by Safe
Aid's Board of Directors, from funds legally available therefore. In the event
of liquidation, dissolution or winding up of the affairs of Safe Aid, all assets
and funds of Safe Aid remaining after the payment of all debts and other
liabilities shall be distributed, pro rata, among the holders of Safe Aid Common
Stock. Holders of Safe Aid Common Stock are not entitled to preemptive or
subscription or conversion rights and there are no redemption or sinking fund
provisions applicable to Safe Aid Common Stock. All outstanding shares of Safe
Aid Common Stock are, and the shares of Safe Aid Common Stock offered hereby
will be when issued, fully paid and non-assessable.
Redeemable Common Stock Purchase Warrants.
In June of 1988, Safe Aid completed a sale of 150,000 units to the
public at a price of $10 per unit. 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, entitled
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, entitled the holder
to purchase one share of common stock for $.05 per share. The exercise periods
of both Class A and Class B Warrants have been extended by the Board of
Directors through January 9, 1998. At May 31, 1997, 147,272,800 shares of common
stock were reserved in connection with such warrants, which number of shares
will be reduced to 14,727,280 as a result of the proposed reverse stock split.
Business Combination Provision
Safe Aid is subject to a Delaware statute regulating "business
combinations," defined to include a broad range of transactions between
Delaware corporations and "interested stockholders," defined as persons who have
acquired at least 15% of a corporation's stock. Under the law, a corporation may
not engage in any business combination with any interested stockholder for a
period of three years from the date such person became an interested stockholder
unless certain conditions are satisfied. Safe Aid has not sought to "elect out"
of the statute and, therefore the restrictions imposed by such statute apply to
Safe Aid.
APPRAISAL RIGHTS
Safe Aid
Holders of record of Safe Aid Common Stock who do not vote in favor of
the Merger Proposal and who otherwise comply with the applicable statutory
procedures summarized herein will be entitled to appraisal rights under Section
262 ("Section 262") of the Delaware General Corporation Law ("DGCL"). A person
having a beneficial interest in shares of Safe Aid Common Stock held of record
in the name of another person, such as a broker or nominee, must act promptly to
cause the record holder to follow the steps summarized below properly and in a
timely manner to perfect appraisal rights.
32
<PAGE>
The following discussion is not a complete statement of the law
pertaining to appraisal rights under the DGCL and is qualified in its entirety
by the full text of Section 262 which is reprinted in its entirety as Exhibit C.
All references in Section 262 and in this summary to a "stockholder" or "holder"
are to the record holder of the shares of Safe Aid Common Stock as to which
appraisal rights are asserted.
Under the DGCL, holders of shares of Safe Aid Common Stock ("Appraisal
Shares") who follow the procedures set forth in Section 262 will be entitled to
have their Appraisal Shares appraised by the Delaware Chancery Court and to
receive payment in cash of the "fair value" of such Appraisal Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, as determined by
such court.
Under Section 262, where a proposed merger is to be submitted for
approval at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, must notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal rights
are available, that appraisal rights are so available, and must include in such
notice a copy of Section 262.
This Proxy Statement constitutes such notice to the holders of
Appraisal Shares and the applicable statutory provisions of the DGCL are
attached to this Proxy Statement as Exhibit C. Any stockholder who wishes to
exercise such appraisal rights or who wishes to preserve his right to do so
should review the following discussion and Exhibit C carefully, because failure
to timely and properly comply with the procedures specified will result in the
loss of appraisal rights under the DGCL.
A holder of Appraisal Shares wishing to exercise such holders'
appraisal rights (a) must not vote in favor of the Merger Proposal and (b) must
deliver to Safe Aid prior to the vote on the Merger at the Safe Aid meeting to
be held on September __, 1997, a written demand for appraisal of such holder's
Appraisal Shares.
All written demands for appraisal should be sent or delivered to
English, McCaughan & O'Bryan, P.A., 100 N.E. Third Avenue, Suite 1100, Fort
Lauderdale, Florida 33301, Attention: Gerald W. Gritter, Esq.
Within 10 days after the consummation of the Merger, Safe Aid will
notify each stockholder who has properly asserted appraisal rights under Section
262 and has not voted in favor of the Merger Proposal of the date the Merger
became effective.
Within 120 days after the consummation of the Merger, but not
thereafter, Safe Aid or any stockholder who has complied with the statutory
requirements summarized above may file a petition in the Delaware Chancery Court
demanding a determination of the fair value of the Safe Aid Common Stock. Safe
Aid is under no obligation to and has no present intention to file a petition
with respect to the appraisal of the fair value of the Appraisal Shares.
Accordingly, it is the
33
<PAGE>
obligation of the stockholders to initiate all necessary action to perfect their
appraisal rights within the time prescribed in Section 262.
Within 120 days after the consummation of the Merger, any stockholder
who has complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from Safe Aid a statement setting
forth the aggregate number of Appraisal Shares not voted in favor of adoption of
the Merger Proposal and with respect to which demands for appraisal have been
received and the aggregate number of holders of such Appraisal Shares. Such
statements must be mailed with ten days after a written request therefor has
been received by Safe Aid.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the "fair value" of their Appraisal
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. Stockholders considering
seeking appraisal should be aware that the fair value of their Appraisal Shares
as determined under Section 262 could be more than, the same as or less than the
value of the consideration they would receive pursuant to the Merger Agreement
if they did not seek appraisal of their Appraisal Shares and that investment
banking opinions as to fairness from a financial point of view are not
necessarily opinions as to fair value under Section 262. The Delaware Supreme
Court has stated that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings.
The Delaware Chancery Court will determine the amount of interest, if
any, to be paid upon the amounts to be received by persons whose Appraisal
Shares have been appraised. The costs of the action may be determined by the
Delaware Chancery Court and taxed upon the parties as the Delaware Chancery
Court deems equitable. The Delaware Chancery Court may also order that all or a
portion of the expenses incurred by any stockholder in connection with an
appraisal, including, without limitation, reasonable attorneys fees and the fees
and expenses of experts utilized in the appraisal proceeding, be charged pro
rata against the value of all of the Appraisal Shares entitled to appraisal.
Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, after the consummation of the Merger, be
entitled to vote the Appraisal Shares subject to such demand for any purpose or
be entitled to the payment of dividends or other distributions on those
Appraisal Shares (except dividends or other distributions payable to holders of
record of Appraisal Shares as of a record date prior to the consummation of the
Merger).
If any stockholder who properly demands appraisal of his Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his right to appraisal, as provided in the DGCL the Appraisal Shares of such
stockholder will be converted into the right to receive the consideration
receivable with respect to such Appraisal Shares in accordance with the Merger
Agreement. A stockholder will fail to perfect, or effectively lose or withdraw,
his right to appraisal if, among other
34
<PAGE>
things, no petition for appraisal is filed within 120 days after the
consummation of the Merger, or if the stockholder delivers to Safe Aid a written
withdrawal of his demand for appraisal. Any such attempt to withdraw an
appraisal demand more than 60 days after the consummation of the Merger will
require the written approval of Safe Aid.
The foregoing discussion only summarizes Section 262. Safe Aid
stockholders are urged to review such section in its entirety which is included
as Exhibit C to this Proxy Statement. Any holder of Safe Aid Common Stock who
intends to dissent from the Merger should review the text of Section 262
carefully and should also consult with his or her attorney. Any Safe Aid
stockholder who fails to strictly follow the procedures set forth in Section 262
will forfeit such dissenters' rights.
