<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required] for the fiscal year ended
December 31, 1995.
Commission file number: 33-26789NY
EFTEK CORP.
(Name of small business issuer in its Charter)
Nevada 93-0996501
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
(Address of Principal Executive Offices)
Registrant's Telephone Number: (609) 767-2300
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
None None
Securities to be registered under Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 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 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 or any amendment to
this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year: $0
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of June 17, 1996 was approximately $6,000,000 based on the
average high and low bid prices for such common stock as reported on the O-T-C
Bulletin Board.
The number of shares of Common Stock outstanding as of June 17, 1996 was
16,033,639. The number of Class A Redeemable Common Stock Purchase Warrants
outstanding as of June 17, 1996 was 65,412. The number of Class B Redeemable
Common Stock Purchase Warrants outstanding as of June 17, 1996 was 82,824.
Documents Incorporated by Reference - Various exhibits from the Company's
Post-Effective Amendment No. 1 to Form S-18 Registration Statement, Sec. File
No. 33-26789NY filed June 1, 1989 and such other documents contained in Item
13(a)(iii).
Transitional Small Business Disclosure Format (Check One): Yes No X
<PAGE>
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
The Company was incorporated in the State of Nevada on December 30,
1988.
The Company became a Public Company by filing and registering with
the Securities and Exchange Commission under Form S-18, certain
Units consisting of four shares of common stock and forty Class A
and forty Class B redeemable common stock purchase warrants. Its
Registration Statement became effective on June 1, 1989. A total
of 32,000 Units were sold at the offering price of $5.50 per Unit
for gross total proceeds of $176,000. The net total proceeds after
deducting the various costs of the offering was $121,369.
On January 5, 1990, Savoy Capital Group, Ltd. acquired all of the
outstanding common stock of Exotic Bodies, Inc., a Pennsylvania
Corporation, which became a wholly owned subsidiary of Savoy
Capital Group, Ltd. in exchange for 15,857,600 shares of the
Company's Common Stock. Pursuant to said Agreement, Savoy Capital
Group, Ltd. amended its Certificate of Incorporation to change its
name to Exotic Bodies, Inc., and the wholly owned subsidiary
changed its name to Exotic Bodies of Pennsylvania, Inc.
The Company operating under the name Exotic Bodies, Inc.,
endeavored to begin operations of automobile theme museums and
entertainment complexes featuring the display of exotic, european
automobiles and associated exotic car products and services. The
Company's attempt to setup and operate such exotic automobile theme
museums was unsuccessful and the Company essentially ceased such
operations in mid-1992 and began to search for a suitable
acquisition candidate.
On July 25, 1994, the Company completed the acquisition of R & D
Innovators, Inc., a New Jersey corporation, engaging in the
development, manufacturing and sales of equipment for the bottling
and packaging industry. As part of such acquisition, the Company
divested itself of the assets relating to the business of exotic
automobiles including all of the logos and trade names in
consideration for the cancellation by Bruce Selig, the former
Chairman of the Board of the Company, of all of his outstanding
loans to the Company. Furthermore, simultaneously with the Closing
on July 25, 1994, prior management was replaced by the management
of R & D Innovators, Inc.
Effective, August 15, 1994, the Company amended its Certificate of
Incorporation to change its name to EFTEK Corp., and on August 22,
1994 the Company effected a 1 for 17 reverse stock split.
<PAGE>
BUSINESS OF ISSUER AFTER THE ACQUISITION OF R & D INNOVATORS, INC.
On July 25, 1994, the Company completed the acquisition of R & D
Innovators, Inc., a New Jersey corporation, organized in July 1990,
to engage in the development, manufacturing and sales of equipment
for the bottling and packaging industry.
R & D Innovators, Inc. developed and attempted to market a device
called the Water Ballaster/Rinser System ("Ballaster"). The
Ballaster addresses a problem encountered by various companies that
fill polyethylene terephthalate (PET) plastic bottles, namely that
this variety of container used typically for Coca-Cola, Pepsi and
other soft drinks is top-heavy and thus tends to tip over prior to
filling. The result is that these bottles can not be run through
filling or bottling lines at anywhere near the speed and efficiency
normally associated with glass or Base-Cup (more costly and
environmentally unsound) equipped plastic bottles. Existing
bottling lines are set up to accommodate only glass bottles with
tabletop conveyors which deliver the bottles to the filler. The
introduction of PET bottles onto the existing tabletop conveyor
lines designed for glass bottles has created inefficiency and has
delayed the speed of the bottling lines by failing to deliver
bottles to the filler as quickly as glass bottles. The filler
speeds vary and are not being utilized to their full capacity
thereby producing fewer bottles (cases) per minute.
Until early 1995, the Company experienced difficulties in
attempting to market the Ballaster. Accordingly, the Company made
the decision not to further divert the Company's resources to
pursue this marketing in the near future. Essentially, all efforts
in this regard were suspended in order to further concentrate the
Company's efforts on its new core business. The Company intends to
license its patents and technologies to other companies who have
more resources and contacts in the industry to further market the
Ballaster.
In 1994 and 1995, the Company became interested in the colorization
of amorphous mixed cullet (broken glass) from recycled glass
containers of green, amber and flint (clear color) bottles that are
recycled and collected by trash haulers. The Company entered into
a Purchase Agreement with International Cullet Exchange, Inc. which
applied for a patent concerning colorizing of 3-MIX cullet to
result in a single color to be utilized by the glass container
industry. The Closing of the acquisition has not occurred to date,
as it was determined that there was great resistance to utilization
of mixed cullet irrespective of color unless it was free of
contaminants. Therefore, the Company believed that it had an
opportunity to form a new core business of processing 3-MIX cullet
to meet the qualifications of the glass bottling and fiberglass
industries. The following sections describe the Company's proposed
new core business and plan of operation for the next year period.
<PAGE>
THE IMPORTANCE OF 3-MIX GLASS CULLET RECYCLING
Today recycling is at an all time high due to its economic
attractiveness and the ever growing environmental conscious
society. One of the major materials recycled in the United States
is glass. When glass is recycled, it is usually color separated at
trash sorting facilities and by haulers into green, amber and
flint. This process, however, is not perfect. Due to the inherent
fragile characteristics of this material and the handling
procedures during the entire recycling process, approximately 50%
of all recyclable glass breaks, becomes amorphous 3-MIX cullet
(broken glass), unsuitable for cost-effective color separation, and
ends up in landfills or, at best, goes in limited quantities to
asphalt production and road construction.
At the same time, single color cullet is a very valuable raw
material for fiberglass and container glass manufacturing. It has
a lower viscosity than other glassmaking materials (sand, etc.) and
liquifies at a lower Farenheit than for the virgin batch. As a
result, not only the melting process speeds up and the wear of the
furnace refracting bricks lessens (leading to its longer production
life) but, most importantly, substantial savings of natural gas,
the principal fuel for glass furnaces, is achieved. A Federal
Department of Energy study claims that every 10% increment of
recycled glass in a batch reduces energy demand by 2%-3%. The US
Glass Packaging Institute estimated that in a standard size furnace
for every 10% increase in cullet, the annual consumption of gas is
reduced by about 24.5 million cubic feet. Also, cullet use in
glass production is more environmentally sound, since it reduces
the use of landfills and lowers furnace air emissions. Landfill
space availability, especially in Metropolitan areas, is becoming
more scarce. Incinerator disposal of waste materials is growing.
Some waste materials such as presently unusable glass cannot be
disposed of by incineration, but are disposed of in landfills.
Unusable scrap glass, referred to as cullet, can be recycled if the
contaminants can be removed. Manufacturers of fiberglass and glass
containers do use clean cullet, even in relatively small amounts of
different colors of commingled glass. The U.S. Fiberglass Market
for cullet is several hundred thousand tons annually. As
technologies advance the use of commingled (3-MIX) cullet, their
usage can equal the bottle glass usage.
CERAMIC DETECTOR
With all the attractiveness of 3-MIX from the economic and
environmental standpoints, this material has not been used very
much by the fiberglass industry. The major reason is the
approximate 10% of contaminants contained in an average 3-MIX
batch. The fiberglass industry limits the 3-MIX contaminant
content and imposes other requirements for the cullet it uses.
While there have been developed ways to automatically remove paper,
<PAGE>
plastics and metals, ceramics still are a major problem, precluding
the large-scale use of 3-MIX in fiberglass production. Its melting
temperature is a minimum of 400 degrees higher than that of a
virgin batch and, as a result, unmelted ceramic seeds and stones
block (and often damage) fiberglass extruders and disrupt the whole
manufacturing process. So far, ceramics have been removed from 3-MIX for the
most part manually. This method is not only unreasonably expensive, but highly
inefficient as well. While non-transparent ceramic pieces (still only the
larger ones) can be removed this way, fragments of Pyrex, which looks very
similar to glass, go undetected and cause an unacceptably high level of 3-MIX
contamination. Other automatic ceramic removal systems on the
market used by recycling firms incorporate a laser beam to scan the
3-MIX and detect only non-transparent ceramics. In addition,
haulers often deliver cullet in a dirty condition and this adds to
the inefficiency of this laser system.
EFTEK's wholly owned subsidiary, C.F.C., Inc., is developing and
has applied for a patent for an automatic Ceramic Detector.
Although there is no assurance that this system will work
efficiently in production, the Company believes that this system
will expose the inches-deep layer of 3-MIX, fed onto a conveyor
belt, to a special electromagnetic treatment and then scan the
activated cullet. The computerized scanner is being designed to
electronically divide the scanned area of the 3 feet wide conveyor
belt into small square sectors and identify those which contain
ceramic pieces. With the help of proprietary software, the scanner
will be coordinated with the contaminant ejection unit, which opens
the correct flap in the "kick-out area" at the right time to
discard the contaminated sector of the conveyor. With a projected
high level of efficiency and limited waste, C.F.C.'s Ceramic
Detector could more effectively solve the problem of ceramic
contamination of 3-MIX cullet and open the possibility for more use
of this material in fiberglass (as well as container glass)
production.
EFTEK'S PROPOSED RECYCLING PLANT
The Company has determined that if it can process mixed cullet to
remove organics, paper, plastic, ceramics, metals and other
contaminants (resulting in an end product that the Company names
"Premium Cullet") so that this Premium Cullet meets qualifications
and specifications from the U.S. Fiberglass and Glass Bottlers
industries, of which there is no assurance, there can be a
substantial market of over one million tons annually.
In order to penetrate this market, the Company proposes to develop
and operate, either for its own use or by joint-ventures, various
recycling plants throughout the U.S. To establish proof of
operation, acceptance of market, and economic viability, the
Company has entered into a sales agreement with immediate
<PAGE>
possession of an approximate 137 acres of land in South New Jersey
containing a 1200 feet long by 65 feet wide preformed concrete
building large enough to house at least two production lines as
well as storage of raw unprocessed 3-MIX cullet, as well as the
processed Premium Cullet. Plans are to operate up to two shifts of
production 7.5 hours per shift. Total employment with two shifts
of operation is expected to be 17 people. The projected schedule
for start up of one shift is late October, 1996.
INCOME FROM RAW MATERIAL ACCEPTANCE
What the Company believes is unique to the recycling industry,
various waste removers, haulers and other recycling companies have
to pay landfills or other environmentally acceptable depositories
tipping fees for the disposal of unusable mixed cullet, which can
range from $20 to $50 per ton on the average, depending upon
location and availability in the U.S.
EFTEK's marketing plans include receiving cullet from recyclers
within a 150 mile range. Tipping fees should be in the $10.00 to
$16.00 range, depending on volume, delivered to the Company's
processing plant. The Company intends to enter into long term (one
and a half years) supply agreements with recyclers in the area.
As a processor of 3-MIX cullet, the Company is not aware of any
special permits required from State or Federal agencies.
The acceptance of the cullet raw material and the payment to the
Company of tipping fees should result in immediate cash flow and a
continuous source of revenue.
As of June 11, 1996 the Company commenced acceptance of its first
delivery of cullet raw material at its first site in Winslow
Township, New Jersey.
DESCRIPTION OF PROPOSED PLANT OPERATION
EFTEK's program for processing 3-MIX cullet consists of machinery
that will remove organics, paper, plastic, ceramics and other
contaminants. The process begins with receipt of cullet from
recyclers. The first step of the process is to remove all ferrous
(magnetic) metals. Next, it is crushed to a size not greater than
two inches. The next step in the process is to wash (and recycle
the water) and then dry the cullet to remove organics, plastics and
paper. Following the drying process, non-ferrous (aluminum,
copper, etc.) metal is removed. The next step of the process is to
remove ceramics, vision ware, pyrex, stones, etc. by EFTEK's patent
pending ceramic detector presently under development. The final
step of the process is to grind the cullet to customer
specifications of twelve mesh size or smaller. The finished
product will be loaded in trucks and rail for delivery to
<PAGE>
customers. The removed contaminants should be a small percentage
of the total. Metals, paper and plastics will be collected and
disposed of through an end user. Sludge, if any, will be compacted
and taken to an incinerating facility or an acceptable landfill.
GOVERNMENT REGULATION
Although the Company believes that its processing plant will not be
subject to any State or Federal regulations, the Company, upon
acceptance of the raw cullet material, will be responsible for
either its processing or ultimate disposal if it can not be
properly processed.
