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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1998
Commission File No. 000-17746
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
(Formerly Safe Aid Products Incorporated)
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(Exact name of Registrant as specified in its Charter)
Delaware 22-2824492
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(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
249 Peruvian Avenue
Suite F2
Palm Beach, Florida 33480
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code: (561) 832-2700
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Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and if no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB. X
Issuer's revenues for the most recent fiscal year were $427,552.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $22,265,837 on December 31, 1998 based upon the
latest published average bid and ask price on such date.
The approximate number of shares outstanding of the Registrant's common stock
on December 31, 1998 was 712,489,700. The approximate number of "A" Warrants
outstanding as of December 31, 1998 was 7,227,280 convertible into 7,227,280
shares of common stock at $.20 per share. Each outstanding "A" Warrant, upon
exercise, will result in the issuance of one redeemable "B" Warrant. As of
December 31, 1998 there were approximately 272,720 "B" Warrants outstanding
exercisable into 272,720 shares of common stock at $.50 per share.
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
PART I
Item 1. Business
Overview
Safe Technologies International, Inc., a Delaware corporation (the "Company")
is a multi-faced company, fast evolving into an E-corporation. As of March
31, 1999, the Company has two active subsidiaries: Internet Commerce, Inc., a
Florida corporation ("Internet Commerce") and Internet Associates
International, Inc, a Nevada corporation ("Internet Associates" or "IAI").
Unless the context otherwise requires, the term "Company" shall refer to the
Company, Internet Commerce and IAI.
Internet Commerce
Internet Commerce specializes in developing, managing and promoting Internet
commerce web sites for small and medium sized businesses wanting to expand
their Internet operations. More specifically, Internet Commerce helps design
web sites for small and medium sized businesses and provides hosting services
for such web sites.
Internet Commerce, Inc. also owns "INCyberMall.com", an Internet commerce
mall. With INCyberMall.com, Internet Commerce hopes to fill the needs in the
marketplace, where none of the other Internet malls have concentrated before,
on promoting and selling exclusively upmarket products.
One of the most unique features of the mall, which is expected to attract a
great deal of worldwide interest is the section called 'Famous Shopping
Streets of the World'. Some of the Famous Shop Streets are Worth Avenue, Palm
Beach; Fifth Avenue, New York; Rodeo Drive, Beverly Hills and Bond Street,
London. On December 16, 1998 this section opened with Worth Avenue in Palm
Beach, Florida. The Worth Avenue street is presented graphically with
photography, maps and a merchant directory. As of March 31, 1999, the Company
had completed two other streets: Fifth Avenue, New York and Rodeo Drive,
Beverly Hills.
Internet Commerce is in the process of contacting stores on Worth Avenue and
some of the other famous streets to ascertain their interest in being
graphically represented on their street in the mall with their own exterior
store front, product photography and option for virtual tours of these
premises. Stores with existing web sites will be offered the opportunity to
have their sites linked in for a monthly fee. Internet Commerce is offering a
flexible tenant package that should accommodate important retailers' needs and
be cohesive with their marketing plans. Mall tenants will be able to select
from a number of options for participation in the mall, i.e. revenue sharing
or partnering of revenue sales, banner advertising, leasing space in the mall,
hosting web sites, web site construction, or comprehensive Internet commerce
fulfillment services.
In addition to the specific shopping streets, shoppers are also be able to
browse and shop for upmarket products at the 'CyberMalls Castle Store'.
CyberMalls Castle Store will contain upmarket products for the 'Rich and
Famous', and will offer, when completed, a complete line of luxury goods which
will allow the shopper to select from a worldwide range of unique, exclusive
products. Each product will be displayed in its appropriate environment. For
example, the finest wines of the world will be displayed in the Wine Cellar;
prints, antiques and statuary will be displayed in the Gallery and books, cd's
and videos will be displayed in the Library.
<PAGE>
As of March 31, 1999, Internet Commerce had entered into agreements with four
companies to display their products in the Castle Store. These companies and
their respective products are Amazon.Com - books, cd's and all other product
lines carried by Amazon.Com; H. J.C. Harris & Co. - men's clothing; Frozen
Pelican Gallery - art exhibits and Fran Murphy Interiors - interior
decorating.
The mall also include topics and subjects of interest to the "rich and
famous", i.e. society news, fashions shows, social calendar events, and a
number of investment news and financial hyperlinks. Also included on the web
site is a prize box, where browsers can drop their name, address, telephone
number and hope to win a prize donated by one of the mall tenants at a monthly
drawing.
During fiscal 1999, Internet Commerce intends to complete its construction of
Phase II of the mall which will contain an INCyberMall.com department store
where INCyberMall.com will make its own direct sales of select upmarket
products. Internet Commerce will also expand its Famous Shopping Streets
section by securing mall tenants for its Worth Avenue, Rodeo Drive and Fifth
Avenue shopping streets and by adding new streets. Management is also
currently seeking an appropriate celebrity person or persons for endorsement
of the mall.
Internet Associates
Internet Associates is an Internet marketing and web site development firm
involved in the development, marketing, and hosting of web sites, as well as
the training of web developers. IAI owns and maintains five Internet servers,
on location in Boca Raton, Florida, with direct redundant T-1 connections to
the Internet. The Internet servers are equipped with secure commerce, E-
commerce applications, shopping cart facilities and database driven
applications.
IAI specializes in quality "market-driven" web sites that unleash the power of
the Internet, combining innovative web design and programming with traditional
marketing and advertising elements especially designed to promote
interactivity and volume response to each customer web site. IAI works with a
variety of clients in providing web design services. The web design work that
IAI performs for each client is customized and the contract price varies
depending upon the nature and scope of the work. IAI also provides web
marketing services. IAI's web marketing services consist of search engine
submissions, banner advertising placement and promotion through alternative
media.
IAI offers web hosting services to over 3,000 customers, nationally. The web
hosting contracts are typically for an initial term of six months and renewed
quarterly thereafter. Web site hosting fees start at $50 per month. Using
this service subscribers can build their own web site and upload the pages to
the server directly.
IAI also offers a training program for Web Master Certificates, to Ft.
Lauderdale Art Institute graduates.
<PAGE>
Proprietary Rights
The Company regards its copyrights, trade names, web sites and domain names as
valuable intellectual property. The Company relies upon copyright law, trade
secret protection and confidentiality or license agreements with its
employees, customers, partners and others to protect its proprietary rights.
Effective copyright and trade secret protection may not be available in every
country in which its products and media properties are distributed or made
available through the Internet.
Competition
The market for Internet products and services is highly competitive. There
are no substantial barriers to entry in these markets, and the Company expects
that competition will continue to intensify.
Internet Commerce believes that the principal competitive factors for
companies seeking to create shopping malls on the Internet are brand
recognition, user affinity and loyalty, demographic focus and open access for
visitors. Internet Commerce competes for users and advertisers with other
content providers and with thousands of Web sites operated by individuals, the
government and educational institutions. Although there is a great deal of
potential competition in this market, management believes that there are only
five or six companies that offer direct competition.
IAI believes that is ability to compete successfully in the Internet services
market depends on a number of factors, including market presence; the adequacy
of IAI's design team and customer and technical support services; the
capacity, reliability and security of its network infrastructure; the pricing
policies of IAI, its competitors and its suppliers; IAI's ability to support
existing and emerging industry standards; and industry and general economic
trends. There can be no assurance that IAI can maintain or develop the
financial resources, technical expertise or marketing and support capabilities
to compete successfully.
Employees
As of March 15, 1998, the Company employed 24 persons full time. Of the full-
time employees, 3 are engaged in management position, 3 administration and 18
in IAI's operations.
<PAGE>
History and Summary of Activity during Fiscal 1998 and 1999
The Company was incorporated in Delaware on May 27, 1989 as Safe Aid Products
Incorporated. The Company's initial business purpose was to engage in
research and development regarding nasal and transdermal delivery of aspirin
and other drugs. However, due to insufficient capital and insufficient market
acceptance, the Company was unsuccessful at effectuating its original business
purpose and remained in its development stage. From 1993-1998, the Company's
principal business objective was to find and merge with an operating company
that would increase shareholder value.
On February 9, 1998, the Company completed a reverse merger with Intelligence
Network International, Inc., a Florida corporation ("INI"). Pursuant to the
terms of the merger agreement, the Company changed its name to Safe
Technologies International, Inc. As a result of the merger, the Company moved
from its development stage status to being a fully operating business. The
Company's new business consisted of a broad range of Internet and technology
based services and products. The Company had two subsidiaries, Total Micro
Computers, Inc. ("TMC") and GMG Computers Consultants, Inc. d.b.a. Precision
Imaging ("GMG"). TMC was a wholesaler and retailer of custom designed and
assembled computer systems and related products and GMG was a digital pre-
press company. In May 1998, the Company also formed a new subsidiary,
Internet Commerce, Inc., a Florida company to serve as the business entity for
its Internet related activities.
During fiscal 1998, management searched for companies to grow the Company's
core operations. The Company entered into letters of intent to acquire two
(2) companies: Toddlers Learning Center, a child care and education center in
Stuart, Florida and V-Prime Computers, Inc., a specialist in computer repairs,
upgrades, networking and installation of custom computer systems and service
for small business in Boca Raton, Florida. However, for reasons discussed
herein, the Company did not complete either of the proposed acquisitions.
On May 27, 1998, Internet Commerce entered into a contract with AT&T to
include AT&T WorldNet Service, AT&T's value-added Internet access, on all of
its new Internet software products. AT&T WorldNet service is one of the
largest Internet service providers in the U.S., serving nearly one million
subscribers. Internet Commerce has commenced work on several software
products that are targeted for specific industries and feature Internet
electronic commerce applications.
In July 1998, the Board of Directors decided to move TMC's operations from
Tampa to South Florida. During fiscal 1998, TMC's financial performance had
deteriorated and management believed that it could better oversee TMC's
operations if they were located in South Florida. The former TMC shareholders
were not issued the 1,062,500 shares of the Company's common stock that they
were due to receive pursuant to their acquisition agreement with the Company.
Management is currently seeking a new acquisition which is compatible to the
TMC services and intends to integrate the existing TMC customer base into that
acquisition.
<PAGE>
On July 21, 1998, the Company entered into a letter of intent for the
acquisition of Toddler's Learning Center, Inc. ("TLC"), a child care and
education center in Stuart, Florida. The Company had planned on operating
TLC as a subsidiary of its Health and Wellness Division. However, in August
after the Company completed its due diligence of TLC, it decided that this
acquisition was not in the Company's best interest.
Shortly after entering into the letter of intent with TLC, the Company entered
into a letter of intent with V-Prime on July 26, 1998. Six months later in
January 1999, the Company planned on closing its acquisition of V-Prime and
issued a press release to that effect on January 6, 1999. However, the
Company decided not to close the deal because it discovered certain adverse
information about V-Prime prior to the closing.
On October 6, 1998, the Company entered into a license agreement with Hangzhou
Jiuyuan Gene Engineering Co., Ltd., for the field testing and production and
distribution of the Company's nasal aspirin patent. Hangzhou is in the
process of completing field testing for the nasal aspirin patent.
In December 1998, the Board of Directors decided that it would reverse the
Company's acquisition of GMG. GMG's financial statements for the third
quarter were below expectations. On December 17, 1998, the Company, GMG and
the former GMG shareholders entered into a reversion agreement and mutual
general release agreements in order to effectuate the reversal of the GMG
acquisition. As part of the reversion agreement, the former GMG shareholders
returned their 14,000,000 shares of the Company's common stock to the transfer
agent to be canceled.
In December 1998, the Company opened up InCyberMall, the Internet mall for the
"rich and famous". On February 5, 1999, the Company completed an acquisition
of IAI, an Internet marketing and web site development firm, involved in the
development, marketing and hosting of web sites, as well as the training of
web developers. The acquisition was structured as a stock for stock
transaction, wherein the IAI former shareholders entered into three year share
lock-up agreements after the closing. The acquisition price was based on a
formula of IAI net profits for fiscal 1999.
<PAGE>
Item 2. Property
The Company's principal executive office is located at 249 Peruvian Avenue,
Palm Beach, Florida where the Company leases office space comprising
approximately 1,000 square feet. The lease is on a month-to month basis and
the monthly rental is $914.
IAI leases 1,000 feet of office space in Boca Raton, Florida. The lease is on
a month to month basis and the monthly rental is $1,200.
Item 3. Legal Proceedings
There are no legal proceedings pending to which the Company is subject, nor to
the knowledge of the Company are any such legal proceedings threatened.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matter submitted to vote of security holders during the last
quarter of the period covered by this report.
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's common stock is traded in the over-the-counter market under the
symbol "SFAD". The following table sets forth the high and low bid and ask
prices, as reported by the National Quotation Bureau, Inc., for the Company's
common stock for the calendar periods indicated.
Common Stock
Bid Asked
Period High/Low High/Low
1997
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1st Quarter .016/.007 .018/.0071
2nd Quarter .0199/.004 .02/.0044
3rd Quarter .013/.0045 .014/.0049
4th Quarter .0095/.0046 .01/.0049
1998
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1st Quarter .06/.0038 .07/.0039
2nd Quarter .202/.024 .205/.026
3rd Quarter .12/.0375 .125/.04
4th Quarter .21/.015 .24/.015
The average of the bid and ask price of the Company's common stock in the
over-the-counter market as of the most recent available date, March 25, 1999
was $.051 per share. These above quotations do not include retail mark-ups,
mark-downs or commissions and represents prices between dealers and not
necessarily actual transactions. The past performance of the Company's
securities is not necessarily indicative of future performance.
Common Stock and Warrants
As of December 31, 1998, the Company had issued and outstanding 712,489,700
shares of its common stock, 7,227,280 Class A Warrants and 272,720 Class B
Warrants. Upon exercise, each Class A Warrant entitles the holder to purchase
one share of common stock for $.20 per share and to receive one redeemable
Class B Warrant. Upon exercise, each Class B Warrant entitles the holder to
purchase one share of common stock for $.50 per share. The exercise periods
of the Class A and Class B Warrants have been extended by the Board of
Directors through January 9, 2000. All of these numbers are adjusted to
reflect the Company's ten-for-one reverse stock split effected as of February
9, 1998.
Holders of Record
At March 26, 1999, there were approximately 1,260 shareholders of record of
the Company's common stock. Such number does not include beneficial owners
holding shares through nominee name.
Dividend Policy
The Company has never paid cash dividends on its Common Stock. Payment of
dividends will be within the sole discretion of the Company's Board of
Directors and will depend, among other factors, upon earnings, capital
requirements and the operating and financial condition of the Company. At the
present time, the Company's anticipated financial capital requirements are
such that it intends to follow a policy of retaining earnings in order to
finance the development of its business.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operations.
RESULTS OF OPERATION
Comparison of the years ended December 31, 1998("fiscal 1998") and December
31, 1997("fiscal 1997")
Revenues were $427,552 for fiscal 1998 and were $3,141,750 for fiscal 1997,
representing a decrease of Eighty Six Percent. Approximately, $35,000 of the
1998 revenues were derived from ICI. The balance of the 1998 revenues were
from Total Micro Computers, Inc, (TMC) subsidiary.
ICI's revenues, were derived in the fourth quarter, as ICI opened for business
in October, 1998. Revenues for TMC were dramatically reduced in 1998 due to
the impact of the theft loss, at TMC's location in Tampa, Florida, and from
the two former stockholders of TMC, abandoning their key management positions
and employment contracts with that subsidiary.
