===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 9, 1998
Safe Technologies International, Inc.
(Exact Name of Registrant as Specified in its Charter)
33-20064 Delaware 22-2824492
-------- -------- ----------
(Commission (State or Other (IRS Employer
File Number) Jurisdiction of Indemnification
Incorporation) Number)
249 Peruvian Avenue, Palm Beach, Florida 33480
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 832-2700
--------------
===============================================================================
<PAGE>
Item 1. Change in Control of Registrant.
On January 30, 1998, at a Special Meeting, the shareholders of Safe
Technologies International, Inc., formerly known as Safe Aid Products
Incorporated ("Safe Aid") approved a proposal to merge Intelligence Network
International, Inc., a Florida corporation ("INI") with and into Safe Aid
pursuant to the terms and conditions of a merger agreement dated August 29,
1997, as amended (the "Merger Agreement"). The transaction was a "reverse
merger" wherein the former Shareholders of INI (the "INI Shareholders") acquired
a majority interest (83%) of Safe Aid.
Pursuant to the Merger Agreement, the INI Shareholders acquired
beneficial ownership of 83% of Safe Aid's Common Stock (the "Acquired Shares").
As consideration for the Acquired Shares, the INI Shareholders delivered to Safe
Aid all of the capital stock of INI. Pursuant to the Merger Agreement, INI was
merged with and into Safe Aid (the "Merger"). The Merger became effective on
February 9, 1997 when Safe Aid filed a Certificate of Merger with the Delaware
Secretary of State and Articles of Merger with the Florida Secretary of State
(the "Effective Time"). At the Effective Time, the separate corporate existence
of INI terminated, and each issued and outstanding share of INI Common Stock was
converted into the right to receive one share of Safe Aid Common Stock.
The foregoing summary of the Merger Agreement is qualified by reference
to the complete text of the Merger Agreement, which is filed as Exhibit 2 and is
incorporated herein by reference. Please also review the description of the
Merger and the Merger Agreement in Item 2 hereof.
The basis of control of Safe Aid by the INI Shareholders results from
their beneficial ownership of approximately 83% of the issued and outstanding
shares of Safe Aid's Common Stock. There are no arrangements known to Safe Aid,
the operation of which may at a subsequent date result in another change of
control of Safe Aid.
On the closing date of the Merger Agreement, the existing directors and
officers of Safe Aid resigned, and new officers and directors appointed by INI's
management took their place. The former officers and directors of Safe Aid were
Stanley Snyder, President and Director, Barney Melsky, Secretary, Treasurer and
Director and Melvin Fritz, Director. The new officers and directors of Safe Aid
are Barbara Tolley, Chief Executive Officer and Chairman, Michael Bhathena, Vice
President and Chief Information Officer, Bradford Tolley, Secretary and
Treasurer, Charles Martus, Director, Jack Tolley, Director, Franklin Frank,
Director and Robert Alexander, Director. Moreover, the name of Safe Aid was
changed from Safe Aid Products Incorporated to Safe Technologies International,
Inc.
Prior to the Merger, Safe Aid's Common Stock was owned by approximately
1,207 stockholders of record ("Safe Aid's former shareholders"). After the
Merger, Safe Aid's former
2
<PAGE>
shareholders will own approximately 10% of Safe Aid's Common Stock. The
principal stockholders of Safe Aid after the Merger are identified in Exhibit 99
accompanying this Current Report.
Item 2. Acquisition and Disposition of Assets.
As described in Item 1, above, on February 9, 1997, the INI
Shareholders acquired 83% of the beneficial ownership of Safe Aid's Common Stock
and INI was merged with and into Safe Aid pursuant to the terms of the Merger
Agreement. As of the Effective Time, the separate corporate existence of INI
terminated, and each issued and outstanding share of INI Common Stock was
converted into the right to receive one share of Safe Aid Common Stock. In the
aggregate, INI Shareholders received 585,819,936 restricted shares of Safe Aid
Common Stock in the Merger. This consideration for the acquired capital stock of
INI was determined as a result of arm's length negotiations between Safe Aid and
Barbara Tolley, a representative of all of the INI Shareholders. Additionally,
Safe Aid issued 49, 109,544 restricted shares of its common stock to certain
brokers, finders and consultants for services rendered in the Merger
transaction.
INI offers a broad range of Internet services and products and has two
divisions. The Internet Software and Commerce Division specializes in developing
Internet bundled software packages and Internet Electronic Commerce, and the
Internet Information/Data/Directory Division specializes in providing
information, data and directories for select subjects on the Internet. After the
Merger, Safe Aid's new management will continue the businesses conducted by INI
and focus on developing Safe Aid's Internet, New Media and New Technology
Products and Services.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
I. Intelligence Network International, Inc.
a. Audited Financial Statements for the Fiscal Year ended December 31, 1996
Independent Auditor's Report.............................................
Balance Sheet as of December 31, 1996....................................
Statement of Revenues, Expenses and Retained Earnings for the period
beginning October 2, 1996 (inception), ending December 31, 1996..........
Statement of Changes in Stockholders' Equity - December 31, 1996.........
Statement of Cash Flows for the period beginning October 2, 1996
(inception), ending December 31, 1996....................................
Notes to Financial Statements............................................
b. Unaudited Financial Statements for the Quarter Ended September 30, 1997
Balance Sheet as of September 30, 1997...................................
Statements of Income for the nine months ended September 30, 1997........
Statement of Cash Flows for the nine months ended September 30, 1997.....
3
<PAGE>
JAY S. SHAPIRO, P.A.
Certified Public Accountant
1031 Ives Dairy Road Member: American Institute of
Suite 127 Certified Public Accountants
North Miami Beach, Florida 33179 and
Dade (305) 654-9989 Florida Institute of
Broward (954) 522-2915 Certified Public Accountants
Fax (305) 654-0055
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders'
of Intelligence Network International, Inc.
We have audited the accompanying Balance Sheet of Intelligence Network
International, Inc. as of December 31, 1996, and the related statements of
(loss), changes in stockholders' equity and cash flows for the period beginning
October 2, 1996 (date of inception) and ending December 31, 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 audit.
We conducted our audit 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Intelligence Network
International, Inc. as of December 31, 1996, and the results of its operations
and cash flows for the period beginning October 2, 1996 (date of inception) and
ending December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ J.S. Shapiro, CPA, P.A.
North Miami Beach, Florida
November 12, 1997
4
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
DECEMBER 31, 1996
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
CASH $57,977
-------
57,977
$57,977
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES: --
STOCKHOLDER'S EQUITY:
Common stock, $.00 par value,
19,980,000 shares authorized,
1,449,700 shares issued and outstanding $ 0
Additional Paid-in Capital 78,000
Retained earnings (deficit) (20,023)
--------
57,977
--------
$ 57,977
========
The accompanying notes are an integral part of these Financial Statements
</TABLE>
5
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS
FOR THE PERIOD OCTOBER 2, 1996 (INCEPTION) ENDING DECEMBER 31, 1996
<CAPTION>
<S> <C>
REVENUES: $ --
DIRECT COST OF REVENUES: --
--------
GROSS PROFIT --
GENERAL AND ADMINISTRATIVE COSTS:
Management fees 20,023
--------
NET LOSS (20,023)
RETAINED EARNINGS (DEFICIT):
Beginning of period --
--------
(20,023)
--------
End of period $(20,023)
========
The accompanying notes are an integral part of these Financial Statements
</TABLE>
6
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
DECEMBER 31, 1996
<CAPTION>
COMMON SHARES ADDITIONAL RETAINED
SHARES AMOUNT PAIN CAPITAL EARNINGS TOTAL
BALANCE
<S> <C> <C> <C> <C> <C>
OCTOBER 2, 1996 1,449,700 0 $78,000 $78,000
NET INCOME FOR THE YEAR (20,023) (20,023)
LESS SHAREHOLDERS'
DIVIDEND DISTRIBUTIONS 0 0
BALANCE,
DECEMBER 31, 1996 1,449,700 0 $78,000 (20,023) $57,977
</TABLE>
7
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD BEGINNING OCTOBER 2, 1996 (INCEPTION) ENDING DECEMBER 31, 1996
<CAPTION>
<S> <C>
OPERATING ACTIVITIES:
Net income(loss) $(20,023)
Adjustments to reconcile net income to net
cash provided by operating activities: --
--------
NET CASH USED FOR INVESTING ACTIVITIES --
--------
FINANCING ACTIVITIES
Issuance of common stock 78,000
--------
Net cash (used) by financing activities 78,000
--------
INCREASE (DECREASE) IN CASH 57,977
CASH:
Beginning of year --
--------
End of year $ 57,977
========
The accompanying notes are an integral part of these Financial Statements
</TABLE>
8
<PAGE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - BACKGROUND INFORMATION
Description of Business:
Intelligence Network International, Inc. (INI) was incorporated in the state of
Florida on October 2, 1996. The Company plans to offer a broad selection of
internet based products and services.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from sales of internet services are recognized upon delivery to
the customer.
Income Taxes
The income tax effects on transactions are recognized for financial reporting
purposes in the year in which they enter into the determination of recorded
income, regardless of when they are recognized for income tax purposes.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
may effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying value of cash, receivables and accounts payable approximates fair
value due to the short maturity of these instruments. The carrying values of
short term debt approximate fair value based on discounting the projected cash
flows using market rates available for similar maturities. None of the financial
instruments are held for trading purposes.
Vulnerability of a New Business in Internet Technology
The likelihood of success of the Company 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 uncertainty of market acceptance of
new services, intense competition from larger more established competitors and
other factors.