FUTURE PLANS
Upon successful performance from the first processing plant,
subsequent plants will be considered in locations where cullet
supplies are available and there are customers within a reasonable
radius.
RISKS AND UNCERTAINTIES
Although the Company's proposed plans have a high upside potential,
shareholders are cautioned that there are also substantial risks
including, but not limited to, the following: 1) Requirements for
acceptance of the Company's Premium Cullet by the proposed end
users may be too restrictive to economically satisfy; 2) New more
economic technologies may be developed to satisfy end users'
requirements; 3) Raw mixed cullet may become too scarce affecting
availability, or too abundant, reducing tipping fees; 4) Government
regulations may either change or be interpreted differently; 5) The
Company could encounter higher operational costs or delays; 6) or
other unforeseen circumstances could arise to adversely affect the
Company's operations.
SUBSEQUENT EVENT - FIRE DOCTOR, INC.
As a subsequent event in April 20, 1996, the Company acquired 100%
of stock of Fire Doctor, Inc. ("Fire") in exchange for two million
shares of restricted common stock of EFTEK. The acquisition was
handled as a non-taxable reorganization pursuant to the Internal
Revenue Code of 1986, as amended. After the reorganization, Fire
became a wholly owned subsidiary of EFTEK. As part of the
acquisition, the Company agreed to dedicate $500,000 of its Private
Placement proceeds to Fire. Further, the Company agreed that Fire
would be independent of control of EFTEK unless or until for the
year ending December 31, 1997, Fire does not achieve a pre-tax
profit of a minimum of $100,000; and a minimum of $500,000 for the
year ending December 31, 1998. Berkshire International Finance,
Inc. ("Berkshire") and William N. Levy ("Mr. Levy") who are more
than 5% owners of the stock of the Company, owned 30% and 13%,
<PAGE>
respectively, of the common stock of Fire. The acquisition was
negotiated between various officers and directors of both entities
with Mr. Levy declining to participate. The Company and Fire
waived any potential conflict from Mr. Levy's past dual legal
representation of both parties.
Fire developed and manufactures a proprietary chemical formula
designed to retard the spread of flame. Fire has been in business
for approximately two years of which it devoted to developing a
product line of fire retardent chemicals. Their main product, Fire
Barrier II, has received "Underwriter's Laboratories Recognition"
in their flame reduction category. To Fire's knowledge, this is
the only product that has been recognized by Underwriter's
Laboratories in this category.
Fire has submitted the product for testing to various independent
testing organizations which results have shown that use of the
product is an effective treatment on natural and most synthetic
fibers as well as natural wood. In addition, the product has been
tested and classified as non-toxic and a non-irritant.
Fire's current marketing strategy is as follows:
1. To enter into agreements with key manufacturers to incorporate
Fire's product into their core offering such as paints, shelf
liners, wicker furniture, etc.
2. To target distributors in various "after market" industries to
market through service providers to the end user. These include
carpet cleaners and replacement roof companies.
3. To target selective broadcast media marketers to incorporate
the product in both infomercial and commercial format.
Fire has begun to assemble commissioned manufacturers sales
representatives to call on a pre-assigned list of potential
customers.
Robert H. Rudman was appointed President of Fire (see Item 9. for
biography of Robert H. Rudman). Also see Acquisition Agreement
annexed hereto as Exhibit 10(h).
ITEM 2. DESCRIPTION OF PROPERTY
The Company has leased approximately 4,500 square feet of office
space located at 408 Bloomfield Drive, Bloomfield Business Park,
Units 1 and 2, Berlin, New Jersey 08009, from a non-affiliate for
a period of a remaining two years for rent of $2,300 per month and
$2,600 per month during the third year of the lease term. Fire
Doctor, Inc. subsidiary is sharing the leased premises.
As a subsequent event, on June 5, 1996, the Company entered into a
Sales Agreement for an approximate 137 acre industrial compound
<PAGE>
located in Winslow Township, New Jersey, from High Concrete
Structures, Inc., for the total consideration of $650,000.
Pursuant to the Purchase Agreement, EFTEK paid a $250,000 non-
refundable deposit. The Company will pay the remaining $400,000
upon closing of the transaction, subject to various closing
conditions.
Pending the closing of the transaction, the Company has obtained
immediate possession of the property under a 10-year Lease
Agreement for monthly lease payments of $4,000 plus a 3% increase
each year and escalation tax clauses.
There are currently four structures located on the property
totaling 148,000 square feet, including an 80,000 square foot
industrial plant and a 6,000 square foot commercial office
building. The Company intends to house its proprietary 3-Mix
Cullet processing operations in the 80,000 square foot facility.
ITEM 3. LEGAL PROCEEDINGS
As of May 15, 1996, there were no material actions, proceedings or
litigations pending at that time, or to the knowledge of the
Company, threatened, to which the property of the Company was
subject, or to which the Company was a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted in the Over-The-Counter market
on the OTC Bulletin Board under the trading symbol "EFTK". The
following table indicates the high and low bid prices of the Common
Stock from August 1994 to March 31, 1996 for the quarterly periods
ended on the dates set forth (reflecting the Company's common
stock 1 for 17 reverse stock split in August, 1994).
<TABLE>
<CAPTION>
QUARTERLY PERIOD ENDED HIGH BID LOW BID
<S> <C> <C>
1994
September 30 1-3/4 1-1/2
December 31 3-3/4 1-3/4
1995
March 31 3-3/4 3
June 30 3-3/4 2-3/4
September 30 2-3/4 2-1/4
December 31 2-1/4 3/4
1996
March 31 1-1/2 5/8
</TABLE>
<PAGE>
As of June 17, 1996, the high and low bid quotations for the
Company's Common Stock were 3/4 and 3/4.
No price is currently available for the redeemable warrants which
have been restructured so that each warrant (after the 1 for 17
reverse stock split) permits the warrant holder to purchase six
shares of the Registrant's common stock at an exercise price of
$2.00 per share, with an extended expiration date for the warrants
of December 31, 1996. As of this date, Units, which were comprised
of the Company's common stock and warrants, are no longer available
or being traded.
There are approximately 183 holders of record of the Company's
common stock, however, the Company believes that its beneficial
shareholders are in excess of 300 in street name in various
brokerage accounts. The Company has never declared a dividend on
its common stock and does not plan to do so in the near future.
The prices set forth above are not necessarily indicative of the
depth of the trading market of the Company's common stock. These
over-the-counter market quotations reflect inter-dealer prices
without markups, markdowns, or commissions and may not necessarily
reflect actual transactions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's primary source of funds and liquidity to date has
been through the sale of its securities. In 1994 and 1995 the
Company used its resources to further develop and attempt to sell
its Ballaster and related technology to various bottling companies,
without success. The Company intends to license its patents and
technology to allow other companies to attempt to market the
Ballaster and related technologies and, thus, not further divert
the resources of the Company from its new core business.
Also as a subsequent event as discussed in the Business section,
the Company anticipates substantial revenue through the payment of
tipping fees for delivery and acceptance by the Company of "mixed
cullet" and the sale of "processed premium cullet" to the
Fiberglass and Glass Bottling industries. In order to "process"
the cullet, the Company intends to make substantial capital
expenditures of over $2,000,000 (by lease, purchase, or
development) for machinery, equipment and leasehold improvements.
The Company believes, although there is no assurance, that it has
commitments to raise such capital through additional equity
investments as well as tipping fees. To a significant extent the
Company is dependent on the operational success of its (patent
applied for) Ceramic Detector technology.
Such successful operation of processing and reselling the cullet
should result in expansion plants which would need additional
<PAGE>
funding or the Company could, without assurance, depend on joint
ventures to supply such expansion funding.
Although the Company believes that is a substantial and lucrative
market for clean, non-contaminated cullet, the Company recognizes
that there are risks of delays, mechanical proof of concept, and
additional costs which may adversely affect the Company's
operations.
Also as a subsequent event, in April 1996, as a diversification and
hedge, the Company acquired 100% of the stock of Fire Doctor, Inc.
to market as a wholly owned independent subsidiary a chemical that
substantially retards the spread of flame. The initial funding to
be $500,000, which was a condition of the Company's overall
funding, has been dedicated to Fire Doctor, Inc. Additional
funding will only be granted subject to the belief of the Company's
Board that its sales progress justifies same. Although Fire Doctor
has recently employed a new President and a new Sales Manager, both
with retail sales experience and to be compensated on a highly
weighted performance basis, it is unlikely that this subsidiary
would need any additional funding in the near future, especially in
the event of the receipt of anticipated sales revenue, of which
there is no assurance.
As a subsequent event, in February, 1996, the Company sold 78,300
shares of its common stock in a Private Placement to a non-affiliate
for $39,150, and as additional subsequent events, in
April and May, 1996, the Company sold 2,533,333 shares of its
common stock in a Private Placement to Arista High Technology
Growth Fund Ltd. for a consideration of $950,000. Although there
is no assurance, the Company believes that additional financing
through Private Placement is available, and such funds in addition
to the anticipated tipping fees should provide enough financing for
the Company for the next year.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements are presented under Item 13 of
this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
DIRECTORS AND OFFICERS AFTER THE ACQUISITION OF R & D INNOVATORS,
INC.
The following are the Officers and Directors of the Company as of
June 17, 1996:
<TABLE>
<CAPTION>
Name Age Position Held with Company
- ----- ----- ----------------------------
<S> <C> <C>
Frank Whitmore1 60 President, Chief Executive Officer, Director
Frank G. Pringle2 51 Vice President R & D, Director
Shawn Pringle 27 Treasurer and Chief Financial Officer
Kevin J. Coffey, Esq.3 37 Secretary, Director
Thomas Dickinson 35 Director
Thomas L. Brandt4 41 Director
Robert H. Rudman5 45 President of Fire Doctor, Inc., Director
Gerard T. Wisla6 38 Secretary
______________________________
</TABLE>
1 Appointed January 31, 1996
2 President until January 31, 1996; resigned as Director on June 12, 1996.
3 Resigned as Secretary on June 12, 1996.
4 Appointed March 13, 1996.
5 Appointed May 7, 1996
6 Appointed June 12, 1996.
FRANK WHITMORE, President, Chief Executive Officer since January
31, 1996 and a Director of the Registrant, a general consultant
since 1991, retired in 1991 from Anchor Glass Container Corporation
where he served as a Corporate Officer and Vice President of
Technical Services from 1984 to 1990. From 1983 to 1984 he was
President of Midland Glass Company. From 1981 to 1983 Mr. Whitmore
was Vice President of Engineering & Manufacturing. He held various
positions with Anchor Hocking Corporation of Lancaster, Ohio
between 1960 and 1981, beginning as a plant engineer, and advancing
to Engineering Manager, Plant Manager, to Vice President of
Operations. Mr. Whitmore received a bachelor of science degree in
Electrical Engineering from Ohio University.
FRANK G. PRINGLE, President and Chairman of the Board of Directors
of the Registrant and its subsidiary until January 31, 1996, has
worked in the packaging industry since 1969 being initially
employed by R.A. Jones. From 1971 through 1975, he was employed by
Standard Knapp Packaging Machinery where his last position was as
Regional Sales Manager. From 1975 to 1979, Mr. Pringle was
employed as Sales Manager for Simplimatic Engineering Corporation.
In 1979, Mr. Pringle purchased a part interest in Ambec Systems,
serving as Vice President of Marketing and New Machine Development.
At such time, he helped to developed a patented machine called "10"
Conveyor. In 1981, Mr. Pringle left Ambec Systems and the
packaging field due to a covenant not to compete and became
involved in the ownership of health clubs, which continued until
<PAGE>
1985 when he started Pringle Systems, a company that installed
packaging equipment and manufactured conveyors and other packaging
machinery. In 1990, Mr. Pringle organized R & D Innovators, Inc.
and has been employed by such company to the present time as well
as by Eftek Corp., the parent company. Mr. Pringle holds a number
of patents in the field of engineering.
SHAWN F. PRINGLE, Treasurer and Chief Financial Officer of the
Registrant and its subsidiary, is the son of Frank G. Pringle.
From 1987 to 1991, he was involved on a part time basis in the
fabrication, engineering and drafting work of Pringle Systems while
working for a Bachelor of Science Degree in biology at the
University of South Carolina which he received in December of 1992.
Thereafter, he joined R & D Innovators, Inc. full time and has been
responsible for certain aspects of corporate operations and
engineering.
KEVIN J. COFFEY, ESQ., Secretary and Director of the Registrant and
its Subsidiary has been a partner since 1986 in the law firm of
Donner, Coffey & Donner, which engages in multi-state general
litigation and general practice. He received Juris Doctorate
Degree from Delaware Law School in 1985 and a Bachelor of Arts from
the University of Connecticut in 1980.
THOMAS DICKINSON, a Director of the Registrant and its subsidiary,
was the Vice President/Group Manager of Knoblauch State Bank, where
he is responsible for the administration of a diversified $35MM
portfolio, business development and five staff professionals. From
1989 to 1993 he was the Senior Vice President/Chief Lending Officer
of First Bank of Philadelphia, where he was responsible for all
lending activities of a $100MM commercial bank. From 1985 to 1989
Mr. Dickinson was the Assistant Vice President of Liberty
Bank/Equibank. He started the small business lending department
which was designed to provide banking relationships for businesses
and individuals with credit needs up to $500,000. From 1979 to
1985 Mr. Dickinson was a banking officer with Provident National
Bank. He advanced from a customer service representative, through
various Loan Production Office positions, to a banking officer
managing a loan portfolio and business development capacities. He
received a bachelor of science degree in management/finance from
LaSalle University.