OTHER MATTERS
As of the date of this Proxy Statement, the Safe Aid Board knows of no
matters that will be presented for consideration at the Special Meeting other
than as described in this Proxy Statement. If any other matters shall properly
come before either such meeting or any adjournments or postponements thereof and
be voted upon, the enclosed proxies will be deemed to confer discretionary
authority on the individuals named as proxies therein to vote the shares
represented by such proxies as to any such matters. The persons named as proxies
intend to vote or not to vote in accordance with the recommendation of the
management of Safe Aid.
LEGAL MATTERS
The validity of the Safe Aid Common Stock to be issued in the Merger
will be passed upon by Lazer, Aptheker, Feldman, Rosella & Yedid,
LLP, Melville, New York.
EXPERTS
The audited financial statements of Safe Aid at November 31, 1996 and
1995, and for the years then ended appearing in this Proxy Statement have been
audited by Scott & Guilfoyle, independent auditor, as set forth in their report
thereon and incorporated herein by reference. Such audited financial statements
have been incorporated herein by reference in reliance upon such report given
upon the authority of such firms as experts in accounting and auditing.
INDEPENDENT ACCOUNTANTS
Representatives of Scott & Guilfoyle are expected to be present at the
Special Meeting. These representatives will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
35
<PAGE>
INCORPORATION BY REFERENCE
Safe Aid incorporates by reference herein the following documents filed
pursuant to the Exchange Act under Safe Aid's Exchange Act File No. 0-17746:
1. Safe Aid's Annual Report on Form 10-KSB for the year ended
November 31, 1996;
2. Safe Aid's Quarterly Reports on Form 10-QSB for the quarters ended
February 28, and May 31, 1997;
3. Safe Aid's Current Reports on Form 8-K filed on February 25, 1997,
March 4, 1997 and June 17, 1997, respectively;
4. The description of Safe Aid's capital stock which is contained in
Safe Aid's registration statement on Form 8-A dated May 9, 1989.
All documents and reports filed by Safe Aid pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Proxy Statement
and prior to the date of the Special Meeting shall be deemed to be incorporated
by reference in this Proxy Statement and to be a part hereof from the dates of
filing of such documents or reports. Any statement contained in a document
incorporated or deemed to incorporated by reference herein shall be deemed to be
modified or superseded for the purpose of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement.
This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference)
are available, without charge, to any person, including any beneficial owner, to
whom this Proxy Statement is delivered, on written or oral request to Safe Aid
Products Incorporated, c/o Lazer, Aptheker, Feldman, Rosella & Yedid, LLP, 225
Old Country Road, Melville, New York 11747-2712 (telephone number (516)
364-3887) Attention: Barney Melsky, Secretary. In order to ensure timely
delivery of the documents prior to the Special Meeting, request should be made
by ______________, 1997.
36
<PAGE>
SAFE AID PRODUCTS INCORPORATED
THIS STOCKHOLDER PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS SEPTEMBER __, 1997
The undersigned hereby appoints Stanley Snyder, Barney Melsky, or either of
them, as proxies, each with the power to appoint his substitute, to represent,
and vote all share of Common Stock of and on behalf of the undersigned as
designated on the reverse side at the Special Meeting of Stockholders of Safe
Aid Products Incorporated, to be held September __, 1997, and any adjournments
thereof, with all powers the undersigned would possess if personally present and
voting at such meeting. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Special Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4
1. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A TEN-FOR-ONE
REVERSE STOCK SPLIT
FOR _____ AGAINST ____ ABSTAIN ____
2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK
FOR _____ AGAINST ____ ABSTAIN ____
3. PROPOSAL TO CHANGE SAFE AID'S NAME TO SAFE TECHNOLOGIES INTERNATIONAL, INC.
FOR _____ AGAINST ____ ABSTAIN ____
4. PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT WITH INI AND THE
TRANSACTIONS CONTEMPLATED THEREBY
FOR _____ AGAINST ____ ABSTAIN ____
This Proxy, when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is indicated, the Proxy will be
voted FOR Proposals 1, 2, 3 & 4.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Date:____________________________ , 1997.
______________________________________________________________
Signature
______________________________________________________________
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME(S) APPEAR(S) HEREON. If shares are held in the name
of two or more persons, all must sign. When signing as Attorney, Executor,
Administrator, Personal Representative, Trustee, or Guardian, give full title as
such. If signer is a corporation, sign full corporate name by duly authorized
officer.
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of
Safe Aid Products Incorporated:
We hereby consent to the use of our report dated February 5, 1997 on
the financial statements of Safe Aid Products Incorporated as of November 30,
1996 in the preliminary proxy statement of Safe Aid Products Incorporated to be
filed with the Securities and Exchange Commission on September 11, 1997 (the
"Preliminary Proxy Statement").
We also consent to the reference of our firm under the caption
"Experts" in the Preliminary Proxy Statement.
/s/ Scott Guilfoyle
Lake Success, New York
September 11, 1997
EXHIBIT "A"
-----------
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is entered into on August 29,
1997, by and among INTELLIGENCE NETWORK INTERNATIONAL, INC., a Florida
corporation ("INI") and SAFE AID PRODUCTS INCORPORATED, a Delaware corporation
("Safe Aid").
RECITALS
The Boards of Directors of Safe Aid and INI believe that the merger of
INI with and into Safe Aid would be advantageous and beneficial and in the best
interests of INI and Safe Aid and their respective shareholders.
It is the intention of the parties hereto that: (i) INI shall be merged
with and into Safe Aid (the "Merger") (ii) effective as of Closing, each
outstanding share of the common stock of INI will be converted into one share of
the common stock of Safe Aid; (ii) the Merger shall qualify as a transaction in
securities exempt from registration or qualification under the Securities Act of
1933, as amended (the "Securities Act"), and under applicable state securities
laws; and (iii) the Merger shall qualify as a tax-free reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and intending to be legally bound, the parties hereto agree as
follows:
1. Recitals and Definitions.
-------------------------
(a) The foregoing RECITALS are true and correct, and are
incorporated herein and made a part hereof.
(b) For purposes of this Agreement, the terms set forth below
shall have the following meanings:
INI Statements - audited consolidated financial statements of INI
for the fiscal year ended December 31, 1996
Safe Aid
Statements - unaudited financial statements of Safe Aid for the
fiscal years ended November 30, 1995 and 1996
Closing - the consummation of the transaction of events set
forth in Section 11 hereof
A-1
<PAGE>
Closing Date - the day on which the Closing is held as set forth
in Section 7 hereof and the time that Articles of
Merger are filed in accordance with the General
Corporation Law of the State of Delaware.
Common Stock - common stock, $.00001 par value per share, of Safe
Aid
Merger - the merger of INI with and into Safe Aid which
will result in the conversion of each outstanding
share of the common stock of INI into one share of
the Merger Stock
Merger Stock - 585,819,936 shares of Safe Aid Common Stock
2. The Merger.
-----------
(a) Safe Aid and INI agree that on the Closing Date INI shall be
merged with and into Safe Aid, which shall be the surviving corporation, and
Safe Aid shall change its name to "Safe Technologies International, Inc." or
such other name as may be designated by INI. Safe Aid shall retain its current
stock trading symbol. Pursuant to the Merger, each share of common stock of INI
issued and outstanding immediately prior to the Closing shall, without any
action on the part of the holder thereof, be converted into one share of the
Merger Stock. No other consideration shall be payable to the INI stockholders in
connection with the Merger. The issuance of the Merger Stock will not be
registered pursuant to the Securities Act.
(b) From and after the Closing, the Articles of Incorporation and
Bylaws of Safe Aid as in effect immediately prior to the Closing shall be the
Articles of Incorporation and Bylaws of Safe Aid, as the surviving corporation,
until further amended, except that Article FIRST of the Safe Aid Articles of
Incorporation shall be amended to read as follows, effective upon consummation
of the Merger:
"The name of the Corporation is SAFE TECHNOLOGIES INTERNATIONAL, INC.