NOTE 3 - SUBSEQUENT EVENTS
On January 10, 1997 INI acquired assets from three internet related companies.
On August 2, 1997 INI acquired a company that wholesales and retails custom
designed and assembled computer systems and related products. On August 28, 1997
INI acquired a company that is a pre- press designer of magazines and
catalogues.
9
<PAGE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
FINANCIAL STATEMENT
AS OF SEPTEMBER 30, 1997
10
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC
BALANCE SHEET
AS OF SEPTEMBER 30, 1997
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 12,308
Accounts Receivable 0
Total Current Assets $ 12,308
PROPERTY AND EQUIPMENT, NET 0
---------
TOTAL ASSETS $ 12,308
---------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 8,150
Accrued expenses 2,105
Total Current Liabilities 10,255
STOCKHOLDERS' EQUITY
Common Stock 0
Additional Paid In Capital 104,000
Retained Earnings (101,947)
---------
Total Stockholders' Equity (2,053)
---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 12,308
---------
</TABLE>
11
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
REVENUES:
<S> <C>
Sales $ 0
COST OF SALES 0
--------
GROSS PROFIT 0
--------
OPERATING EXPENSES 88,399
INCOME FROM OPERATIONS (88,399)
--------
NET (LOSS) $(88,399)
--------
</TABLE>
12
<PAGE>
<TABLE>
INTELLIGENCE NETWORK INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997
OPERATING ACTIVITIES
<S> <C>
Net (loss) $(88,399)
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase (decrease) in accounts payable 8,150
Increase (decrease) in accrued expenses 2,105
Total adjustments 10,255
--------
NET CASH PROVIDED BY OPERATING ACTIVITIES $(78,144)
INVESTING ACTIVITIES --
--------
NET CASH USED FOR INVESTING ACTIVITIES --
--------
FINANCING ACTIVITIES 32,475
Issuance of common stock
Net cash (used) by financing activities 32,475
INCREASE (DECREASE) IN CASH (45,669)
CASH:
Beginning of nine month period 57,977
End of nine month period 12,308
</TABLE>
13
<PAGE>
II. GMG Computer Consultants, Inc.
a. Audited Financial Statements for the Fiscal Year ended December 31, 1995
Independent Auditor's Report.............................................
Statement of Assets, Liabilities and Stockholder's Equity................
Statement of Revenues, Expenses and Retained Earnings....................
Statement of Changes in Stockholders' Equity.............................
Statement of Cash Flows..................................................
Notes to Financial Statements............................................
Supplementary Information General and Administrative Costs...............
b. Audited Financial Statements for the Fiscal Year ended December 31, 1996
Independent Auditor's Report.............................................
Statement of Assets, Liabilities and Stockholder's Equity................
Statement of Revenues, Expenses and Retained Earnings....................
Statement of Changes in Stockholders' Equity.............................
Statement of Cash Flows..................................................
Notes to Financial Statements............................................
Supplementary Information General and Administrative Costs...............
c. Unaudited Financial Statements for the nine months ended September 30, 1997
Balance Sheet - September 30, 1997
Statements of Income - nine months ended September 30, 1997 and 1996.....
Statement of Cash Flows - nine months ended September 30, 1997 and 1996..
14
<PAGE>
JAY S. SHAPIRO, P.A.
Certified Public Accountant
1031 Ives Dairy Road Member: American Institute of
Suite 127 Certified Public Accountant
North Miami Beach, Florida 33179 and
Dade (305) 654-9989 Florida Institute of
Broward (954) 522-2915 Certified Public Accountants
Fax (305) 654-0055
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and
Stockholders of GMG Computer Consultants, Inc.
We have audited the accompanying Balance Sheet of GMG Computer Consultants, Inc.
as of December 31, 1995, and the related statements of income, changes in
stockholders' equity, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GMG Computer Consultants, Inc.
as of December 31, 1995, and the results of its operations and cash flows for
the year then ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as whole. The supplemental information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ J.S. Shapiro, CPA, P.A.
North Miami Beach, Florida
November 12, 1997
15
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
DECEMBER 31, 1995
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 392
Accounts receivable - trade, net of
allowance for doubtful accounts of $778 51,010
Shareholder loan receivable 7,026
-------
58,428
PROPERTY AND EQUIPMENT, NET 16,654
OTHER ASSETS:
Deposits 3,630
-------
3,630
-------
$78,712
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $18,305
Line of credit payable - bank 16,123
Payroll taxes payable 2,440
Sales tax payable 2,759
-------
39,627
-------
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par value 200
shares authorized, issued and
outstanding 200
Additional Paid-in Capital 4,200
Retained earnings 34,685
-------
39,085
-------
$78,712
=======
The accompanying notes are an integral part of these Financial Statements
</TABLE>
16
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
<S> <C>
SALES $406,227
COST OF SALES 79,351
--------
GROSS PROFIT 326,876
OPERATING EXPENSES 230,666
--------
INCOME FROM OPERATIONS 96,210
OTHER INCOME (EXPENSES)
Bad debt expense (778)
Interest expense (1,663)
---------
(2,441)
---------
NET INCOME $ 93,769
========
The accompanying notes are an integral part of these Financial Statements
</TABLE>
17
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
DECEMBER 31, 1995
<CAPTION>
COMMON SHARES ADDITIONAL RETAINED
SHARES AMOUNT PAIN-CAPITAL EARNINGS TOTAL
------ ------ --------------- -------- -----
BALANCE,
<S> <C> <C> <C> <C> <C>
JANUARY 1, 1995 200 $200 $ 4,200 $ 4,400
NET INCOME FOR THE YEAR $93,769 93,769
LESS SHAREHOLDERS'
DIVIDEND DISTRIBUTIONS $59,084 59,084
BALANCE,
DECEMBER 31, l995 200 $200 $ 4,200 $34,685 39,085
The Accompanying notes are an integral part of these Financial Statements
</TABLE>
18
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
OPERATING ACTIVITIES:
<S> <C>
Net income $ 93,769
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,186
Provision for doubtful accounts 778
Changes in account balances
Accounts receivable (51,788)
Deposits 1,905
Accounts payable 18,305
Payroll taxes payable 3,789
Sales taxes payable (744)
--------
NET CASH PROVIDED BY OPERATING ACTIVITIES 78,200
INVESTING ACTIVITIES:
Purchase of property and equipment (691)
--------
NET CASH USED FOR INVESTING ACTIVITIES (691)
--------
FINANCING ACTIVITIES
Proceeds from line of credit payable - bank 763
Repayments on shareholders' note (8,084)
Repayments on short term debt (15,536)
Payments on shareholder's dividend distributions (59,084)
--------
Net cash (used) by financing activities (81,941)
--------
INCREASE (DECREASE) IN CASH (4,432)
CASH:
Beginning of year 4,824
--------
End of year $ 392
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest expense $ 1,663
The accompanying notes are an integral part of these Financial Statements
</TABLE>
19
<PAGE>
GMG COMPUTER CONSULTANTS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1995
NOTE 1 - BACKGROUND INFORMATION
GMG Computer Consultants, Inc. was incorporated in the state of Florida on May
14, 1990. The Company is a professional digital pre-press and color services
firm servicing the magazine and advertising industry. Its customer base is
nationwide with a concentrated emphasis in South Florida.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from sales of digital pre-press and color services are
recognized upon delivery to the customer.
Trade Receivables
The Company provides an allowance for losses on trade receivables based on a
review of the current status of existing receivables and management's evaluation
of periodic aging of accounts.
Property and Equipment
Property and equipment are stated at cost. Depreciation for both financial
accounting and income tax purposes is computed using combinations of the
straight line and accelerated methods over the estimated lives of the respective
assets. Maintenance and repairs are charged to expense when incurred.
Income Taxes
The Company is an S Corporation for federal income tax purposes. Consequently,
all income tax attributes are reported by the stockholders' individually.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
may effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments
The carrying value of cash, receivables and accounts payable approximates fair
value due to the short maturity of these instruments. The carrying values of
short term debt approximate fair value based on discounting the projected cash
flows using market rates available for similar maturities. None of the financial
instruments are held for trading purposes.
NOTE 3 - NOTES RECEIVABLE
The Company holds note receivables from its stockholders' totaling $7,026. These
notes earn interest at 8% and are due upon demand.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Machinery and equipment $91,112
Less - accumulated depreciation 74,458
-------
Net property & equipment $16,654
Depreciation expense amounted to $12,186 in 1995.
20
<PAGE>
NOTE 5 - LINE OF CREDIT PAYABLE - BANK
Equitable Bank
Line of credit payable on demand
Interest rate at 10.00%
Secured by corporate assets $16,123
NOTE 6 - LEASE COMMITMENTS
The Company leases office space which expires in December, 1998.
The lease requires the Company to pay monthly installments of $2,188.
Future minimum lease payments as of December 31, 1995 are as follows:
1996 $26,260
1997 42,235
1998 46,389
--------
$114,884
Rent expense for 1995 was $17,030.
The Company leases production and computer equipment under operating leases
which expire in 1997 and 1998. The leases require the Company to pay monthly
installments of $3,815.
Future minimum lease payments as of December 31, 1995 are as follows:
1996 $45,766
1997 45,766
1998 32,521
--------
$124,053
Equipment lease expense for 1995 was $30,889.
21
<PAGE>
SUPPLEMENTARY INFORMATION
GMG COMPUTER CONSULTANTS, INC.