The Company is still evaluating the merits of pursuing the State Farm claim
and the two former TMC Stockholders for breach of fiduciary duty. The Company
has been seeking another acquisition which will replace the TMC subsidiary and
will permit the Company to continue to offer those services which integrate
into the technology requirements of the Company.
Cost of Sales were $281,263 in fiscal 1998 compared to $2,578,964 in fiscal
1997. This decrease is attributable to the reduction in TMC's operations in
1998. Cost of Sales were $7,569 for ICI in 1998 and were $273,694 for TMC.
Selling, general, and administration expenses were $718,908 for fiscal 1998
compared to $2,161,950 for fiscal 1997. This decrease is attributable to the
reduction in TMC's operations in 1998.
Comparison of the years ended December 31, 1997 ("fiscal 1997") and December
31, 1996 ("fiscal 1996")
Revenues were $5,864,300 for fiscal 1997 and were $19,647 for fiscal
1996, representing an increase of $5,844,653. This increase is attributable
to the Company's first year as an operating company and the Company's
consummation of a reverse merger with Intelligence Network International, Inc.
("INI") on February 9, 1998. Under the SEC accounting regulations, INI's
historical financial statements are deemed to be the historical financial
statements of the Company. Since INI was more active than the Company on a
pre-merger basis, revenues, sales, and expenses of the Company will be
significantly greater in fiscal 1997 compared to fiscal 1996.
Costs of sales were $3,144,200 in fiscal 1997 compared to $15,187 in
fiscal 1996. Selling, general and administrative expenses were $33,418 in
fiscal 1997 compared to $9,460 in fiscal 1996. The increases in costs of
sales and selling, general and administrative expenses are attributable to
INI's activity prior to the reverse merger.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, the Company had a working capital deficit of $150,845
compared to a working capital deficit of $7,990 at December 31, 1997. The
increased deficit is a result of the Company's change from being a development
stage company to being an operating company.
This increase is investing activities is due to the Company's acquisition of
Internet assets from three related companies. The Internet assets purchased
include Internet copyrights, trademarks, employment contracts, web sites and
trade names.
<PAGE>
The increase in financing activities resulted from a $500,000 equity
investments from one of the Company's principal shareholder and smaller equity
investments other investors.
Management intends to make a $2 million private offering of its common stock
in the second quarter of 1998.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this Form 10-KSB including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements The following factors, among others, could cause actual results to
differ materially from those set forth in the forward-looking statements: the
Company's ability to successfully (i) develop and profitable grow its
InCyberMall web site, including entering into licensing agreements with
merchants to sell upmarket products in the CyberMall Castle Store and to
locate their stores on the Famous Shopping Streets section of the mall, (ii)
develop IAI's Internet web design, hosting and marketing business, (iii)
identify and finalize acquisition agreements with select Internet companies
and/or enter into partnership agreements with established companies in high
technology deals, and (v) raise additional capital to finance its operations
in the next fiscal year. Additional factors include, but are not limited to
the following: the size and growth of the market for the Company's products;
competition, pricing pressures, market acceptance of the Company's products
and services, the effect of economic conditions, the availability of
management; risks in product development and other risks identified in this
and the Company's other SEC reports.
FUTURE BUSINESS STRATEGY
Year 2000
The Company has completed an assessment of whether its systems and those of
third parties which could have a material impact on its business will function
properly with respect to dates in 2000 and thereafter. The Company has
determined that none of its systems require modification. The Company
believes the only third parties that could have a material impact on its
business are the major financial institutions that process its collections of
accounts receivables and monthly dues by the electronic payment method. The
Company believes these financial institutions are currently working on
modifications to their internal systems to insure these systems will function
properly with respect to dates in 2000 and thereafter and expect these
modifications will be completed in 1999. The Company does not anticipate that
noncompliance, if any, with Year 2000 of any non-information technology
systems, such as embedded micro controllers, will materially or adversely
affect our business. The Company is currently undertaking an analysis of
worst-case scenarios and developing contingency plans to deal with these
scenarios.
<PAGE>
Management believes that the Company's operations are on tract with an overall
concept for sustained growth. Having been fortunate in having an active Board
of Directors, acting as a 'think tank' group for developing innovative, yet
realistic achievable goals to be recognized as a company on the cutting edge
of future technology and electronic commerce, SFAD is poised for growth in
1999. SFAD's Management has already adapted and assimilated the
revolutionary changes which businesses are undergoing due to electronic
business having changed the rules as to how companies conduct their business.
Additionally, the CEO's extensive experience in electronic business, stemming
from early 1990's electronic business information collaborations with AT&T,
has lined up several important pieces which have laid the ground work in
preparation for the Company's growth. Extensive efforts have been made to
improve the INCyberMall copyrights, dating from 1995, which creates two new
profit centers for the Company: the 'famous shopping streets of the world'
and 'CyberMalls Castle'.
Management's focus is on expanding its E-Commerce operation, both from within
ICI, and with select new Internet company acquisitions, as well as potential
partnering with other established companies in high technology deals.
The Company's Nasal Aspirin Patent, currently licensed to Hangzhou Jiuyuan
Gene Engineering Co., Ltd., for the Asian Rim is moving forward at a very slow
pace due to current negotiations of Hangzhou Jiuyuan wishing to have the
licensee for the United States, also. Management's concern is that they have
not moved aggressively forward during the past months of their Agreement with
SFAD, and to agree to extend the Licensee for the US, might be detrimental in
loosing SFAD's position to market. In consideration of the current strong
market interest in nasal delivery applications, Management is cognizant that
the Company has a valuable patent which is now timely for development. and
intends to allocated time and attention seeking an American partner to develop
the Nasal Aspirin Patent for the US.
<PAGE>
Item 7. Financial Statements.
INDEX
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Page
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Independent Auditors' Report....................................13
Consolidated Balance Sheets -
December 31, 1998 and December 31, 1997. (Unaudited-Restated)..14
Consolidated Statements of Operations -
December 31, 1998 and December 31, 1997. (Unaudited-Restated)..16
Statement of Changes in Stockholders' Equity....................17
Consolidated Statements of Cash Flows -
December 31, 1998 and December 31, 1997. (Unaudited-Restated)..20
Notes to Consolidated Financial Statements......................22
<PAGE>
SEWELL AND COMPANY, PA
8080 PASADENA BOULEVARD
PEMBROKE PINES, FLORIDA
Tom Sewell, C.P.A. (954)432-3100
Ross Oppenhieimer C.P.A. Fax (954)436-6898
INDEPENDENT AUDITORS REPORT
To the Stockholders
Safe Technologies International, Inc. and Subsidiaries
Palm Beach, Florida
We have audited the accompanying balance sheet of Safe Technologies
International, Inc. and Subsidiaries (a corporation) as of December31, 1998,
and the related statements of income and expenses, 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. For comparison purposes, we have restated the 1997 financial
statements, but no audit was performed for 1997.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Safe Technologies
International, Inc. and Subsidiaries as of December 31, 1998, and the results
of its operations, and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
SEWELL AND COMPANY, PA
March 9, 1999
-13-
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
BALANCE SHEET
DECEMBER 31, 1998 AND 1997
<CAPTION>
<S> <C> <C>
ASSETS
1998 1997
Unaudited
Restated
--------- ---------
Current assets
Cash $ 66,473 $ 52,091
Accounts receivables (net of allowance
for doubtful accounts of $ 5,000 in 1997) 500 90,526
Notes receivables stockholders 35,188
Inventory 14,151
Prepaid assets 2,494
--------- ---------
Total current assets 66,973 194,450
Property, plant and equipment (net of
accumulated depreciation of $ 326 and $7,631) 4,233 50,974
--------- ---------
Intangible assets (net of accumulated
amortization of $ 20,575 in 1998.) 324,968
--------- ---------
Other assets 37,500
--------- ---------
$ 433,674 $ 245,424
========= =========
See auditors' report and notes to financial statements.
-14-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
BALANCE SHEET
DECEMBER 31, 1998 AND 1997
<CAPTION>
<S> <C> <C>
1998 1997
Unaudited
Restated
--------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 57,776 $ 180,710
Accrued expenses 37,452 21,730
Loan payable stockholders 123,590
--------- ---------
Total current liabilities 218,818 202,440
Shareholders' equity
Common stock (par value $ 0.00001
999,999,000 shares authorized,
712,489,700 issued and outstanding for 1998
and 950,000,000 shares authorized,
705,477,200 issued and outstanding for 1999) 7,125 7,055
Capital subscribed 40,000
Less: subscription receivables (1,000)
Additional paid in capital 2,591,531 1,781,327
Retained earnings (deficit) (2,422,800) (1,745,398)
--------- ---------
Total stockholders' equity 214,856 42,984
========= =========
$ 433,674 $ 245,424
See auditors' report and notes to financial statements.
-15-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF INCOME AND EXPENSES
DECEMBER 31, 1998 AND 1997
<CAPTION>
<S> <C> <C>
1998 1997
Unaudited
Restated
--------- ----------
Sales $ 427,552 $ 3,141,750
Cost of sales 281,263 2,578,964
--------- ----------
Gross profit 146,289 562,786
Expenses
Operating & administrative expenses 151,788 1,247,997
Research and development 594,618
Salaries 206,870 281,389
Consulting fees 133,184 9,975
Proxy and brokers services 101,795 2,973
Accounting and legal 91,870 21,483
Depreciation and amortization 20,901 3,515
Management expense 12,500
--------- ----------
718,908 2,161,950
--------- ----------
Income (loss) from operations (572,619) (1,599,164)
Other income (expenses)
Interest income 2,995 120,676
Interest expense (12,140)
Theft (loss) of inventory (114,640) (169,919)
Other expenses (48,229)
Inventory adjustments (174,900)
Forgiveness of debt 19,000
--------- ----------
(104,785) (272,372)
--------- ----------
Net loss $ (677,404) $(1,871,536)
========= ==========
Earnings per common share $ 0.001 $ 0.003
========= ==========
See auditors' report and notes to financial statements.
-16-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Capital Paid in Accumulated
Shares Amount Subscribed Capital Deficit TOTAL
----------- ------ ----------- --------- ----------- -------
Balance November 30, 1996 702,977,200 $7,030 $1,548,969 $(1,570,758) $(14,759)
Issuance of common stock for consulting
services based on Board of Directors assessment
of value of services rendered for the period
ended April, 1997 ($.0093 per share) 2,500,000 25 23,225 - 23,250
- - (31,186) (31,186)
Net loss for the year ended November 30, 1997----------- ------ ----------- --------- --------- -------
Balance November 30, 1997 705,477,200 7,055 1,572,194 (1,601,944) (22,695)
Net loss for December 1997 (2,068) (2,068)
INI 143,600 (154,686) (11,086)(1)
TMC 65,533 13,302 78,835
----------- ------ ----------- --------- ---------- ------
Balance December 31,1997 705,477,200 7,055 1,781,327 (1,745,396) 42,986
Correction of error INl 11,086(1) 11,086
ICI 100 100
Ten for one reverse stock split (reduction
of shares as of closing merge with no change
to par value of the common stock,
(February 09, 1998) (634,929,480) (6,349) 6,349 0.00
----------- ------ ----------- --------- ---------- ------
70,547,720 $ 706 $1,798,862 $(1,745,396) $ 54,172
See auditors' report and notes to financial statements.
-17-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Capital Paid in Accumulated
Shares Amount Subscribed Capital Deficit TOTAL
----------- ------ ----------- -------- ------------ -------
70,547,720 $ 706 $1,798,862 $(1,745,396) $ 54,172
TMC acquisition 196,088 196,088
Merge INI and Safe Aid 585,819,936 5,858 (5,858) 0
Less: shares of INI not issued (1,062,500) (11) 11 0
Issuance of common stock for consultant
services after the merge (February 09, 1998) 49,109,544 491 (491) 0
Issuance of common stock for stock sale
DLSK Trust, August 3, 1998 500,000 5 19,995 20,000
Issuance of common stock to Ruth Deutsch and
Franklin L. Frank - August 3, 1998 250,000 3 289,997 290,000
Issuance of common stock for legal services to
English, McCayghan & O'Brien November 1998 1,000,000 10 39,990 40,000
Capital subscribed - agreement November 1998 40,000 40,000
----------- ------ ----------- -------- ------------ -------
706,164,700 $7,061 $40,000 $2,338,594 $(1,745,396) $640,259
See auditors' report and notes to financial statements.
-18-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Capital Paid in Accumulated
Shares Amount Subscribed Capital Deficit TOTAL
----------- ------ ----------- --------- ------------ -------
706,164,700 $7,061 $40,000 $2,338,594 $(1,745,396) $640,259
Less: Subscription receivables (1,000) (1,000)
Issuance of common stock for Public Relations
services for the year ending December 31, 1998 1,325,000 13 52,987 53,000
Issuance of common stock for consulting services
for the year ending December 31, 1998 800,000 8 31,992 32,000
Issuance of common stock for employee
compensation in lieu of cash payment 4,200,000 42 167,958 168,000
Net income (loss) December31, 1998 (677,404) (677,404)
----------- ------ ----------- --------- ------------ -------
Balance December, 31,1998 712,489,700 $7,125 $39,000 $2,591,531 $ (2,422,800) $215,856
=========== ====== =========== ========= ============ =======
See auditors' report and notes to financial statements.
-19-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net Loss $ (677,404)
-----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,270
Provision for losses on accounts receivable (5,000)
(Gain) loss on disposal of property 58,605
(Increase) decrease in accounts receivable 95,026
(Increase)decrease in notes receivables 35,188
(Increase) decrease in prepaid expenses 2,494
(Increase) decrease in inventories 14,151
(Increase) decrease in other assets 12,500
Increase (decrease) in accounts payable (44,084)
Increase (decrease) in accrued liabilities 15,722
Increase (decrease) in shareholders' loan 44,740
-----------
Total adjustments 242,612
-----------
Net cash used for operating activities (434,792)
Cash flows from investing activities:
Cash payments for the purchase of property (4,559)
Cash payments for the purchase of intangibles (199,455)
-----------
Net cash used for investing activities (204,014)
-----------
Cash flows from financing activities:
Proceeds from issuance of common stock 613,188
Proceeds from capital subscribed 40,000
-----------
Net cash provided by financing activities 653,188
-----------
Net increase in cash and cash equivalents 14,382
Cash and cash equivalents, beginning of year 52,091
-----------
Cash and cash equivalents, end of year $ 66,473
===========
Supplemental cash flow information:
Cash paid during the year for: Interest $ 12,140
See auditors' report and notes to financial statements.
-20-
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly Known as
SAFE AID PRODUCTS INCORPORATED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
<S> <C>
Unaudited
Restated
-----------
Cash flows from operating activities:
$ (1,871,536)
-----------
Net Loss
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,515
Deferred income taxes (4,800)
(Increase) decrease in accounts receivable 111,654
(Increase) decrease in inventories 127,352
Increase (decrease) in accounts payable (88,754)
Increase (decrease) in accrued liabilities (4,329)
Increase (decrease) in income taxes payable (10,680)
Increase (decrease) in shareholders' loan 50,350
Increase (decrease) Development stage 1,577,204
-----------
Total adjustments 1,761,512
-----------
Net cash used for operating activities (110,024)
-----------
Cash flows from investing activities:
Cash payments for the purchase of property (12,103)
-----------
Net. cash used for investing activities (12,103)
-----------
Cash flows from financing activities:
Proceeds from issuance of common stock 88,850
-----------
Net cash provided by financing activities 88,850
-----------
Net decrease in cash and cash equivalents (33,277)
Cash and cash equivalents, beginning of year 85,369
-----------
Cash and cash equivalents, end of year $ 52,092
===========
See auditors' report and notes to financial statements.