3. Representations and Warranties of INI. As a material inducement to
Safe Aid to enter into this Agreement and consummate the transactions
contemplated hereby, INI makes the following representations and warranties to
Safe Aid. The representations and warranties are true and correct in all
material respects at this date, and will be true and correct in all material
respects on the Closing Date as though made on and as of such date.
(a) INI Statements. Schedule 3(a) contains the INI Statements. The
INI Statements and financial information contained therein present fairly the
financial condition of INI for the periods covered (subject, in the case of
unaudited statements, to normal year-
A-2
<PAGE>
end audit adjustments which will not be material to INI, taken as a whole, in
amount or effect). The INI Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied. The books and
records of INI, financial and other, are in all material respects complete and
correct and have been maintained in accordance with good business and accounting
practices.
(b) Undisclosed Liabilities. INI does not have any liabilities or
obligations of any nature, fixed or contingent, matured or unmatured, that are
not shown or otherwise provided for in INI Statements, except for liabilities
and obligations arising subsequent to the date of INI Statements in the ordinary
course of business, none of which individually or in the aggregate will be
materially adverse to the business or financial condition of INI. There are no
material loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 of the Financial Accounting Standards Board) of INI
that will not be adequately provided for.
(c) Materially Adverse Change. Since the date of the most recent
INI Statements, the business of INI has been operated in the ordinary course and
there has
not been:
(i) Any materially adverse change in the business,
condition (financial or otherwise), results of operations, prospects,
properties, assets, liabilities, earnings or net worth of INI for such period or
at any time during such period.
(ii) Any material damage, destruction or loss (whether
or not covered by insurance) affecting INI or its assets, properties or
businesses.
(iii) Any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of the capital stock of
INI, or any direct or indirect redemption, purchase or other acquisition of any
such stock or any agreement to do so.
(iv) Any issuance or sale by INI, or agreement by INI
to sell or pledge any of its securities, other than the issuance of common stock
as contemplated in Section 9(d) of this Agreement and issuances of common stock
to existing shareholders of INI for cash and/or services rendered. No
irrevocable proxies been given with respect to any securities of INI.
(v) Any statute, rule, regulation or order adopted by
any governmental body, agency or authority (including orders of regulatory
authorities with jurisdiction over INI) that materially and adversely affects
INI or their respective businesses or financial conditions.
(vi) Any material increase in the rate of compensation
or in bonus or commission payments payable or to become payable to any of the
salaried employees
A-3
<PAGE>
of INI; provided, however, that this subsection shall not restrict or limit INI
in any way from hiring additional personnel who are required for their
operations.
(vii) Any other events or conditions of any character
that may reasonably be expected to have a materially adverse effect on INI or
their business or financial condition.
(d) Litigation. There are no actions, suits, claims,
investigations or legal, administrative or arbitration proceedings pending or,
to the knowledge of INI, threatened against INI, whether at law or in equity, or
before or by any federal, state, municipal, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, nor does INI
know of any basis for any such action, suit, claim, investigation or proceeding.
(e) Compliance: Governmental Authorizations. INI has complied
in all material respects with all federal, state, local or foreign laws,
ordinances, regulations and orders applicable to its business, including without
limitation, federal and state securities, banking collection and consumer
protection laws and regulations that, if not complied with, would materially and
adversely affect its businesses. INI has all federal, state, local and foreign
governmental licenses and permits necessary for the conduct of its business.
Such licenses and permits are in full force and effect. INI knows of no
violations of any such licenses or permits. No proceedings are pending or
threatened to revoke or limit the use of such licenses or permits.
(f) Due Organization. INI is a corporation duly organized and
validly existing; its status is active; it is qualified to do business and in
good standing in each state where the properties owned, leased or operated, or
the business conducted, by them require such qualification and where failure to
so qualify would have a material adverse effect on their financial condition,
properties, business or results of operations. INI has the power to own its
properties and assets and to carry on its business as now presently conducted. A
true and complete copy of the Articles of Incorporation, By-Laws and Minutes of
Board of Directors and Stockholders Meetings of INI are attached hereto as
Schedule 3(f) and are made a part hereof.
(g) Tax Matters. INI has, or at the time of the Closing
hereunder will have, filed all federal, state and local tax or related returns
and reports due or required to be filed, which reports will accurately reflect
in all material respects the amount of taxes due. INI has paid all amounts or
taxes or assessments that would be delinquent if not paid as of the date of this
Agreement, and will have paid such required amounts as of the Closing Date.
There are no tax liens with respect to any properties owned by INI.
(h) Agreements. Schedule 3(h) contains a true and complete
list and brief description of all material written or oral contracts,
agreements, mortgages, obligations, understandings, arrangements, restrictions
and other instruments to which INI is a party
A-4
<PAGE>
or by which INI or its assets may be bound. True and correct copies of all items
set forth on Schedule 3(h) have been or will have been made available to Safe
Aid prior to the Closing. No event has occurred that (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a material default by INI under any of the contracts or agreements
set forth in Schedule 3(h). INI has no knowledge of any material default by the
other parties to such contracts or agreements. In addition, no material
violations have occurred pursuant to any loan agreements to which any of INI is
a party.
(i) Title to Property and Related Matters. INI has, and at the
time of the Closing will have, good and marketable title to all of its
properties, interests in properties and assets, real, personal and mixed, owned
by it at the date of this Agreement or acquired by it after the date of this
Agreement, of any kind or character, free and clear of any liens or
encumbrances. Except for matters that may arise in the ordinary course of
business, the assets of INI are in good operating condition and repair,
reasonable wear and tear excepted. To the best of the knowledge of INI, there
does not exist any condition that materially interferes with the use thereof in
the ordinary course of the business of INI.
(j) Licenses; Trademarks; Trade Names. Schedule 3(j) sets
forth all licenses, trademarks, trade names, service marks, copyrights, patents
or any applications for any of the foregoing that relate to the business of INI,
all of which are solely owned by INI, free and clear of any claims, liens or
encumbrances except as set forth on Schedule 3(j).
(k) Due Authorization. This Agreement has been duly
authorized, executed and delivered by INI and constitutes a valid and binding
agreement of INI, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and
other similar laws relating to, limiting or affecting the enforcement of
creditors rights generally or by the application of equitable principles.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, nor compliance with any of the provisions
hereof, will violate any order, writ, injunction or decree of any court or
governmental authority, or violate or conflict with in any material respect or
constitute a default under (or give rise to any right of termination,
cancellation or acceleration under) any provisions of INI's Articles of
Incorporation or Bylaws, the terms or conditions or provisions of any note,
bond, lease, mortgage, obligation, agreement, understanding, arrangement or
restriction of any kind to which INI is a party or by which INI or its
properties may be bound, or violates any statute, law, rule or regulation
applicable to INI. No consent or approval by any governmental authority is
required in connection with the execution and delivery by INI of this Agreement
or the consummation of the transactions contemplated hereby.
(l) Capitalization. The authorized capitalization of INI as of
the Closing Date will consist of 600,000,000 shares of no par value common stock
of which 585,819,936 shares will be issued and outstanding. Included within such
issued and
A-5
<PAGE>
outstanding shares are shares of INI common stock to be issued as necessary and
appropriate to fulfill the conditions precedent to Closing as set forth in
Section 9(d) of this Agreement. All issued and outstanding shares, when issued,
will be duly authorized, validly issued, fully paid and non-assessable, and will
be issued in compliance with applicable federal and state securities laws and
regulations. Except for the foregoing, there are no outstanding or presently
authorized securities, warrants, preemptive rights, subscription rights or
options to issue any of INI's securities.