GENERAL AND ADMINISTRATIVE COSTS
FOR THE YEAR ENDED DECEMBER 31, 1995
Advertising $ 3,750
Auto expense 13,306
Bank charges 639
Beeper charges 189
Delivery services 7,357
Depreciation and amortization 12,186
Dues & subscriptions 841
Equipment leases 30,889
Insurance 12,796
Legal fees 1,097
Licenses & taxes 2,653
Meals & entertainment 1,501
Office expenses 7,415
Office salaries 29,683
Officer's salaries 46,610
Outside services 9,701
Payroll taxes 14,415
Postage 916
Professional fees 3,075
Rent 17,030
Repairs & maintenance 144
Security 850
Seminars 325
Software 674
Supplies 865
Telephone 11,759
---------
$ 230,666
=========
The accompanying notes are an integral part of these Financial Statements
22
<PAGE>
JAY S. SHAPIRO, P.A.
Certified Public Accountant
1031 Ives Dairy Road Member: American Institute of
Suite 127 Certified Public Accountant
North Miami Beach, Florida 33179 and
Dade (305) 654-9989 Florida Institute of
Broward (954) 522-2915 Certified Public Accountants
Fax (305) 654-0055
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and
Stockholders of GMG Computer Consultants, Inc.
We have audited the accompanying Balance Sheet of GMG Computer Consultants, Inc.
as of December 31, 1996, and the related statements of income, changes in
stockholders' equity, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GMG Computer Consultants, Inc.
as of December 31, 1996, and the results of its operations and cash flows for
the year then ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as whole. The supplemental information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ J.S. Shapiro, CPA, P.A.
North Miami Beach, Florida
November 12, 1997
23
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
DECEMBER 31, l996
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 2,309
Accounts receivable - trade, net of
allowance for doubtful accounts of $778 19,835
Notes receivable, shareholders' 46,665
-------
68,809
PROPERTY AND EQUIPMENT, NET 16,893
OTHER ASSETS:
Deposits 4,567
-------
4,567
-------
$90,269
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 6,905
Line of credit payable - bank 15,924
Payroll taxes payable 16,958
-------
39,787
-------
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par value 200
shares authorized, issued and
outstanding 200
Additional Paid-in Capital 4,200
Retained earnings 46,082
-------
50,482
-------
$90,269
=======
The accompanying notes are an integral part of these Financial Statements
</TABLE>
24
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
REVENUES:
<S> <C>
Sales $389,694
DIRECT COST OF REVENUES:
Purchases 51,931
--------
GROSS PROFIT 337,763
OPERATING EXPENSES 256,399
--------
INCOME FROM OPERATIONS 81,364
OTHER INCOME (EXPENSES)
Bad debt expense (302)
Interest expense (2,600)
---------
(2,902)
---------
NET INCOME $ 78,462
========
The accompanying notes are an integral part of these Financial Statements
</TABLE>
25
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
DECEMBER 31, 1996
<CAPTION>
COMMON SHARES ADDITIONAL RETAINED
SHARES AMOUNT PAIN-CAPITAL EARNINGS TOTAL
------ ------ --------------- -------- -----
BALANCE,
<S> <C> <C> <C> <C> <C>
JANUARY 1, 1996 200 $200 $ 4,200 $34,685 $39,085
NET INCOME FOR THE YEAR $78,462 $78,462
LESS SHAREHOLDERS'
DIVIDEND DISTRIBUTIONS $67,065 $67,065
BALANCE,
DECEMBER 31, l995 200 $200 $ 4,200 $46,082 $50,482
The Accompanying notes are an integral part of these Financial Statements
</TABLE>
26
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
OPERATING ACTIVITIES:
<S> <C>
Net income $ 78,462
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,601
Provision for doubtful accounts 302
Changes in account balances
Accounts receivable 30,872
Deposits (937)
Accounts payable (11,400)
Payroll taxes payable 14,518
Sales taxes payable (2,759)
--------
NET CASH PROVIDED BY OPERATING ACTIVITIES 121,659
INVESTING ACTIVITIES:
Issuance of stockholders' note receivable (39,639)
Purchase of property and equipment (12,839)
--------
NET CASH USED FOR INVESTING ACTIVITIES (52,478)
--------
FINANCING ACTIVITIES
Repayments on line of credit payable - bank (199)
Payments on shareholder's dividend distributions (67,065)
--------
Net cash (used) by financing activities (67,264)
--------
INCREASE (DECREASE) IN CASH 1,917
CASH:
Beginning of year 392
--------
End of year $ 2,309
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest expense $ 2,600
The accompanying notes are an integral part of these Financial Statements
</TABLE>
27
<PAGE>
GMG COMPUTER CONSULTANTS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - BACKGROUND INFORMATION
GMG Computer Consultants, Inc. was incorporated in the state of Florida on May
14, 1990. The Company is a professional digital pre-press and color services
firm servicing the magazine and advertising industry. Its customer base is
nationwide with a concentrated emphasis in South Florida.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from sales of digital pre-press and color services are
recognized upon delivery to the customer.
Trade Receivables
The Company provides an allowance for losses on trade receivables based on a
review of the current status of existing receivables and management's evaluation
of periodic aging of accounts.
Property and Equipment
Property and equipment are stated at cost. Depreciation for both financial
accounting and income tax purposes is computed using combinations of the
straight line and accelerated methods over the estimated lives of the respective
assets. Maintenance and repairs are charged to expense when incurred.
Income Taxes
The Company is an S Corporation for federal income tax purposes. Consequently,
all income tax attributes are reported by the stockholders' individually.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
may effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments
The carrying value of cash, receivables and accounts payable approximates fair
value due to the short maturity of these instruments. The carrying values of
short term debt approximate fair value based on discounting the projected cash
flows using market rates available for similar maturities. None of the financial
instruments are held for trading purposes.
28
<PAGE>
NOTE 3 - NOTES RECEIVABLE
The Company holds note receivables from its stockholders' totaling $46,665.
These notes earn interest at 8% and are due upon demand.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Machinery and equipment $102,768
Less - accumulated depreciation 85,875
-------
Net property & equipment $16,893
Depreciation expense amounted to $12,601 in 1996.
NOTE 5 - LINE OF CREDIT PAYABLE- BANK
Equitable Bank
Line of credit payable on demand
Interest rate at 10.00%
Secured by corporate assets $15,924
NOTE 6 - LEASE COMMITMENTS
The Company leases office space which expires in December, 1998.
The lease requires the Company to pay monthly installments of
$3,519.
Future minimum lease payments as of December 31, 1996 are as follows:
1997 $42,235
1998 46,389
-------
$88,624
Rent expense for 1996 was $26,708.
The Company leases production and computer equipment under operating leases
which expire in 1997 and 1998. The leases require the company to pay monthly
installments of $3,815.
Future minimum lease payments as of December 31, 1996 are as follows:
1997 $45,766
1998 32,521
-------
$78,287
Equipment lease expense for 1996 was $41,528.
29
<PAGE>
SUPPLEMENTARY INFORMATION
GMG COMPUTER CONSULTANTS, INC.
GENERAL AND ADMINISTRATIVE COSTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Advertising $ 5,851
Auto expenses 9,412
Bonuses 4,900
Delivery services 16,997
Depreciation and amortization 12,601
Equipment leases 41,528
Insurance 10,622
Miscellaneous 1,889
Office expenses 6,047
Office salaries 45,605
Officer's salaries 49,170
Outside services 1,905
Payroll taxes 7,708
Professional fees 2,136
Rent 26,708
Telephone 7,305
Utilities 6,015
--------
$256,399
========
The accompanying notes are an integral
part of these Financial Statements
30
<PAGE>
<TABLE>
UNAUDITED GMG FINANCIAL STATEMENTS
GMG COMPUTER CONSULTANTS, INC.
BALANCE SHEET
SEPTEMBER 30, 1997
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 4,424
Accounts receivable - trade, net of
allowance for doubtful accounts of $569 16,768
Notes receivable, shareholders' 70,653
-------
91,845
PROPERTY AND EQUIPMENT, NET 8,492
OTHER ASSETS:
Deposits 5,073
-------
5,073
-------
$105,410
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $11,195
Line of credit payable - bank 16,099
Payroll taxes payable 3,045
-------
30,339
-------
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par value 200
shares authorized, issued and
outstanding 200
Additional Paid-in Capital 4,200
Retained earnings 70,671
-------
75,071
-------
$105,410
=======
</TABLE>
31
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
<CAPTION>
Nine months ended Nine months ended
September 30, 1997 September 30, 1996
------------------ ------------------
REVENUES:
<S> <C> <C>
Sales $225,569 $223,199
DIRECT COSTS 29,359 39,096
-------- --------
GROSS PROFIT 226,210 184,103
-------- --------
OPERATING EXPENSES
Advertising 2,200 3,869
Auto expenses 3,244 8,674
Bad debt 255 314
Bank charges 544 376
Depreciations 8,401 8,124
Delivery services 13,157 6,963
Equipment leases 26,431 24,370
Insurance 9,395 8,508
Interest expense 1,079 1,081
Licenses & taxes 2,183 353
Office expenses 2,797 8,227
Office salaries 22,440 82,173
Payroll taxes 2,728 568
Professional fees 3,575 700
Rent 24,864 19,477
Repairs & maintenance 472 595
Telephone 5,365 5,751
Travel 1,015 4,366
Utilities 3,619 3,067
-------- --------
133,764 187,566
-------- --------
NET INCOME $ 92,446 $ (3,453)
======== ========
</TABLE>
32
<PAGE>
<TABLE>
GMG COMPUTER CONSULTANTS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
<CAPTION>
Nine months ended Nine months ended
September 30, 1997 September 30, 1996
------------------ ------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 92,446 (3,453)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,401 8,124
Provision for doubtful accounts 255 314
Changes in account balances
Accounts receivable 3,067 30,382
Deposits (506) 1,756
Accounts payable 4,290 (13,559)
Payroll taxes payable (13,913) 9,698
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 94,040 33,262
INVESTING ACTIVITIES:
Issuance of stockholders' note receivable (23,988) (1,670)
Purchase of property and equipment (255) (3,073)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (24,243) (4,743)
-------- --------
FINANCING ACTIVITIES
Repayments on line of credit payable - bank (175) (197)
Payments on shareholder's dividend distributions (67,857) (27,773)
------- --------
Net cash (used) by financing activities (67,682) (27,970)
-------- --------
INCREASE (DECREASE) IN CASH 2,115 549
CASH:
Beginning of period 2,309 392
-------- --------
End of period $ 4,424 $ 941
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest expense $ 1,079 $ 1,081
</TABLE>
33
<PAGE>
III. Total Micro Computers, Inc.
a. Audited Financial Statements for the Fiscal Year ended December 31, 1996
Independent Auditor's Report.............................................