-21-
</TABLE>
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description:
Safe Technologies International, Inc. ("Safe Tech") and its subsidiaries is a
multi-faceted company specializing in Internet services and products and in
the development of a nasal aspirin patent for which the Company has perpetual
worldwide rights.
Organization:
The Company was incorporated under the laws of the state of Delaware on May
21, 1987 as Safe Aid Products, Incorporated. On February 9, 1998, the Company
changed its name to Safe Technologies International, Inc.
The Company was considered to be in the development stage through December 31,
1997.
Basis of Consolidation:
The consolidated financial statements include the accounts of Safe
Technologies International Inc. and its subsidiaries, ICI and TMC. All
material intercompany transactions and balances have been eliminated in the
consolidated financial statements. The 1997 financial statements have been
restated including ICI, TMC, INI, and Safe Aid Products for comparison
purposes.
Wholly Owned Subsidiaries:
On June 16, 1997, Intelligence Network International, Inc. (INI) entered into
an agreement to acquire Total Micro Computers, Inc. (TMC) in Tampa, Florida in
exchange for 100% of the issued and outstanding common stock. TMC received
1,062,500 shares of the company which was valued at $.40 per share or
$425,000. Acquired assets were accounted as a purchase, and are being
carried on the balance sheet. After a theft loss incurred by TMC, the former
stockholders abandoned the business in June 1998. The revenues and expenses
are included in the financial statements and the loss due to theft is included
under other income (expenses). The Company intends to resume business in
1999.
.
On May 21, 1998, Internet Commerce, Inc. (ICI) was incorporated under the laws
of the state of Florida. ICI was formed to engage in the business of Internet
services and products, and to develop the copyrights and trademarks acquired
by the Company.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business Combinations:
On September 2, 1996, Intelligence Network International Inc. (INI) was
incorporated under the laws of the state of Florida. INI was formed to engage
in the business of Internet services and products. Through a series of stock
transactions described in the business combination section below, INI merged
with Safe Technologies International, Inc. on February 9, 1998. There was a
ten-for-one reverse stock split (the reverse stock split) and the stockholders
voted to change the name of Safe Aid Products Incorporated to Safe
Technologies International, Inc.
Cash and Cash Equivalents:
For purposes of the statements of cash flows, the Company treats all short-
term investments with maturates of three months or less at acquisition to be
cash equivalents.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect 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.
Change of Fiscal Year:
On February 9, 1998, the new management of Safe Tech decided to change Safe
Tech's fiscal year end from November 30th to December 31st. Accordingly, the
financial statements of December 31, 1997 reflect a restated twelve-month
period.
Revenue Recognition:
Revenues of Safe Tech, ICI, and TMC are recognized at the time the services
are rendered to customers. Services are rendered when the Company's
representatives receive the customer's requests and completes the customer's
orders.
Financial Instruments:
Cash and cash equivalents, accounts receivable and accounts payable are short-
term in nature and the net values at which they are recorded are considered to
be reasonable estimates at their fair values. The carrying values of notes
payable are deemed to be reasonable estimates of their fair values.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment:
Property and equipment are stated at cost. Depreciation of depreciable assets
is computed using the straight-line method of depreciation over the estimated
useful lives of the assets. The estimated useful life is 7 years.
Amortization:
Amortization of trademarks and copyrights, and goodwill is determined
utilizing the straight-line method based generally on the estimated useful
lives of the intangibles as follows:
Trademarks and copyrights 15 years
Goodwill 15 years
Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 131, Disclosures About Segments of an Enterprise and
Related Information (SFAS No. 131) which established presentation of financial
date based on the "management approach". SFAS No. 131 is applicable for
fiscal years beginning after December 15, 1997. For the current fiscal year
we are not going to present segment reporting because it is immaterial.
Basic Loss per Share and Diluted Loss per Share:
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128),
which specifies the computation, presentation and disclosure requirements for
earnings per share. SFAS No. 128 supercedes Accounting Principle Board
Opinion No. 15 entitled Earnings Per Share. Basic earnings per share are
computed by dividing income available to common stockholders (the numerator)
by the weighted-average number of common shares (the denominator) for the
period. The computation of diluted earnings per share is similar to basic
earnings per share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potentially dilutive common shares had been issued.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic Loss per Share and Diluted Loss per Share:
The numerator in calculating basic earnings per share is reported net loss.
The denominator is based on the following weighted-average number of common
shares:
1998 1997
Basic 652,071,619 612,933,835
The 14,727,280 shares of common stock, reserved in connection with warrants
are not included in the diluted earnings per share calculation since the
exercise price is greater than the average market price.
2. CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation provide for the authorization of 950,000,000
shares of common stock at $.00001 par value. On January 30, 1999, the
stockholders approved increasing the authorized number of shares to
999,999,000.
In June of 1988, the Company completed a sale of 150,000 units to the public
at a price of $10 per unit. The Company received proceeds in the amount of
$1,213,841, net of commissions and expenses to the underwriter, legal,
accounting and other expenses related to the public offering in the amount of
$286,159. Each unit consisted of 1,000 shares of common stock, $.00001 par
value, and 500 redeemable common stock warrants designated redeemable Warrant
"A". Each redeemable Warrant "A" would, upon exercise, entitle the holder to
purchase one share of common stock for $.02 per share and to receive one
redeemable Class "B" Common stock purchase warrant. Each redeemable Class "B"
Common Stock purchase warrant would, upon exercise, entitle the holder to
purchase one share of common stock for $.05 per share. These exercise periods
of both Class "A" and Class "B" warrants have been extended by the Board of
Directors through January 9, 2000, after giving effect to the ten for one
reverse split on February 9, 1998. At December 31, 1998, 14,727,280 shares of
common stock, reserved in connection with such warrants remain outstanding.
There was no market activity for these warrants through December 31, 1998.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. CAPITAL STOCK TRANSACTIONS (CONTINUED)
On February 9, 1998, INI merged with and into Safe Aid Products, Inc. The
Board of Directors of the Company authorized a ten for one reverse stock split
pursuant to which its outstanding common stock will be reduced to 70,547,720
shares with no change to the par value of the common stock. At the same time,
according to the merge, 585,819,936 shares of common stock were issued to INI
stockholders. A remaining 1,062,500 shares of TMC stock were not issued.
On February 9, 1998, per terms of the merge, 49,109,544 shares of common stock
were issued for consultant services.
On August 3, 1998, 500,000 shares of common stock were issued to an unrelated
party as repayment of a loan. The shares were valued at $0.04 per share.
On August 3, 1998, 250,000 shares of common stock were issued to a stockholder
in addition to previously issued shares (259,595,536) in exchange for
$290,000.
In November 1998, 1,000,000 shares of common stock were issued to an unrelated
company as compensation for legal services rendered to the Company. These
shares have been valued by the Company at $0.04 per share.
On December 31, 1998, 800,000 shares of common stock were issued to certain
officers and consultants of the Company in exchange for their services
rendered to the Company. These shares have been valued by the Company at
$0.04 per share. The Company recorded these shares as consultant fees.
On December 31, 1998, 1,325,000 shares of common stock were issued as
compensation for public relation services to an officer of the Company. These
shares have been valued by the Company at $0.04 per share. The Company
recorded these shares as consultant fees.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. CAPITAL STOCK TRANSACTIONS (CONTINUED)
On December 31, 1998, 4,200,000 shares of common stock were issued to an
employee as compensation in lieu of cash payment. The Company has valued
these shares at $0.04 per share, and recorded them as salaries.
The Company's common stock as of December 31, 1998 consisted of the following:
999,999,000 shares authorized; 712,489,700 shares
issued and outstanding $0.00001 par value. $ 7,125
========
3. SUBSCRIPTIONS
The Company entered into a subscription agreement for the purchase of
4,405,882 shares common stock for $40,000 on November 4, 1998. At December
31, 1998, the Company had received payments amounting to $39,000. No stock
has been issued relating to this subscription.
4. PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment at December 31, 1998 consisted of the following:
Telephone equipment $ 4,559
Less: accumulated depreciation (326)
--------
$ 4,233
========
Depreciation expense for the year ended December 31, 1998 was $326.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
5. INTANGIBLE ASSETS
At December 31, 1998, intangible assets were summarized by major
classification as follow
Copyrights and trademarks $ 199,455
Goodwill 146,088
---------
345,543
Less: Accumulated amortization (20,575)
$ 324,968
=========
Amortization expenses for the year ended December 31, 1998 were $20,575.
6. LEASES
The Company rents office space in Palm Beach, Florida on a month to month
basis. There is no lease in force. The monthly rent is currently $914. The
Company also rents office furniture and equipment on a month to month basis
for $1,000 per month from the president.
The Company leases telephone equipment through a capital lease. The term of
the lease is for 36 months, commencing July 22, 1998, in the amount of $119.48
plus sales tax per month. There is a $1.00 purchase option at the end of the
lease.
Rental expense for the year ended December 31, 1998 was $22,471. Future
anticipated minimum annual rental expense for subsequent years are as follows:
1999 $ 24,398
2000 24,398
2001 23,800
2002 22,964
2003 22,964
Thereafter 0
---------
Total $ 118,524
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
7. INCOME TAXES
The Company and its subsidiaries file consolidated income tax returns. No
provision has been made in the accompanying financial statements for income
taxes payable because of the Company's operating loss from operations. At
November 30,1997, the Company has $1,590,710 of operating loss carryforwards
for financial reporting and income tax purposes that expire through the year
2012. Net operating loss of $666,206 from the year ended December 31, 1998
will expire in 2018. Additionally, the Company has approximately $44,000 of
research and development credits available to offset future income taxes
through the year 2005. There can, however, be no assurance that the Company
will have future operating profits.
8. SHORT-TERM DEBT
At December 31, 1998, short-term debt consisted of the following:
8% note payable to an officer, unsecured, due on
demand. Upon any default, the note becomes due
immediately at an interest rate of 18% per annum. $ 97,240
Note payable to an officer, unsecured, due on
demand, no interest. 1,350
Note payable to an individual, unsecured and
due on demand, no interest. 25,000
---------
Total short-term debt $ 123,590
=========
Interest expense for the years ended December 31, 1998 was $12,140.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
9. STOCK OPTION AND STOCK AWARDS
The Company has an Incentive Stock Plan 1998 for selected employees, officers,
directors and key consultants to the Company and its subsidiaries. The number
of shares and grant dates are determined at the discretion of a committee,
consisting of not less than two members of the Board of Directors of the
Company. A maximum of 60,000,000 shares of common stock may be issued under
the plan, distributed as follows:
a) 30,000,000 shares of common stock under a non-qualified stock option with
an expiration of ten (10) years from the date of the grant.
b) 15,000,000 shares of common stock under a restricted stock grant, subject
to specified restrictions on transferability and vesting.
c) 15,000,000 shares of common stock under a stock awards plan. Stock awards
may be made in lieu of cash compensation or as additional compensation.
The proposed maximum offering price per share is $0.0425. At December 31,
1998, there were no options, grants, or stock awards granted.
10. EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement dated January 30, 1998 with
Barbara Tolley, its president and CEO. The term of the agreement is for a
period of two (2) years, commencing on February 9, 1998 and ending on February
9, 2000.
The Company agrees, in consideration of the services performed, to term of two
years. The Company will pay to employee a monthly salary of $10,000, payable
in all cash, or half cash/half stock, all stock, or partial accrual, at the
option of the employee.
In the event the employee elects to exercise the employment option for one
additional year, the Company will pay to the employee a monthly salary of
$15,000 per month.
In the event the Company's Board of Directors terminates the employee at any
time during the term of this employment, with or without cause, the Company
will pay to the employee a termination severance payment of $300,000.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
10. EMPLOYMENT AGREEMENTS (CONTINUED)
In addition to the annual salary, the employee shall receive a cash bonus on
an annual basis throughout the term of employment, based on the Company's
annual profits (pre tax) for the year. The bonus shall be calculated on a
percentage of the net profits for the year as follows:
1) A percentage of fifteen (15) percent for annual net profits up to $500,000
2) A percentage of ten (10) percent for annual net profits from $500,000 to
$2,000,000.
3) Profits over $2,000,000 are to be negotiated.
In addition, the agreement calls for the Company to provide additional
employment benefits, which include automobile, insurance, telephone, dues and
vacation.
11. OTHER TRANSACTIONS
On December 17, 1998, the Company's Board of Directors rescinded the
acquisition of GMG Computer Consultant, Inc., doing business as Precision
Imaging ("GMG"). GMG was originally acquired July 22, 1997 with the exchange
of 14,000,000 shares of the Company for 100% of the issued and outstanding
common stock of GMC. GMC returned 14,000,000 shares of SFAD stock. The
financial statements do not include GMC.
The management of Safe Tech did not encumber the assets of GMG in any way or
cause any UCC-1 financing statements to be reported on such assets.
12. MERGER
On February 9, 1998, INI merged with and into Safe Aid Products, Inc. The
name of the combined foundation is Safe Technologies International, Inc. The
combination was accounted for as a pooling of interest under which net assets
of both foundations were combined at book value and neither entity recognized
a gain or loss. 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 law, and
the merger shall qualify as a tax-free reorganization under Section
386(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("the code").
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
13. DEVELOPMENT STAGE COMPANY
Prior to December 31, 1997, the Company, Safe Aid Products Incorporated, was
considered to be in the development stage. A summary of expenses during this
period is as follows:
Revenue $ 256,831
Expenses
Cost of sales $ 211,032
General and administrative 955,865
Research and development 594,618
Selling expenses 65,642
Depreciation and amortization 29,443
Loss - inventory obsolescence 124,919
--------
1,981,519
---------
(1,724,688)
Other Income
Interest income 120,676
---------
Net Loss $(1,604,012)
---------
14. SUBSEQUENT EVENTS
On January 29, 1999, the Company (SFAD) entered into an acquisition agreement
with the stockholders of Internet Associates International, Inc. (IAI), a
Nevada corporation.
It is the intention of both companies that all of the issued and outstanding
stock of IAI shall be acquired by SFAD in exchange for the issuance to the IAI
stockholders of SFAD common stock. This acquisition is intended to qualify
as tax-free reorganization.
The IAI stockholders agree to sell and SFAD agrees to purchase, all of the
issued and outstanding shares of stock of IAI for a purchase price equal to
ten (10) times the net profits of IAI for the calendar year 1999.
The entire purchase price shall be paid by the issuance to the IAI
stockholders of shares of common stock of SFAD.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
During fiscal 1998, the Company did not have any changes in or disagreements
with its accountants, Scott & Guilfoyle, an accounting firm based in Lake
Success, New York. However, on March 4, 1999, the Company decided that it was
in its best interest to retain an accounting firm that was based in South
Florida and dismissed Scott & Guilfoyle. The Company's decision to change
accountants was based solely on the decision to have a local accounting firm
and was not at all related to the quality of Scott & Guilfoyle's work or any
disagreements with such firm. Effective as of March 4, 1999, the Company
engaged Sewell and Company, P.A. ("Sewell") as its new independent
accountants. Sewell has offices in Hollywood, Florida and Pembroke Pines,
Florida. The Company reported its change in independent accountants in a Form
8-K it filed with the SEC on March 9, 1999.