(m) Full Disclosure. INI has, and at the Closing Date will
have, disclosed to Safe Aid in the Schedules to this Agreement or independently,
in writing, or made available to Safe Aid, documents, books and records
pertaining to, all events, conditions and facts materially affecting the
properties, business and prospects of INI. INI has not and will not have, at the
Closing Date, withheld disclosure or availability of any events, conditions and
facts of which it may have knowledge and that may materially and adversely
affect the properties, businesses or prospects of INI.
(n) Brokerage Fees. INI has not incurred, and will not incur,
any liability for brokerage or finder's fees or similar charges in connection
with this Agreement, except for finders' fees due to Robert Weinberg and Norman
and Bernice Moskowitz, which fees will be paid by Safe Aid on the Closing Date
by issuance of 3,527,386 shares of Common Stock to Robert Weinberg or his
designees and 3,527,386 shares of Common stock to Norman and Bernice Moskowitz
or their designees.
(o) Employee Benefit Plans. True and complete copies of all
employee benefit plans of INI, in any, have been heretofore delivered to Safe
Aid.
(p) Not Investment Company. INI is not an "investment company"
as defined in Section 368(a)(2)(F)(iii) of the Code.
4. Representations and Warranties of Safe Aid. Safe Aid, as a material
inducement to INI to enter into this Agreement and consummate the transactions
contemplated hereby, makes the following representations and warranties to INI,
which representations and warranties are true and correct in all material
respects at this date, and will be true and correct in all material respects on
the Closing Date as though made on and as of such date.
(a) Due Organization. Safe Aid is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Safe Aid has the corporate power to own its property and to carry on
its business as now presently conducted. The Articles of Incorporation and
By-Laws of Safe Aid are attached hereto as Schedule 4(a) and are made a part
hereof.
(b) Capitalization. The authorized capital stock of Safe Aid
consists of 950,000,000 shares of $.00001 par value Common Stock, of which
705,477,200 shares
A-6
<PAGE>
are outstanding as of the date of this Agreement. Prior to Closing, Safe Aid
shall complete a 10 to 1 reverse stock split pursuant to which the number of
outstanding shares will be reduced to 70,547,720 as of Closing with no change to
the par value of the Common Stock, and shall increase its authorized Common
Stock to 999,999,000 shares. All of the outstanding shares of Common Stock have
been validly issued and are fully paid and non-assessable. Except (i) for
outstanding warrants for the purchase of 147,272,800 shares of Common Stock as
described in the Form 10-QSB filed by Safe Aid with the Securities and Exchange
Commission for the quarter ended May 31, 1997 and (ii) as described in this
Agreement, Safe Aid has no shares of Common Stock reserved for issuance and
there are no outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued Common Stock or other securities of Safe Aid obligating Safe
Aid to issue any securities.
(c) Subsidiaries. Safe Aid has no subsidiaries, nor does it
own any interest in any other corporation, partnership or other entity, nor does
it have any right or obligation, whether under any agreement (oral or written)
or instrument of any kind, to acquire any such interest.
(d) Due Authorization. Subject only to approval of this
Agreement by Safe Aid's shareholders, this Agreement has been duly authorized,
executed, and delivered by Safe Aid, and constitutes a legal, valid, and binding
obligation of Safe Aid, enforceable in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and
other similar laws relating to, limiting or affecting the enforcement of
creditors rights generally or by the application of equitable principles. The
execution, delivery and performance of this Agreement by Safe Aid will not
violate or conflict with in any material respect or constitute a default under
any provisions of applicable law, Safe Aid's Articles of Incorporation or
Bylaws, or any agreement or instrument to which Safe Aid is a party or by which
it or its assets are bound. No consent of any federal, state, municipal or other
governmental authority is required by Safe Aid for the execution, delivery or
performance of this Agreement by Safe Aid. No consent of any party to any
contract or agreement to which Safe Aid is a party or by which any of its
property or assets are subject is required for the execution, delivery or
performance of this Agreement by Safe Aid that has not been obtained at the date
of this Agreement.
(e) Shares of Merger Stock; Nature of Transactions. The Merger
Stock will be validly and legally issued, free and clear of all liens,
encumbrances, transfer fees and preemptive rights, and will be fully paid and
non-assessable. When consummated, the transactions provided in this Agreement,
including the issuance and delivery of the Merger Stock, will constitute (I) a
transaction of securities "not involving a public offering" under the Securities
Act, and (ii) a tax-free reorganization under Section 368(a)(1)(A) of the Code.
(f) SEC Reports. From the first date that such reports were
required of Safe Aid, Safe Aid has accurately and completely filed with the SEC
all of its required
A-7
<PAGE>
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. As of their
respective dates, neither Safe Aid's Annual Report on Form 10-KSB for the fiscal
year ended November 31, 1996, nor Safe Aid's Quarterly Report on Form 10-QSB for
the period ended May 31, 1997, each in the form (including exhibits) filed with
the SEC (collectively, the "Company Reports"), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. True and complete copies
of the Company Reports have been heretofore delivered to INI.
(g) Safe Aid Statements. Schedule 4(f) contains the Safe Aid
Statements. The Safe Aid Statements fairly present the financial position of
Safe Aid as of the date thereof. The books and records, financial and other, of
Safe Aid are in all material respects complete and correct.
(h) Undisclosed Liabilities. Safe Aid has no liabilities or
obligations of any nature, fixed or contingently matured or unmatured, that are
not shown or otherwise provided for in Safe Aid Statements or have not been
disclosed to INI.
(i) Litigation. There are no actions, suits, claims,
investigations or legal, administrative or arbitration proceedings pending
against Safe Aid, its assets or business, whether at law or in equity, or before
or by any federal, state, municipal, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, nor does Safe
Aid know of a threat of, or any basis for, any such action, suit, claim,
investigation or proceeding.
(j) Tax Matters. Safe Aid has filed all federal, state and
local, tax or related returns and reports due or required to be filed, which
reports accurately reflect in all material respects the amount of taxes due.
Safe Aid has paid all taxes or assessments that have become due, other than
taxes or charges being contested in good faith or not yet finally determined.
Safe Aid is not aware of any tax liens with respect to any properties owned by
Safe Aid.
(k) Full Disclosure. Safe Aid has not, and will not have at
the Closing Date, withheld disclosure of any events, conditions, and facts of
which it may have knowledge and that may materially and adversely affect the
business or prospects of Safe Aid.
(l) Brokerage Fees. Safe Aid has not incurred, and will not
incur, any liability for brokerage or finder's fees or similar charges in
connection with this Agreement, except for a finders' fee due to Private Trust
Corp., Ltd., as Trustee for New Amsterdam Investment Trust, which fee will be
paid by Safe Aid on the Closing Date by issuance of 7,054,772 shares of Common
Stock to Private Trust Corp., Ltd., as Trustee.
A-8
<PAGE>
(m) No Approvals Required. No approval, authorization,
consent, order or other action of, or filing with, any person, firm or
corporation or any court, administrative agency or other governmental authority
is required in connection with the execution and delivery by Safe Aid of this
Agreement or the consummation of the transactions described herein, except to
the extent that Safe Aid may be required to file reports in accordance with
relevant regulations under federal and state securities laws.
5. Covenants and Agreements.
The parties covenant and agree as follows:
(a) Conduct of Business. From the date hereof through the date
of the Closing, Safe Aid and INI shall conduct their respective businesses in
the ordinary course and in material compliance with all requirements of law to
which they are subject, keep their respective business and properties
substantially intact, and except in the ordinary course of business without the
prior written consent of Safe Aid, INI will not undertake any of the actions
specified in Section 3(c).