THOMAS L. BRANDT, a Director of the Registrant and its subsidiary,
is the founder, President and Chief Operating Officer of Brandt
Technologies, Inc. ("BTI"). BTI has operated since 1985 as a
supplier of precision inspection equipment and packaging
technologies to the glass and plastics container industries
worldwide. From 1983 to 1985, Mr. Brandt served on the management
team of Emhart/Powers Machinery Group integrating glass
manufacturing systems throughout North America, Europe and the
Middle East. From 1980 to 1983, he held the position of Site
Project Engineer for Guardian Industries, responsible for the
construction of a 186,000 square foot windshield manufacturing
plant. Between 1975 - 1908, Mr. Brandt held various positions with
<PAGE>
Thatcher Glass beginning as Corporate Layout Engineer and advancing
to Assistant Plant Engineer at the Lawrenceburg, Indiana
manufacturing facility. Mr. Brandt received a two year technical
degree through the State University of New York for Mechanical
Design and holds three (3) U.S. and International patents, jointly
holds two (2) European patents and four (4) patents pending in
progress.
ROBERT H. RUDMAN, a Director of the Registrant and its subsidiary,
is the President of Fire Doctor, Inc., a wholly owned subsidiary of
EFTEK, since March 1996 and President of V.Q. International, Inc.
since January 1996. From 1994 to 1996, Mr. Rudman served as
Executive Vice President, Chief Merchandise Officer for Michaels
Stores, Inc. From 1991 to 1994, Mr. Rudman's title was Senior Vice
President Merchandise and Marketing for Michaels Stores, Inc. The
position held by Mr. Rudman while at Michaels Stores was charged
with building the merchandise and marketing support group, develop
business strategies and implement corporate fiscal and operational
goals. During his tenure, Michaels Stores grew from a 140 store
retailer doing just over $400 million in sales to a 443 store
national retailer dominating it's niche doing in excess of $1.2
billion. From 1973 to 1991, Mr. Rudman held various positions
within a wide variety of retail formats including the Discount,
Variety and Warehouse Clubs. His primary focus has been
merchandise and marketing management at middle and executive
levels.
GERALD WISLA is a Certified Public Accountant and a principal
partner of Wisla & Cohen Certified Public Accountants for the last
five years. Mr. Wisla was previously a shareholder and Director of
Quality Control for a large regional accounting firm. His
experience includes presentations at continuing education seminars
and articles published in various newsletters. Mr. Wisla is a
graduate of Drexel University. He is a member of the American and
Pennsylvania Institutes of Certified Public Accountants. Mr. Wisla
is a past Board member of an alumni association at Drexel
University and currently serves as Treasurer and Chairman of the
Finance Committee of a local non-profit organization.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
(a)Name and (b) (c) (d) (e)Other (f)Restricted (g)Securities (h) (i)
Principal Annual Stock Underlying LTIP All Other
Position Year Salary Bonus($) Compensation Awards($) Option/SARs(#) Payouts($) Compensation
- ----------- ---- ------ -------- ------------ --------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frank Pringle, 1995 $ 63,750 0 0 0 0 0 0
President 1994 $112,950 0 0 0 0 0 0
</TABLE>
Frank Pringle has agreed to receive $75,000 salary until or if
management increases same subject to performance criteria. In
addition, 1,000,000 shares of the Company's common stock owned by
him will be kept in escrow subject to a one year performance
<PAGE>
criteria relating to earnings per share. The criteria are
currently under negotiation.
Frank Whitmore, the current President of the Company, agreed to
receive $50,000 annual salary and 500,000 stock options, (100,000
of which are already vested and an additional 100,000 options to be
vested each year thereafter as long as he is still employed by the
Company). Mr. Whitmore also received 7,500 stock options for
Director compensation for 1995.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
RECORD AND BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK AFTER
THE ACQUISITION OF R & D INNOVATORS, INC.
(A) (B) The following table sets forth certain information with
regard to the record and beneficial ownership of the Company's
common stock as of June 17, 1996 by (i) each shareholder owner of
record or beneficially 5% or more of the Company's common stock
(ii) each Director individually and (iii) all Officers and
Directors of the Company as a group. All numbers have been adjusted
for the 1 for 17 reverse stock split, which occurred August 22,
1994:
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER SHARES OWNED OF CLASS
<S> <C> <C> <C>
Common Frank Whitmore 507,5001 3.17%
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
Common Frank G. Pringle 3,475,7502, 4 21.28%
8 Tallowood Drive
Medford, NJ 08055
Common Kevin J. Coffey, Esq. 382,2633 2.38%
153 Lost Lake
Marlton, NJ 08053
Common Shawn Pringle 255,5594 1.59%
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
Common Thomas Dickinson 15,0005 0.09%
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
Common Thomas L. Brandt 7,5006 0.05%
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
<PAGE>
Common Robert H. Rudman 74,0007 0.46%
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, New Jersey 08009
Common Arista High Technology Growth 1,332,667 8.31%
Fund Ltd.
P.O. Box 20043
Phase 3, British American Center
Georgetown, Grand Cayman
Cayman Islands, British West Indies
Common William N. Levy 827,320 5.16%
Plaza 1000, Suite 309
Voorhees, New Jersey 08043
Common Berkshire International Finance, Inc. 1,350,000 8.42%
551 Fifth Avenue, Suite 605
New York, NY 10017
Common Gerard Wisla 28,503 0.18%
4808 Rainbow Ridge Circle
Schwenksville, Pennsylvania 19473
All Officers and Directors as a group (8 in number) 4,746,075 29.60%
</TABLE>
__________________________
1 Includes 7,500 stock options granted to Mr. Whitmore as a member of the Board
of Directors on a yearly basis.
2 See information contained in Item 10.
3 Includes 15,000 shares of which represent stock options at 7,500 per year as
compensation for being a Director.
4 Frank G. Pringle and Shawn Pringle, father and son, each disclaim beneficial
ownership of the shares of Registrant held by the other.
5 Includes 15,000 stock options granted to Mr. Dickinson as a member of the
Board of Directors at the rate of 7,500 stock options yearly.
6 Includes 7,500 stock options granted to Mr. Brandt as a member of the Board
of Directors on a yearly basis.
7 Does not include 200,000 stock options of 250,000 that were granted of which
50,000 are vested.
(C) CHANGE IN CONTROL
None.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See SUBSEQUENT EVENT - FIRE DOCTOR, INC. for certain transactions
concerning William N. Levy and Berkshire International Finance,
Inc. as set forth in Part I, Item 1.
As an additional subsequent event, on June 1, 1996, the Company
entered into a Consulting and Advisory Agreement with Fifth Avenue
Research and Advisory Group, Inc., an affiliate of Berkshire
International Finance, Inc., for financial consulting and advisory
services for a one year period. Compensation is $3,000 per month
in addition to 200,000 stock options exercisable at $1.00 per share
for three years. This Agreement was negotiated and approved by the
Board of Directors which approved the fairness and reasonableness
of the Agreement.<PAGE>
Also as additional subsequent events, in March, April and May,
1996, the Company sold 2,533,333 shares of its common stock in a
Private Placement to Arista High Technology Growth Fund Ltd. for a
consideration of $950,000. Affiliates of Berkshire International
Finance, Inc. were issued 760,000 shares of restricted common stock
as a fee for arranging said Private Placements. The Private
Placements and the fee were negotiated and approved by the Board of
Directors which approved the fairness and reasonableness of the
Agreement.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(A) The following documents are filed as a part of this Form 10-KSB at the page
indicated.
<TABLE>
Page Number
<S> <C> <C>
(a)(i) Financial Statements
Auditor's Report as of February 14, 1996...........F1
Consolidated Balance Sheets - December 31, 1995 and
1994...............................................F2
Consolidated Statement of Operations - For the years
ended December 31, 1995 and 1994...................F3
Statement of Shareholder's Equity - For the years
ended December 31, 1995 and 1994...................F4
Statement of Cash Flows - For the years ended
December 31, 1995 and 1994.........................F5
Consolidated Notes to Financial Statements.........F6-F10
(a)(ii) Consolidated Schedules -
None.
All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable
and, therefore, have been omitted.
(a)(iii) Exhibits
Sequential
NUMBER DESCRIPTION Page Number
3(a) Articles of Incorporation of the Company
(Savoy Capital Group, Inc.) *
3(b) By-Laws of the Company *
3(c) Certificate of Incorporation of Exotic Bodies, Inc. **
<PAGE>
3(d) Amendment of Articles of Incorporation of Savoy
Capital Group Ltd. changing its name to Exotic Bodies,
Inc. **
3(f) Amendment to Certificate of Incorporation of Exotic
Bodies, Inc. changing its name to EFTEK Corp. ***
3(g) Certificate of Incorporation of R & D Innovators, Inc. ***
10(a) Stock Purchase Agreement of January 5, 1990 between
the Registrant and Exotic Bodies, Inc. **
10(d) 1989 Stock Option Plan **
10(g) Stock Purchase Agreement dated July 25, 1994 by and
between the Registrant and R & D Innovators, Inc. ***
10(h) Stock Purchase Agreement dated February, 1996 by and
between the Registrant and the Shareholders of Fire
Doctor, Inc. 33
10(i) Purchase Agreement between EFTEK Corp.
and High Concrete Structures, Inc. dated June 5, 1996. 57
10(j) Consulting and Advisory Agreement between EFTEK Corp.
and Fifth Avenue Research and Advisory Group, Inc. 68
* Incorporated by reference from the like-numbered exhibit to
Form S-18 Registration Statement, SEC File No. 33-26789-NY Post-Effective Amendment No. 1 filed June 1, 1989.
** Incorporated by reference from the like-numbered exhibit to
Form S-18 Registration Statement, SEC file No. 33-26789-NY Post-Effective Amendment No. 3 filed April 25, 1990.
*** Incorporated by reference from the Exhibit to Form 10-KSB for
the fiscal year ended December 31, 1994.
(b) Form 8-K
None filed during the fourth quarter.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, EFTEK Corp. has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EFTEK CORP.
Dated: June 24, 1996 By:/s/Frank Whitmore
___________________________
FRANK WHITMORE
President, Chief Executive
Officer and Director
Dated: June 24, 1996 By:/s/Shawn Pringle
__________________________
SHAWN PRINGLE
Treasurer and Chief Financial Officer
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, this report has been signed on
behalf of EFTEK Corp. and in the capacities and on the dates
indicated.
Dated: June 24, 1996 By:/s/Frank Whitmore
____________________________
FRANK WHITMORE
President, Chief Executive
Officer and Director
Dated: June 24, 1996 By:/s/Frank Pringle
_____________________________
FRANK PRINGLE*
Vice President R & D, Director
Dated: June 24, 1996 By:/s/Shawn Pringle
_____________________________
SHAWN PRINGLE
Treasurer and Chief Financial Officer
Dated: June 24, 1996 By:/s/Kevin J. Coffey
____________________________
KEVIN J. COFFEY
Secretary and Director
Dated: June 24, 1996 By:/s/Thomas Dickinson
____________________________
THOMAS DICKINSON, Director
<PAGE>
Dated: June 24, 1996 By:/s/Thomas L. Brandt
____________________________
THOMAS L. BRANDT, Director
Dated: June 24, 1996 By:/s/Robert H. Rudman
____________________________
ROBERT H. RUDMAN**
President of Fire Doctor,
Inc. and Director
* As to events prior to June 12, 1996
** As to events subsequent to May, 1996
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING
ISSUERS
No annual report or proxy material has been forwarded to securities
holders of the Registrant during the period covered by this Form
10-KSB.
EFTEK\1995.10K
<PAGE>
EFTEK CORPORATION AND SUBSIDIARY
YEARS ENDED DECEMBER 31, 1995 AND 1994
CONTENTS
<TABLE>
Page
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-10
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
EFTEK Corporation
408 Bloomfield Drive
Berlin, New Jersey 08009
We have audited the accompanying consolidated balance sheets of
EFTEK Corporation and subsidiary as of December 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders' equity
and cash flows for the years 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits 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 audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of EFTEK
Corporation and its subsidiary as of December 31, 1995 and 1994, and the
results of its operations, changes in stockholders' deficiency and its
cash flows for the years then ended, in conformity with generally
accepted accounting principles.
BARATZ & ASSOCIATES, P.A.