PART III
Item 9. Directors, Executive Officers and Significant Employees
The executive officers and directors of the Company during fiscal 1998 were as
follows:
Name Age Position Held with Registrant
Barbara L. Tolley 61 CEO and Chairman of the Board
Charles N. Martus 75 Director
Jack W. Tolley 75 Director
Robert L. Alexander 55 Director
Bradford L. Tolley 34 Secretary and Treasurer
Michael Bhathena 31 Vice President and Chief Information Officer
Barbara L. Tolley has served as Chief Executive Officer and Chairman of the
Company since February 9, 1998. Ms. Tolley received her BA from Ohio State
University in 1959. In 1975, she founded Westchester Ltd., Inc., a privately
held company specializing in international marketing and advertising in which
she held the office of President until 1989. In 1990, Ms. Tolley founded one
of the Internet companies, Property Intelligence International, Inc. (PII), an
international consulting and online real estate business service currently on
the Internet. Since 1996, Ms. Tolley has been one of the majority
stockholders in Villas International Realty, Inc., an international holiday
rental agency. Ms. Tolley is the wife of Jack W. Tolley and the mother of
Bradford L. Tolley.
<PAGE>
Charles N. Martus has served as a Director of the Company since February 9,
1999. Mr. Martus is a graduate of Dartmouth College, Hanover, New Hampshire
in 1944, and attended Amos Tuck School. Mr. Martus was a principal in a
gourmet food operation in Manhattan from 1946 until 1990. During the past
five years, Mr. Martus has been retired.
Jack W. Tolley has served as a Director of the Company since February 9, 1999.
Mr. Tolley is a graduate of Dartmouth College, Hanover, New Hampshire in 1947,
and attended Cornell University in Ithaca, New York. Mr. Tolley founded J.W.
Tolley & Associates in 1953, a national marketing and advertising agency and
served as President until 1975. Mr. Tolley was a Director and consultant to
Westchester Ltd., Inc. until 1982. Mr. Tolley has been pursuing a career as
an artist and painter of Southwestern American art and as an author of several
books on Florida and immigration for foreign nationals. Mr. Tolley is the
husband of Barbara L. Tolley and the father of Bradford L. Tolley.
Robert L. Alexander has served as a Director of the Company since February 9,
1998. Mr. Alexander has been in management with Fortune 500 companies, and
has had start up responsibility with privately held corporations during his
career. Mr. Alexander was President of International Communications Systems
(ICS) from 1991 to 1993. He was President of United Communications Systems
(USC) from 1993-1994, a telephone reseller company in select markets. Mr.
Alexander founded his own company, Comstar International, Inc., with master
distributor contracts with GE Capital Communications Services in 1994. He was
recruited by Systems Communications, Inc. as CEO, responsible for operations
of communications companies acquired and merged into the public company.
Since April 1997, Mr. Alexander has been President of International Teledata
Corporation, responsible for its transition from a privately held company to a
public company.
Bradford L. Tolley has been the Secretary and Treasurer of the Company since
February 9, 1998. Mr. Tolley is a graduate of Phillips Academy in Andover,
Massachusetts in 1982, and attended Rollins College in Winter Park, Florida.
He was employed by Westchester Ltd., Inc., as an account executive from 1984
to 1989. From 1990-1992, Mr. Tolley was employed by Bilfinger & Berger's
American subsidiary, Fru-Con Corporation, both subsidiaries of Dresdner Bank
in Germany. From 1992-1995, Mr. Tolley was Vice President of PII, one of the
Internet Companies. Mr. Tolley is currently President of Tolley Investments,
Inc., a privately held company. Mr. Tolley is the son of Jack W. Tolley and
Barbara L. Tolley.
Michael Bhathena has served as the Chief Information Officer of the Company
since February 9, 1998. Mr. Bhathena holds a B.A. in Computing & Statistics
and a masters degree in computing science, from the University of Kent in
Great Britain. Mr. Bhathena served as an assistant trader and then in the
finance department at the Hong Kong & Shanghai Banking Corporation's (HSBC)
City of London Offices from 1986-1988. Mr. Bhathena served as a voice and
data communications executive for the Infocheck Group, Ltd. from 1992-93, a
pioneer in providing on-line credit information to British companies. Mr.
Bhathena was employed and served as President of PII Ltd., United Kingdom,
which is an affiliate of PII, one of the Internet Companies, from 1993-1995.
<PAGE>
Item 10. Executive Compensation
Summary Compensation Table
The following table sets forth the aggregate compensation paid to Barbara L.
Tolley, the Company's Chief Executive Officer and Chairman (the "Named
Executive Officer") by the Company. None of the other executive officers of
the Company received compensation in excess of $100,000 during the fiscal
years ended December 31, 1998, 1997 or 1996. Except as set forth in the table
below, no bonuses or other compensation were paid during the fiscal year ended
December 31, 1998.
Annual Compensation
Name of Principal Fiscal Salary Bonus Other Annual
Position Year Compensation
Barbara L. Tolley, Chief 1998 0(1) 0 $119,000(2)
Executive Office and
Chairman
1997 0(1) 0 --
1996 -- -- --
(1) Ms. Tolley joined the Company as its Chief Executive Officer on February
9, 1998. Under her employment agreement, Ms. Tolley was entitled to receive
an annual salary of $120,000. However, due to the Company's financial
condition Ms. Tolley elected not to receive her salary in fiscal 1997 and
1998.
(2) The Board of Directors granted Ms. Tolley an aggregate of 4,200,000 stock
awards pursuant to the Company's 1998 Incentive Stock Plan. The date, number
of stock awards and market price on the date of grant are as follows:
September 15 - 200,000 stock awards at $.017; September 29 - 500,000 at $.017;
December 4 - 500,000 stock awards at $.02 and December 18 - 3,000,000 at $.03.
<PAGE>
Options Granted to the Named Executive Officer During Fiscal 1998
The Company did not grant any options to the Named Executive Officer during
the fiscal year ended December 31, 1998. However, as noted in the Summary
Compensation Table, the Named Executive Officer has received stock awards, in
lieu of compensation.
Aggregated Option Exercises and Fiscal Year-End Option Value Tables
As of December 31, 1998, Ms. Tolley did not own any options to purchase shares
of the Company's common stock. However, as noted in the Summary Compensation
Table, the Named Executive Officer has received stock awards, in lieu of
compensation.
Employment Agreement
The Company entered into an employment agreement with Barbara Tolley, its
Chief Executive Officer and Chairman, effective as of February 9, 1998. The
term of the agreement is for two years, with an option exercisable by Ms.
Tolley to extend the employment agreement for an additional year. Ms.
Tolley's compensation is $120,000 per year for the initial two year term. At
Ms. Tolley's option, this sum can be paid with half cash and half stock, all
cash or on an accrual basis. Ms. Tolley is entitled to bonus compensation
based on a percentage of the annual net pre-tax profits of Safe Aid. As an
officer of Safe Aid, she will be entitled to participate in an overall group
insurance plan providing health, life and disability insurance benefits for
employees of Safe Aid. The employment agreement will also provide for the use
of an automobile and/or a monthly automobile allowance, payment of club dues
and other fringe benefits commensurate with her duties and responsibilities.
The employment agreement provide that Ms. Tolley is entitled to receive a
$300,000 severance payment if she is terminated for any reason or if she
chooses to terminate her employment. If Ms. Tolley dies during her term of
employment, Ms. Tolley's estate or beneficiaries are entitled to receive the
$300,000 severance payment. If the Company is sold, consolidated or merged,
Ms. Tolley's employment agreement provides that the successor corporation
shall be obligated to perform all of the Company's obligations under the
employment agreement.
As disclosed in the Summary Compensation Table, Ms. Tolley did not receive her
annual salary or any of the other benefits (1) to which she was entitled to
under the employment agreement in fiscal 1997 and 1998. However, Ms. Tolley
did receive stock awards.
(1) Ms. Tolley joined the Company as its Chief Executive Officer on February
9, 1998. Under her employment agreement, Ms. Tolley was entitled to receive
an annual salary of $120,000. However, due to the Company's financial
condition Ms. Tolley elected not to receive her salary in fiscal 1997 and
1998. However, Ms. Tolley did receive reimbursement for her monthly
automobile and cellular telephone expenses.
Incentive Stock Plan
In April 1998, the Company adopted a stock option plan called the "Safe
Technologies International, Inc. -1998 Incentive Stock Plan". (the "Incentive
Stock Plan"). The Incentive Stock Plan is intended to provide incentives to,
and awards for, certain eligible employees, officers, directors and
consultants who have contributed and will continue to contribute to the
success of the Company.
The Incentive Stock Plan provides for the granting of nonstatutory stock
options, restricted stock grants and stock awards. The Company has reserved
up to 60,000,000 shares of common stock under the Incentive Stock Plan,
consisting of a maximum of 30,000,000 stock options, 15,000,000 restricted
stock grants and 15,000,000 stock awards. The 1998 Stock Plan is administered
by the Compensation Committee of the Board of Directors. As of this date,
the Company has granted 6,325,000 stock awards to its officers and directors
and has not made any stock option or restricted stock grants.
<PAGE>
Director Compensation
Directors who are full-time employees of the Company received no additional
compensation for services rendered as members of the Company's Board of
Directors. Directors who are not full-time employees of the Company also do
not receive any compensation for services rendered as members of the
Company's Board of Directors. However, three directors who provided
consulting services to the Company outside of the scope of their duties as
directors received stock awards. The Company awarded stock awards to these
directors on December 31, 1998 and the trading price of the Company's common
stock was $.11 on such date. The names of the directors and the amount of
stock awards received are as follows: Robert Alexander- stock awards,
Charles Martus - stock awards and Jack Tolley - stock awards.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to the number of
shares of the Company's Common Stock that will be beneficially owned by (i)
each executive officer of the Company, (ii) each director of the Company and
(iii) each shareholder of the Company who owns more than 5% of the Company's
Common Stock as of January 31, 1999. An asterisk indicates beneficial
ownership of less than 1% of the outstanding Safe Aid Common Stock after the
Merger. Except as otherwise indicated, each of the shareholders listed below
has voting and investment power over the shares beneficial owned and the
address of each beneficial owner is c/o the Company, 249 Peruvian Avenue, Palm
Beach, Florida 33480. As of March 1, 1999, there were issued and outstanding
705,477,200 shares of the Company's common stock.
Name of Amount and Nature Percent of Class
Beneficial Owner of Beneficial Ownership
Barbara L. Tolley(1) 268,295,651 38.0
Chairman and Chief
Executive Officer
Ruth Deutsch(2) 253,846,535 36.0
Shareholder
Franklin Frank(3) 253,846,535 36.0
Shareholder
Jack W. Tolley(4) 268,295,651 38.0
Director
Charles N. Martus 200,000 *
Director
Robert L. Alexander 225,000 *
Director
All Officers and Directors 555,567,186 78.8
as a group. (5)
(1) Includes 259,445,651 shares hold by the Lang Family Trust. Ms. Tolley is
the settler and trustee of the trust. Also includes 8,000,000 shares held by
her husband, Johns W. Tolley; however, Ms. Tolley disclaims any beneficial
interest in the shares owned by her husband.
(2) Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by
Franklin Frank, Ms. Deutsch's husband. Ms. Deutsch disclaims any beneficial
interest in the shares held by her husband.
<PAGE>
(3) Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by
Mr. Frank. Includes 182,315,649 shares held by Ruth Deutsch, Mr. Frank's
wife. Mr. Frank disclaims any beneficial interest in the shares held by his
wife.
(4) Includes 259,445,651 shares beneficially owned by Barbara Tolley, Mr.
Tolleys wife, through the Lang Family Trust. Mr. Tolley disclaims any
beneficial interest in the shares owned by his wife.
(5) The 267,445,651 shares of common stock owned by Barbara L. Tolley and Jack
W. Tolley referred to in footnotes 1 and 4 and the 216,315,649 shares of
common stock owned by Ruth Deutsch and Franklin Frank referred to in footnotes
2 and 3 are counted only once to avoid a misleading total.
Item 12. Certain Relationships and Related Transactions
On January 10, 1998, INI, the pre-merger name of the Company, acquired
select assets for INI stock. INI acquired the following assets: Internet
copyrights, trademarks, employment contracts, an AT&T WorldNet contract,
Internet software copyrights, web sites and trade names.
Other than the foregoing during fiscal 1998 and 1997, there were not any
transactions.
<PAGE>
During fiscal 1998 and 1997, there were not any transactions or series of
similar transactions to which the Company was or is a party in which the
amount involved exceeds $60,000 and in which any current director, executive
officer or holder of more than 5% of any class of the Company's voting
securities, or members of such persons' immediate family had or will have a
direct or indirect material interest.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibit Index
2.1 Merger Agreement dated August 29, 1997 between Safe Aid Products
Incorporated, Inc. and Intelligence Network International, Inc. (filed as an
Exhibit to the Company's definitive proxy statement filed December 31, 1997
and incorporated herein by this reference)
2.2 Extension Agreement dated between Safe Aid Products Incorporated, Inc.
and Intelligence Network International, Inc. (filed herewith electronically)
2.3 Acquisition Agreement dated February 5, 1998 by and between the Company
and Randi Swatt, John Reinbergs and David Fox, as the sole shareholders of
Internet Associates International, Inc (filed herewith electronically)
2.4 Reversion Agreement, dated as of December 17, 1998, by and among the
Company, GMG, Gary Bart, Gail Bart and Dean Constantine (filed as Exhibit 2.1
to the Company's Form 8-K dated December 31, 1998 and incorporated herein by
this reference)
3.1 Certificate of Incorporation and Amendment to the Company's Certificate
of Incorporation (filed as an Exhibit to the Company's Registration Statement
on Form S-18 filed February 18, 1988 and incorporated herein by this
reference)
3.2 Amendment to the Company's Certificate of Incorporation filed with the
Delaware Secretary of State on February 6 1998 (filed as an Exhibit to the
Company's definitive proxy statement filed December 31, 1997 and incorporated
herein by this reference).
3.3 Bylaws (filed as an Exhibit to Company's registration statement on Form
S-18 filed February 18, 1988).
4.1 Amended Form of Underwriters' Unit Purchase Warrant (filed as an Exhibit
to the Amendment No. 2 to the Company's Registration Statement on Form S-18
filed April 11, 1988 and incorporated herein by this reference)
4.2 Amended Form of Class A and Class B Common Stock Purchase Warrant (filed
as an Exhibit to Amendment No. 2 to the Company's Registration Statement on
Form S-18 filed April 11, 1988 and incorporated herein by this reference)
4.3 Amended Form of Warrant Agreement (filed as an Exhibit to Amendment No. 2
to the Company's Registration Statement on Form S-18 filed on April 11, 1988
and incorporated herein by this reference)
4.4 Specimen Stock Certificate (filed as an Exhibit to Amendment No. 2 to the
Company's Registration Statement on Form S-18 filed on April 11, 1988 and
incorporated herein by this reference)
10.1 Employment Agreement dated February 9, 1997 between the Company and Ms.
Tolley (filed herewith electronically)
10.2 Employment Agreement dated February 5, 1998 between the Company and Randi
Swatt (filed herewith electronically)
10.3 Employment Agreement dated February 5, 1998 between the Company and John
Reinsberg (filed herewith electronically).
<PAGE>
10.4 Mutual General Release Agreement dated December 17, 1998 by and among
GMG, Gary Bart, Gail Bart, Dean Constantine and the Company (filed as Exhibit
2.2 to the Company's Form 8-K dated December 31, 1998 and incorporated
herein by this reference).
10.5Safe Technologies International, Inc. - 1998 Stock Incentive Plan (filed
as Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1998 and incorporated herein by this reference)
16.1 Letter on Change in Certifying Accountant (filed as Exhibit 99.1 to the
Company's Report on Form 8-K dated March 9, 1999 and incorporated herein by
this reference)
21.1 Subsidiaries of the Company (filed herewith electronically)
23.1 Consent of Sewell and Company, P.A. (filed herewith electronically)
27.1 Financial Data Schedules (filed herewith electronically)
(b) Reports on Form 8-K
The Company filed five reports on Form 8-K during the fourth quarter ended
December 31, 1998.