(b) Litigation. Safe Aid and INI shall promptly notify each
other of any lawsuit, claims, proceedings or investigations which after the date
hereof are threatened or commenced against it or against any officer, director,
employee, affiliate or consultant of it, with respect to the transactions
contemplated hereby or which reasonably could be expected to have a material
adverse effect.
(c) Distribution of Proxy Statement; Stockholder Meetings. At
the earliest practicable date following the date hereof, each of INI and Safe
Aid shall distribute a Joint Proxy Statement to its stockholders which gives
notice of the Stockholder Meetings for the purposes of adopting this Agreement
and approving the Merger (including the change of Safe Aid's name to Safe
Technologies International, Inc.), and (in the case of Safe Aid) approving the
reverse stock split and increase in authorized capital provided in Section 4(b)
of this Agreement, and considering such other matters as may properly come
before such meetings. The stockholder meetings shall be held as soon as
practicable (but in no event less than 20 or more than 30 days following
completion of the Joint Proxy Statement).
(d) Issuance of Capital Stock. Neither INI nor Safe Aid shall
issue, commit to issue, redeem or purchase, or amend the terms of, any of its
capital stock after the date hereof and prior to the Closing Date except as
otherwise contemplated by this Agreement.
(e) Notification of Certain Events. Each of INI and Safe Aid
shall promptly be given notice by the other of any event, condition or
circumstance occurring from the date hereof through the Closing Date which would
constitute or which would, with the passage of time or giving notice or both,
constitute a violation or breach of any representation or warranty contained
herein occurring with respect to the party required to give notice pursuant to
this Section.
A-9
<PAGE>
(f) Tax Treatment. INI and Safe Aid undertake and agree to
take no action which would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code. Safe Aid
agrees that it will file no tax returns or otherwise take a position
inconsistent with such tax treatment.
(g) Compensation. Neither party shall authorize any salary or
compensation increase, dividend or loans to officers or directors without the
prior written consent of the other party.
(h) Reports. Safe Aid shall file all required reports to
comply, and to remain in compliance with, all applicable federal and state
securities laws, rules and regulations.
6. Due Diligence and Termination. Safe Aid and INI each shall be
entitled to conduct, and all of the parties agree to cooperate in the conduct
of, such due diligence as Safe Aid or INI may wish to conduct prior to and on
the Closing Date to verify the truth, accuracy and completeness of
representations and warranties of the other parties to this Agreement. Safe Aid
shall have the right to terminate this Agreement upon written notice to INI at
any time prior to the Closing if INI fails to fulfill the conditions set forth
in Sections 5 and 9 that are applicable to INI. INI shall have the right to
cancel this Agreement upon written notice to Safe Aid at any time prior to the
Closing if Safe Aid fails to fulfill the conditions set forth in Sections 4(b),
5 and 8 that are applicable to Safe Aid. If either Safe Aid or INI so terminates
this Agreement, this Agreement shall be of no further force and effect and all
rights and obligations of the parties shall terminate without liability to
either party.
7. Closing Date. Both parties will diligently and continuously pursue
the actions required to close the Merger as soon as possible, using best efforts
to close by September 30, 1997. Either party may extend the Closing Date for up
to 30 days upon demonstration to the reasonable satisfaction of the other party
that they are diligently pursuing the performance of, and compliance with, all
conditions precedent to their obligations hereunder. Either party may terminate
this Agreement upon written notice to the other if the Closing has not occurred
by October 31, 1997, without liability to either party.
8. Conditions Precedent to Obligations of INI. All obligations of INI
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date (unless otherwise stated herein), of each of the following conditions, any
one or all of which may be waived by INI:
(a) The Shareholders of Safe Aid and INI shall have approved
the execution of this Agreement and the Merger thereby.
(b) The representations and warranties made by or on behalf of
Safe Aid contained in this Agreement or in any certificate or document delivered
to INI pursuant to the provisions hereof at the Closing shall be true in all
material respects at and as of the
A-10
<PAGE>
time of the Closing as though such representations and warranties were made at
and as of such time.
(c) Safe Aid shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
(d) Safe Aid shall have delivered all of the Schedules
required herein, and copies of the documents referred to therein, to INI and
such Schedules and documents shall have been reasonably acceptable to INI.
(e) Any Due Diligence Examination by INI prior to the Closing
Date shall not have resulted in the discovery of any materially adverse
information concerning the business, condition (financial or otherwise), results
of operations, prospects, properties, assets, liabilities, earnings or net worth
of Safe Aid that was not previously disclosed and which constitutes a breach of
a representation or warranty of Safe Aid under this Agreement.
9. Conditions Precedent to Obligations of Safe Aid. All obligations of
Safe Aid under this Agreement are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions, any one or all of which may
be waived in writing by Safe Aid:
(a) The stockholders of INI and Safe Aid shall have approved
the execution of this Agreement and the Merger thereby.
(b) The representations and warranties by INI contained in
this Agreement or in any certificate or document delivered to Safe Aid pursuant
to the provisions hereof shall be true in all material respects at and as of the
time of the Closing as though such representations and warranties were made at
and as of such time.
(c) INI shall have performed and complied in all material
respects with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by them prior to or at the Closing.
(d) Simultaneously with or prior to Closing, INI shall close
its acquisition of at least two companies active in industries related to that
of INI and reasonably acceptable to Safe Aid, and as of the Closing Date shall
have not less than $280,000 in cash or cash equivalent assets. Any securities of
INI issued in connection with transactions entered into by INI in order to
satisfy the foregoing conditions shall be issued in compliance with all
applicable federal and state securities laws.
(e) INI shall have delivered all of the Schedules required
herein, and copies of the documents referred to therein, to Safe Aid and such
Schedules and documents shall have been reasonably acceptable to Safe Aid.
A-11
<PAGE>
(f) INI shall have (i) no liens or encumbrances of any nature
on its assets, other than capital lease obligations that exist at the date of
this Agreement or as described in INI Statements or the Schedules to this
Agreement or otherwise disclosed to Safe Aid; (ii) no violations in any material
respect pursuant to any loan agreements; and (iii) no debt or other obligations
except as described in INI Statements or the Schedules to this Agreement or
otherwise disclosed to Safe Aid.
(g) Any Due Diligence Examination by Safe Aid prior to the
Closing Date shall not have resulted in the discovery of any materially adverse
information concerning the business, condition (financial or otherwise), results
of operations, prospects, properties, assets, liabilities, earnings or net worth
of INI.
(h) Safe Aid and Barbara Tolley shall have entered into an
Employment Agreement pursuant to which Tolley will be employed as Chief
Executive Officer and Chairman of the Board of Safe Aid. The Employment
Agreement will be for a term of two years, subject to termination for cause,
will provide for a compensation package as agreed to by Safe Aid and Tolley, and
will include an option to Tolley to extend the Employment Agreement for one
additional year.
10. Nature of Representations and Warranties. All of the parties hereto
are executing and carrying out the provisions of this Agreement in reliance on
the representations, warranties, covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for, and any
investigation that they might have made or any other representations,
warranties, covenants, agreements, promises or information, written or oral,
made by the other party or parties or any other person shall not be deemed a
waiver of any breach of any such representation, warranty, covenant or
agreement.
11. Closing. At the Closing, the following transactions shall occur,
all of such transactions being deemed to occur simultaneously:
(a) INI will deliver, or cause to be delivered, to Safe Aid
the following:
(i) All corporate records of INI, including without
limitation corporate minute books (which shall contain copies of the Articles of
Incorporation and Bylaws, as amended to the Closing Date), stock books, stock
transfer books, corporate seals, shares of stock of the Subsidiaries; and such
other corporate books and records as may reasonably be requested by Safe Aid and
its counsel.