Balance Sheet as of December 31, 1996....................................
Statement of Income for the fiscal year ended December 31, 1996..........
Statement of Changes in Stockholders' Equity.............................
Statement of Cash Flows..................................................
Notes....................................................................
b. Unaudited Financial Statements for the six months ended September 30, 1997
Balance Sheet - September 30, 1997
Statements of Income - nine months ended September 30, 1997 and 1996.....
Statement of Cash Flows - nine months ended September 30, 1997 and 1996..
34
<PAGE>
Simmons LaPlant & Associates
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Stockholders of Total Micro Computers, Inc.
We were engaged to audit the accompanying balance sheet of Total MicroComputers,
Inc. (a Florida corporation) as of December 31, 1996, and the related statements
of income, retained earnings, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above fairly, in all
material respects, the financial position of Total Micro Computers, Inc. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Simmons, LaPlant & Associates, CPA, PA
July 8, 1997
Certified Public Accountants / a Professional Association
First of America Plaza - 201 East Kennedy Boulevard, Suite 715
Tampa, Florida 33602-5828 - 813-229-2090 - 223-7104 FAX
35
<PAGE>
<TABLE>
TOTAL MICRO COMPUTERS, INC.
BALANCE SHEET
<CAPTION>
As of December 31, 1996
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 25,533
Accounts receivable-trade
net of allowance for doubtful accounts of $5,000 202,180
Inventory 141,503
Notes receivable, stockholders 35,188
Prepaid expenses 2,494
--------
Total Current Assets 406,898
PROPERTY AND EQUIPMENT, NET 42,386
--------
TOTAL ASSETS $449,294
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $101,973
Accrued expenses 54,846
Accrued income taxes 67,446
Note payable, stockholder 8,000
Note payable, related party 7,000
Deferred income taxes 4,800
--------
Total Current Liabilities 244,065
--------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value; 10,000 shares
authorized, 500 shares issued and outstanding 500
Additional paid-in capital 65,033
Retained earnings 139,686
--------
Total Stockholders' Equity 205,219
--------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $449,284
========
Read accompanying notes to financial statements
</TABLE>
36
<PAGE>
<TABLE>
TOTAL MICRO COMPUTERS, INC.
STATEMENT OF INCOME
<CAPTION>
Year Ended December 31, 1996
<S> <C>
SALES $ 4,566,492
COSTS OF SALES 3,917,191
-----------
GROSS PROFIT 649,301
OPERATING EXPENSES 462,970
-----------
INCOME FROM OPERATIONS 186,331
-----------
OTHER INCOME (EXPENSES)
Other income 27,767
Interest expense (2,166)
-----------
25,601
-----------
INCOME BEFORE INCOME TAXES 211,932
Provision for income taxes 72,246
-----------
NET INCOME $ 139,686
===========
</TABLE>
37
<PAGE>
<TABLE>
TOTAL MICRO COMPUTERS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Year Ended December 31, 1996
Common Shares Additional Retained
Shares Amount Paid-In Capital Earnings Total
------ ------- --------------- -------- -----
ISSUANCE OF COMMON STOCK,
<S> <C> <C> <C> <C> <C>
JANUARY 2, 1996 500 $500 $65,033 $65,533
NET INCOME FOR THE YEAR
$139,686 139,686
--- ---- ------- -------- --------
BALANCE,
DECEMBER 31, 1996 500 $500 $65,033 $139,686 $205,219
=== ==== ======= ======== ========
Read accompanying notes to financial statements.
</TABLE>
38
<PAGE>
<TABLE>
TOTAL MICRO COMPUTERS, INC.
STATEMENT OF CASH FLOWS
<CAPTION>
Year Ended December 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
Net income $ 139,686
---------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 4,116
Provision for doubtful accounts 5,000
Changes in account balances:
Accounts receivable (207,180)
Inventory (92,238)
Prepaid expenses (275)
Accounts payable 101,973
Accrued income taxes 67,446
Deferred income taxes 4,800
Accrued expenses 54,846
---------
Total Adjustments (61,512)
---------
Net Cash Provided by Operating Activities 78,174
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Issuance of stockholders notes receivable (35,188)
Purchase of fixed assets (31,272)
---------
Net Cash Used by Investing Activities (66,460)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of stockholder note (3,674)
Repayment of related party note (1,000)
Proceeds from related party note 8,000
Issuance of common stock 10,493
---------
Net Cash Provided by Financing Activities 13,819
---------
NET INCREASE IN CASH 25,533
CASH, BEGINNING OF YEAR 0
---------
CASH, END OF YEAR $ 25,533
=========
SUPPLEMENTAL DISCLOSURES
- ------------------------
Cash paid during the year for interest $ 2,166
=========
Read accompanying notes to financial statements.
</TABLE>
39
<PAGE>
TOTAL MICRO COMPUTERS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1-BACKGROUND INFORMATION
Total Micro Computers, Inc. (the Company), was organized and incorporated under
the laws of Florida on October 23, 1995. The Company began business on January
2, 1996 and is in the sale and service of computer hardware and software.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
- -------------------
The company used the accrual method of accounting which means that revenues
are recorded when earned. Revenue is considered earned at the point of sale
of the inventory.
Trade Receivables
- ----------------
The company provides an allowance for losses on trade receivables based on a
review of the current status of existing receivables and management's evaluation
of periodic aging of accounts.
Inventory
- ---------
Inventory consisting primarily of computer hardware components is stated at the
lower of cost or market. Cost is based on standard costs generated principally
by most recent purchase prices.
Property and Equipment
- ---------------------
Property and equipment are stated at cost. Depreciation for both financial
accounting and income tax purposes is computed using combinations of the
straight line and accelerated methods over the estimated lives of the respective
assets. Maintenance and repairs are charged to expense when incurred.
Income Taxes
- ------------
The Company uses Statement of Financial Accounting Standards No.109, "Accounting
for Income Taxes". Under Statement 109, deferred tax assets and liabilities are
recognized based on the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Use of Estimates
- ---------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
may effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
- --------------------------------
The carrying value of cash, receivables and accounts payable approximates fair
value due to the short maturity of these instruments. The carrying values of
short term debt approximate fair value based on discounting the projected cash
flows using market rates available for similar maturities. None of the financial
instruments are held for trading purposes.
NOTE 3 - NOTES RECEIVABLE
The Company holds a note receivable from each stockholder totaling $35,188.
These notes earn interest at 8.5% and are due upon demand.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Store equipment $ 2,860
Furniture and equipment 18,767
Office equipment 24,875
-------
46,502
Less accumulated depreciation 4,116
-------
Property and equipment, net $42,386
=======
Depreciation expense amounted to $4,116 in 1996.
NOTE 5 - NOTES PAYABLE
Notes payable consists of the following:
Note payable to related party with monthly
payments of $150, including interest
at 1.00%. Balloon payment due March 1997.
The note is unsecured $ 7,000
Note payable to a stockholder includes interest
at 18%. Note is due on demand. The note
is unsecured 8,000
-------
$15,000
=======
NOTE 6 - LEASE COMMITMENTS
The Company leases office space and a truck under operating leases which expire
in April 1997 and August 1998, respectively. The leases require the Company to
pay monthly installments of $1,073.
Future minimum lease payments as of December 31, 1996 are as follows:
1997 $5,862
1998 1,566
------
$7,428
======
Rent expense for all operating leases for 1996 was $15,652.
NOTE 7 - INCOME TAXES
The provision for income taxes for the year ended December 31, 1996 consist of:
Current Deferred Total
------- -------- -----
Federal $56,766 $ 4,000 $60,766
State 10,680 800 11,480
------- ------- -------
$67,446 $ 4,800 $72,246
======= ======= =======
Provision for income taxes is reconciled to the amount computed by applying the
federal corporate tax rate to earnings before income taxes as follows:
Income tax at statutory rate $63,579
State income taxes 8,667
-------
$72,246
=======
The significant portion of the deferred tax liability is due to the tax effects
of temporary differences on depreciation of fixed assets.
NOTE 8 - RELATED PARTY TRANSACTIONS
During the year, the Company sold inventory to companies affiliated through
common ownership. Revenues from these sales totaled $1,199,655 for the year
ended December 31, 1996.
NOTE 9 - NON-CASH FINANCING ACTIVITY
On January 2, 1996 , the stockholders contributed non-cash assets totaling
$66,714 in exchange for shares of common stock. The Company also assumed a note
payable to a stockholder totaling $11,674 at January 2, 1996.