February 14, 1996 except for
Note 9, as to which the date
is April 20, 1996
<PAGE>
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
Assets ---- ----
------
<S> <C> <C>
Current Assets
Cash $ 391 $ 210,645
Accounts receivable 11,066
Prepaid expenses 11,232
Due from officer (Note 2) 258,338 225,109
------- -------
Total Current Assets 258,729 458,052
------- -------
Property and Equipment, Net (Note 1) 19,113 23,261
------- -------
Other Assets
Patent costs, net (Note 1) 49,540 45,497
Organization costs, net (Note 1) 1,050 1,500
Deposits 3,300 2,900
------- -------
Total Other Assets 53,890 49,897
------- -------
Total Assets 331,732 531,210
======= =======
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts payable and accrued
liabilities 70,023 46,660
Due to related party (Note 2) 4,776
------- -------
Total Liabilities 74,799 46,660
------- -------
Commitments and Contingencies (Note 3)
Stockholders' Equity
Common stock, $.001 par; authorized
25,000,000 shares; issued
11,861,435 and 11,761,435 shares
at December 31, 1995 and 1994,
respectively (Note 5) 11,861 11,761
Additional paid in capital 1,385,178 1,295,278
Deficit (1,139,860) ( 822,243)
--------- ---------
257,179 484,796
Common stock held in treasury
(14,434 shares), at cost 246 246
--------- --------
Total Stockholders' Equity 256,933 484,550
--------- --------
Total Liabilities and Stockholders'
Equity $ 331,732 $ 531,210
========= =========
</TABLE>
<PAGE>
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenue (Note 1) $ $ 70,832
---------- ----------
Cost and Expenses
Cost of revenue 12,347 61,648
Selling, general and
administrative 326,626 329,229
---------- ---------
Total Cost and
Expenses 338,973 390,877
---------- ---------
Loss From Operations ( 338,973) ( 320,045)
---------- ---------
Other Income (Expense)
Interest income 20,729
Miscellaneous income 1,634 1,028
Miscellaneous expense ( 1,007)
Interest expense (Note 2) ( 25,037)
--------- ----------
Total Other Income
(Expense) 21,356 ( 24,009)
--------- ---------
Net Loss $( 317,617) $( 344,054)
========= =========
Net Loss Per Share (Note 1) $( .03) $( .03)
========= =========
Weighted Average
Number of Shares
Outstanding 11,832,120 10,625,083
========== ==========
</TABLE>
<PAGE>
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Additional Treasury
Common Stock Paid-In Stock
Shares Amount Capital Deficit at Cost Total
----------------- ----------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 -
as previously reported 85,900 $ 98,860 $ $( 703,298) $(15,000) $(619,438)
Prior period adjustment
(Note 8) 225,109 225,109
------- ------- --------- --------- ------- --------
Balance, January 1, 1994 -
as restated 85,900 98,860 ( 478,189) (15,000) (394,329)
Recapitalization
resulting from
acquisition of R&D
Innovators, Inc.
on July 25, 1994
(Note 1) 9,925,535 (88,849) 651,357 14,754 577,262
Conversion of additional
loans and payables of
R&D Innovators, Inc.'s
Shareholders to
additional paid in
capital 196,237 196,237
Common stock issued
(Note 4) 1,750,000 1,750 447,684 449,434
Net loss for year ended
December 31, 1994 ( 344,054) (344,054)
---------- ------ --------- ----------- ------- ---------
Balance, December 31, 1994 11,761,435 11,761 1,295,278 ( 822,243) ( 246) 484,550
Common stock issued
(Note 4) 100,000 100 89,900 90,000
Net loss for year
ended December 31, 1995 ( 317,617) (317,617)
---------- ------ --------- ---------- ------- ---------
Balance, December 31, 1995 11,861,435 $ 11,861 $ 1,385,178 $(1,139,860) $( 246) $ 256,933
========== ====== ========= ============ ======== =========
</TABLE>
<PAGE>
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flows From
Operating Activities
Net loss $(317,617) $(344,054)
Adjustments to Reconcile
Net Loss to Net Cash Used
In Operating Activities
Amortization and depreciation 7,367 4,851
Additional paid in capital recorded in
exchange for wages and interest on loans 155,706
Changes in Operating Assets
and Liabilities
Decrease in accounts receivable 11,066
Decrease in inventory 53,817
Decrease (increase) in prepaid expenses 11,232 ( 11,232)
Increase in intangible assets ( 6,812) ( 27,357)
Increase in deposits ( 400) ( 2,900)
Increase (decrease) in
accounts payable and
accrued liabilities 23,363 ( 29,858)
Increase in due to related party 4,776
Decrease in unearned revenue ( 29,262)
--------- --------
Net Cash Used in Operating
Activities (267,025) (230,289)
--------- --------
Cash Flows From
Financing Activities
Loan to officer ( 33,229)
Other loan additions 1,405
Debt reduction ( 31,800)
Net proceeds from issuance of
common stock 90,000 449,434
Officer and other loan proceeds converted
to additional paid in capital 40,531
--------- --------
Net Cash Provided By
Financing Activities 56,771 459,570
--------- --------
Cash Flows From Investing
Activities
Cash from acquisition 1,801
Purchase of equipment ( 25,332)
---------- --------
Net Cash Used in Investing
Activities ( 23,531)
---------- --------
Net (Decrease) Increase
In Cash (210,254) 205,750
Beginning Cash 210,645 4,895
----------- --------
Ending Cash $ 391 $ 210,645
=========== ========
</TABLE>
Supplemental Disclosures (Note 7)
<PAGE>
EFTEK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. Summary of Significant Accounting Policies
Description of Business
EFTEK Corporation, formerly known as Exotic Bodies, Inc. (Exotic),
a development stage company, was incorporated on December 30, 1988
in the State of Nevada. The Company was formed to begin operations
of automobile theme museums and entertainment complexes featuring
the display of exotic and European automobiles and associated exotic
car products and services. The Company's attempt to establish and
operate such exotic automobile theme museums was unsuccessful.
Operations ceased in mid-1992 and the Company began to search for a
suitable acquisition candidate.
On July 25, 1994, the Company completed the acquisition of R & D
Innovators, Inc. (R&D), a New Jersey Corporation, engaged in the
development, manufacturing and sales of equipment for the bottling
and packaging industry. For accounting purposes, the transaction
was treated as an acquisition of Exotic and as a recapitalization of
R & D. The shareholders of R & D agreed to exchange all of the
common stock of R & D, their outstanding loan balances, accrued
payroll and accrued interest for 9,000,000 newly issued shares of
Exotic common stock. Prior to the execution of the acquisition,
Exotic had 25,000,000 shares of authorized common stock and
17,194,400 shares outstanding. In accordance with the agreement,
Exotic effected a 17 for 1 reverse stock split which resulted in
1,011,435 shares outstanding, post-split. Exotic's authorized
common stock remained at 25,000,000 shares post-split. Also, as
part of such acquisition, Exotic divested itself of the assets
relating to the business of exotic automobiles in consideration for
the cancellation by Mr. Bruce Selig (the former chairman of the
board of the Company) of all his outstanding loans and accrued
interest due Exotic. Simultaneously with the acquisition on July
25, 1994, prior management was replaced by the management of R & D
Innovators, Inc.
Effective August 15, 1994, Exotic amended its Certificate of
Incorporation to change its name to EFTEK Corporation (EFTEK).
Principles of Consolidation
The consolidated financial statements include the accounts of EFTEK
Corporation and its wholly owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.
<PAGE>
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, income, and expenses. Such estimates primarily relate
to unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
over the estimated useful lives of the respective assets using the
straight line method. Expenditures for additions, major repairs and
replacements are capitalized and expenditures for maintenance and
minor repairs are charged to operations as incurred. When property
and equipment are retired or otherwise disposed of, the costs
thereof and the applicable accumulated depreciation are removed from
the respective accounts and the resulting gain or loss is reflected
in earnings. Depreciation expense for the year ended December 31,
1995 and 1994 was $4,148 and $2,071, respectively.
Property and equipment consisted of the following at December 31,
1995 and 1994:
<TABLE>
1995 1994
<S> <C> <C>
Equipment $ 10,829 $10,829
Furniture and fixtures 12,003 12,003
Leasehold improvements 2,500 2,500
25,332 25,332
Less accumulated depreciation 6,219 2,071
Net property and equipment $ 19,113 $ 23,261
</TABLE>
Patent and Organization Costs
Certain patent and organization costs have been capitalized and are
amortized over the estimated useful lives of the assets using the
straight-line method. Patent costs are being amortized over a
period of 17 years. Organization costs are being amortized over a
period of 5 years.
Revenue Recognition
The Company recognizes revenue upon installation of their machines.
Loss Per Common Share
Loss per common share is based upon the weighted average number of
common and common equivalent shares outstanding (including the
dilutive effect of warrants). Outstanding warrants had no
significant dilutive effect on loss per share or were anti-dilutive.
2. Related Party Transactions
At December 31, 1994, $225,109 was due from an officer and
shareholder of the Company. During 1995 the Company made additional
loans of $38,229 and received payments of $5,000 resulting in
$258,338 due from the officer at December 31, 1995. Interest is
charged on the loan at the rate 6.5% per annum. In addition, at
<PAGE>
December 31, 1995, the Company owed $4,776 to a related company for
services rendered.
In 1994, under an acquisition agreement, the stockholders of R & D
agreed to exchange all the common stock of R & D, their outstanding
loan balances, accrued interest and accrued payroll for 9,000,000
newly issued shares of Exotic's common stock (See Note 1). In 1994
interest at the higher rate of 10% or 2% over prime was accrued on
stockholder loans in the aggregate amount of $26,421.
3. Commitments and Contingencies
Technology License Agreement
On May 15, 1993, R & D entered into a technology license agreement
with an affiliated company (common ownership), whereby R & D granted
certain licensing and patent rights in exchange for royalties equal
to 10% of the affiliated company sales. In 1995 and 1994, no
royalties had been earned or were due to R & D.
Operating Leases
The Company leases office and warehouse facilities and
transportation equipment under non-cancellable operating leases with
expiration dates through October 1997. Rent expense amounted to
$24,600 and $6,641 in 1995 and 1994, respectively.
Future minimum rental payments under non-cancellable lease
agreements are as follows:
<TABLE>
<S> <C>
1996 $ 33,108
1997 30,090
</TABLE>
Litigation
The Company is a defendant in two lawsuits against contractors for
breach of contract and unpaid fees. The Company believes the suits
are without merit and intends to vigorously defend its position.
Counsel has estimated the maximum potential losses at $28,000.
4. Income Taxes
The Company had operating losses in 1995 and 1994; no provisions
were made for income taxes. At December 31, 1995 the Company had
available net operating loss carryforwards approximating $1,027,000.
The loss carryforwards expire in 2005.
Under SFAS 109 "Accounting for Income Taxes," deferred income taxes
are provided on temporary differences. The principal sources of
these temporary differences are the financial accounting and tax
recognition of intangible assets and net operating losses.
The net deferred tax assets at December 31, 1995 and 1994 include
the following:
<TABLE>
1995 1994
<S> <C> <C>
Deferred tax asset $ 450,298 $ 320,295
Valuation allowance for
deferred tax asset (450,298) (320,295)
$ -0- $ -0-
</TABLE>
<PAGE>
The tax effect of major temporary differences that gave rise to the
Company net deferred tax asset at December 31, 1995 and 1994 was as
follows:
<TABLE>
1995 1994
<S> <C> <C>
Start - up costs $ 40,204 $ 267,848
Net operating loss
carryforwards 410,094 52,447
$ 450,298 $ 320,295
</TABLE>
5. Common Stock
In April 1995, the Company, in a private placement, sold 100,000
shares of its common stock at an aggregate purchase price of
$100,000.
Subsequent to the July 25, 1994 acquisition (see Note 1), the
Company, in a private placement, sold 1,750,000 shares of its common
stock at an aggregate purchase price of $500,000.
6. Warrants
As a result of the Company's recapitalization, the Company had
outstanding at December 31, 1995 and 1994 approximately 65,000 Class
A redeemable common stock purchase warrants and 83,000 Class B
redeemable common stock purchase warrants. Each warrant allows for
the purchase of 6 shares of the Company's common stock at an
exercise price of $2 per share. The warrants were extended to
expire in June 1996.
7. Supplemental Disclosure of Noncash
Investing and Financing Activities
In accordance with the acquisition of R & D loans from shareholders,
accrued payroll and accrued interest totalling $591,662 at December
31, 1993 were reclassified to additional paid in capital. Also,
additional paid in capital of $155,706 was recorded during 1994 in
exchange for wages and interest on loans.
In connection with the recapitalization on July 25, 1994 R & D
common stock par value was changed to $.001 per share. The change
in par value resulted in a total of $74,095 being reclassified from
common stock and treasury stock to additional paid in capital. Also
the total equity deficit of Exotic of $14,400 was reclassified to
additional paid-in capital. In addition with reference to the
acquisition (see Note 1) liabilities were assumed as follows at
December 31,:
<TABLE>
1994
<S> <C>
Liabilities assumed
resulting from acquisition
of Exotic $ 17,700
Less assets acquired 1,500
Excess of liabilities
assumed over assets $ 16,200
</TABLE>
<PAGE>
Cash paid during the periods ended December 31,:
<TABLE>
1995 1994
<S> <C> <C>
Interest $ 0 $ 4,350
</TABLE>
8. Prior Period Adjustment
The Company's deficit at the beginning of 1994 has been adjusted to
reverse an accrual that was incorrectly recorded. The adjustment
had no effect on net income for 1994.
9. Subsequent Events
Through April 20, 1996, the Company, in private placements, sold
1,410,967 shares of its common stock at an aggregate purchase price
of $539,150.
On April 20, 1996, the Company entered into an agreement with Fire
Doctor, Inc. (Fire Doctor), a New Jersey corporation, to acquire all
the issued and outstanding shares of Fire Doctor in exchange for
2,000,000 authorized, but unissued shares of the Company. Fire
Doctor is engaged in the manufacture and sale of various fire
retardant products.
AGREEMENT
CONCERNING THE EXCHANGE OF STOCK
BETWEEN
EFTEK CORP.