(ii) A Certificate of Status for INI from the Secretary
of State of Florida, dated at or about the Closing Date, to the effect that such
corporation is in good standing under the laws of Florida.
A-12
<PAGE>
(iii) Articles of Incorporation and Bylaws of INI
certified by the Secretary of INI as to their accuracy and completeness.
(iv) Copies of resolutions of the Board of Directors
and Shareholders of INI authorizing the transactions contemplated under this
Agreement.
(v) Such documents as may be needed to accomplish the
Merger under the corporate laws of the State of Delaware.
(vi) A certificate of INI's President to the effect
that all representations and warranties of INI made under this Agreement are
reaffirmed on the Closing Date, as though originally given on such date.
(vii) Such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement or that may be reasonably requested in furtherance of the
provisions of this Agreement.
(b) Safe Aid will deliver or cause to be delivered to INI:
(i) Stock issuance instructions to Safe Aid's transfer
agent for the conversion of INI common stock to Safe Aid common stock, within
five business days after the Closing Date.
(ii) A Certificate of Status from the Secretary of
State of Delaware, dated at or about the Closing Date, to the effect that such
corporation is in good standing under the laws of Delaware.
(iii) Copies of resolutions of the Board of Directors
and Shareholders of Safe Aid authorizing the transactions contemplated under
this Agreement.
(iv) Such documents as may be needed to accomplish the
Merger under the corporate laws of the State of Delaware.
(v) A certificate of Safe Aid's President to the effect
that all representations and warranties of Safe Aid made under this Agreement
are reaffirmed on the Closing Date, as though originally given on such date.
(vi) Such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement, or that may be reasonably requested in furtherance of the
provisions of this Agreement.
(c) As of the Closing Date, all existing directors and
officers of Safe Aid shall resign, Barbara Tolley and two other persons
designated by Tolley will be elected as the directors of Safe Aid.
A-13
<PAGE>
(d) Safe Aid shall issue, for services rendered in connection
with the Merger and for other good and valuable consideration, 17,500,000 shares
of Common Stock (on a post-split basis) to each of Stanley Snyder and Lawrence
Feldman.
12. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or sent by overnight courier delivery, confirmed facsimile
transmission or prepaid first class registered or certified mail, return receipt
requested, to the following addresses, or such other addresses as are given to
the other parties to this Agreement in the manner set forth herein:
If to Safe Aid, to: Stanley Snyder, President
Safe Aid Products Incorporated
c/o Lazer, Aptheker, Feldman, Rosella & Yedid, LLP
35 Pinelawn Road, Suite 203W
Melville, NY 11747
with a copy to: Eric W. Nodiff, Esq.
Dornbush Mensch Mandelstam & Schaeffer, LLP
747 Third Avenue
New York, NY 10017
If to INI, to: Barbara Tolley, President
Intelligence Network International, Inc.
249 Peruvian Avenue
Palm Beach, FL 33480
with a copy to: Gerald W. Gritter, Esq.
English, McCaughan & O'Bryan, P.A.
100 NE Third Avenue, Suite 1100
Fort Lauderdale, FL 33301
Any such notices shall be effective when delivered in person or sent by
facsimile transmission, one business day after being sent by overnight courier
delivery or three business days after being sent by registered or certified
mail. Any of the foregoing addresses may be changed by giving notice of such
change in the foregoing manner, except that notices for changes of address shall
be effective only upon receipt.
13. Miscellaneous.
(a) Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and take
such further action as may be reasonably requested by the other party to confirm
or perfect title to any
A-14
<PAGE>
property transferred hereunder or otherwise to carry out the intent and purposes
of this Agreement.
(b) Time. Time is of the essence.
(c) Survival of Representations. All covenants and agreements
made herein shall survive the Closing through all applicable statutes of
limitation. All covenants and agreements by or on behalf of the parties hereto
that are contained or incorporated in this Agreement shall bind and inure to the
benefit of the successors and assigns of all parties hereto.
(d) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
It supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
(e) Amendment. This Agreement may not be amended, supplemented
or modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
(f) Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties.
(g) Choice of Law. This Agreement shall be interpreted,
construed and enforced in accordance with the laws of the State of Florida
(except insofar as Delaware law shall govern the Merger and the corporate
actions of the parties contemplated hereby).
(h) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this agreement.
(i) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
(j) Number and Gender. Words used in this Agreement,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context indicates is appropriate.
(k) Construction. The parties hereto and their respective
legal counsel participated in the preparation of this Agreement; therefore, this
Agreement shall be construed neither against nor in favor of any of the parties
hereto, but rather in accordance with the fair meaning thereof.
A-15
<PAGE>
(l) Effect of Waiver. The failure of any party at any time or
times to require performance of any provision of this Agreement will in no
manner affect the right to enforce the same. The waiver by any party of any
breach of any provision of this Agreement will not be construed to be a waiver
by any such party of any succeeding breach of that provision or a waiver by such
party of any breach of any other provision.
(m) Severability. The invalidity, illegality or
unenforceability of any provision or provisions of this Agreement will not
affect any other provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or unenforceability of a portion
of any provision of this Agreement affect the balance of such provision. In the
event that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
(n) Enforcement. Should it become necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
The parties hereto acknowledge and agree that any party's
remedy at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and such breach or threatened breach shall be per
se deemed as causing irreparable harm to such party. Therefore, in the event of
such breach or threatened breach, the parties hereto agree that, in addition to
any available remedy at law, including but not limited to monetary damages, an
aggrieved party, without posting any bond, shall be entitled to obtain, and the
offending party agrees not to oppose the aggrieved party's request for,
equitable relief in the form of specific enforcement, temporary restraining
order, temporary or permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
(o) Binding Nature. This Agreement will be binding upon and
will inure to the benefit of any successor or successors of the parties hereto.
(p) No Third-Party Beneficiaries. No person shall be deemed to
possess any third-party beneficiary right pursuant to this Agreement. It is the
intent of the parties hereto that no direct benefit to any third party is
intended or implied by the execution of this Agreement.
(q) Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
A-16
<PAGE>
(r) Facsimile Signature. This Agreement may be executed and
accepted by facsimile signature and any such signature shall be of the same
force and effect as an original signature.
(s) Press Releases and Announcements: Prohibition on Trading
in Safe Aid Stock. Upon execution of this Agreement, INI and Safe Aid shall
jointly prepare and issue a press release or announcement relating to the
subject matter of this Agreement. INI and Safe Aid acknowledge that the United
States Securities Laws prohibit any person who has received material non-public
information concerning the matters which are the subject matter of this
Agreement from purchasing or selling the securities of Safe Aid, or from
communicating such information to any person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell securities
of Safe Aid. Accordingly, INI and Safe Aid agree that they will instruct their
respective directors and officers not to purchase or sell any securities of Safe
Aid, or communicate such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell securities of Safe Aid, until no earlier than 72 hours following the
dissemination of a Current Report on Form 8-K to the SEC announcing the proposed
Merger pursuant to this Agreement.
(t) Expenses. All expenses incident to the preparation of
documents for, and closing of, the Merger will be borne by INI. Safe Aid
acknowledges that INI has forwarded its check in the amount of $10,000 to
counsel for Safe Aid as payment in full for their legal services in connection
with this transaction.
(u) Additional Agreement. For a period of two (2) years
following the Closing Date, Safe Aid shall be prohibited, directly and
indirectly, from effectuating a reverse stock split and for a period of three
(3) years following the Closing Date, the issuance of any capital stock or
securities convertible into or exercisable for capital stock shall be subject to
the approval of Barbara Tolley so long as she is the President or Chief
Executive Officer of Safe Aid.