(i) The Company filed a report on Form 8-K dated October 6, 1999 which
reported information under Item 5 - Other Events.
(ii) The Company filed a report on Form 8-K dated November 24, 1998 which
reported information under Item 5 - Other Events.
(iii) The Company filed a report on Form 8-K dated December 9, 1998 which
reported information under Item 5 - Other Events.
(iv) The Company filed a report on Form 8-K dated December 16, 1998 which
reported information under Item 5 - Other Events.
(v) The Company filed a report on Form 8-K dated December 31, 1998 which
reported information under Item 2 - Acquisition or Disposition of Assets.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SAFE TECHNOLOGIES INTERNATIONAL, INC.
Date: March 30, 1999 By: /s/ Barbara L. Tolley
------------------------------------
Barbara L. Tolley
Chief Executive Officer and Chairman
In accordance with the Exchange Act of 1934, this report has been signed by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date: March 30, 1999 By: /s/ Barbara L. Tolley
------------------------------------
Barbara L. Tolley
Chief Executive Officer and Chairman
Date: March 30, 1999 By: /s/ Bradford Tolley
------------------------------------
Bradford Tolley
Chief Financial Officer
EXHIBIT 2.2
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.
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.
<PAGE>
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 2.3
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is entered into on January 30,
1999, by and between SAFE TECHNOLOGIES INTERNATIONAL, INC., a Delaware
corporation ("SFAD") and RANDI SWATT, JOHN REINBERGS and DAVID FOX
(collectively, the "IAI Stockholders") as the sole shareholders of INTERNET
ASSOCIATES INTERNATIONAL, INC., a Nevada corporation ("IAI").
RECITALS
It is the intention of the parties hereto that all of the issued and
outstanding stock of IAI shall be acquired by SFAD, in exchange for the
issuance to the IAI Stockholders of SFAD Common Stock as set forth below (the
"Acquisition"). The issuance of stock to the IAI Stockholders is intended to
qualify as a transaction in securities exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), and under the
applicable securities laws of the state or jurisdiction where IAI Stockholders
reside, and the Acquisition is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(B) 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. Purchase and Purchase Price. The IAI Stockholders agree to sell, and SFAD
agrees to purchase, all of the issued and outstanding shares of stock of IAI
(the "IAI Stock") for a purchase price equal to ten (10) times the net profits
of IAI for the calendar year 1999. For purposes of this Agreement, net
profits shall mean all revenues less all expenses, excluding only those
expenses of IAI incurred at the request of SFAD or incurred as a result of
SFAD being a public company. Normally occurring IAI accounting expenses, such
as the preparation of monthly, quarterly and annual financial statements and
tax returns shall be included in the calculation of net profits, but the
expenses of auditing the financial statements shall not be included, nor shall
any expenses of SFAD be allocated to IAI, including but not limited to,
extraordinary items, overhead, or the like. The net profits of IAI shall be
determined by IAI's independent accountants in accordance with generally
accepted accounting principles, consistently applied. Should either party
disagree with the determination of net profits, the parties agree to mutually
appoint another independent accounting firm to review IAI's financial
statements with IAI's independent accountants and make a final determination
of the net profits of IAI, which determination will be binding on all parties.
The expense of such additional independent accountants will be shared equally
between SFAD and the IAI Stockholders.
<PAGE>
2. Payment of Purchase Price.
(a) The entire purchase price shall be paid by the issuance to the IAI
Stockholders of shares of common stock of SFAD (the "SFAD Stock"). The first
One Hundred Million (100,000,000) shares of SFAD Stock issued in payment of
the purchase price shall be valued at four cents ($.04) per share, which was
the approximate market value per share at the time the parties reached
agreement in principle. If the purchase price exceeds four million dollars
($4,000,000) so that more than 100,000,000 shares of SFAD Stock are to be
issued in payment of the purchase price, such additional shares shall be
valued at the average of the mean between the closing bid and asked prices for
SFAD Stock for each trading day in the month of January, 2000.
(b) At closing, the IAI Stock shall be delivered to SFAD, Twenty Five
Million (25,000,000) shares of the SFAD Stock shall be delivered to the IAI
Stockholders, and Seventy Five Million (75,000,000) shares of the SFAD Stock
shall be delivered into escrow to be held in escrow until SFAD has received
IAI's audited financial statements as of and for the year ended December
31,1999; the actual purchase price has been determined based upon the above
formula; and the actual number of shares of SFAD Stock to be issued to the IAI
Stockholders has been determined in accordance with the above valuation
method. The appropriate number of shares of SFAD Stock shall then be released
to the IAI Stockholders (or, if the purchase price is determined to be less
than $100,000, the IAI Stockholders shall return to SFAD for cancellation the
appropriate number of shares of SFAD Stock, based upon a value of $.04 per
share), SFAD shall issue to the IAI Stockholders additional shares of SFAD
Stock if required in order to complete payment of the final purchase price,
and the IAI Stock shall be released to SFAD. The SFAD Stock shall be divided
among the IAI Stockholders in the same proportion as they own the IAI Stock.
SFAD and the management of the IAI business will use their best efforts, and
will cooperate with each other and the accountants retained to perform the IAI
audit, in order to complete the audit by February 10, 2000, or as soon
thereafter as possible.
(c) The escrow shall be established with an independent legal counsel,
acceptable to both parties, along with escrow instructions for the release of
the SFAD Stock and the IAI Stock to the appropriate parties.
(d) At closing, the IAI Stockholders will deliver to SFAD their irrevocable
proxies to vote (a) the 25,000,000 shares of SFAD Stock issued to the IAI
shareholders, and (b) the 75,000,000 shares of SFAD Stock held in escrow. The
proxies as to the 25,000,000 shares will be canceled at such time as IAI
attains year to date net profits of not less than $100,000. The proxies as to
the 75,000,000 shares will be canceled at such time as all the terms and
conditions of the escrow have been fulfilled. Additionally, the IAI
Stockholders agree that they will not sell any of the 25,000,000 shares of
SFAD common stock issued to them at the Closing (or any additional shares
issued thereafter) until all the conditions of escrow have been satisfied.
<PAGE>
3. Securities Representations of IAI Stockholders. In connection with this
transaction, the IAI Stockholders represent and acknowledge that:
(a) They have been advised and are aware that the issuance of the SFAD Stock
to them will not be registered under the Securities Act of 1933 or any state
securities laws and that, therefore, the SFAD Stock cannot be sold by them
unless the SFAD Stock is so registered or exemptions from registration, such
as SEC Rule 144, are available. Under Rule 144, no sales of the SFAD Stock
can be made for one year after closing, and the IAI Stockholders agree that
they will not sell or pledge the SFAD Stock in any manner for a period of one
year after closing. In addition, notwithstanding the volume of sales which may
be allowable under Rule 144 after one year from closing, the IAI Stockholders
agree that, until three years after closing, the number of shares of the SFAD
Stock sold by them within any three month period will not exceed one half
percent (1/2%) of the total number of shares of SFAD common stock outstanding
as of the date of the most recent report filed by the Company with the
Securities and Exchange Commission during those years.
(b) They have received and read copies of SFAD's Form 10K for the fiscal
year ended December 31, 1997, SFAD's Form 10Q for the period ended September
30, 1998, and any Form 8K's filed by SFAD since the date of the foregoing Form
10Q, have had an opportunity to question the principals of SFAD as to all
matters which they deem material and relevant to their decision to enter into
this transaction, and have had the opportunity to obtain any and all
additional information necessary to verify the accuracy of the information
received or any other supplemental information which they deem relevant to
make an informed investment decision.
(c) They have such knowledge and experience in business and financial
matters, or competent professional advice, that they are capable of evaluating
the merits and risks of acquiring the SFAD Stock. They understand the risks
inherent in this transaction and have consulted with an attorney and/or
accountant to the extent they deemed it necessary in reviewing this
transaction.
(d) They are entering into this transaction and acquiring the SFAD Stock for
their own account for investment only and not as a nominee for others.
(e) They are residents of the State of Florida.
(f) The representations and agreements made in this paragraph shall survive
closing of the transaction described in this Agreement.
4. Employment Contracts. At closing, Randi Swatt and John Reinsberg shall
enter into Employment Agreements with IAI, for three year terms, pursuant to
which they will assume the offices of President and Secretary/Treasurer of
IAI. The Employment Agreements shall provide for a base salary and benefits
as shall be agreed by all parties. After closing, Randi Swatt and John
Reinsberg, as officers of IAI, will be responsible for the day to day
operations of IAI as a wholly owned autonomous subsidiary of SFAD, and will
notify IAI's banker of the change of ownership of IAI. The IAI officers will
provide SFAD with monthly financial statements. IAI will remit to SFAD on a
monthly basis, commencing January, 1999, seventy five percent (75%) of IAI's
net profits for the prior month for as long as IAI exists as a subsidiary of
SFAD, subject to reduction in any month as necessary to allow IAI to pay its
payroll, trade creditors and other usual and necessary business expenses. To
the extent any monthly remittance is so reduced, the shortfall will be
remitted as soon as the cash requirements of IAI allow.
5. Board of Directors of IAI. After closing, SFAD will cause the number of
directors of IAI to be increased to three. The three directors shall be Randi
Swatt, John Reinsberg and a person to be designated by SFAD. For so long as
Randi Swatt and John Reinsberg are employed by IAI, SFAD agrees to maintain
the number of directors at three and to elect Randi Swatt and John Reinsberg
as directors. The IAI board of directors will hold bi-monthly meetings.
<PAGE>
6. Representations and Warranties of the IAI Stockholders. The IAI
Stockholders, jointly and severally, as a material inducement to SFAD to enter
into this Agreement and consummate the transactions contemplated hereby, make
the following representations and warranties to SFAD. 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) Due Organization. IAI 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, requires such qualification. IAI has the power to
own its properties and assets and to carry on its business as now presently
conducted. The Articles of Incorporation and By-Laws of IAI are attached
hereto as Schedule 5(a) and are made a part hereof.
(b) Capitalization. The authorized capitalization of IAI consists of 25,000
shares of no par value common stock, of which 1,000 shares are currently
issued and outstanding. Except for the foregoing, there are no outstanding or
presently authorized securities, warrants, preemptive rights, subscription
rights or options to issue any of IAI securities.
(c) IAI Balance Sheet. Schedule 5(c) contains the balance sheet of IAI as
of January 4, 1999. The balance sheet fairly presents the financial position
of IAI as of the date thereof. The books and records, financial and other, of
IAI are in all material respects complete and correct. IAI does not now own,
and at the closing date will not own, more than 5% percent of the issued and
outstanding capital stock of any other corporation or an equity interest in
any other entity.
(d) Ownership of IAI Stock. The IAI Stockholders are, and will be on the
closing date, the sole record and beneficial owners of all the issued and
outstanding shares of IAI capital stock. At closing the IAI Stock will be
transferred to SFAD by the IAI Stockholders free and clear of all liens and
encumbrances of any kind or nature.
(e) Undisclosed Liabilities. Except as otherwise disclosed to SFAD in
writing, IAI does not have any liabilities or obligations of any nature, fixed
or contingent, mature or unmatured, that are not shown or otherwise provided
for in its balance sheet, except for liabilities and obligations arising
subsequent to the date thereof and liabilities incurred 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 IAI. There are no material
loss contingencies of IAI that will not be adequately provided for.
<PAGE>
(f) Materially Adverse Change. Since the date of the IAI balance sheet, the
business of IAI has been operated in the ordinary course and there has not
been:
(i) Any material adverse change in the business, condition (financial or
otherwise), results of operations, prospects, properties, assets, liabilities,
earnings or net worth of IAI.
(ii) Any material damage, destruction or loss (whether or not covered by
insurance) affecting IAI or their respective 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 IAI 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 IAI, or agreement by IAI or any of the IAI
Stockholders, to sell or pledge any of IAI securities, nor have any
irrevocable proxies been given with respect to IAI securities.
(v) Any statute, rule, regulation or order adopted by any governmental
body, agency or authority (including orders of regulatory authorities with
jurisdiction over IAI) that materially and adversely affects IAI or its
business or financial condition.
(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 IAI; provided, however, that this subsection shall not restrict
or limit IAI in any way from hiring additional personnel who are required for
their operations.
(vii) Any other events or conditions of any character that may reasonably be
expected to have a materially adverse effect on IAI or its business or
financial condition.
(g) Litigation. There are no actions, suits, claims, investigations or
legal administrative or arbitration proceedings pending or, to the knowledge
of any of the IAI Stockholders, threatened against IAI, 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 do the IAI Stockholders know of any basis for any such action, suit,
claim, investigation or proceeding.
(h) Compliance: Governmental Authorizations. IAI 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. IAI 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. The IAI
Stockholders know 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.
(i) Tax Matters. IAI 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 on or before such date, which reports will
accurately reflect in all material respects the amount of taxes due. IAI 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 IAI.
<PAGE>
(j) Agreements. Schedule 5(j) contains a true and complete list and brief
description of all IAI's assets, material written or oral contracts,
agreements, mortgages, obligations, understandings, arrangements, restrictions
and other instruments to which IAI is a party or by which IAI or its assets
may be bound. True and correct copies of all items set forth on Schedule 5(j)
have been made available to SFAD as part of SFAD's due diligence. 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 IAI under any of the contracts or agreements set forth in Schedule
5(j). Neither of the IAI Stockholders have knowledge of any material
violations have occurred pursuant to any loan agreements to which any of IAI
is a party.
(k) Title to Property and Related Matters. IAI 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, 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 IAI are in good operating condition and
repair, reasonable wear and tear excepted. To the best of the knowledge of
the IAI Stockholders, there does not exist any condition that materially
interferes with the use thereof in the ordinary course of the business of IAI.
(l) Licenses: Trademarks: Trade Names. Schedule 5(l) 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 IAI, all
of which are solely owned by IAI, free and clear of any claims, liens or
encumbrances.
(m) Due Authorization. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance with any of provisions hereof, will violate in any material respect
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 any note, bond, lease, mortgage, obligation,
agreement, understanding, arrangement or restriction of any note, bond, lease,
mortgage, obligation, agreement, understanding, arrangement or restriction of
any kind to which either IAI Stockholder is a party or by which he or she may
be bound. 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 the IAI Stockholders of this Agreement or the
consummation of the transactions described herein.
(n) Full Disclosure. The IAI Stockholders have disclosed to SFAD in the
Schedules to this Agreement or independently, or made available to SFAD,
documents, books and records pertaining to, all events, conditions and facts
materially affecting the properties, business and prospects of IAI. At
closing, the IAI Stockholders will not have withheld disclosure of any events,
conditions and facts that may materially and adversely affect the properties,
businesses or prospects of IAI.
(o) Brokerage Fees. The IAI Stockholders represent to SFAD that they know
of no person or entity entitled to a commission, broker's fee, finder's fee or
other compensation in connection with this transaction other than Franklin L.
Frank, whose fee is being paid by SFAD. The IAI Stockholders agree to
indemnify and hold SFAD harmless from any and all loss or damages, including a
reasonable attorney's fee and court costs at all trial and appellate levels,
arising out of any claim against SFAD for brokerage or other compensation by a
party claiming such compensation by reason of its relationship with the IAI
Stockholders.