40
<PAGE>
<TABLE>
UNAUDITED TOTAL MICRO COMPUTERS, INC
BALANCE SHEET
SEPTEMBER 30, 1997
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 6,748
Accounts Receivable - trade,
net of allowance for doubtful accounts of $4,000 246,572
Inventory 82,419
Notes receivable, stockholders 35,188
Prepaid expenses 2,494
--------
Total Current Assets 373,421
PROPERTY AND EQUIPMENT, NET 53,256
--------
TOTAL ASSETS $426,677
--------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade 75,192
Accrued expenses 66,740
Accrued income taxes 67,446
Notes payable, stockholder 14,750
Deferred income taxes 4,800
--------
Total Current Liabilities 228,928
--------
STOCKHOLDERS' EQUITY
Common Stock 500
Additional Paid In Capital 65,033
Retained Earnings 132,216
--------
Total Stockholders'Equity 197,749
--------
$426,677
--------
</TABLE>
41
<PAGE>
<TABLE>
UNAUDITED TOTAL MICRO COMPUTERS, INC
STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
<CAPTION>
Nine months ended Nine months ended
September 30, 1997 September 30, 1996
------------------- ------------------
<S> <C> <C>
SALES $ 2,750,896 $ 1,976,432
COST OF SALES 2,282,713 1,613,543
----------- -----------
GROSS PROFIT 468,183 362,889
----------- -----------
OPERATING EXPENSES 475,653 379,034
NET INCOME $ (7,470) $ (16,145)
----------- -----------
</TABLE>
42
<PAGE>
<TABLE>
UNAUDITED TOTAL MICRO COMPUTERS, INC
STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
<CAPTION>
Nine months ended Nine months ended
September 30, 1997 September 30, 1996
------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ (7,470) $ (16,145)
Adjustments to reconcile net income to net
cash provided by operating activities (195) 19,678
-------- --------
Net Cash Provided by Operating Activities (7,665) 3,533
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (10,870) (15,642)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of related party note (250) 0
Proceeds from related party note 0 8,000
Issuance of common stock 0 10,493
Net Cash Provided by Financing Activities (250) 18,493
NET INCREASE (DECREASE IN CASH) (18,785) 6,384
CASH, BEGINNING OF PERIOD 25,533 0
CASH, END OF PERIOD $ 6,748 $ 6,384
======== ========
</TABLE>
43
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
Introductory Paragraph
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of August 31,
1997
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended November 30, 1996 and the nine months ended August 31, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
44
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
Introductory Paragraph
The accompanying pro forma condensed consolidated financial statements
give effect to the Merger in which Safe Aid acquired all of the outstanding
common stock of INI in exchange for an aggregate of 585,819,936 shares of Safe
Aid Common Stock. On February 9, 1998, INI was merged with and into Safe Aid and
its separate corporate existence ceased.
The accompanying pro forma condensed balance sheet as of August 31,
1997 has been prepared as if (i) the Merger of INI with and into Safe Aid and
(ii) INI's acquisitions of GMG Computer Consultants, Inc. d.b.a. Precision
Imaging ("GMG") and Total Micro Computers, Inc. ("TMC") had been completed as of
the balance sheet date. The accompanying pro forma condensed statement of
operations has been prepared as if (i) the Merger of INI with and into Safe Aid
had been completed as of December 1, 1995 and (ii) INI's acquisition of GMG and
TMC had been completed as of December 1, 1995.
The unaudited pro forma financial information is presented for
illustrative purposes only and is not necessarily indicative of the consolidated
financial position or operating results that would have occurred had the Merger
been consummated on the dates specified, nor is it indicative of future
operating results or financial position. In the opinion of the management of
Safe Aid and INI, all adjustments necessary to presently fairly the unaudited
pro forma financial information has been made.
The pro forma financial information should be read in conjunction with
the historical financial statements of INI, GMG and TMC included within this
Current Report on Form 8-K and Safe Aid's historical financial statements
included in Safe Aid's filings with the Securities and Exchange Commission (the
"SEC"). The SEC filings include Safe Aid's Annual Report on Form 10-KSB for the
fiscal year ended November 30, 1996 and its unaudited financial statements for
the quarters ended February 28, 1997, May 31, 1997 and August 31, 1997.
45
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
INTELLIGENCE NETWORK INTERNATIONAL
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
<CAPTION>
at August 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
- ----------------------------------------------------------------------------- ----------------------------------
Safe Aid INI TMC + GMG Adjustments INI (1) Adjustments As Adjusted
-------- --- --------- ----------- ------ ----------- -----------
ASSETS
Currents assets
<S> <C> <C> <C> <C> <C> <C>
Cash...................... $ 2,119 $ 12,308 $ 15,610 $ 0 $ 27,918$ 0 $ 30,037
Notes receivable.......... 0 0 105,841 0 105,841 0 105,841
Accounts receivable, net.. 0 0 270,070 0 270,070 0 270,070
Inventories............... 0 0 99,721 0 99,721 0 99,721
Prepaid expenses & other
current assets........ 0 0 2,494 0 2,494 0 2,494
Total current assets......... 2,119 12,308 493,736 0 506,044 0 508,163
Property, plant and equipment net
of accumulated depreciation 0 0 61,748 0 61,748 0 61,748
Management agreements........ 0 0 0 50,000(3) 1,050,000 0 1,050,000
............................. 1,000,000(4)
Goodwill..................... 0 0 0 146,088(3) 471,017 0 471,017
............................. 324,929(4)
Other assets................. 0 0 5,073 0 5,073 5,073
............................. $ 2,119 $ 12,308 $ 560,557 $1,521,017 $ 2,093,882$ 0 $ 2,096,001
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
<S> <C> <C> <C> <C> <C> <C> <C>
Accounts payable..........$ 0 $ 8,150 $ 86,195 $ 0 $ 94,345 $ 0 $ 94,345
Shareholders loans........ 19,000 0 0 0 0 0 19,000
Accrued expenses.......... 2,874 2,105 64,239 0 66,344 0 69,218
Notes payable............. 0 0 14,750 0 14,750 0 14,750
Other current liabilities. 0 0 91,390 0 91,390 0 91,390
Total current liabilities.... 21,874 10,255 256,574 0 266,829 0 288,703
Long-term debt and capital
lease obligations........ 0 0 0 0 0 0 0
Common stock issued with right of
of reversion............. 1,400,000(7) 1,400,000 1,400,000
Stockholders' equity (deficiency):
Par value of common stock. 7,055 0 700 12(2) 698 (700)(2) 7,053
............................. (14)(7)
Additional paid in capital 1,572,194 102,550 69,233 9,276(2) 536,140 378,843(2) 888,173
............................. 196,088(3) (1,599,004)(6)
............................. 1,324,929(4)
............................. 234,050(5)
............................. (1,399,986)(7)
Deficit accumulated during
development stage.......(1,599,004) 0 0 0 0 1,599,004(6) 0
Retained Earnings......... 0 (100,497) 234,050 (234,050)(5) (109,785) (378,143)(2) (487,928)
............................. (9,288)(2)
............................. $ 2,119 $ 12,308 $ 560,557 $1,521,017 $ 2,093,882 $ 0 $ 2,096,001
FOOTNOTES TO UNAUDITED PRO FORMA BALANCE SHEET AS OF AUGUST 31, 1997
(1) Pro forma Financials are recast and provided by INI at the request of the
Registrant on September 24, 1997. Represents the combined Balance Sheets of
INI, Total Micro Computers and GMG Computer Consultants.
46
<PAGE>
(2) Pro forma adjustment to give effect to brokerage, finder and consultant
fees to be paid through the issuance of 50,315,700 shares at the closing of
the Merger and the acquisitions of GMG and TMC. For pro forma purposes, the
shares have been valued at $.0077 per share based on the fair market value
of Safe Aid's common stock as of the dates of the acquisition agreements.
The valuation of the INI shares being issued to the former shareholders of
GMG and TMC are based on the fair market value of Safe Aid common stock
because these shares will be exchanged on a one for one share basis for
Safe Aid common stock upon the consummation of the reverse merger.
Therefore, this adjustment reflects a total cost of $387,431 in brokerage,
finder and consultant fees. Included in the 50,315,700 shares are 1,100,000
shares that will be issued to Lockwood Realway for the GMG acquisition and
106,200 shares that will be issued to First Venture Realty for the TMC
acquisition. The remaining shares will be issued in connection with the INI
and Safe Aid reverse merger. Also, par value common stock has been adjusted
to reflect the amount of outstanding shares post-merger.
(3) Pro forma adjustment to give effect to the acquisition of TMC which has
been accounted for using the purchase method in accordance with APB Opinion
No. 16 with INI being the acquiring company. The management of INI and TMC
valued TMC at $425,000. Therefore, INI issued 1,062,500 shares of INI stock
to the former shareholders of TMC with a guaranteed price of $0.40 per
share. Upon the consummation of the INI and Safe Aid reverse merger the
shares would be exchanged for Safe Aid common stock on a one-for-one basis.
Therefore, the Company has guaranteed that the shares issued to the former
shareholders of TMC will be trading at a price of not lower than $0.40 per
share at the time of one year forward the date of closing of the
acquisition. If the shares are trading at a price of lower than $0.40 per
share, upon that date, the Company will upon evidence of stock sales by the
former shareholders of TMC either, at the discretion of those former
shareholders, make up any difference so as to equal the acquisition price
of $425,000 in cash or by issuing additional shares. As of August 31, 1997,
the fair value of the consideration given exceeded the net book value of
TMC by $196,088. Therefore, $50,000 of the excess was allocated to the
management agreements (one year contracts with option to renew for an
additional year) acquired and the remaining $146,088 was allocated to
goodwill.