A-17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SAFE AID PRODUCTS INCORPORATED
By: /s/ Lawrence Feldman
----------------------------------
Lawrence Feldman, Corporate Agent
INTELLIGENCE NETWORK INTERNATIONAL, INC.
By: /s/ Barbara Tolley
----------------------------------
Barbara Tolley, President
List of Schedules:
Schedule 3(a) - INI Financial Statements
Schedule 3(f) - INI Articles of Incorporation, Bylaws and Minutes
Schedule 3(h) - INI Contracts
Schedule 3(j) - INI Licenses, Trademarks & Tradenames
Schedule 4(a) - Safe Aid Articles of Incorporation and Bylaws
Schedule 4(f) - Safe Aid Financial Statements
A-18
EXHIBIT "B"
-----------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SAFE AID PRODUCTS INCORPORATED
Safe Aid Products Incorporated, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
(the "Corporation")
DOES HEREBY CERTIFY:
FIRST: That by a unanimous written consent of the Board of Directors of
the Corporation dated August 29, 1997, a resolution was duly adopted setting
forth a proposed amendment of the Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and recommending that it
be submitted to the Stockholders of the Corporation for consideration thereof.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by changing paragraph thereof numbered "FIRST" and "FOURTH" so that, as
amended, said paragraphs shall be and read as follows:
FIRST: Article 1 of the Certificate of Incorporation is hereby amended
to read as follows:
"The name of the Corporation is Safe Technologies International, Inc."
SECOND: Article Four of the Certificate of Incorporation is hereby
amended to read as follows:
The total number of shares of stock which the Corporation
shall have the authority to issue is Nine Hundred Ninety Nine
Million Nine Hundred Ninety Nine Thousand (999,999,000)
shares, par value $.00001 per share. All such shares are of
one class and are shares of Common Stock.
Simultaneously, at the effective time of this Amendment, the
Corporation shall effect a ten-for-one reverse stock split. At
the effective time, each ten shares of Common Stock held by a
stockholder shall automatically and without any action on the
part of the stockholder be re-classified as and changed,
pursuant to a ten-for-one reverse stock split into one share
of common stock. No fractional shares will be issued. Any
fractional shares will result in the adjustment of the number
of shares upward or downward to the next whole share.
B-1
<PAGE>
THIRD: The foregoing amendment was adopted in accordance with the
provisions of Section 241 of the General Corporate Law of the State of Delaware.
The necessary number of shares as required by statute and the Corporation's
Certificate of Incorporation were voted in favor of this amendment at a Special
Meeting of Stockholders held on September ____, 1997.
IN WITNESS WHEREOF, said Directors and Stockholders have caused this
Certificate to be signed by Barbara L. Tolley, Chief Executive Officer, and
Bradford L. Tolley, Secretary, this ______ day of September, 1997.
By:___________________________________________
Barbara L. Tolley, Chief Executive Officer
Attest:_______________________________________
Bradford L. Tolley, Secretary
B-2
EXHIBIT "C"
-----------
SECTION 262 OF DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to subsection
(g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the holders of
the surviving corporation as provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant to
ss.ss.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository receipts in respect
thereof;
C-1
<PAGE>
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will be either
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss.253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of his
shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to take
such action must do so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or consolidation, the surviving
or resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor of
or consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
ss.228 or ss.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or
C-2
<PAGE>
within ten days thereafter, shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and the appraisal rights
are available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective date of
the merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights. Such notice may,
and, if given on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within twenty
days after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either (i)
each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is required
to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given; provided that, if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the
C-3
<PAGE>
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such
C-4
<PAGE>
stock. The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation be a
corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
(Last amended by Ch. 349, L. '96, eff. 7-1-96.)
C-5
<TABLE>
EXHIBIT "D"
-----------
Scott & Guilfoyle
Certified Public Accountants
5 Dakota Drive - Suite 206
Lake Success, New York 11042
Paul J. Scott. C.P.A. (516) 775-9600
Richard T. Guilfoyle. C.P.A. Fax (516) 328-6638
INDEPENDENT AUDITOR'S REPORT
The Board of Directors of
Safe Aid Products Incorporated
We have audited the accompanying balance sheets of Safe Aid Products
Incorporated (a development stage company) as of November 30, 1996 and 1995 and
the related statements of operations, stockholders' equity and cash flows for
the years then ended and for the period May 21, 1987 (inception) through
November 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements for the
period May 21, 1987 (inception) through November 30, 1994, were audited by other
auditors whose report dated February 14, 1995 expressed an unqualified opinion
on those statements. The financial statements for the period May 21, 1987
(inception) through November 30, 1994 include total revenue and net loss of
$338,215 and ($1,546,700) respectively. Our opinion on the statements of
operations, shareholders' equity, and cash flows for the period May 21, 1987
(inception) through November 30, 1996 insofar as it relates to amounts for prior
periods through November 30, 1994, is based solely on the report of other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position Safe Aid Products Incorporated (a development stage
company) as of November 30, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, and the period from May 21, 1987
(inception) to November 30, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to this matter are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Scott & Guilfoyle
Lake Success, New York
February 5, 1997
D-1
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
NOVEMBER 30
ASSETS
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash $ 4,034 $ 2,191
------------ -----------
TOTAL CURRENT ASSETS 4,034 2,191
MACHINERY AND EQUIPMENT
Net of accumulated depreciation of $4,258 0 0
------------ -----------
TOTAL ASSETS $ 4,034 $ 2,191
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Shareholder loans $ 13,500 $ 5,000
Accrued expenses 5,293 6,941
----------- -----------
TOTAL CURRENT LIABILITIES 18,793 11,941
----------- -----------
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 (1,570,758) (1,565,749)
---------- -----------
TOTAL ( 14,759) ( 9,750)
---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,034 $ 2,191
============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
D-2
<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)
The accompanying notes are an integral part of the financial statements.
</TABLE>
D-3
<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)
----------- --------- --------------- ----------- ----------
Balance, November 30, 1990 608,477,200 6,085 1,535,314 (1,328,529) 212,870
Net loss for the year ended
November 30, 1991 0 0 0 ( 108,242) ( 108,242)
------------ --------- --------------- ----------- ----------
Balance, November 30, 1991 608,477,200 6,085 1,535,314 (1,436,771) 104,628
Net loss for the year ended
November 30, 1992 0 0 0 ( 58,009) ( 58,009)
----------- --------- -------------- ----------- ---------
Balance, November 30, 1992 608,477,200 6,085 1,535,314 (1,494,780) 46,619
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)
----------- --------- --------------- ----------- ---------
Balance, November 30, 1993 608,977,200 6,090 1,535,809 (1,539,259) 2,640
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)
=========== ====== ========= ========= =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
D-4
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<CAPTION>
For The Years From Inception
Ended (May 21, 1987)
November 30 to November 30
1996 1995 1996
REVENUE
<S> <C> <C> <C>
Net sales $ 19,647 $ 9,819 $ 237,030
License fees 0 0 10,000
Interest income 0 25 120,676
-------- -------- ---------
TOTAL REVENUES 19,647 9,844 367,706
-------- -------- ---------
EXPENSES
Cost of sales 15,187 7,589 203,463
Selling, general and
administrative 9,469 21,304 920,379
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 24,656 28,893 1,938,464
------- -------- ---------
NET LOSS $( 5,009) $(19,049) $(1,570,758)
====== ====== =========
LOSS PER SHARE:
Net loss per share NIL NIL NIL
====== ====== ======
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 702,977,200 702,977,200 654,257,057
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
D-5
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<CAPTION>
For The Years From Inception
Ended (May 21, 1987)
November 30 to November 30
1996 1995 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 5,009) $(19,049) $(1,570,758)
-------- -------- -----------
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:
Accounts receivable 0 0 0
Organization costs 0 0 ( 1,350)
Other current assets 0 78 0
Increase (decrease) in liabilities:
Accounts payable and accrued expenses ( 1,648) 6,941 5,293
------ ------ ------------
TOTAL ADJUSTMENTS ( 1,648) 7,019 166,504
------ ------ ----------
NET CASH USED BY OPERATING
ACTIVITIES ( 6,657) (12,030) (1,404,254)
------ ------ ---------
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 8,500 5,000 23,500
Repayment of stockholders' loans 0 0 ( 10,000)
------ ------ ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 8,500 5,000 1,447,399
------ ------ ---------
INCREASE (DECREASE) IN CASH 1,843 ( 7,030) 4,034
BEGINNING CASH BALANCE 2,191 9,221 0
------ ------ ----------
ENDING CASH BALANCE $ 4,034 $ 2,191 $ 4,034
======= ====== ==========
The accompanying notes are an integral part of the financial statements.