<PAGE>
7. Representations and Warranties of SFAD. SFAD, as a material inducement to
the IAI Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, makes the following representations and
warranties to the IAI Stockholders, 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. SFAD is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. SFAD
has the corporate power to own its property and to carry on its business as
now presently conducted.
(b) SEC Reporting. From the first date that such reports were required of
SFAD, SFAD has accurately and completely filed with the SEC all required
reports, including but not limited to, Annual Reports on Form 10-KSB,
Quarterly Reports on Form 10-QSB and Periodic Reports on Form 8-K (the "SEC
Filings"). As of their respective dates, none of the SEC Filings 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.
(c) SFAD Financial Statements. The SFAD financial statements as contained
in the SEC Filings were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
and present fairly the consolidated financial position of SFAD and its
subsidiaries as of the respective dates, and for the respective periods,
covered thereby.
(d) Undisclosed Liabilities. SFAD has no liabilities or obligations of any
nature, fixed or contingent, matured or unmatured, that are not shown or
otherwise provided for in SFAD's financial statements or otherwise disclosed
in writing to IAI.
(e) No Material Adverse Change. Since September 30, 1998, there has been no
development or occurrence that would constitute a material adverse change in
the financial condition or prospects of SFAD.
(f) Due Authorization. Subject only to ratification of this Agreement by
SFAD's Board of Directors, this Agreement has been duly authorized, executed,
and delivered by SFAD, and constitutes a legal, valid, and binding obligation
of SFAD, 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 SFAD will not violate
or conflict within any material respect or constitute a default under any
provisions of applicable law, SFAD's Articles of Incorporation or Bylaws, or
any agreement or instrument to which SFAD 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 SFAD for the execution, delivery or
performance of this Agreement by SFAD. No consent of any party to any
contract or agreement to which SFAD 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 SFAD that has not been obtained at the date of this
Agreement.
(g) Litigation. There are no actions, suits, claims, investigations or
legal, administrative or arbitration proceedings pending against SFAD, 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 SFAD know or a threat of,
or any basis for, any such action, suit claim, investigation or proceeding.
<PAGE>
(h) Tax Matters. SFAD has filed all federal, state and local, tax or
related returns and reports due or required to be filed, which reports
accurately reflects in all material respects the amount of taxes due. SFAD
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. SFAD is
not aware of any tax liens with respect to any properties owned by SFAD.
(i) Full Disclosure. SFAD has not, at the Closing Date, 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 SFAD.
(j) No Approvals Required. No approval, authorization, consent, order of
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 SFAD of this Agreement or the
consummation of the transactions described herein, except to the extent that
SFAD may be required to file reports in accordance with relevant regulations
under federal and state securities laws.
(k) Brokerage Fees. SFAD has incurred a finders fee in connection with this
Agreement in the amount of six million (6,000,000) shares of SFAD Stock which
shall be issued by SFAD directly to Franklin L. Frank simultaneously with
release from escrow of the SFAD Stock to the IAI Stockholders.
(l) Right of Rescission. SFAD warrants that if (i) within one year from the
Closing Date, SFAD files a petition in bankruptcy or commences any proceeding
under any bankruptcy, reorganization, arrangement, liquidation or similar law
of any jurisdiction, or if there is filed against SFAD any such petition or
application, or any such proceeding is commenced against SFAD, in which an
order for relief is entered or which remains undismissed for a period of sixty
(60) days or more, or if SFAD by any act or omission indicates its consent to,
approval of or acquiescence in any such petition, application, proceeding or
order for relief, or (ii) within two years from the release of the SFAD Stock
from escrow, there occurs a period of not less than 90 days in which there are
no published bid prices for SFAD common stock, then the IAI Stockholders shall
have the right, upon written notice to SFAD, to rescind this Agreement, in
which event all SFAD Stock issued to the IAI Stockholders and all IAI Stock
and corporate records transferred to SFAD shall be returned and this Agreement
shall be of no further force or effect.
8. Covenants of IAI. Prior to Closing, IAI shall:
(a) Not engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the ordinary course of
business, without the prior written consent of SFAD.
(b) Keep IAI's business and properties substantially intact, including its
recent operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers and employees.
(c) Not authorize any salary or compensation increase, dividends or loans to
officers or directors without prior written consent of SFAD.
(d) Not contact any third party for the purpose of soliciting or arranging
for the solicitation of any proposals involving a business combination, equity
financing or sale of IAI's outstanding capital stock or assets, issuance of
additional securities, merger, consolidation or other capital transactions
outside the ordinary course of IAI's businesses.
<PAGE>
9. Closing. The Closing shall occur on or before February 5, 1999 at SFAD's
attorneys offices at such hour to be advised by SFAD. SFAD may extend the
Closing Date for up to 30 days upon demonstrating that there are reasonable
circumstances delaying the Closing and evidence that SFAD is diligently
pursuing the performance of, and compliance with, all conditions precedent to
the obligations hereunder. At the Closing, the following transactions shall
occur, all of such transactions being deemed to occur simultaneously:
(a) The IAI Stockholders will deliver, or cause to be delivered, to SFAD the
following:
(i) Stock certificates for of the shares of capital stock of IAI being
transferred to SFAD hereunder, duly endorsed or with stock powers attached in
blank.
(ii) All corporate records of IAI, 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 SFAD and its counsel.
(iii) A certificate of good standing for IAI from the Secretary of State of
its state of incorporation, dated at or about the Closing Date, to the effect
that such corporation is in good standing under the laws of such state.
(iv) Names, addresses, and Social Security numbers of the IAI
Stockholders.
(v) The Employment Agreements referred to in Section 4 of this Agreement.
(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.
(b) SFAD will deliver or cause to be delivered to the IAI Stockholders:
(i) Stock issuance instructions to SFAD's Transfer Agent for 25,000,000
shares of the SFAD Stock for delivery to the IAI Stockholders within ten
business days after the Closing Date.
(ii) Stock issuance instructions to SFAD's Transfer Agent for 75,000,000
shares of the SFAD Stock for delivery into escrow in accordance with this
Agreement within ten business days after the Closing Date.
(iii) A Certificate from the Secretary of State of Delaware dated at or
about the Closing Date that SFAD is in good standing under the laws of said
state.
(iv) The Employment Agreements referred to in Section 4 of this Agreement.
(v) 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, including a copy of the resolutions of the Board of Directors
authorizing the execution and delivery of this Agreement and issuance of the
SFAD Stock.
10. Conditions Precedent to Obligations of the IAI Stockholders. All
obligations of the IAI Stockholders 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:
(a) The Board of Directors of SFAD shall have approved the execution and
delivery of this Agreement.
<PAGE>
(b) The representations and warranties made by SFAD in this Agreement or in
any certificates or documents delivered to the IAI Stockholders pursuant to
the provisions hereof shall be true in all 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) SFAD 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.
11. Conditions Precedent to Obligations of SFAD. All obligations of SFAD
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:
(a) The representations and warranties made by the IAI Stockholders in this
Agreement or in any certificates or documents delivered to SFAD pursuant to
the provisions hereof shall be true in all respects at and as of the time of
the Closing as though such representations and warranties were made at and as
of such time.
(b) The IAI Stockholders 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.
(c)The IAI Stockholders shall have delivered to SFAD all of the Schedules
referenced herein, and such Schedules and documents shall have been reasonably
acceptable to SFAD.
(d) Any Due Diligence Examination by SFAD 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 IAI.
(e) IAI 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; (ii) no violations in any material respect pursuant to any loan
agreements; and (iii) no debt or other obligations except as described in the
Schedules to this Agreement.
12. Nature of Representation 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 branch of any such representation, warranty, covenant or
agreement.
<PAGE>
13. 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 SFAD, to:
Barbara Tolley, President
Safe Technologies International, Inc.
249 Peruvian Avenue F-2
Palm Beach, Florida 33480
If to the IAI Stockholders, to:
Internet Associates International, Inc.
123 Northwest 13 Street, Suite 206
Boca Raton, FL 33423
With a copy to:
Leonard H. Bloom, Esq.
Shapo, Freedman & Bloom, P.A.
200 South Biscayne Blvd., Suite 4750
Miami, FL 33131
Any such notices shall be effective when delivered in person or sent by
facsimile transmission, one business day after being sent by overnight courier
delivery or three business days after being sent by registered or certified
mail. Any of the foregoing addresses may be changed by giving notice of such
change in the foregoing manner, except that notices for changes of address
shall be effective only upon receipt.
14. 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) Expenses of the Transaction. Each party will bear their own expenses in
connection with this transaction.
(c) Survival of Representations. All covenants, agreements, representations
and warranties made herein shall survive the Closing for a period of one year,
except that all representations and warranties as to tax matters shall survive
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 of
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.
<PAGE>
(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) Effect of Waiver. The failure of any party at any time or times to
required performance of any provisions 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 provision.
(l) 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 attorney's fees at all trial
appellate levels, expenses and costs. Any suit , action or proceeding with
respect to this Agreement shall be brought in the courts of Palm Beach County
in the State of Florida or in the U.S. District Court for the Southern
District of Florida. The parties hereto hereby accept the exclusive
jurisdiction of those courts for the purpose of any such suit, action or
proceeding. The parties hereto hereby irrevocably waive, to the fullest
extent permitted by law, any objection that any of them may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement or any judgment entered by any court in respect
thereof brought in Palm Beach County, Florida, has been brought in an
inconvenient forum.
(m) Specific Performance. 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 breech, 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.
(n) Binding Nature. This Agreement will be binding upon and will inure to
the benefit of any successor or successors of the parties hereto.
(o) 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.
(p) 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.
<PAGE>
(q) Facsimile Signature. This Agreement may be executed and delivered by
facsimile transmission and any such signature shall be of the same force and
effect as an original signature.
IN WITNESS THEREOF, the parties have executed this Agreement on the date first
above written.
SAFE TECHNOLOGIES INTERNATIONAL, INC. BY:
/s/ Barbara L. Tolley
- - ------------------------------
Barbara Tolley, CEO & Chairman
IAI BY:
/s/ Randi Swatt
- - ------------------------------
Randi Swatt
/s/ John Reinbergs
- - ------------------------------
John Reinbergs
/s/ David Fox
- - ------------------------------
David Fox
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made this January 30, 1998 between SAFE
TECHNOLOGIES INTERNATIONAL, INC, a Delaware Corporation, with offices at 249
Peruvian Ave., Palm Beach, Florida, 33480 (hereinafter called "SFAD") and
Barbara L. TOLLEY, residing in Palm Beach, Florida (hereinafter called
"TOLLEY").
WITNESSETH:
WHEREAS, TOLLEY desires to be employed by SFAD as its President and Chief
Executive Officer, and
WHEREAS, SFAD acknowledges TOLLEY's importance to its future growth and
profitability because of TOLLEY's knowledge and business acumen in the
communications and marketing industries and general management, and SFAD
desires to engage TOLLEY as its President and Chief Executive Officer:
NOW THEREFORE, in consideration of the premises and mutual covenants herein
set forth and made to be performed by the parties hereto, it is covenanted and
agreed to as follows;
1. Employment. SFAD hereby agrees to employ TOLLEY as President and Chief
Executive Officer of SFAD and TOLLEY agrees to serve SFAD in the capacity in
accordance with the terms and conditions set forth herein
2. Term Of Employment The term of this Agreement shall be for a period of two
(2) years commencing on January 30, 1998 and ending on January 30, 2000
("Term"), unless terminated sooner in accordance with the provision of Section
7 below. This Term may be renewed for an additional one (1) year, at the
Option of TOLLEY.
3. Duties and Responsibilities As President and Chief Executive Officer,
TOLLEY shall have responsibility, subject to the direction of the Board of
Direction of SFAD1 for the business and affairs of SFAD. Employee shall at
times faithfully, industriously and to the best of Employee's ability,
experience and talents perform all of the duties that may be required of and
from Employee pursuant to the express and implicit terms hereof, to the
reasonable satisfaction of Corporation. Such duties shall be rendered at such
place or places which the interests, needs, business or opportunity of
Corporation
shall require.
Employee agrees to devote all of Employee's time and energy to Employee's
duties and responsibilities as set forth herein. Employee shall not render
personal services to or for any person, firm or corporation or other
organization for compensation other than Corporation except that Employee may
partake in part-time or occasional work outside the scope of responsibility of
Employee under this Agreement so long as such part-time or occasional work
does not interfere with the time Employee spends working on behalf of the
Corporation or affects the quality of Employee's work to corporation.
<PAGE>
The Employee shall not at any time either during the term hereof or
thereafter, or after termination Ir' any manner either directly or indirectly,
divulge, disclose or communicate to any person, firm or corporation in any
manner Whatsoever any information, other than public reported information,
concerning any matters affecting or relating to the business of the
Corporation, Including, but without limiting the generality of the foregoing,
any of its customers, its budget or finances, its manner of operation, its
plans, processes research material and findings, new software developments,
new technologies, or other information concerning the business of the
Corporation, its customers, and its subsidiaries. - Without regard to whether
all of the foregoing matters will be deemed confidential, material or
important, the parties to this Agreement hereby stipulate that the foregoing
matters are confidential1 material and important and gravely affect the
successful conduct of the business of the Corporation, and the Corporation's
goodwill and professional reputation and that any breach of the terms of this
paragraph shall be a material breach of this Agreement. Employee shall require
of others under Employee's direction and or supervision the same standards of
non-disclosure.
Employee acknowledges and agrees that the Board of Directors shall have the
right to request testing for the presence of illegal substances upon ~
determination by the Corporation, in the Corporation's sole and exclusive
discretion, that Employee's behavior or judgment is impaired.
4 Compensation and Benefits.
a. Salary. SAFD shall pay to TOLLEY a salary in accordance with the
following schedule, less such payroll deductions as $FAD may be required by
law to make or as may be authorized by TOLLEY.
(i). Employer covenants and agrees that, in consideration of the services
performed hereunder. for the Term of Year One and Year Two, SFAD Corporation
will pay to Employee a monthly salary of $10,000.,
payable in all cash1 or half cash/half stock, or partial accrual, at the
Option of TOLLEY. In the event that TOLLEY elects to exercise the Employment
Option for one additional year, Year Three, Corporation will pay to Employee a
monthly salary of $15,000 per month. In addition to the foregoing,
Corporation shall provide those additional benefits as set forth in Section 4.
(ii) In the event that TOLLEY would be terminated by the Corporation's Board
of Directors, at any time during the term of this Employment Agreement, with
or without cause1 Corporation will pay to TOLLEY a Termination Severance
Payment in a cash amount of $300,000, to be paid upon Termination.
All payments due under Subsection (1) shall be made twice each month beginning
January 30, 1998, upon execution of this Agreement.
b. Performance Bonus. In addition to the salary granted under Subsection (a)
above, TOLLEY shall receive a cash bonus on an annual basis throughout the
Term of Employment1 based on me SFAD annual net profits (pre tax) for the
year. The bonus shall be calculated on a percentage of the net profits for the
year: a percentage of fifteen (15) percent for annual net profits up to
$500,000; a percentage of ten (10) percent for annual net profits from
$500,000 to $2,000,000; over $2, 000.000 to be negotiated.
All or any portion of a cash bonus so determined to be due and owing to TOLLEY
shall be paid to TOLLEY within five (5) days following SFAD's receipt of the
accountant's written determination at year end.
<PAGE>
c. Other Benefits. SFAD shall also provide to TOLLEY the following
employment benefits.
(i) A one-time sign on bonus of $10,000 payable in one lump sum to TOLLEY
on or before December 31 1997.
(ii) An automobile allowance equal to Five Hundred Fifty Dollars ($550.00)
per month, commencing on January 30, 1998 or a company furnished car of equal
lease.