AND
SHAREHOLDERS OF
FIRE DOCTOR, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 EXCHANGE OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Exchange of Shares.. . . . . . . . . . . . . . . . . . . . . 1
1.2 Exemption from Registration. . . . . . . . . . . . . . . . . 1
1.3 Stock for Stock Transaction. . . . . . . . . . . . . . . . . 2
1.4 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Additional Documentation.. . . . . . . . . . . . . . . . . . 2
2 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS OF FIRE DOCTOR,
INC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Organization.. . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Directors and Officers.. . . . . . . . . . . . . . . . . . . 2
2.5 Financial Statements.. . . . . . . . . . . . . . . . . . . . 2
2.6 Absence of Changes.. . . . . . . . . . . . . . . . . . . . . 3
2.7 Absence of Undisclosed Liabilities.. . . . . . . . . . . . . 3
2.8 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Investigation of Financial Condition.. . . . . . . . . . . . 3
2.10 Patents, Trade Names and Rights. . . . . . . . . . . . . . . 3
2.11 Compliance with Laws.. . . . . . . . . . . . . . . . . . . . 3
2.12 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Ability to Carry Out Obligations.. . . . . . . . . . . . . . 4
2.15 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . 4
2.16 Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17 Legal Opinion .. . . . . . . . . . . . . . . . . . . . . . . 4
2.18 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 4
2.19 Indemnification of Officers and Directors. . . . . . . . . . 5
3 REPRESENTATIONS AND WARRANTIES OF EFTEK . . . . . . . . . . . . . 5
3.1 Organization.. . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Directors and Officers.. . . . . . . . . . . . . . . . . . . 5
3.5 Investigation of Financial Condition.. . . . . . . . . . . . 5
3.6 Patents, Trade Names and Rights. . . . . . . . . . . . . . . 6
3.7 Compliance with Laws.. . . . . . . . . . . . . . . . . . . . 6
3.8 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.9 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 Ability to Carry Out Obligations.. . . . . . . . . . . . . . 6
3.11 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.13 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Subsequent Filings.. . . . . . . . . . . . . . . . . . . . . 7
4 REPRESENTATIONS AND WARRANTIES OF FIRE DOCTOR, INC. AND ITS
SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Share Ownership. . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Investment Intent. . . . . . . . . . . . . . . . . . . . . . 7
4.3 Legend.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Investigative Rights.. . . . . . . . . . . . . . . . . . . . 8
5.2 Conduct of Business. . . . . . . . . . . . . . . . . . . . . 8
6 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
6.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Conditions Precedent to Closing. . . . . . . . . . . . . . . 9
7 SPECIAL TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . 9
7.1 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Independence . . . . . . . . . . . . . . . . . . . . . . . . 9
7.3 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . 9
8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Captions and Headings. . . . . . . . . . . . . . . . . . . . 10
8.2 No Oral Change.. . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Non-Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . 10
8.5 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . 10
8.6 Counterparts and/or Facsimile Signature. . . . . . . . . . . 10
8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.8 Binding Effect.. . . . . . . . . . . . . . . . . . . . . . . 11
8.9 Mutual Cooperation.. . . . . . . . . . . . . . . . . . . . . 11
8.10 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.11 Announcements. . . . . . . . . . . . . . . . . . . . . . . . 11
8.12 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.13 Survival of Representations and Warranties.. . . . . . . . . 11
8.14 Exhibits.. . . . . . . . . . . . . . . . . . . . . . . . . . 11
EXHIBIT 1.1
SCHEDULE OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . 13
EXHIBIT 1.2
INVESTMENT LETTER . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT 2.4
OFFICERS AND DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 16
EXHIBIT 2.5
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 17
EXHIBIT 3.3
SCHEDULE I
SUBSIDIARIES OF EFTEK CORP. . . . . . . . . . . . . . . . . . . . 18
EXHIBIT 3.4
DIRECTORS AND OFFICERS OF EFTEK CORP. . . . . . . . . . . . . . . 19
</TABLE>
<PAGE>
AGREEMENT
THIS AGREEMENT made this day of February, 1996 by and
between EFTEK CORP., a Nevada Corporation ("EFTEK") whose address is
Bloomfield Business Park, 408 Bloomfield Drive, Units 1 & 2, Berlin, New
Jersey 08009; and THE SHAREHOLDERS OF FIRE DOCTOR, INC.("FIRE"), a New
Jersey Corporation, LISTED ON SCHEDULE A, who shall collectively be
hereinafter referred to as "Shareholders". For purposes of this
Agreement, the address of the Shareholders shall be Plaza 1000, Suite
309, Main Street, Voorhees, New Jersey 08043.
WHEREAS, EFTEK, a public Company, as part of an overall financing
restructuring, desires to acquire all of the issued and outstanding
common stock of FIRE from Shareholders making FIRE a wholly owned
subsidiary of EFTEK; and
WHEREAS, the respective Boards of Directors of the Companies have
authorized their proper corporate officers to effect the transactions
contemplated herein; and
WHEREAS, there are no guarantees of product success; and
WHEREAS, each of the parties desires to assist the others in
effecting the transaction pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, on the following terms and
conditions:
1 EXCHANGE OF SECURITIES
1.1 Exchange of Shares. Subject to all the terms and conditions of
this Agreement, EFTEK agrees to exchange 2,000,000 authorized, but
unissued unregistered shares of EFTEK $.001 par value common stock
("EFTEK Shares") in exchange for 100% of the issued and outstanding
shares of FIRE.
1.2 Exemption from Registration. The parties hereto intend that
the EFTEK Shares to be exchanged shall be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder and exempt from the registration requirements of
the applicable states. In furtherance thereof, Shareholders will
execute and deliver to EFTEK on the closing date an investment letter
suitable to EFTEK counsel, in form substantially as per Exhibit 1.2
attached hereto.
<PAGE>
1.3 Stock for Stock Transaction. The parties intend to effect
this transaction as a non-taxable reorganization pursuant to the
Internal Revenue Code of 1986, as amended. EFTEK shall be the parent
corporation after the reorganization.
1.4 Costs. Each party shall bear its own costs associated with
this Agreement, the closing of this Agreement, and all ancillary or
related measures, including without limitation, costs of attorneys fees,
accountants fees, filing fees, or other costs or expenses, without right
or recourse from the other.
1.5 Additional Documentation. The parties acknowledge that further
agreements and documents, in addition to the Exhibits appended hereto,
may be required in order to effect the transactions contemplated
hereunder. Each party agrees to provide and execute such other and
further agreements or documentation as, in the opinions of respective
counsel, are reasonably necessary to effect the transactions
contemplated hereunder and to maintain regulatory and legal compliance.
2 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS OF FIRE DOCTOR, INC.
Shareholders hereby represent and warrant to EFTEK that:
2.1 Organization. FIRE is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey,
has all necessary corporate powers to own its properties and to carry on
its business as now owned and operated by it, and is duly qualified to
do business and is in good standing in each of the states where its
business requires qualification.
2.2 Capital. The authorized capital stock of FIRE consists solely
of 50,000,000 shares of $.0001 par value common stock, of which
1,500,000 shares are currently issued and outstanding. All of the issued
and outstanding shares of FIRE are duly and validly issued, fully paid
and nonassessable. There are no outstanding subscriptions, options,
rights, warrants, debentures, instruments, convertible securities or
other agreements or commitments obligating FIRE to issue or to transfer
from treasury any additional shares of its capital stock of any class.
2.3 Subsidiaries. FIRE does not have any subsidiaries or own any
interest in any other enterprise.
2.4 Directors and Officers. Exhibit 2.4 hereto contains the names
and titles of all directors and officers of FIRE as of the date of this
Agreement.
<PAGE>
2.5 Financial Statements. Exhibit 2.5 by addendum (within 2 weeks)
will consist of the financial statements of FIRE as of December 31,
1995. The financial statements have been prepared in accordance with
generally accepted accounting principles and practices consistently
followed by FIRE throughout the periods indicated, and fairly present
the financial position of FIRE as of the dates of the balance sheets
included in the financial statements and the results of operations for
the periods indicated. Further, FIRE hereby represents that it will
deliver to EFTEK the last two years income statements and balance sheets
certified by independent certified public accountants acceptable to
EFTEK and its auditors ("Audited Financial Statements") within 60 days
of Closing. Such Audited Financial Statements will not be materially
different from Exhibit 2.5 and have no material liabilities and minimal
assets.
2.6 Absence of Changes. Since the date of FIRE's most recent
financial statements included in the Exhibits, there has not been any
change in the financial condition or operations of FIRE, except for
changes in the ordinary course of business, which changes have not, in
the aggregate, been materially adverse.
2.7 Absence of Undisclosed Liabilities. As of the date of FIRE's
most recent balance sheet included in the Exhibits, FIRE did not have
any material debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become
due, that is not reflected in such balance sheet, except as set forth on
Exhibit 2.5.
2.8 Tax Returns. Within the times and in the manner prescribed by
law, FIRE has filed or will file within 60 days of Closing, all federal,
state and local tax returns required by law and has paid all taxes,
assessments and penalties due and payable. The provisions for taxes, if
any reflected in the Exhibits are adequate for the periods indicated.
There are no present disputes as to taxes of any nature payable by FIRE.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
EFTEK and its accountants shall have the opportunity to meet with FIRE's
legal counsel and accountants to discuss the financial condition of
FIRE. FIRE shall make available to EFTEK all books and records of FIRE.
2.10 Patents, Trade Names and Rights. FIRE owns and holds all
necessary U.L. approvals, patents, franchise rights, trademarks, service
marks, trade names, inventions, processes, know-how, trade secrets,
copyrights, licenses and other rights necessary to its business as now
conducted or proposed to be conducted. FIRE is not
<PAGE>
infringing upon or otherwise acting adversely to the right or claimed
right of any person with respect to any of the foregoing.
2.11 Compliance with Laws. FIRE has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building,
zoning or other law, ordinance or regulation) affecting its properties
or the operation of its business.
2.12 Litigation. FIRE is not a defendant to any suit, action,
arbitration or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge of
FIRE, threatened against or affecting FIRE or its business, assets or
financial condition. FIRE is not in default with respect to any order,
writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it. FIRE is
not engaged in any material lawsuits to recover monies due it.
2.13 Authority. The Board of Directors of FIRE has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and FIRE has full power and authority to execute,
deliver and perform this Agreement, and this Agreement is a legal, valid
and binding obligation of FIRE and is enforceable in accordance with its
terms and conditions.
2.14 Ability to Carry Out Obligations. The execution and delivery
of this Agreement by FIRE and the performance by FIRE of its obligations
hereunder in the time and manner contemplated will not cause, constitute
or conflict with or result in (a) any breach or violation of any of the
provisions of or constitute a default under any license, indenture,
mortgage, instrument, article of incorporation, bylaw, or other
agreement or instrument to which FIRE is a party, or by which it may be
bound, nor will any consents or authorizations of any party other than
those hereto be required; (b) an event that would permit any party to
any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of FIRE; or (c) an
event that would result in the creation or imposition of any lien,
charge or encumbrance on any asset of FIRE.
2.15 Full Disclosure. None of the representations and warranties
made by FIRE herein or in any exhibit, certificate or memorandum
furnished or to be furnished by FIRE, or on its behalf, contains or will
contain any untrue statement of material fact or omit any material fact
the omission of which would be misleading.
2.16 Assets.
<PAGE>
2.16.1 FIRE has good and marketable title to all of its
property, free and clear of all liens, claims and encumbrances, except
as otherwise indicated on FIRE's financial statements. However, no
guarantees are furnished as to the commercial worth or saleability of
its products including "Fire Barrier II".
2.16.2 All equipment presently on the books of FIRE or being
utilized by FIRE shall remain the property of FIRE at the time of the
Closing.
2.17 Legal Opinion . FIRE agrees to have its legal counsel furnish
a legal opinion confirming to the best of his knowledge the warranties
and representations set forth in this Section 2.
2.18 Indemnification. FIRE agrees to indemnify, defend and hold the
EFTEK shareholders, EFTEK, its officers and directors, harmless against
and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney fees, and
specifically including indemnification for any claim relating to the
ownership of FIRE of all of their formulas, or proprietary technologies
involved in FIRE products, that it shall incur or suffer, which arise
out of, result or relate to any breach of, or failure by FIRE to perform
any of its material representations, warranties, covenants or agreements
in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by FIRE under this Agreement.
2.19 Indemnification of Officers and Directors. The parties
acknowledge and agree that prior to execution of this Agreement, each
party had separately adopted resolutions and bylaws affording
indemnification, to the fullest extent permitted by law, of all
officers, directors, promoters, attorneys and other responsible persons,
past or present, which arises out of or pertains to any action or
omission taken in good faith while serving in such capacity on behalf of
the Corporation. The parties hereby agree that each shall, to the
fullest extent permitted by law, retain and maintain such
indemnification provisions with respect to its officers and directors
and that each party shall hereafter continuously maintain the fullest
indemnification of officers and directors as permitted by law.
3 REPRESENTATIONS AND WARRANTIES OF EFTEK
EFTEK represents and warrants to Shareholders of FIRE that:
3.1 Organization. EFTEK is a corporation duly organized, validly
existing and in good standing under the laws of the State
<PAGE>
of Nevada, has all necessary corporate powers to own its properties and
to carry on its business as now owned and operated by it, and is duly
qualified to do business and is in good standing in each of the states
where its business requires qualification.