(4) Pro forma adjustment to give effect to the acquisition of GMG which has
been accounted for using the purchase method in accordance with APB Opinion
No. 16 with INI being the acquiring company. The management of INI and GMG
valued GMG at $1,400,000. Therefore, INI issued 14,000,000 shares of INI
stock to the former shareholders of GMG with a guaranteed price of $0.10
per share. Upon the consummation of the INI and Safe Aid reverse merger the
shares would be exchanged for Safe Aid common stock on a one-for-one basis.
Therefore, the Company has guaranteed that the shares issued to the former
shareholders of GMG will be trading at a price of not lower than $0.10 per
share at the time of one year forward the date of closing of the
acquisition. If the shares are trading at a price of not lower than $0.10
per share, upon that date, the Company will permit GMG to invoke it's right
of reversion (See Note 7 regarding GMG's right of reversion). As of August
31, 1997, the fair value of the consideration given exceeded the net book
value of GMG by $1,324,929. Therefore, $1,000,000 was allocated to the
management agreements (one year contracts with option to renew for an
additional year) acquired and the remaining $324,929 was allocated to
goodwill.
(5) To eliminate the prior retained earnings of GMG and TMC as the acquired
companies in accordance with APB Opinion No. 16.
(6) To eliminate the deficit accumulated during development stage of Safe Aid
as the acquired company in accordance with APB Opinion No. 16.
(7) To reclassify the paid in capital and the par value of the stock issued to
the former stockholders of GMG from the stockholders' equity section in
order to give effect to its potentially temporary status as a result of
GMG's former stockholders right of reversion. Pursuant to the Acquisition
Agreement between INI and GMG, the former stockholders of GMG have the
right of reversion after a one year period and under a condition in which
the INI public stock is not trading, at a minimum of $.10 per share, at
that time. If the GMG's former stockholders elect to invoke this right of
reversion, at that time, one year forward from the closing date, the
Company must return to the former GMG shareholders all of their GMG stock,
contingent on the following terms: (1) GMG's former shareholders must
return all Safe Aid Common Stock held by them, a minimum of 10,000,000
shares, (2) any monies which Safe Aid might have advanced to GMG as working
capital must be repaid under the terms established (3) Safe Aid must be
released from any lease facility equipment guarantees which it made on
behalf of GMG.
</TABLE>
47
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
INTELLIGENCE NETWORK INTERNATIONAL
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
<CAPTION>
From Inception
Nine Months Ended (May 21, 1987)
August 31, 1997 to August 31, 1997
- --------------------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
- ------------------------------------------------------------------------------ ------------------------------------------------
Safe Aid INI TMC + GMG Adjustments INI (1) Adjustments As Adjusted As Adjusted
-------- --- --------- ----------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue............... $ 9,801 $ 0 $ 2,914,867 $ 0 $ 2,914,867 $ 0 $ 2,924,668 $ 5,323,892
Costs and expenses
Cost of sales...... 7,569 0 2,234,213 0 2,234,213 0 2,241,782 4,172,585
Operating expenses. 30,478 88,399 564,515 216,000 (2) 897,034 90,000 (3) 1,017,512 3,017,538
...................... 28,120 (4)
Net Income (Loss) Before
Pro Forma Tax Provision (28,246) (88,399) 116,139 (244,120) (216,380) (90,000) (334,626) (1,866,231)
Pro Forma Tax Provision 0 0 0 19,682 (5) 19,682 0 19,682 19,682
Net Income (Loss)..... $(28,246) $(88,399) $ 116,139 $ (263,802) $ (236,062) $ (90,000) $ (354,308) $(1,885,913)
Net Loss per common share NIL NIL NIL NIL
Weighted Average common
shares outstanding 705,477,200 705,477,200 609,989,049
FOOTNOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED AUGUST 31, 1997
(1) Pro forma Financials are recast and provided by INI at the request of the
Registrant on September 24, 1997. Represents the combined Balance Sheets of
INI, Total Micro Computers and GMG Computer Consultants.
(2) Pro forma adjustment to give effect to management agreements with Gary Bart
and Dean Constantine of GMG effective November 1, 1997 and Anthony Diaz and
Gerardo Toquica of TMC effective October 2, 1997 as if the agreements were
effective at the beginning of the period.
(3) Pro forma adjustment to give effect to Barbara Tolley's employment
agreement with Safe Aid that will be effective upon the closing of the
reverse merger.
(4) Pro forma adjustment to give effect to the amortization of goodwill in GMG
and TMC over a ten year period.
(5) To reflect the pro forma tax provision of GMG which was an S corporation
during this period as if it were a C corporation.
</TABLE>
48
<PAGE>
<TABLE>
SAFE AID PRODUCTS INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
INTELLIGENCE NETWORK INTERNATIONAL
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
<CAPTION>
From Inception
Year Ended (May 21, 1987)
November 30, 1996 to Nov 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
--------------------------------------------------------- ------------------------------------
Safe Aid INI TMC + GMG Adjustments INI (1) Adjustments As Adjusted As Adjusted
-------- --- --------- ----------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue............... $ 19,647 $ 0 $ 4,956,186 $ 0 $ 4,956,186 $ 0 $4,975,833 $ 5,323,892
Costs and expenses
Cost of sales.......... 15,187 0 3,969,122 0 3,969,122 0 3,984,309 4,172,585
Operating expenses..... 9,469 20,023 719,369 288,000(2) 2,114,885 120,000(3) 2,244,354 3,969,886
.......................... 37,493(4)
......................... 1,050,000(5)
Net Income (Loss) Before
Pro Forma Tax Provision (5,009) (20,023) 267,695 (1,375,493) (1,127,821) (120,000) (1,252,830) $(2,818,579)
Pro Forma Tax Provision 14,297(6) 14,297 0 14,297 14,297
Net Income (Loss)......... $ (5,009)$(20,023) $ 267,695 $(1,389,790) $(1,142,118) $ (120,000) $(1,267,127) $(2,832,876)
Net Loss per common share NIL NIL NIL NIL
Weighted Average common
shares outstanding...... 702,977,200 702,977,200 654,257,057
FOOTNOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1996
(1) Pro forma Financials are recast and provided by INI at the request of the
Registrant on September 24, 1997. Represents the combined Balance Sheets of
INI, Total Micro Computers and GMG Computer Consultants.
(2) Pro forma adjustment to give effect to management agreements with Gary Bart
and Dean Constantine of GMG effective November 1, 1997 and Anthony Diaz and
Gerardo Toquica of TMC effective October 2, 1997 as if the agreements were
effective as of the beginning of the period.
(3) Pro forma adjustment to give effect to Barbara Tolley's employment
agreement with Safe Aid that will be effective upon the closing of the
reverse merger.
(4) Pro forma adjustment to give effect to the amortization of goodwill in GMG
and TMC over a ten year period.
(5) Pro forma adjustment to give effect to the amortization of the management
agreements over a one year period. The management agreements are all one
year contracts with an option to renew for an additional year.
(6) To reflect the pro forma tax provision of GMG which was an S corporation
during this period as if it were a C corporation.
</TABLE>
49
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited pro forma information includes the historical financial
statements of Safe Aid for its fiscal year ended November 30, 1996 and for the
nine month period ended August 31, 1997, the historical financial statements of
INI for its fiscal year ended December 31, 1996 and the nine month period ended
September 30, 1997, the historical financial statements of GMG for its fiscal
year ended December 31, 1996 and the nine month period ended September 30, 1997
and the historical financial statements of TMC for its fiscal year ended
December 31, 1996 and the nine month period ended September 30, 1997. See the
financial statements attached as Annexes B-E of this Proxy Statement.
NOTE 2 - CAPITAL TRANSACTIONS
In anticipation of the Reverse Merger, the following capital
transaction occurred: On August 27 1997, INI amended its Articles of
Incorporation to increase its authorized common stock from 30,000,000 Shares to
600,000,000 in anticipation of the reverse merger so that INI shareholders could
exchange one share of INI Common Stock for one share of Safe Aid Common Stock.
As of November 20, 1997, INI had 327,617,550 shares of its common stock issued
and outstanding. Immediately prior to the Merger, INI will issue and additional
258,202,386 shares of its common stock for capital contributions and services
rendered to INI in connection with the Merger. In aggregate, immediately prior
to the Merger, INI will have 585,819,936 shares of its common stock issued and
outstanding. In order to effectuate the Merger, each INI shareholder will
exchange one share of INI Common Stock for one share of Safe Aid Common Stock.
50
<PAGE>
(c) EXHIBITS
2.0 Merger Agreement dated August 29, 1997, as amended between Safe
Aid and INI
2.1 Extension Agreement dated October 31, 1997 between Safe Aid and
INI
3.0 Certificate of Amendment to Safe Aid's Certificate of
Incorporation (effectuating the Reverse Stock Split, Name Change
Amendment and Common Stock Amendment)
4.0 Certificate of Merger filed with the Delaware Secretary of State
4.1 Articles of Merger filed with the Florida Secretary of State
99.0 List of Principal Stockholders of Safe Aid after the Merger
Item 8. Change in Fiscal Year End
On February 9, 1998, the new management of Safe Aid decided to change
Safe Aid's fiscal year end from November 30, 1997 to December 31, 1997. Safe Aid
will file a transitional report for the one month period between November 30,
1997 (its previous fiscal year end) and December 31, 1997 (its new fiscal year
end) on its Form 10-QSB for the quarter ended March 31, 1998.