(iii) Medical insurance, dental insurance, D&O Liability Insurance and life
insurance will be fully paid by the company upon programs being established by
SFAD.
(iv) Payment of monthly reasonable expenses incurred by TOLLEY in
connection with operating her home office in Palm Beach, Florida (i.e.
telephone, fax machine, supplies, computer equipment, etc.); and
(v) Payment of monthly necessary expenses Incurred by TOLLEY In connection
with the use of a Mobile and Automobile Telephones
(vi) Payment of membership fees, club dues and charges for the Company's or
TOLLEY's membership in any association which TOLLEY shall join throughout the
Term for the purpose of advancing the interests of SFAD, and with prior
approval of the Board of Directors.
(vii) TOLLEY shall be entitled to an annual vacation of Six (6) weeks.
Vacation time shall be scheduled (or accrued) at those times most convenient
to the Corporation's business.
5. Performance of TOLLEY. Employee hereby accepts employment with Corporation
on the terms and conditions herein set forth and agrees that during the period
of active employment, as defined above, Employee shall devote Employee's full
time and attention to the rendition of the enumerated services on behalf of
Corporation and to the furtherance of Corporation's best interests. Employee
agrees that, In the rendition of such services and in all aspects of the
employment. Employee shall comply with the policies, standards and regulations
of the Corporation from time to time established, provided that such policies,
standards and regulations shall not violate the law or ethics.
6. Location. TOLLEY shall not be required to perform any services which would
necessitate moving her residence from Palm Beach County, Florida. If a move
with TOLLEY'S approval, is required in the future, all relocation expenses
will be paid by SFAD.
If any move or relocation out of the United States would be deemed advisable
by the Board of Directors1 and with TOLLEY's approval, all moving and housing
expenses in the foreign country would be paid by SFAD for the Term.
<PAGE>
7. Termination. This Agreement may be terminated by a majority Vote of the
Corporation's Board of Directors at any time during the term of Employment
Agreement for cause. Notwithstanding such termination, Employee shall be
entitled to receive a Termination Severance Payment of $300,000., to be paid
upon Termination. The date on which termination is deemed to have occurred
pursuant to this section is hereinafter referred to as the Date of
Termination.
If Termination is made by TOLLEY a Termination Severance Payment of $300,000.,
will be paid by SFAD upon the Date of Termination.
a). For the Purpose of this section, "cause" shall mean:
(i) If Employee is convicted by a court of competent and final jurisdiction
of any crime (whether or not involving Employer) which constitutes a felony in
the jurisdiction involved;
(ii) If Employee commits any act of fraud1 embezzlement or similar conduct
against or shall breach a fiduciary obligation to Employer,
(iii) if Employee unreasonably fails or refuses to perform in any material
respect any of Employee's duties and responsibilities as required by this
Agreement.
(iv) It the Employee shall tail or refuse to comply with the policies,
standards and regulations of the Corporation from time to time established; or
(v) In the event the Employee shall tail and refuse to diligently Perform
or comply with the conditions of this Agreement and Employee's unusual and
customary duties; or
(vi) After receipt of urinalysis or a blood test, upon the determination by
the Corporation that Employee is unfit to perform Employee's services, duties
and responsibilities; or
(vii) Upon request by the Corporation, failure by Employee to submit to
urinalysis or a blood test for the purpose of determining the presence of
illegal substances.
(viii) The determination by the Board of Directors that TOLLEY shall have been
unable to substantially perform her duties hereunder by reason of illness,
accident or other physical or mental disability for a continuous period of at
least six (6) months or an aggregate of nine (9) months during any continuous
twelve (12) month period ('Disability').
8. Death. In the event of Employee's death during the term of Employee's
employment, this Agreement shall terminate as to the date of death. Employee's
beneficiary or estate shall be entitled to receive Termination Severance
Payment of $300,000.
9. Confidentiality. TOLLEY shall maintain the confidentiality of SFAD's trade
secrets and all confidential information pertaining to the operations and
business affairs of SFAD. TOLLEY agrees that she shall not1 during the Term
disclose any such confidential information to any person, firm, corporation,
association or other entity, for any reason or purpose whatsoever.
<PAGE>
10. Covenant Not to Compete. For and in consideration of sums of money to be
paid by SFAD pursuant to the terms hereof, TOLLEY consents and agrees that she
will not at any time during the Term, directly or indirectly, on her own
behalf or as a partner officer, director, employee, consultant, member of the
board of directors or board of trustees of any person, firm corporation
association, entity or otherwise, engage in any business or any activity which
competes with the business or activities of SFAD or its subsidiaries or
affiliated companies..
11. Sale. Consolidation or Merger of SFAD. In the event of any consolidation
or merger of SFAD into or with another firm or corporation or the sale Of all
or substantially all of the assets of SFAD to another firm or corporation, the
acquiring firm or corporation shall assume this Agreement and become obligated
to perform all the terms and conditions herein set forth to be performed on
the part of $FAD, and TOLLEY'S obligations hereunder shall continue in favor
of such acquiring firm or corporation.
12. Bank Accounts. Any and all bank accounts of SFAD shall require the
signature of TOLLEY, during her Term of Employment. During periods of TOLLEY'S
absence, one additional officer of SFAD will be an authorized signature to
withdraw funds from any such account during those periods. SFAD shall adopt a
resolution to effect the foregoing, arid additionally define TOLLEY'S
authority for expenditures and other financial authority.
13. Notice. Any and all notices required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and forwarded to the
parties hereto at the addresses set forth herein, prepaid certified mail as
follows:
If to TOLLEY:
Barbara L. Tolley
Palm Beach, Florida
With copy to:
Michael Posner, Esquire
Gooney, Ward, Leseher & Damon
4420 Beacon Circle
West Palm Beach, Florida 33407
If to SFAD; Safe Technologies International, Inc.
Charles N. Martus
249 Peruvian Ave.
Palm Beach Florida, 33480
<PAGE>
14. Assignment and Successors n Interest. To the extent that the obligations
provided for herein required the personal performance of TOLLEY, TOLLEY'S
right and interest and obligations as provided herein may be assigned with
approval of SFAD Except as otherwise provided in the immediately preceding
sentence of this Section 13, all right, privileges and obligations of the
parties hereto shall inure to the benefit of and be binding upon their
respective successors, assigns, heirs, executors, administrators and estates.
15. Modifications of Agreement This Agreement contains the entire Agreement
between the parities and supersedes any and all other Agreements written or
0ra1 expressed or implied, pertaining to the subject matter thereof It may not
be changed orally, but only by written Instrument signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought
16. Law Governing. This Agreement shall be construed and governed in all
respects in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date and year first above set forth.
SAFE TECHNOLOGIES INTERNATIONAL, INC
By:
/s/ Charles Martus
- - ------------------------------
Charles Martus, Director
By:
/s/ Barbara L. Tolley
- - ------------------------------
Barbara Tolley, CEO & Chairman
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on February 5,
1999, by and between INTERNET ASSOCIATES INTERNATIONAL, INC., a Nevada
Corporation ("IAI") and RANDI SWATT ("Employee").
WHEREAS: IAI desires to secure the Services of Employee, and Employee desires
to furnish such services to IAI upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto agree as follows:
1. POSITION: Employee will assume the position of President and Chairman of
the Board of IAI.
2. TERM. Subject to the terms of this Agreement, IAI agrees to employ the
Employee, and the Employee agrees to be so employed, for a period of three (3)
years, commencing on the Closing Date of the acquisition of IAI by Safe
Technologies International., Inc. ("SFAD"). The term of employment, including
both the initial term and any renewal terms, is hereinafter referred to as the
"period of active employment." This term of this Agreement will be
automatically renewed for additional successive one year periods unless either
Employee or SFAD notifies the other in writing within ninety (90) days prior
to the end of the then current period of active employment that this Agreement
will not be renewed.
3. DUTIES. Employee is employed pursuant to the terms of this Agreement to
perform those tasks reasonably consistent with Employee's position which are
prescribed by the Board of Directors of IAI. Employee shall at times
faithfully, industriously and to the best of Employee's ability, experience
and talents, perform all of the duties that may be required of and from
Employee pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of IAI. Employee agrees to devote all of Employee's time and
energy to Employee's duties and responsibilities as set forth herein.
Employee shall not render personal services to or for any person, firm,
corporation or other organization for compensation, other than IAI, except
that Employee may partake in part-time or occasional work which does not
interfere with the performance of the Employee's duties pursuant to this
Agreement in a material way. The Employee may be employed by Cybergraphics
Institute, Inc. ("Cybergraphics") as long as Cybergraphics pays all of its
expenses of operations and remits all the remaining proceeds to IAI.
4. COMPENSATION. IAI covenants and agrees that, in consideration of the
services performed hereunder, IAI will pay to Employee an annual Base Salary
of $104,000. The Base Salary shall be paid on a weekly basis in the amount of
$2,000.00 per week. Employee's Base Salary will be subject to annual review
and, if appropriate, increase, by the Board of Directors of SFAD. Employee
shall also be entitled to an annual bonus equal to seven and one half percent
(7.5%) of any amount by which the net profits of IAI for the prior fiscal year
exceeds the net profits of IAI for the fiscal year ended December 31, 1999.
In addition to the foregoing, IAI shall provide Employee a Benefit Package
agreeable to the Employee and the Board of Directors, which shall include an
automobile allowance of $800 per month, reimbursement for reasonable and
necessary business expenses, health insurance and three weeks paid vacation
(also described in Section 15 hereof).
<PAGE>
5. TIME. Employee hereby accepts employment with IAI on the terms and
conditions herein set forth and agrees that during the period of active
employment, as defined above, Employee shall devote Employee's full time and
attention to the rendition of the enumerated services on behalf of IAI and to
the furtherance of IAI's best interests. Employee agrees that, in the
rendition of such services and in all aspects of the employment, Employee
shall comply with the policies, standards and regulations of the IAI from time
to time established, provided that such policies, standards and regulations
shall not violate the law or ethics.
6. TERMINATION.
(a) This Agreement may be terminated by the Board of Directors of SFAD at
any time for cause. Notwithstanding such termination, Employee shall be
entitled to receive Employee's Base Salary as accrued through the date of
termination.
(b) For purposes of this section, "cause" shall mean:
(i) If Employee is convicted by a court of competent and final
jurisdiction of any crime (whether or not involving IAI) which constitutes a
felony in the jurisdiction involved;
(ii) If Employee commits any act of fraud, embezzlement or similar conduct
against, or breaches a material fiduciary obligation to, IAI;
(iii) If Employee unreasonably fails or refuses to perform in any material
respect any of Employee's duties and responsibilities as required by this
Agreement; or
(iv) If Employee breaches the terms of Section 7 or Section 8 herein.
(c) Prior to terminating the Employee pursuant to Section 5(b)(iii) of this
Agreement, IAI shall first send the Employee a written notice of the alleged
breach and a thirty (30) day period to cure such alleged breach. If the
Employee has not cured the alleged breach within the thirty (30) day cure
period, IAI may send the Employee a notice of termination. If IAI terminates
the Employee for any other reason, termination
shall be effective when IAI sends the Employee written notice of termination.
(d) This Agreement may be terminated by the Employee upon the occurrence of
any event that has, or can reasonably be expected to have, a material adverse
effect on the financial condition, business, results of operation or prospects
of IAI's parent corporation, SFAD. Upon any such termination, Employee shall
be entitled to receive Employee's Base Salary as accrued through the date of
termination.
<PAGE>
7. CERTAIN RESTRICTIVE COVENANTS.
(a) Employee recognizes and acknowledges that confidential information may
exist, from time to time, with respect to the business of IAI. Accordingly,
Employee agrees that Employee will not disclose any confidential information
relating to the business of IAI to any individual or entity during Employee's
employment or thereafter. The provisions of this paragraph shall not apply to
information which is or shall become generally known to the public or the
trade (except by reason of Employee's breach of Employee's obligations
hereunder), and information which Employee is required to disclose by order of
a court of competent jurisdiction (but only to the extent specifically ordered
by such court and, when reasonably possible, if Employee shall give IAI prior
notice of such intended disclosure so that it has the opportunity to seek a
protective order if it deems appropriate).
(b) As used in this Agreement, "confidential information" shall mean
studies, plans, reports, surveys, analyses, notes, records, unpublished
memoranda or documents, and all other non-public information relating to IAI's
business activities, including without limitation, all methods, processes,
techniques, equipment, research data, marketing and sales information,
personnel data, customer lists, employee lists, financial data, plans and all
other techniques, know how and trade secrets which presently or in the future
are in the possession of IAI.
(c) All memoranda, notes, records, reports, plans, papers or other documents
made or compiled by or made available to Employee in the course of employment
are and shall be the sole and exclusive property of IAI and shall be promptly
delivered and returned to IAI by Employee immediately upon termination of
employment with IAI.
8. NON-COMPETITION.
(a) During the period of active employment, and for a period of one year
thereafter, Employee shall not engage as principal, officer, director,
employee, controlling stockholder, partner or member, directly or indirectly,
in any activity or business which competes with ongoing operations of the IAI
in any area of the world where IAI regularly conducts its business. This
provision shall not prevent Employee from serving as a consultant to any such
business after the period of active employment.
(b) Employee also agrees to refrain from soliciting or otherwise calling
upon any then current clients of IAI for a period of two (2) years immediately
following termination of this agreement.
(c) The provisions of this Article regarding Non-Competition have been
carefully considered by Employee, and it is expressly covenanted and agreed
that in consideration of the totality of the circumstances under which
Employee has been retained by IAI, the foregoing restrictions on competition
are fair and that the provisions of this Article regarding Non-Competition are
to be construed as one of the exceptions to the prohibitions on restraint of
trade set forth in Section 542.33 Florida Statues. The provisions of this
Article shall survive the termination of this Agreement.
(d) This Article shall not apply if Employee's period of active employment
is terminated by the Board of Directors of SFAD without cause in violation of
this Agreement or if, at any time after the period of active employment, the
published bid price for SFAD common stock is less than $.04, or there are no
published bid prices for SFAD common stock, for a period of 10 consecutive
business days.
<PAGE>
9. INJUNCTION. Employee acknowledges that the services to be rendered by
Employee are of a special, unique and extraordinary character, and,
in connection with such services, Employee will have access to
confidential information vital to IAI's business. Accordingly, Employee
consents and agrees that if Employee violates any of the provisions of
Section 7 or Section 8 hereof, IAI would sustain irreparable harm and,
therefore, in addition to any other remedies which may be available to it,
IAI shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining Employee form committing or continuing any such
violation of this Agreement without the necessity of showing irreparable harm
or inadequate remedy at law or the requirement of posting any bond. Nothing in
this Agreement shall be construed as prohibiting IAI form pursuing any other
remedy or remedies including, without limitation, recovery of damages.
10. MODIFICATIONS OR ELIMINATION OF RESTRICTIONS. In the event that any of
the restrictions contained in Sections 7, 8, or 9 hereof shall be held to be
in any way an unreasonable restriction on Employee, then the court so holding
shall reduce the territory and/or period of time in which such restriction
operated, or modify or eliminate any such restriction to the extent necessary
to render such paragraphs enforceable.
11. ENTIRE AGREEMENT. This Agreement represents the entire Agreement between
the parties with respect to the subject matter hereof and shall not be
modified or affected by any offer, proposal, statement or representation,
oral or written, made by or for either party in connection with the terms
hereof. This Agreement may not be amended except by an instrument in writing
signed by IAI and Employee.
12. SEVERABILITY. Should any provision or clause hereof be held to be
invalid, such invalidity shall not affect any other provision or clause hereof
which can be given effect without such invalid provisions.