3.2 Capital. The authorized capital stock of EFTEK consists of
25,000,000 shares of common stock, par value $0.001 of which
approximately 11,861,435 shares of common stock are currently issued and
outstanding. All of the issued and outstanding shares are duly and
validly issued, fully paid and nonassessable. There are no outstanding
subscriptions, options, rights, debentures, instruments, convertible
securities or other agreements or any additional shares of its capital
stock of any class.
3.3 Subsidiaries. EFTEK owns 100% of the subsidiaries listed in
Exhibit 3.3 attached hereto.
3.4 Directors and Officers. The names and titles of all directors
and officers of EFTEK are as set forth in Exhibit 3.4 attached hereto
and have not changed as of the date of this Agreement.
3.5 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
FIRE and its legal counsel and accountants shall have the opportunity to
meet with EFTEK's legal counsel and accountants to discuss the financial
condition of EFTEK. EFTEK shall make available to FIRE all books and
records of EFTEK.
3.6 Patents, Trade Names and Rights. To the best of its knowledge,
EFTEK is not infringing upon or otherwise acting adversely to the right
or claimed right of any person with respect to any of the foregoing.
3.7 Compliance with Laws. EFTEK has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building,
zoning or other law, ordinance or regulation) affecting its properties
or the operation of its business.
3.8 Litigation. EFTEK is not a party to any suit, action, arbitration
or legal, administrative or other proceeding, or governmental investigation
which is pending or, to the best knowledge of EFTEK threatened against or
affecting EFTEK or its business, assets or financial condition. EFTEK is
not in default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or
instrumentality applicable to it. EFTEK is not engaged in any
<PAGE>
material lawsuits to recover monies due it.
3.9 Authority. The Board of Directors of EFTEK has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and EFTEK has full power and authority to execute,
deliver and perform this Agreement, and this Agreement is a legal, valid
and binding obligation of EFTEK and is enforceable in accordance with its
terms and conditions.
3.10 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by EFTEK and the performance by the EFTEK of the obligations
hereunder in the time and manner contemplated will not cause, constitute
or conflict with or result in (a) any breach or violation of any of the
provisions of or constitute a default under any license, indenture,
mortgage, instrument, article of incorporation, bylaw, or other agreement
or instrument to which EFTEK is a party, or by which it may be bound,
nor will any consents or authorizations of any party other than those
hereto be required; (b) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of
any indebtedness or other obligation of EFTEK; or (c) an event that would
result in the creation or imposition of any lien, charge or encumbrance on
any asset of EFTEK.
3.11 Full Disclosure. None of the representations and warranties made
by EFTEK herein or in any exhibit, certificate or memorandum furnished or
to be furnished by EFTEK or on its behalf, contains or will contain any
untrue statement of material fact or omit any material fact the omission
of which would be misleading.
3.12 Assets. EFTEK has good and marketable title to all of its
property, free and clear of all liens, claims and encumbrances, except as
otherwise indicated.
3.13 Indemnification. EFTEK agrees to indemnify, defend and hold FIRE
harmless against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees,
that it shall incur or suffer, which arise out of, result or relate to any
breach of, or failure by EFTEK to perform any of its representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
EFTEK under this Agreement.
3.14 Subsequent Filings. Upon closing, EFTEK shall prepare and file
all required filings before federal and state authorities, including the
Securities and Exchange Commission. Such filings may include Forms 8-K and
post-effective amendments to the EFTEK
<PAGE>
Registration Statement, and all other filings where the due date of such
filing has not passed on the date of closing.
4 REPRESENTATIONS AND WARRANTIES OF FIRE DOCTOR, INC. AND ITS
SHAREHOLDERS
By execution of Exhibit 1.2 hereto, FIRE and Shareholders will
represent, among other things, that:
4.1 Share Ownership. Shareholders hold the number of FIRE Shares set
forth in Exhibit 1.1 hereto. Such shares are owned of record and
beneficially by each holder thereof and are not subject to any lien,
encumbrances or pledge. Each FIRE shareholder has the authority to exchange
such shares pursuant to this Agreement.
4.2 Investment Intent. Shareholders understand that the unregistered
EFTEK Shares are being offered for exchange in reliance upon the exemption
provided in Section 4(2) of the Act for nonpublic offerings and that:
4.2.1 The EFTEK Shares are being acquired solely for the
account of Shareholders, for investment purposes only, and not with a view
to, or for sale in connection with, any distribution thereof and with no
present intention of distributing or reselling any part of the unregistered
EFTEK Shares;
4.2.2 Shareholders will not dispose of the unregistered EFTEK
Shares or any portion thereof unless and until counsel for EFTEK shall have
determined that the intended disposition is permissible and does not
violate the Act or any applicable state securities laws, or the rules and
regulations thereunder;
4.2.3 EFTEK has made all documentation pertaining to all
aspects of the Exchange Offer available to him and to his qualified
representatives, if any, and has offered such person or persons any
opportunity to discuss the Exchange Offer with the officers of EFTEK;
4.2.4 Shareholders have relied solely upon EFTEK's Business
Plan for 1996-1998 and any independent investigations made by Shareholder
or Shareholders' representatives;
4.2.5 Shareholders are knowledgeable and experienced in
making and evaluating investments of this nature and desires to accept the
EFTEK Shares on the terms and conditions set forth;
4.2.6 Shareholders are able to bear the economic risk of
an investment in the EFTEK Shares; and
<PAGE>
4.2.7 Shareholders understand that an investment in the
unregistered EFTEK Shares is not liquid, and such shareholder has adequate
means of providing for current needs and personal contingencies and has no
need for liquidity in this investment.
4.3 Legend. Shareholders acknowledge that the certificates
evidencing the unregistered EFTEK Shares acquired pursuant to this
Agreement will have a legend placed thereon stating that the EFTEK Shares
have not been registered under the Act or any state securities laws and
setting forth or referring to the restrictions on transferability and sale
of the EFTEK Shares as per the standard legend of the Company's transfer
agent, American Stock Transfer and Trust Co., for restricted shares.
5 COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsel, if any, accountants, auditors and other authorized
representatives, full access during normal business hours and upon
reasonable advance written notice to all of each party's properties, books,
contracts, commitments and records for the purpose of examining the same.
Each party shall furnish the other party with all information concerning
each party's affairs as the other party may reasonably request.
5.2 Conduct of Business. Prior to Closing, FIRE shall conduct its
business in the normal course and shall not sell, pledge or assign any
assets without the prior written approval of the other party, except in the
normal course of business. FIRE shall not amend its Articles of Incor-
poration or Bylaws (except as may be described in this Agreement), declare
dividends, redeem or sell stock or other securities, incur additional or
newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than
its stated amount, or enter into any other transaction other than in the
normal course of business.
6 CLOSING
6.1 Closing. The closing of this transaction shall be held at the
offices of EFTEK prior to or on April 21, 1996, at such other place and
time as is mutually agreeable to the parties, or by FAX and Federal
Express. At the closing:
6.1.1 FIRE shall deliver to EFTEK copies of Exhibit 1.2
executed by Shareholders;
<PAGE>
6.1.2 EFTEK shall deliver to Shareholders certificates
representing the number of EFTEK Shares for which the Shares have been
exchanged, pursuant to the share computations set forth in Exhibit 1.1
hereto;
6.2 Conditions Precedent to Closing. Closing shall be contingent upon
the following:
6.2.1 Satisfactory examination and verification of the
adequacy and accuracy of all representations and warranties of the
respective parties, including those contained in the financial statements;
6.2.2 Satisfactory verification that FIRE has certified or
certifiable financial statements, prepared by independent auditors, that
comply with the requirements of Regulation S-X promulgated by the United
States Securities & Exchange Commission.
7 SPECIAL TERMS AND CONDITIONS
7.1 Financing. EFTEK hereby agrees to segregate and dedicate
$500,000 of its Private Placement proceeds to be furnished to FIRE as soon
as practical as an inter-subsidiary indefinite loan to be utilized solely
at the discretion of FIRE and its to be chosen new president.
7.2 Independence. EFTEK hereby agrees that FIRE shall be operated
as a wholly independent subsidiary not subject to control by EFTEK unless
or until for the fiscal year ending December 31, 1997, FIRE does not
achieve a pre-tax profit of a minimum of at least $100,000 and for the
fiscal year ending December 31, 1998, a pre-tax profit of a minimum of at
least $500,000. In the event that these criteria are not met or exceeded,
EFTEK shall have the right to appoint a majority of the Board of Directors
of FIRE.
7.3 Conflicts. The parties hereby acknowledge that Berkshire
International Finance, Inc. and its affiliates own 30%; William N. Levy
owns 13% respectively of the common stock of FIRE. Further, the firm of
Levy & Levy, P.A. solely owned by William N. Levy has performed legal
services and represented both entities. However, in this transaction,
William N. Levy is furnishing legal representation of FIRE. The Board
Members of both entities have had the opportunity to review the legal
documents with attorneys of their choice. Accordingly, both entities
hereby acknowledge such potential conflicts and hereby waive any such
conflicts of Mr. Levy's dual representation in the past and future. It is
noted that the business aspects of this transaction were solely negotiated
with various officers and directors of both entities
<PAGE>
with Mr. Levy declining to participate in such discussions and decisions.
In the event of any litigation between the parties, William N. Levy agrees
to decline to represent either party.
8 MISCELLANEOUS
8.1 Captions and Headings. The article and paragraph headings
throughout this Agreement are for convenience and reference only and shall
not define, limit or add to the meaning of any provision of this Agreement.
8.2 No Oral Change. This Agreement and any provision hereof may not
be waived, changed, modified or discharged orally, but only by an agreement
in writing signed by the party against whom enforcement of any such waiver,
change, modification or discharge is sought.
8.3 Non-Waiver. The failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants or
conditions of this Agreement or to exercise any option herein contained
shall not be construed as a waiver or relinquishment for the future of any
such provisions, covenants or conditions. No waiver by any party of one
breach by another party shall be construed as a waiver with respect to any
other subsequent breach.
8.4 Time of Essence. Time is of the essence of this Agreement and
of each and every provision.
8.5 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of New Jersey.
8.6 Counterparts and/or Facsimile Signature. This Agreement may be
executed in any number of counterparts, including counterparts transmitted
by telecopier or FAX, any one of which shall constitute an original of this
Agreement. When counterparts of facsimile copies have been executed by all
parties, they shall have the same effect as if the signatures to each
counterpart or copy were upon the same document and copies of such
documents shall be deemed valid as originals. The parties agree that all
such signatures may be transferred to a single document upon the request
of any party. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.7 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served
<PAGE>
personally on the party to whom notice is to be given, or on the third day
after mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
Copies to:
EFTEK Corp.
Bloomfield Business Park
408 Bloomfield Drive, Units 1 & 2
Berlin, NJ 08009
Fire Doctor, Inc. Levy & Levy, P.A.
405 Magnolia Road Plaza 1000, Suite 309
Pemberton, NJ 08068 Main Street
Voorhees, NJ 08043
8.8 Binding Effect. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of
each of the parties to this Agreement.
8.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
8.10 Brokers. The parties hereto represent that no other broker has
brought about this Agreement.
8.11 Announcements. The parties will consult and cooperate with each
other as to the timing and content of any public announcements regarding
this Agreement.
8.12 Expenses. Each party will pay its own legal accounting and other
out-of-pocket expenses incurred in connection with this Agreement, whether
or not this Agreement is consummated.
8.13 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion or other writing
provided for herein shall survive the Closing.
8.14 Exhibits. As of the execution hereof, the parties have provided
each other with the exhibits described herein. Any material changes to the
exhibits shall be immediately disclosed to the other party.
<PAGE>
AGREED AND ACCEPTED as of the date first above written.
EFTEK CORP.
By: /s/Frank Whitmore
--------------------------------
Frank Whitmore, President
ATTEST:
- -----------------------------
Corporate Secretary
(Corporate Seal)
FIRE DOCTOR, INC.
Shareholders
/s/John Figliolini /s/Mary Micciche
- --------------------------- ------------------------------
Histon Financial Services, Greater American Financial
Inc./Berkshire Services, Inc.
By: John Figliolini, President By: Mary Micciche, President
/s/William Borrelli /s/Randolph K. Binter
- --------------------------- -------------------------------
William Borrelli Randolph K. Binter
/s/Stephen M. Robinson /s/William N. Levy
- --------------------------- -------------------------------
Stephen M. Robinson William N. Levy
/s/Alfred J. Horn /s/H. Charles Huber
- --------------------------- -------------------------------
Alfred J. Horn H. Charles Huber
/s/Benjamin Bond /s/Marie B. Humphrey
- --------------------------- --------------------------------
Benjamin Bond Marie B. Humphrey
/s/Anna Marie Delaney /s/Gary D. Horn
- --------------------------- --------------------------------
Anna Marie Delaney Gary D. Horn
/s/Joanne M. Stokes
- ---------------------------
Joanne M. Stokes
C:\WP51\DOC\EFTEK\FIREDR.ACQ
<PAGE>
EXHIBIT 1.1
SCHEDULE OF SHAREHOLDERS
OF FIRE DOCTOR, INC.