51
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
SAFE TECHNOLOGIES INTERNATIONAL, INC.
Date: February 23, 1998 By: /S/ Barbara L. Tolley
----------------- ------------------------------------
Barbara L. Tolley
Chief Executive Officer and Chairman
52
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
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
A-1
<PAGE>
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- 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 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.
A-2
<PAGE>
(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 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
A-3
<PAGE>
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 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 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
A-4
<PAGE>
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 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.
A-5
<PAGE>
(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.
(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.
(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
A-6
<PAGE>
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 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
A-7
<PAGE>
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.
(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.
(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.
A-8
<PAGE>
(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.
(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
A-9
<PAGE>
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 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.
(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.
A-10
<PAGE>
(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.
(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.
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
EXTENSION AGREEMENT
Merger Agreement
This Agreement is entered effective as of October 31, 1997, between INTELLIGENCE
NETWORK INTERNATIONAL, INC. ("INI") and SAFE AID PRODUCTS INCORPORATED,
a Delaware corporation ("Safe Aid").
INI and Safe Aid entered into a Merger Agreement dated August 29, 1997 (the
"Merger Agreement") pursuant to which it is intended that INI will merge into
Safe Aid in a reverse merger (the "Merger"). Section 7 of the Merger Agreement
provides that the Merger Agreement may be canceled by either party if the Merger
is not closed by October 31, 1997 (the "Cancellation Date"). The parties have
prepared a Proxy Statement for solicitation of the approval of Safe Aid's
stockholders and, on September 29, 1997, filed such Proxy Statement with the
United States Securities and Exchange Commission (the "SEC"). The SEC has
indicated that it will review the Proxy Statement. Such review may delay mailing
of the Proxy Statement to the stockholders of Safe Aid such that the approval of
the Safe Aid stockholders may not be accomplished in time to close the Merger on
or before the Cancellation Date. The parties now wish to amend the Merger
Agreement to extend the Cancellation Date.
Therefore, in consideration of the mutual promises, covenants and conditions set
forth herein, the parties agree as follows:
1. Extension of Cancellation Date. The Cancellation Date is hereby extended to
November 30, 1997, provided INI has similarly extended its Acquisition
Agreements with Total Micro Computer Systems, Inc. ("Total Micro") and GMG
Computer Consultants, Inc. ("GMG") . The Cancellation Date may be further
extended by INI, to 30 days after resolution of any comments which the SEC might
have on the Proxy Statement, upon written notice to Safe Aid, provided INI has
similarly extended its Acquisition Agreements with Total Micro and GMG. The
Cancellation Date may not be extended beyond March 1, 1998, however, without the
written consent of both INI and Safe Aid.
2. Compliance with Conditions in Merger Agreement. Both INI and Safe Aid
represent to each other that their respective Boards of Directors have approved
the Merger Agreement, and acknowledge that each other is currently in compliance
with all covenants and other obligations contained in the Merger Agreement. INI
represents that it has closed its acquisitions of Total Micro and GMG, subject
to cancellation if the Merger is not consummated by a certain date. INI
represents that it has entered into extension agreements with both Total Micro
and GMG extending such date to November 30, 1997, and providing for further
extension by INI, to 30 days after resolution of any comments which the SEC
might have on the Proxy Statement, upon presentation to Total Micro and GMG of
reasonable evidence that Safe Aid is actively pursuing the resolution of any
such comments. Safe Aid hereby acknowledges that such companies meet the
requirements of Section 9(d) of the Merger Agreement and are acceptable to Safe
Aid.
<PAGE>
3. Proxy Mailing and Shareholder Solicitation. Safe Aid will mail the Proxy
Statement to its shareholders, and INI will pay the postage costs for such
mailing.
4. No Further Changes. Except as modified hereby, all of the terms and
conditions of the Merger Agreement remain unchanged and in full force and
effect.
5. Counterparts. This Agreement may be signed in counterparts, all of which
together shall constitute one Agreement.
6. Facsimile Signatures. This Agreement may be signed and delivered by facsimile
signature and any such signatures shall be of the same force and effect as
original signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
INTELLIGENCE NETWORK INTERNATIONAL, INC.
By: /s/ Barbara L. Tolley
Barbara L. Tolley, President
SAFE AID PRODUCTS INCORPORATED
By: /s/ Stanley Snyder
Stanley Snyder, President
EXHIBIT 3.0
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.
<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 January 30, 1998.
FOURTH: This Amendment shall become effective on Monday, February 9,
1998 at 9:00 a.m. New York time.
IN WITNESS WHEREOF, said Directors and Stockholders have caused this
Certificate to be signed by Stanley Snyder, President, and Barney Melsky,
Secretary and Treasurer, this 6 day of February, 1998.
By: /s/ Stanley Snyder
------------------
Stanley Snyder, President
Attest: /s/ Barney Melsky
------------------
Barney Melsky, Secretary and Treasurer
EXHIBIT 4.0
CERTIFICATE OF MERGER
OF
INTELLIGENCE NETWORK INTERNATIONAL, INC., A FLORIDA CORPORATION,
WITH AND INTO
SAFE TECHNOLOGIES INTERNATIONAL, INC., A DELAWARE CORPORATION,
--------------------------------------------------------------
The undersigned companies, pursuant to Section 252 of the Delaware
General Corporation Law, do hereby execute the following Certificate of Merger:
1. The names of the companies proposing to merge and the states under
the laws of which such companies are organized are as follows:
Name of Company Type of Entity Site of Formation
- --------------- -------------- -----------------
Intelligence Network International, Inc. Corporation Florida
Safe Technologies International, Inc. Corporation Delaware
2. The Merger Agreement between the parties to the merger has been
approved, adopted, certified executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the Delaware General Corporation Law.
3. The surviving corporation shall be Safe Technologies International,
Inc., a Delaware corporation, and it shall be governed by the laws of the State
of Delaware.
4. The present Certificate of Incorporation of the surviving
corporation shall remain unchanged and will continue in full force and effect
until altered or amended as therein provided under the authority of the laws of
the State of Delaware.
5. The present bylaws of Safe Technologies International, Inc. shall be
the bylaws of the surviving corporation and will continue in full force and
effect until altered or amended as therein provided under the authority of the
laws of the State of Delaware.
6. The Agreement and Plan of Merger is on file at the principal place
of business of Safe Technologies International, Inc., located at:
249 Peruvian Avenue
Palm Beach, FL 33480
7. A copy of the Merger Agreement will be furnished by Safe
Technologies
1
<PAGE>
International, Inc., the surviving company, on request and without cost, to any
stockholder of any constituent corporation.
8. As to the authorized capital stock of each constituent corporation
that is not a Delaware corporation:
Name of Company Authorized Capital Stock
- --------------- ------------------------
Intelligence Network International, Inc. Common Stock: 600,000,000 shares
authorized - no par value
9. The merger shall become effective upon the filing of the Articles of
Merger with the Secretary of State of the State of Florida.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Certificate of Merger to be executed in its name by its President as of the
9th day of February, 1998.
INTELLIGENCE NETWORK INTERNATIONAL, INC.,
a Florida corporation
By: /s/ Barbara L. Tolley
Barbara L. Tolley
President and Chairman
SAFE TECHNOLOGIES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Barbara L. Tolley
Barbara L. Tolley
Chief Executive Officer and Chairman
2
EXHIBIT 4.1
ARTICLES OF MERGER
OF
INTELLIGENCE NETWORK INTERNATIONAL, INC., a Florida Corporation,
INTO
SAFE TECHNOLOGIES INTERNATIONAL, INC., a Delaware Corporation,
ARTICLES OF MERGER between INTELLIGENCE NETWORK INTERNATIONAL, INC., a
Florida corporation ("INI") and SAFE TECHNOLOGIES INTERNATIONAL, INC., a
Delaware corporation ("STII").
Pursuant to s. 607.1105 of the Florida Business Corporation Act (the
"Act") INI and STII adopt the following Articles of Merger.
1. The Plan of Merger dated January 30, 1998, ("Plan of Merger) setting
forth the terms and conditions of the merger of INI with and into Safe Aid was
approved and adopted by a majority of the shareholders of INI by written consent
effective as of August 29, 1997, and all of the directors of INI at a special
meeting held on August 20, 1997.
2. The Plan of Merger setting forth the terms and conditions of the
merger of INI with and into Safe Aid was approved and adopted by a majority of
the shareholders of STII at a special meeting held on January 30, 1998 and all
of the directors of Safe Aid by unanimous written consent on August 29, 1997.
3. The Plan of Merger is attached to these Articles as Exhibit "A" and
incorporated by reference as if fully set forth herein.
4. Pursuant to s. 607.1105(1)(b) of the Act, the date and time of the
effectiveness of the Merger shall be on the date and time of filing of these
Articles of Merger with the Secretary of State of Florida.
5. The laws of the State of Delaware, the jurisdiction of organization
of STII permit the merger contemplated by the Plan of Merger, and the laws of
the State of Delaware on fulfillment of all filing and recording requirements
set forth by the applicable laws of the State of Delaware, will have been
complied with.
6. (a) STII agrees that it may be served with process in the State of
Florida in any proceeding for the enforcement of any obligation of INI and in
any proceeding for the enforcement of the rights of a dissenting shareholder of
INI against STII.
(b) STII irrevocably appoints the Secretary of State of Florida as
its agent to accept service of process in any proceeding with respect to those
matters set forth in Subparagraph (a) above. The Secretary of State may forward
a copy of process to: STII's registered agent: Excel Corporate Services, 32
Lockerman Square, Suite L-100, Dover, Delaware 19904.