13. LAWS APPLICABLE. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
14. COVENANTS, WARRANTIES AND REPRESENTATIONS OF EMPLOYEE. Employee
represents, covenants and warrants that entering into this Agreement does not
constitute a breach of any other agreement to which Employee is a party.
15. VACATION. Employee shall be entitled to an annual vacation of three
weeks (3) weeks. Vacation time shall be scheduled at those times most
convenient to IAI's business.
16. RELATIONSHIP BETWEEN PARTIES. The parties recognize that the Board of
Directors of the IAI, in accordance with controlling state statutes, shall
manage the business affairs of the IAI. The relationship between the IAI and
Employee is that of employer and employee.
17. WAIVER. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by any party.
18. SUCCESSORS. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, and
legal representatives, and neither this Agreement nor any beneficiary or
beneficiaries designated by IAI.
19. NOTICES. Any notices required of permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or
certified mail to the party entitled thereto.
<PAGE>
20. ARBITRATION AND ATTORNEY'S FEES. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Any decision rendered by the arbitrator shall be final,
conclusive and binding upon the parties and may be entered as judgement in any
court having jurisdiction thereof. The arbitration shall be held in Palm
Beach County, Florida. The prevailing party shall be entitled to recover all
costs incurred in connection with the arbitration procedure.
21. COUNTERPARTS. This Agreement may be executed in counterparts, any one of
which shall be evidence of the Agreement of the parties hereto, and all of
which, together, shall form the Agreement of the parties.
22. AMENDMENT. No amendment or variation of the terms of this Employment
Agreement shall be valid unless made in writing and signed by the parties
hereto.
23. DEATH AND DISABILITY. In the event of Employee's death during the term of
Employee's employment, this Agreement shall terminate as of the date of death.
Employee's beneficiary or estate shall be entitled to receive Employee's base
salary as accrued through the date of termination, plus a prorated portion of
any bonus earned with regard to that fiscal year. If the Employee is unable
to substantially perform his duties on a full-time basis because of
disability, illness or injury, he shall be retained at full compensation and
other benefits for ninety (90) days. At the expiration of this period, if the
Employee remains unable to substantially perform his duties, IAI shall have
the unqualified right to terminate the Agreement by written notice to the
Employee and no further compensation or benefits shall be due or owing, other
than a prorated portion of any bonus earned with regard to that fiscal year.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WITNESS INTERNET ASSOCIATES INTERNATIONAL, INC.
/s/ Randi Swatt
------------------------------
EMPLOYEE: RANDI SWATT
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on February 5,
1999, by and between INTERNET ASSOCIATES INTERNATIONAL, INC., a Nevada
Corporation ("IAI") and JOHN REINBERGS ("Employee").
WHEREAS: IAI desires to secure the Services of Employee, and Employee desires
to furnish such services to IAI upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto agree as follows:
1. POSITION: Employee will assume the position of Secretary/Treasurer a
Director of IAI.
2. TERM. Subject to the terms of this Agreement, IAI agrees to employ the
Employee, and the Employee agrees to be so employed, for a period of three (3)
years, commencing on the Closing Date of the acquisition of IAI by Safe
Technologies International., Inc. ("SFAD"). The term of employment, including
both the initial term and any renewal terms, is hereinafter referred to as the
"period of active employment." This term of this Agreement will be
automatically renewed for additional successive one year periods unless either
Employee or SFAD notifies the other in writing within ninety (90) days prior
to the end of the then current period of active employment that this Agreement
will not be renewed.
3. DUTIES. Employee is employed pursuant to the terms of this Agreement to
perform those tasks reasonably consistent with Employee's position which are
prescribed by the Board of Directors of IAI. Employee shall at times
faithfully, industriously and to the best of Employee's ability, experience
and talents, perform all of the duties that may be required of and from
Employee pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of IAI. Employee agrees to devote all of Employee's time and
energy to Employee's duties and responsibilities as set forth herein.
Employee shall not render personal services to or for any person, firm,
corporation or other organization for compensation, other than IAI, except
that Employee may partake in part-time or occasional work which does not
interfere with the performance of the Employee's duties pursuant to this
Agreement in a material way. The Employee may be employed by Cybergraphics
Institute, Inc. ("Cybergraphics") as long as Cybergraphics pays all of its
expenses of operations and remits all the remaining proceeds to IAI.
4. COMPENSATION. IAI covenants and agrees that, in consideration of the
services performed hereunder, IAI will pay to Employee an annual Base Salary
of $104,000. The Base Salary shall be paid on a weekly basis in the amount of
$2,000.00 per week. Employee's Base Salary will be subject to annual review
and, if appropriate, increase, by the Board of Directors of SFAD. Employee
shall also be entitled to an annual bonus equal to seven and one half percent
(7.5%) of any amount by which the net profits of IAI for the prior fiscal year
exceeds the net profits of IAI for the fiscal year ended December 31, 1999.
In addition to the foregoing, IAI shall provide Employee a Benefit Package
agreeable to the Employee and the Board of Directors, which shall include an
automobile allowance of $800 per month, reimbursement for reasonable and
necessary business expenses, health insurance and three weeks paid vacation
(also described in Section 15 hereof).
<PAGE>
5. TIME. Employee hereby accepts employment with IAI on the terms and
conditions herein set forth and agrees that during the period of active
employment, as defined above, Employee shall devote Employee's full time and
attention to the rendition of the enumerated services on behalf of IAI and to
the furtherance of IAI's best interests. Employee agrees that, in the
rendition of such services and in all aspects of the employment, Employee
shall comply with the policies, standards and regulations of the IAI from time
to time established, provided that such policies, standards and regulations
shall not violate the law or ethics.
6. TERMINATION.
(a) This Agreement may be terminated by the Board of Directors of SFAD at
any time for cause. Notwithstanding such termination, Employee shall be
entitled to receive Employee's Base Salary as accrued through the date of
termination.
(b)For purposes of this section, "cause" shall mean:
(i) If Employee is convicted by a court of competent and final
jurisdiction of any crime (whether or not involving IAI) which constitutes a
felony in the jurisdiction involved;
(ii) If Employee commits any act of fraud, embezzlement or similar conduct
against, or breaches a material fiduciary obligation to, IAI;
(iii) If Employee unreasonably fails or refuses to perform in any material
respect any of Employee's duties and responsibilities as required by this
Agreement; or
(iv) If Employee breaches the terms of Section 7 or Section 8 herein.
(c) Prior to terminating the Employee pursuant to Section 5(b)(iii) of this
Agreement, IAI shall first send the Employee a written notice of the alleged
breach and a thirty (30) day period to cure such alleged breach. If the
Employee has not cured the alleged breach within the thirty (30) day cure
period, IAI may send the Employee a notice of termination. If IAI terminates
the Employee for any other reason, termination
shall be effective when IAI sends the Employee written notice of termination.
(d) This Agreement may be terminated by the Employee upon the occurrence of
any event that has, or can reasonably be expected to have, a material adverse
effect on the financial condition, business, results of operation or prospects
of IAI's parent corporation, SFAD. Upon any such termination, Employee shall
be entitled to receive Employee's Base Salary as accrued through the date of
termination.
<PAGE>
7. CERTAIN RESTRICTIVE COVENANTS.
(a) Employee recognizes and acknowledges that confidential information may
exist, from time to time, with respect to the business of IAI. Accordingly,
Employee agrees that Employee will not disclose any confidential information
relating to the business of IAI to any individual or entity during Employee's
employment or thereafter. The provisions of this paragraph shall not apply to
information which is or shall become generally known to the public or the
trade (except by reason of Employee's breach of Employee's obligations
hereunder), and information which Employee is required to disclose by order of
a court of competent jurisdiction (but only to the extent specifically ordered
by such court and, when reasonably possible, if Employee shall give IAI prior
notice of such intended disclosure so that it has the opportunity to seek a
protective order if it deems appropriate).
(b)As used in this Agreement, "confidential information" shall mean studies,
plans, reports, surveys, analyses, notes, records, unpublished memoranda or
documents, and all other non-public information relating to IAI's business
activities, including without limitation, all methods, processes, techniques,
equipment, research data, marketing and sales information, personnel data,
customer lists, employee lists, financial data, plans and all other
techniques, know how and trade secrets which presently or in the future are in
the possession of IAI.
(c) All memoranda, notes, records, reports, plans, papers or other documents
made or compiled by or made available to Employee in the course of employment
are and shall be the sole and exclusive property of IAI and shall be promptly
delivered and returned to IAI by Employee immediately upon termination of
employment with IAI.
8. NON-COMPETITION.
(a) During the period of active employment, and for a period of one year
thereafter, Employee shall not engage as principal, officer, director,
employee, controlling stockholder, partner or member, directly or indirectly,
in any activity or business which competes with ongoing operations of the IAI
in any area of the world where IAI regularly conducts its business. This
provision shall not prevent Employee from serving as a consultant to any such
business after the period of active employment.
(b) Employee also agrees to refrain from soliciting or otherwise calling
upon any then current clients of IAI for a period of two (2) years immediately
following termination of this agreement.
(c) The provisions of this Article regarding Non-Competition have been
carefully considered by Employee, and it is expressly covenanted and agreed
that in consideration of the totality of the circumstances under which
Employee has been retained by IAI, the foregoing restrictions on competition
are fair and that the provisions of this Article regarding Non-Competition are
to be construed as one of the exceptions to the prohibitions on restraint of
trade set forth in Section 542.33 Florida Statues. The provisions of this
Article shall survive the termination of this Agreement.
(d) This Article shall not apply if Employee's period of active employment
is terminated by the Board of Directors of SFAD without cause in violation of
this Agreement or if, at any time after the period of active employment, the
published bid price for SFAD common stock is less than $.04, or there are no
published bid prices for SFAD common stock, for a period of 10 consecutive
business days.
<PAGE>
9. INJUNCTION. Employee acknowledges that the services to be rendered by
Employee are of a special, unique and extraordinary character, and,
in connection with such services, Employee will have access to
confidential information vital to IAI's business. Accordingly, Employee
consents and agrees that if Employee violates any of the provisions of
Section 7 or Section 8 hereof, IAI would sustain irreparable harm and,
therefore, in addition to any other remedies which may be available to it,
IAI shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining Employee form committing or continuing any such
violation of this Agreement without the necessity of showing irreparable harm
or inadequate remedy at law or the requirement of posting any bond. Nothing in
this Agreement shall be construed as prohibiting IAI form pursuing any other
remedy or remedies including, without limitation, recovery of damages.
10. MODIFICATIONS OR ELIMINATION OF RESTRICTIONS. In the event that any of
the restrictions contained in Sections 7, 8, or 9 hereof shall be held to be
in any way an unreasonable restriction on Employee, then the court so holding
shall reduce the territory and/or period of time in which such restriction
operated, or modify or eliminate any such restriction to the extent necessary
to render such paragraphs enforceable.
11. ENTIRE AGREEMENT. This Agreement represents the entire Agreement between
the parties with respect to the subject matter hereof and shall not be
modified or affected by any offer, proposal, statement or representation,
oral or written, made by or for either party in connection with the terms
hereof. This Agreement may not be amended except by an instrument in writing
signed by IAI and Employee.
12. SEVERABILITY. Should any provision or clause hereof be held to be
invalid, such invalidity shall not affect any other provision or clause hereof
which can be given effect without such invalid provisions.
13. LAWS APPLICABLE. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
14. COVENANTS, WARRANTIES AND REPRESENTATIONS OF EMPLOYEE. Employee
represents, covenants and warrants that entering into this Agreement does not
constitute a breach of any other agreement to which Employee is a party.
15. VACATION. Employee shall be entitled to an annual vacation of three
weeks (3) weeks. Vacation time shall be scheduled at those times most
convenient to IAI's business.
16. RELATIONSHIP BETWEEN PARTIES. The parties recognize that the Board of
Directors of the IAI, in accordance with controlling state statutes, shall
manage the business affairs of the IAI. The relationship between the IAI and
Employee is that of employer and employee.
17. WAIVER. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by any party.
18. SUCCESSORS. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, and
legal representatives, and neither this Agreement nor any beneficiary or
beneficiaries designated by IAI.
19. NOTICES. Any notices required of permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or
certified mail to the party entitled thereto.
<PAGE>
20. ARBITRATION AND ATTORNEY'S FEES. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Any decision rendered by the arbitrator shall be final,
conclusive and binding upon the parties and may be entered as judgement in any
court having jurisdiction thereof. The arbitration shall be held in Palm
Beach County, Florida. The prevailing party shall be entitled to recover all
costs incurred in connection with the arbitration procedure.
21. COUNTERPARTS. This Agreement may be executed in counterparts, any one of
which shall be evidence of the Agreement of the parties hereto, and all of
which, together, shall form the Agreement of the parties.
22. AMENDMENT. No amendment or variation of the terms of this Employment
Agreement shall be valid unless made in writing and signed by the parties
hereto.
23. DEATH AND DISABILITY. In the event of Employee's death during the term of
Employee's employment, this Agreement shall terminate as of the date of death.
Employee's beneficiary or estate shall be entitled to receive Employee's base
salary as accrued through the date of termination, plus a prorated portion of
any bonus earned with regard to that fiscal year. If the Employee is unable
to substantially perform his duties on a full-time basis because of
disability, illness or injury, he shall be retained at full compensation and
other benefits for ninety (90) days. At the expiration of this period, if the
Employee remains unable to substantially perform his duties, IAI shall have
the unqualified right to terminate the Agreement by written notice to the
Employee and no further compensation or benefits shall be due or owing, other
than a prorated portion of any bonus earned with regard to that fiscal year.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WITNESS INTERNET ASSOCIATES INTERNATIONAL, INC.
/s/ John Reinbergs
------------------------------
John Reinbergs
EXHIBIT 22.1
Name of Subsidairy State of Incorporation
Internet Associates International, Inc. Nevada
Internet Commerce, Inc. Florida
Total Micro Computers, Inc. Florida
EXHIBIT 23.1
CONSENT OF SEWELL AND COMPANY, P.A.
The Board of Directors of
Safe Technologies International, Inc.:
We hereby consent to incorporation by reference in the Registration Statement
of Safe Technologies International, Inc. on Form S-8 filed with the Securities
and Exchange Commission on September 8, 1998 of our report dated March 9, 1999
relating to the financial statements of Safe Technologies International, Inc.
for the fiscal years ended December 31, 1998 and 1997, appears in this Annual
Report on Form 10-KSB of Safe Technologies International, Inc. for the year
ended December 31, 1998
SEWELL AND COMPANY, P.A.
Hollywood, Florida
March 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10K - CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND
CONSOLIDATED STATEMENT OF EARNINGS (LOSS) FOR THE TWELVE MONTH PERIOD
ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 66,473
<SECURITIES> 0
<RECEIVABLES> 500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,973
<PP&E> 4,233
<DEPRECIATION> 0
<TOTAL-ASSETS> 434,674
<CURRENT-LIABILITIES> 218,818
<BONDS> 0
<COMMON> 7,136
0
0
<OTHER-SE> 215,856
<TOTAL-LIABILITY-AND-EQUITY> 434,674
<SALES> 427,552
<TOTAL-REVENUES> 430,547
<CGS> 281,263
<TOTAL-COSTS> 281,263
<OTHER-EXPENSES> 332,275
<LOSS-PROVISION> 814,548
<INTEREST-EXPENSE> 12,140
<INCOME-PRETAX> (677,404)
<INCOME-TAX> 0
<INCOME-CONTINUING> (677,404)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (677,404)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