AND ALLOCATION OF
EFTEK CORP. SHARES
NUMBER OF SHARES EFTEK SHARES
NAME IN FIRE DOCTOR, INC. ALLOCATED
(Such Exhibit is on file at the office of the Company)
<PAGE>
EXHIBIT 1.2
FORM OF INVESTMENT LETTER
EFTEK Corp.
Bloomfield Business Park
408 Bloomfield Drive
Units 1 & 2
Berlin, New Jersey 08009
Re: INVESTMENT LETTER
Gentlemen:
The undersigned having acquired by a stock-for-stock exchange
restricted shares of common stock of EFTEK Corp., a Nevada
Corporation, par value $.001 per share, hereby certifies, represents and
warrants that by signing this agreement the undersigned agrees to the
following:
The undersigned hereby represents to the Company that:
1. The shares of EFTEK CORP. (the "Company") common stock (the
"Securities") which are being acquired by the undersigned are being
acquired for the undersigned's own account and for investment and not with
a view to the public resale or distribution thereof.
2. Will not thereafter sell, transfer or otherwise dispose of the
Securities unless, in the opinion of the Company's Counsel, such
disposition conforms with applicable securities laws requirements.
3. The undersigned is aware that the Securities are "restricted
securities" as that term is defined in Rule 144 (the "Rule") promulgated
under the Securities Act of 1933, as amended.
The undersigned acknowledges that the undersigned has had an
opportunity to ask questions of and receive answers from duly designated
representatives of the Company concerning the finances of the Company and
the proposed business plan of the Company.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is
available.
<PAGE>
EFTEK CORP. Page 2
Investment Letter
- ------------------------------------------------------------------
The undersigned further acknowledges that the undersigned is fully
aware of the applicable limitations in the resale of the Securities. These
restrictions for the most part are set forth in Rule 144. The Rule permits
sales of "restricted securities" upon compliance with the requirements of
such Rule. If and when the Rule is available to the undersigned, the
undersigned may make only routine sales of securities, in limited amounts,
in accordance with the terms and conditions of the rule, or after three
years under Rule 144(k), no limitations.
By reason of the undersigned's knowledge and experience in financial
and business matters in general, and investments in particular, the
undersigned is capable of evaluating the merits and risks of an investment
by the undersigned in the Securities.
The undersigned is capable of bearing the economic risks of an
investment in the Securities. The undersigned fully understands the
speculative nature of the Securities and the possibility of such loss.
The undersigned's present financial condition is such that the
undersigned is under no present or contemplated future need to dispose of
any portion of the Securities to satisfy any existing or contemplated
undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall
bear a restrictive legend.
The undersigned further agrees that the Company shall have the right
to issue stop-transfer instructions to its transfer agent and acknowledge
that the Company has informed the undersigned of its intention to issue
such instructions.
Very truly yours,
(L.S.)
Undersigned
Date:
Address
Social Security Number
<PAGE>
EXHIBIT 2.4
OFFICERS AND DIRECTORS
OF FIRE DOCTOR, INC.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
John Figliolini President and Director
Kathleen Histon Chief Financial Officer, Director of Marketing
and Director
Ernest Micciche Secretary and Director
Randolph K. Binter Vice President, Treasurer and Director
William Borrelli Director
</TABLE>
<PAGE>
EXHIBIT 2.5
FINANCIAL STATEMENTS
<PAGE>
FIRE DOCTOR, INC.
(A DEVELOPMENTAL STAGE COMPANY)
BALANCE SHEET
MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Current Asset
Cash $ 30,247
-------
Other Asset
Organization costs 27,643
--------
Total Assets 57,890
========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 13,633
Due to related party 25,100
-------
Total Liabilities 38,733
-------
Stockholders' Equity
Common stock, $.0001 par, 50,000,000
shares authorized, 1,200,000 shares
issues and outstanding 120
Additional paid in capital 199,880
Deficit accumulated during the
developmental stage (180,843)
--------
Total Stockholders' Equity 19,157
--------
Total Liabilities and Stockholders' Equity $ 57,890
=========
</TABLE>
<PAGE>
FIRE DOCTOR, INC.
(A DEVELOPMENTAL STAGE COMPANY)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Cumulative for the
Three Months Period January 25, 1995
Ended (inception)
March 31, 1996 to December 31, 1995
--------------- -----------------------
<S> <C> <C>
Revenue $ 700 $ 5,632
Costs and Expenses
Cost of sales 692 4,057
Operating expenses 20,270 182,566
-------- --------
Total Costs and Expenses 20,962 186,623
-------- --------
Loss from Operations (20,262) (180,991)
-------- --------
Other income 0 148
-------- --------
Net Loss $(20,262) $(180,843)
======== =========
</TABLE>
<PAGE>
EXHIBIT 3.4
DIRECTORS AND OFFICERS OF
EFTEK CORP.
See Form 10-KSB
CONTRACT OF SALE
Prepared by:
/S/ Lewis Goldshore
_____________________
Lewis Goldshore, Esq.
THIS CONTRACT FOR SALE is made this 5th day of June, 1996, by and
between High Concrete Structures, Inc. of N.J. 1853 William Penn Way,
P.O. Box 10008, Lancaster PA 17605-0008, a Corporation of the State of
Delaware (Seller), and EFTEK Corp., Units 1 & 2, 408 Bloomfield Drive,
Bloomfield Business Park, Berlin, NJ, a Corporation of the State of
Nevada (Buyer).
WITNESSETH THAT:
In consideration of the sum of $650,000.00 (Six Hundred and Fifty
Thousand Dollars and No Cents), subject to adjustments as provided
below, and in further consideration of the covenants and agreements
contained in this Contract, the contracting parties agree as follows:
ARTICLE 1. PURCHASE AND SALE
Purchase Agreement
1.01. Seller agrees to sell and convey, by Bargain and Sale Deed
with Covenants Against the Acts of the Grantor, and Buyer agrees to buy,
the property (the Property) described in this
Contract.
<PAGE>
Description of Property
1.02. The Property to be sold consists of land and improvements
located in the Township of Winslow, County of Camden, State of New
Jersey, as shown on the municipal tax map as Block 2601, Lots 14, 20,
21, and 22, Block 3304, Lot 2.01 and Block 2608, Lot 7 of the Official
Tax Map of the Township of Winslow.
Existing Structures
1.03. The existing structures located on the Property will be
conveyed to Buyer at Closing.
As Is Condition
1.04. The Property, including the existing structures, are being
sold in their "As Is, Where Is" condition and without warranties or
representations as to its environmental conditions, or compliance with
governmental requirements or regulations, except as expressly set forth
hereafter.
1.05. Buyer acknowledges that neither Seller, nor any agent,
officer, employee or representative of Seller, has made any
representation whatsoever regarding the Property or any part thereof,
including, without limitation, representations as to the physical nature
or condition of the Property, except as otherwise expressly set forth in
this Agreement and that Buyer is not relying upon any statement or
information, oral or written, by the Seller, or any agent, officer,
employee or representative of Seller.
<PAGE>
ARTICLE 2. PURCHASE PRICE
Amount of Purchase Price
2.01. The purchase price for the Property is the sum of
$650,000.00 (Six Hundred and Fifty Thousand Dollars and No Cents).
Payment of Purchase Price
2.02. Buyer agrees to pay the purchase price as follows:
(1) On or before the execution of this Contract, the
nonrefundable deposit of $250,000 (Two Hundred and Fifty Thousand
Dollars and No Cents) shall be paid to the Seller. If Closing does not
take place for any reason whatsoever, except for Seller's refusal or
inability to convey title, the deposit shall be retained by Seller as
liquidated damages.
(2) The balance of the purchase price in the amount of
$400,000 (Four Hundred Thousand Dollars and No Cents) to be paid at
closing of title by first party certified or bank cashier's check or by
bank wire transfer of funds.
ARTICLE 3. REPRESENTATIONS AND AGREEMENTS BY SELLER
ISRA Compliance
3.01. The parties agree that the Property has been utilized for
industrial purposes and will continue to be used for such purposes. As
the result of the cessation of its operations at the Property, Seller is
engaged in obtaining approvals from the New Jersey Department of
Environmental Protection (DEP) in accordance with the provisions of the
Industrial Site Recovery Act (ISRA), N.J.S.A. 13:1K-6 et seq.
<PAGE>
3.02. Seller will apply to the DEP for a Classification Exception
Area (CEA), pursuant to N.J.A.C. 7:9-6.1 et seq., in order to satisfy
its ISRA requirements concerning ground water contamination.
3.03. In connection with the ISRA approval, Seller may be required
to conduct work on the Property following the Closing. In that event,
Buyer agrees to allow Seller to have reasonable access to the Property
to conduct such work, which work shall be conducted solely at the
expense of the Seller. Seller agrees that it will pay for any damages
to the Property that may occur as a result of obtaining access to the
Property. Buyer agrees that Seller's construction and maintenance of
the monitoring wells on the Property will not unreasonably disrupt or
interfere with Buyer's business activities and that Buyer hereby waives
any right it may have to seek compensation for any disruption or
interference or reduction in the value of the Property arising from the
monitoring wells and any other monitoring/remedial devices that may be
required pursuant to ISRA.
3.04. The parties agree that the requirements of ISRA and any
other applicable environmental law may be satisfied by the Seller's use
of institutional and/or engineering controls, including the recording of
a deed or use restriction, as defined in N.J.S.A. 58:10B-1. Buyer shall
cooperate and consent with any institutional and/or engineering
controls, including the recording of a deed or use restriction.
<PAGE>
3.05. Seller shall provide Buyer with complete and accurate copies
of all reports and applications that it has submitted to the DEP
relating to the Property at the execution of this Agreement. Seller
shall be responsible for all communications, discussions and
negotiations with DEP concerning compliance with its ISRA obligations
concerning the Property, and Buyer agrees that it will not initiate any
communication with DEP or any other regulatory authority concerning
matters arising out of or relating to such matters.
3.06. In the event that any discharge, release or other event
occurs subsequent to the date hereof which expands the scope or
increases the cost of ISRA compliance, other than a discharge, release
or other event arising from and/or caused by the Seller's acts or
omissions, the Buyer shall be solely responsible for any such increase
in costs.
3.07. Seller represents that it does not have any information
concerning environmental conditions other than those disclosed to Buyer
in the environmental documents prepared by Seller's environmental
consultant, John Rhodes. Based on this representation, Buyer agrees
that upon receipt of written notice from DEP that Seller has complied
with its ISRA obligations with respect to the Property, Seller shall
have no further responsibilities whatsoever regarding environmental
conditions at the Property.
<PAGE>
Remediation Agreement
3.08. Seller agrees to apply to the DEP for a Remediation
Agreement and/or Administrative Consent Order. The approval of a
Remediation Agreement and/or Administrative Consent Order will enable
the Closing of Title to take place prior to obtaining any other ISRA
approval. Upon approval of the Remediation Agreement and/or
Administrative Consent Order, Seller shall provide Buyer with a notice
advising that Buyer must be prepared to proceed to the Closing within
thirty (30) days thereof.
Existing Leases, Rents
3.09. Seller and Buyer shall enter into a Lease of the Property on
the same day as the execution of this Contract. Upon Closing, or upon
Buyer's wrongful refusal to proceed to Closing, that Lease shall
terminate, except that Buyer shall be required to fully comply, at its
sole cost and expense, with any ISRA obligations that might be required
in connection with the period of, and termination of, its tenancy.
Buyer shall be entitled to a credit for any prepaid rent at Closing.
Nothing herein, however, shall be construed to obligate or require the
Buyer to pay or otherwise be responsible for all or any portion of the
costs associated with Seller's compliance with ISRA prior to the date of
Closing.
ARTICLE 4. CLOSING OF TITLE
4.01. The Closing shall take place within thirty (30) days of
Seller's receiving a Remediation Agreement and/or
<PAGE>
Administrative Consent Order from the DEP. Closing of title shall be
held at the office of a title insurance company, or such other
convenient location within the State of New Jersey, as shall be
designated by Buyer's attorney.
4.02. The Closing of this transaction and Buyer's obligations
under this Contract are conditioned on the following:
(1) Delivery of Seller's affidavit of title at the Closing.
(2) Delivery to Buyer of the deed called for by this Contract
at the Closing.
4.03. Purchaser shall pay one-half (1/2) and Seller shall pay one-half
(1/2) of all real estate transfer taxes in the amounts required by
law.
Adjustments and Assessments
4.04. At Closing, taxes, rents, water rents, and utility charges,
shall be adjusted as of the commencement of the Lease. If the Property
or any part of the Property is affected by any assessment, and the first
annual installment is due, in the period between the execution of this
Contract and the closing date, all installments shall be paid by Buyer.
ARTICLE 5. MISCELLANEOUS
5.01. Before the closing date, Buyer's rights and obligations
regarding the Property shall be controlled by the terms and conditions
of the Lease Agreement between the parties, a copy of which is attached
hereto and incorporated herein, as Exhibit A.
<PAGE>
Broker's Commission
5.02. The parties represent that this transaction was brought
about by a listing of the Property with Mertz Corporation of Mt. Laurel,
NJ. Mertz Corporation shall be entitled to a real estate commission
only if, and when, a Closing occurs.
Assignment of Contract
5.03. This Contract may be assigned without the express written
consent of the Seller.