</TABLE>
D-6
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
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 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.
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.
D-7
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
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 November 30, 1996, 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.
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.
D-8
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
NOTE 3: STOCKHOLDERS' EQUITY - continued
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 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 years ended
November 30, 1996 and 1995.
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 years ended
November 30, 1996 and 1995.
D-9
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)
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 years ended November 30, 1996 and 1995.
The Company leased operating facilities located in Hauppauge, New York on a
month-to-month basis at an approximate monthly rental of $150. The Company also
leased storage space in a warehouse on a month-to-month basis at an aggregate
current monthly rental of $436. All leases were terminated during the year ended
November 30, 1995. Rent expense under all leases for the year ended November 30,
1995 was $2,958.
NOTE 5 - SALES TO MAJOR CUSTOMER AND PURCHASES FROM MAJOR SUPPLIERS
Sales to one major customer and purchases from one supplier aggregated 100% of
the Company's net sales and cost of goods for the years ended November 30, 1996
and 1995.
NOTE 6 - SUBSEQUENT EVENT
Effective January 11, 1997, the Board of Directors consented to extend the
exercise periods of both the Class "A" and Class "B" warrants through January 9,
1998.
D-10
EXHIBIT "E"
INDEX TO UNAUDITED FINANCIAL STATEMENTS OF
SAFE AID PRODUCTS INCORPORATED
I. Unaudited Financial Statements for the Quarter ended February 28, 1997
Balance Sheets - February 28, 1997 (unaudited) and November 30, 1996 E-1
Statement of Stockholders' Equity date of inception (May 21, 1987) E-2
through February 28, 1997
Statement of Operations - three months ended February 28, 1997 and E-4
February 29, 1996 (unaudited) and from inception (May 21, 1987)
through February 28, 1997 (unaudited)
Statement of Cash Flows - three months ended February 28, 1997 and E-5
February 29, 1996 (unaudited) and from inception (May 21, 1987)
through February 28, 1997 (unaudited)
Notes to Financial Statements E-6
February 28, 1997 (unaudited)
II. Unaudited Financial Statements for the Quarter ended May 31, 1997
Balance Sheets - May 31, 1997 (unaudited) and November 30, 1996 E-10
Statement of Stockholders' Equity E-11
date of inception (May 21, 1987) through May 31, 1997
Statement of Operatons - six months ended May 31, 1997 and E-13
February 29, 1996 (unaudited) and from inception (May 21, 1987)
through May 31, 1997 (unaudited)
Sttement of Cash Flows - six months ended May 31, 1997 and E-15
May 31, 1996 (unaudited) and from inception (May 21, 1987)
through May 31, 1997 (unaudited)
Notes to Financial Statements E-16
May 31, 1997 (unaudited)
<PAGE>
<TABLE>
EXHIBIT E
---------
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>
E-1
<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>
E-2
<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>
E-3
<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>
E-4
<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>
E-5
<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.
E-6
<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.
E-7
<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."
E-8
<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.
E-9
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<CAPTION>
May 31, 1997 November 30, 1996
Unaudited
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 130 $ 4,034
---------- -----------
TOTAL CURRENT ASSETS 130 4,034
MACHINERY AND EQUIPMENT
Net of accumulated depreciation of $4,258 0 0
------------ -----------
TOTAL ASSETS $ 130 $ 4,034
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Shareholder loans $ 13,500 $ 13,500
Accrued expenses 6,589 5,293
----------- -----------
TOTAL CURRENT LIABILITIES 20,089 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 (1,575,958) (1,570,758)
---------- ----------
TOTAL ( 19,959) ( 14,759)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 130 $ 4,034
============ ===========
</TABLE>
E-10
<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>
E-11
<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 six months ended
May 31, 1997, unaudited 0 0 0 ( 5,200) ( 5,200)
----------- --------- ---------- ------------ -----------
Balance, May 31, 1997 unaudited 702,977,200 $ 7,030 $1,548,969 $(1,575,958) $( 19,959)
=========== ========= ========== ============ ===========
</TABLE>
E-12
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Six From Inception
Months Ended (May 21, 1987) to
May 31, May 31,
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 7,599 203,463
Selling, general and administrative 5,200 5,475 925,579
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 5,200 13,074 1,943,664
--------- ---------- ----------
NET LOSS $( 5,200) $( 3,246) $(1,575,958)
========== ========= ===========
LOSS PER SHARE:
Net loss per share NIL NIL NIL
========== ========= ===========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 702,977,200 702,977,200 694,164,060
=========== =========== ===========
</TABLE>
E-13
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Three
Months Ended
May 31,
1997 1996
<S> <C> <C>
REVENUE
Net sales $ 0 $ 0
---------- ---------
TOTAL REVENUES 0 0
---------- ---------
EXPENSES
Selling, general and administrative 2,425 1,939
-------- -------
TOTAL 2,425 1,939
-------- -------
NET LOSS $( 2,425) $( 1,939)
======== =======
LOSS PER SHARE:
Net loss per share NIL NIL
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 702,977,200 702,977,200
=========== ===========
</TABLE>
E-14
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
UNAUDITED
<CAPTION>
For The Six From Inception
Months Ended (May 21, 1987) to
May 31, May 31,
1997 1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $( 5,200) $( 3,246) $(1,575,958)
------ ------- ---------
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 1,296 ( 1,491) 6,589
------ ------ -----------
TOTAL ADJUSTMENTS 1,296 ( 1,491) 167,800
------- ------ -----------
NET CASH USED BY OPERATING
ACTIVITIES ( 3,904) ( 4,737) (1,408,158)
------ ------ ---------
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 ( 3,904) ( 1,237) 130
BEGINNING CASH BALANCE 4,034 2,191 0
------ ------ ------------
ENDING CASH BALANCE $ 130 $ 954 $ 130
======== ======= ============
</TABLE>
E-15
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 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 six and three months ended May 31, 1997 and 1996, and
the period May 21, 1987 (commencement of development stage) through May 31, 1997
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.
E-16
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 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
carry forwards 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 May 31, 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.
E-17
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 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 each
unless otherwise terminated in accordance with the terms of the Agreement.
However, during the initial term, the corporation 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 the
joint venture.
The corporation and CC Plus shall share the earnings of the joint
venture in equal shares of fifty (50%) percent each. However, the corporation'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."
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 six months ended May 31, 1997.
E-18
<PAGE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
UNAUDITED
NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)
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 six months ended May 31, 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 six months ended May
31, 1997.
E-19