(c) STII agrees that it will promptly pay to the dissenting
shareholders of INI any amounts to which they are entitled pursuant to the
business corporation law of the State of Florida.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands this 9th day of
February, 1998.
ATTEST: INTELLIGENCE NETWORK INTERNATIONAL,
INC., A Florida corporation
By: /s/ Gerald W. Gritter By: /s/ Barbara L. Tolley
--------------------- ---------------------
Gerald W. Gritter Barbara L. Tolley
President and Chairman
ATTEST: SAFE TECHNOLOGIES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Laura Holm By: /s/ Barbara L. Tolley
-------------- ---------------------
Laura Holm Barbara L. Tolley
Chief Executive Officer and Chairman
<PAGE>
EXHIBIT A
PLAN AND AGREEMENT OF MERGER
of
INTELLIGENCE NETWORK INTERNATIONAL, INC., a Florida corporation
with and into
SAFE TECHNOLOGIES INTERNATIONAL, INC., a Delaware corporation
-------------------------------------------------------------
This is a Plan and Agreement of Merger ("Agreement") between
INTELLIGENCE NETWORK INTERNATIONAL, INC., a Florida corporation (the
"Disappearing Corp."), and SAFE TECHNOLOGIES INTERNATIONAL, INC., a Delaware
corporation (the "Surviving Corp."), (collectively the "Constituent
Corporations"). A Plan of Merger ("Plan") in accordance with Section 607.1101 of
the Florida Statutes and Section 368(a)(1) of the Internal Revenue Code, is
adopted as follows:
1. Merger. INTELLIGENCE NETWORK INTERNATIONAL, INC., shall be merged
with and into SAFE TECHNOLOGIES INTERNATIONAL, INC., to exist and be governed by
the laws of the State of Delaware. The name of the Surviving Corporation shall
be SAFE TECHNOLOGIES INTERNATIONAL, , INC.
2. Articles of Incorporation. The Articles of Incorporation of
Surviving Corp., as in effect immediately before the Effective Date of the
Merger (the "Effective Date") shall, without any changes, be the Articles of
Incorporation of the Surviving Corp. from and after the Effective Date until
further amended as permitted by law.
3. Conversion of Stock. The shareholders of Disappearing Corp. will
surrender all of their shares in the manner hereinafter set forth. In exchange
for the shares of Disappearing Corp. surrendered by its shareholders, the
Surviving Corp. will issue and transfer to these shareholders, shares of its
common stock on the following basis: upon the Effective Date, each share of
common stock of the Disappearing Corporation that shall be issued and
outstanding at that time shall without more be converted into and exchanged into
1 share of common stock of the Surviving Corp. in accordance with this Plan.
Each share of Surviving Corp.'s stock that is issued and outstanding on the
Effective Date shall continue as outstanding shares of Surviving Corp.'s stock.
4. Satisfaction of Rights of Disappearing Corp. Shareholders. All
shares of Surviving Corp.'s stock into which shares of Disappearing Corp.'s
stock shall have been converted and become exchangeable for under this Plan
shall be deemed to have been paid in full satisfaction of such converted shares.
5. Fractional Shares. Fractional shares of Surviving Corp.'s stock will
not be issued. Any fractional share interest will result in the adjustment of
the number of shares upward or downward to the nearest whole share.
<PAGE>
6. Effect of Merger. On the Effective Date, the separate corporate
existence of Disappearing Corp. shall cease, and Surviving Corp. shall be fully
vested in and shall succeed, without other transfer, to all the rights,
privileges, immunities, powers, franchises and property of Disappearing Corp.
and shall be subject to all the debts restrictions, liabilities, disabilities,
and duties of the Disappearing Corp. in the same manner as if the Surviving
Corp. had itself incurred them. The Surviving Corp. will carry on business with
the assets of Disappearing Corp., as well as with the assets of Surviving Corp.
All rights of creditors and all liens on the property of each constituent
corporation shall be preserved unimpaired, limited in lien to the property
affected by the liens immediately prior to the merger.
7. Supplemental Action. If at any time after the Effective Date
Surviving Corp. shall determine that any further conveyances, agreements,
documents, instruments, and assurances or any further action is necessary or
desirable to carry out the provisions of this Plan, the appropriate officers of
Surviving Corp. or Disappearing Corp., as the case may be, whether past or
remaining in office, shall execute and deliver, on the request of Surviving
Corp., any and all proper conveyances, agreements, documents, instruments, and
assurances and perform all necessary or proper acts, to vest, perfect, confirm,
or record such title thereto in Surviving Corp., or to otherwise carry out the
provisions of this Plan.
8. Filing with the Florida Secretary of State and Effective Date. Upon
the Closing, as provided in the Merger Agreement of which this Plan is a part,
Disappearing Corp. and Surviving Corp. shall cause their respective President
and Chief Executive Officer to execute Articles of Merger in the form attached
to this Agreement and upon such execution this Plan shall be deemed incorporated
by reference into the Articles of Merger as if fully set forth in such Articles
and shall become an exhibit to such Articles of Merger. Thereafter, such
Articles of Merger shall be delivered for filing by Surviving Corp. to the
Florida Secretary of State. In accordance with s. 607.1105 of the Act, the
Articles of Merger shall specify the "Effective Date," which shall be the filing
date of the Articles of Merger with the Secretary of State of Florida.
9. Amendment and Waiver. Any of the terms or conditions of this Plan
may be waived at any time by the one of the Constituent Corporations which is,
or the shareholders of which are, entitled to the benefit thereof by action
taken by the Board of Directors of such party, or may be amended or modified in
whole or in part at any time before the vote of the shareholders of the
Constituent Corporations by an agreement in writing executed in the same manner
(but not necessarily by the same persons), or at any time thereafter as long as
such change is in accordance with s. 607.1103 of the Act.
10. Termination. At any time before the Effective Date (whether before
or after filing of Articles of Merger), this Plan may be terminated and the
Merger abandoned by mutual consent of the Boards of Directors of both
Constituent Corporations, notwithstanding favorable action by the shareholders
of the respective Constituent Corporations.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands this 9th day of
February, 1998.
ATTEST: INTELLIGENCE NETWORK INTERNATIONAL,
INC., a Florida corporation
By: /s/ Gerald W. Gritter By: /s/ Barbara L. Tolley
--------------------- ---------------------
Barbara L. Tolley, President
(Corporate Seal)
ATTEST: SAFE TECHNOLOGIES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Laura M. Holm By: /s/ Barbara L. Tolley
----------------- ---------------------
Barbara L. Tolley
Chief Executive Officer and Chairman
(Corporate Seal)
EXHIBIT 99.0
The following table sets forth information regarding the principal
stockholder of Safe Aid after the Merger. The table sets forth information as of
February 19, 1998, with respect to the beneficial ownership of Safe Aid's
outstanding Common Stock by (i) each executive officer and director of Safe Aid,
(ii) all directors and executive officers as a group, and (iii) each person
known by Safe Aid to be the beneficial owner of more than 5% of Safe Aid's
Common Stock. As of February 19, 1998, Safe Aid had issued and outstanding
705,477,200 shares of its Common Stock. An asterisk indicates beneficial
ownership of less than 1% of Safe Aid's outstanding Common Stock.
Percentage of Shares of
Name and Position Amount and Nature Beneficial Ownership
- ----------------- ----------------- -----------------------
Barbara L. Tolley(1) 268,295,651 38.0%
Chairman and CEO
Michael Bhathena 11,000,000 1.6%
Vice President and
Chief Information Officer
Bradford L. Tolley(2) 22,000,000 1.6%
Treasurer and Secretary
Jack W. Tolley(3) 268,295,651 38.0%
Director
Franklin L. Frank(4) 219,595,535 31.1%
Director
Charles N. Martus 200,000 *
Director
Robert L. Alexander 200,000 *
Director
Ruth Deutsch 219,595,535 31.1%
Shareholder
All officers and
directors as a group(5) 521,291,186 73.9%
<PAGE>
(1) Includes 260,295,651 shares held by the Lang Family Trust, a living trust
established by Ms. Tolley, and 8,000,000 shares held by Ms. Tolley's
husband. Under the federal securities laws, Ms. Tolley is deemed to be the
beneficial owner of all Safe Aid Common Stock owned by her husband; however,
pursuant to Rule 16a-1(4), Ms. Tolley disclaims any beneficial interest in
the Safe Aid Common Stock owned by her husband.
(2) Bradford L. Tolley is the son of Barbara L. Tolley and Jack W. Tolley.
(3) Includes 260,295,651 shares held by the Lang Family Trust, a living trust
established by Mr. Tolley's wife. Under the federal securities laws, Mr.
Tolley is deemed to be the beneficial owner of all Safe Aid Common Stock
owned by his wife; however, pursuant to Rule 16a-1(4), Mr. Tolley disclaims
any beneficial interest in the Safe Aid Common Stock owned by his wife.
(4) Includes 185,595,535 shares held by Mr. Frank's wife, Ruth Deutsch and
34,000,000 shares held by LVDB, Inc., a Nevada corporation, controlled by
Ms. Deutsch. Mr. Frank disclaims any beneficial interest in the Safe Aid
Common Stock owned by his wife.
(5) The 268,295,651 shares owned by Barbara L. Tolley and Jack W. Tolley
referred to in footnotes 1 and 3, and the 219,595,535 shares of common stock
owned by Ruth Deutsch and Franklin Frank referred to in footnotes 2 and 4,
are counted only once in calculating the total in order to avoid a
misleading total.