Lease Back
5.04. Seller and Buyer agree that Seller shall have the option to
lease approximately 20 acres of the Property as generally depicted on
Exhibit B, attached hereto and made a part hereof, for a period of up
to two (2) years subsequent to Closing. In the event that Seller opts
to lease all or a portion of the Property depicted on Exhibit B, Seller
shall notify Buyer of its exercise of such option in writing within 120
days after the date of the Closing. In such event, Seller shall be
responsible for its pro rata share of local property taxes for the
portion of the Property it occupies for the period it occupies same.
During said period of occupancy, Seller shall also be responsible to
maintain that portion of the Property and repair any damage to same.
This provision of the Contract shall survive Closing.
<PAGE>
Concrete Forming
5.05. Seller and Buyer agree that Buyer shall not engage in the
business of manufacturing precast and/or prestressed concrete products
and related concrete products. This provision of the Contract shall
survive Closing and Buyer agrees to accept a deed including a deed
restriction to this effect.
Notice
5.06. All notices under this Contract must be in writing. The
notices must be delivered personally or sent by certified mail, return
receipt requested, to the other party at the address set forth above,
with copies to their respective attorneys: for Seller -- Lewis
Goldshore, Esq., Goldshore & Wolf, 501 Plainsboro Road, Plainsboro, NJ
08536; for Buyer -- Kevin Coffey, Esq., 709 Church Road, Cherry Hill, NJ
08002.
Choice of Law and Choice of Jurisdiction
5.07. This contract shall be governed by, and construed in
accordance with, the laws of the State of New Jersey. All obligations
of the parties are performable in Camden County, New Jersey. Any
litigation concerning, relating to, or arising under this Contract shall
be filed in the Superior Court of New Jersey, Camden County.
Integration Clause
5.08. This Contract constitutes the entire agreement between the
parties and supersedes any prior understandings or written or oral
agreements between the parties respecting the
<PAGE>
subject matter of this Contract. This Contract shall not be modified or
amended except by a writing executed by both parties.
Recording
5.09. Seller and Buyer agree that this Contract may not be
recorded.
Counterparts
5.10. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together
shall constitute one instrument. Copies of the fully executed and
complete Agreement shall have the same force and effect as an original
for any and all purposes.
SIGNED AND AGREED TO BY:
Witnessed or Date Signed:
Attested by: EFTEK CORP.
/S/ William N. Levy /S/ Frank Whitmore
___________________ ___________________
William N. Levy 6/5/96 Frank Whitmore
As to Buyer Buyer
HIGH CONCRETE STRUCTURES,
INC. OF N.J.
/S/ Linferd L. Good /S/ William J. Clayton
____________________ ______________________
Linferd L. Good 6/5/96 William J. Clayton
As to Seller
EFTEK\HIGHCONC.AGM
<PAGE>
EXHIBIT A
The Property to be leased consists of land and improvements in the
Township of Winslow, County of Camden, State of New Jersey, as shown on
the municipal tax map as Block 2601, Lots 14, 20, 21, and 22, Block
3304, Lot 2.01 and Block 2608, Lot 7 of the Official Tax Map of the
Township of Winslow, being the same property as that which is the
subject of a Contract of Sale, dated May , 1996, between High Concrete
Structures, Inc. of NJ and EFTEK Corp.
FIFTH AVENUE RESEARCH AND ADVISORY GROUP, INC.
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is entered into as of June 12,
1996, by and among FIFTH AVENUE RESEARCH AND ADVISORY GROUP, INC.
("Consultant"), whose address is 551 Fifth Avenue, New York, New York and
EFTEK CORP. ("Company") whose address is Bloomfield Business Park, 408
Bloomfield Drive, Units 1 & 2, Berlin, New Jersey 08009 (collectively the
"Parties").
1. Consultation Services. Company hereby retains consultant to
perform services as mutually determined from time to time by the Parties
in accordance with the terms and conditions set forth in this Agreement.
Such services may include generally consulting with the officers and
employees of Company concerning matters relating to the Company's financial
policies, and generally any matter arising out of the business affairs of
Company. Such services may include on an as needed basis (a) analysis and
preparation of research reports regarding potential mergers, acquisitions
or divestitures by the company; (b) analysis and preparation of research
reports regarding the Company's financial condition and cash flow; and (c)
analysis and preparation of research reports regarding the Company's
capitalization.
2. Term of Agreement. This Agreement will begin June 1, 1996
("Effective Date") and will end one year after the Effective Date. As a
retainer for availability of Consultant, on the Effective Date, Company
shall execute the Stock Purchase Warrant Agreement attached hereto as
Exhibit "A" and also issue 200,000 stock purchase warrants to Consultant
in accordance with the terms and conditions set forth in the Stock Purchase
Warrant Agreement.
3. Time Devoted by Consultant. Consultant shall devote such time
as appropriate in accordance with its duties under this Agreement.
4. Place Where Services Rendered. Consultant will perform most of
its services in accordance with this Agreement at its principal executive
office.
5. Independent Contractor. Both Company and Consultant agree that
Consultant will act as an independent contractor in the performance of its
duties under this Agreement.
6. Payment to Consultant. Company shall pay Consultant the sum of
$3,000 per month quarterly, in advance, on or before the first day of each
calendar quarter. Consultant shall also be paid for extraordinary
traveling and living expenses if travel is required by Company.
<PAGE>
7. Employment of Others. Company may from time to time request that
Consultant arrange for the services of others. All costs to Consultant
for those services will be paid directly by Company, but in no event shall
Consultant employ others without Company's prior authorization.
8. Indemnification. Consultant shall be entitled to rely on, and
shall be protected in acting in reliance upon, any instructions or
directions furnished to it by Company, and shall be entitled to rely on,
and shall be protected in acting in reliance upon, any information provided
by Company, without any obligation to make independent verification of
same. Company shall indemnify and hold Consultant harmless from and
against any and all liability and expense which may arise out of any action
taken or omitted by Consultant in reliance on such instructions, directions
and/or information.
9. Miscellaneous.
9.1 Arbitration. Any controversy or claim arising out of ore
relating to this Agreement or the transactions contemplated thereby shall
be settled by arbitration in accordance with the rules of the American
Arbitration Association, in New York, New York, and judgment upon such
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The prevailing party shall be entitled to
reimbursement of reasonable attorney's fees and expenses.
9.2 Choice of Law. This Agreement shall be construed in
accordance with the laws of the State of New York.
9.3 Successors and Assigns. This Agreement shall inure to the
benefit and bind the successors and assigns of the parties.
9.4 Extent of Agreement. This Agreement represents the entire
agreement of the parties.
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement on the date first above written.
Consultant: Company
FIFTH AVENUE RESEARCH EFTEK CORP.
AND ADVISORY GROUP, INC.
/s/ John Figliolini /s/Frank Whitmore
- -------------------------- ---------------------------
John Figliolini, President Frank Whitmore, President
Consulting Agreement 2 of 2
<PAGE>
STOCK PURCHASE WARRANT AGREEMENT
TO SUBSCRIBE FOR AND PURCHASE SHARES OF
EFTEK CORP.
THIS CERTIFIES THAT, for value received, Fifth Avenue Research and
Advisory Group, Inc. (hereinafter called "Holder") or registered assign(s),
is entitled to subscribe for and purchase from Eftek Corp., incorporated
under the laws of the State of Nevada (hereinafter called the "Company")
at the price of $1.00 per share at any time from the issuance of this
Warrant to and including the date five (5) years from said date up to Two
Hundred Thousand (200,000) fully paid and non-assessable shares of the
Company's Common Stock, subject however, to the provisions and upon the
terms and conditions hereinafter set forth.
THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF NEVADA OR ANY
OTHER STATE AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND
QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND
STATE SECURITIES LAWS OR IF AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS APPLICABLE.
1. Warrant. The rights represented by this Warrant may be
exercised by the Holder hereof, in whole or in part (but not as to
a fractional share of Common Stock), by the surrender of the
Warrant Certificate or Certificates with the Form of Election to
Purchase duly executed, at the principal office of the Company and
upon payment to it, for the account of the Company, by cash, check,
certified check or bank draft, of the purchase price for such
shares of Common Stock. The Company agrees that the shares of
Common Stock shall be and be deemed to be issued to the Holder
hereof as the record owner of such Shares, as of the close of
business on the date on which the Warrant Certifcate shall have
been surrendered and payment made for such Shares, as aforesaid.
Certificates for the Shares shall be delivered to the Holder hereof
within a reasonable time, not exceeding ten days, after the rights
represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new Warrant Certificate,
representing the number of shares of Common Stock, if any, with
respect to which this Warrant shall not then have been exercised,
shall also be issued to the Holder hereof within such time. The
Company shall have no right to call the Warrant or the shares of
Common Stock issued upon the exercise hereof.
2. Transferability. The Holder of this Warrant, by acceptance
hereof, agrees that, prior to the disposition of the Warrant or
<PAGE>
shares of Common Stock purchased on the exercise thereof under
circumstances which might require registration of such securities
under the Securities Act of 1933, as then in force, or any similar
federal statute then in force, such Holder will give written notice
to the Company, expressing such Holder's intention of effecting as
to the disposition to be made of the securities theretofore issued
upon exercise hereof. If, in the written opinion of Holder's
counsel, subject to the written approval of Company's counsel the
proposed disposition does not require registration under the
Securities Act of 1933, as then in force, or any similar federal
statute then in force, of the Warrant or securities issuable or
issued upon the exercise of this Warrant, the Holder, subject to
the company's counsel's written approval, shall, as promptly as
practicable, notify the Company hereof of such opinion, whereupon
such Holder shall be entitled to dispose of the Warrant or such
securities theretofore issued upon the exercise hereof, all in
accordance with the terms of the notice delivered by such Holder to
the Company.
3. Shares Issuable Upon Exercise. The Company covenants and
agrees that all securities that may be issued upon the exercise of
the rights, represented by this Warrant will, upon issuance, be
validly issued, fully paid and non-assessable, and free from all
taxes, liens, and charges with respect to the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously
with such issue). The Company further covenants and agrees that,
during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have
authorized, and reserved, a suffcient number of shares of its
Common Stock to provide for the exercise of rights presented by
this Warrant.
4. Certain Events. In the case, at any time during the period
this Warrant shall be exercisable, (i) the Company shall pay any
dividend payable in stock on its Common Stock, or make any
distribution (other than cash dividends paid at established annual
or quarterly rates) to the Holders of its Common Stock; (ii) the
Company shall offer for subscription pro rata to the Holders of its
Common Stock any additional shares of stock of any class, or other
rights; (iii) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all, its assets to another corporation; or (iv) there
shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, in any one or more of such cases,
the Company shall give to the Holder of this Warrant (i) at least
twenty days prior written notice of the date on which the books of
the Company shall close or a record shall be taken for such
<PAGE>
dividend, distribution or subscription rights, or for determining
rights to vote in respect of any such reorganization,
reclassifcation, consolidation, merger, sale, dissolution,
liquidation or winding up, and (ii) in the case of any such
reorganization, liquidation or winding-up, at lest twenty days
prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the Holders of Common Stock
shall be entitled thereto, and such notice in accordance with the
foregoing clause (ii) shall also specify when the holders of Common
Stock shall be entitled to exchange their Common Stock for
securities or the property deliverable upon such reorganization,
liquidation or winding-up, as the case may be. Each such written
notice shall be given by first class mail, postage prepaid,
addressed to the Holder of the Warrant at the address of such
Holder as shown on the books of the Company.
5. Common Stock. As use herein, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the date
of the original issue of any class of the Company thereafter
authorized that shall not be limited to a fixed sum or percentage
in respect to the rights of the Holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding-up of the Company,
provided, that the shares purchasable pursuant to this Warrant
shall include only shares of such class referred to in the first
paragraph hereof designated in the Company's Articles of
Incorporation as Common Stock on the date of the original issue or
Warrant, or, in case of any reorganization, reclassification,
consolidation, merger or sale of assets of the character referred
to in paragraph 4 hereof, the stock, securities or assets provided
for in such paragraph.
6. Exchange of Warrant Certificate. The Warrant Certificate is
exchangeable, upon its surrender by the registered Holder at such
office or agency of the Company, for a new Warrant Certificate of
like tenor, representing, in the aggregate, the right to subscribe
for and purchase hereunder each of such new Warrant to represent
the right to subscribe for and purchase such number of shares and
warrants as shall be designated by the registered Holder at the
time of such surrender. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of the
Warrant Certificate, and, in case of any such loss, theft or
destruction, upon delivery of a bond of indemnity satisfactory to
the Company, or, in the case of any such mutilation, upon surrender
or cancellation of the Warrant Certificate, the Company will issue
to the registered Holder a new Warrant Certificate of like tenor,
<PAGE>
in lieu of the Warrant Certifcate, representing the right to
subscribe for and purchase the number of shares that may be
subscribed for and purchased at that time.
7. Registration Rights. The Company covenants and agrees as
follows:
A. Piggy-Back Registration. If (but without any obligation
to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders
other than the Holder(s)) any of its stock or other securities
under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock
plan, a registration on any form which does not include
substantially the same information as would be required to be
included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered), the Company
shall, at such time, promptly give each Holder written notice of
such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company
the Company shall cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be
registered.
B. Obligations of the Company. Whenever required under
this paragraph 1 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably
possible:
i. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred
twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that
(i) such 120-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the
case of any registration of Registrable Securities which are
intended to be offered on a continuous or delayed basis, such
120-day period shall be extended, if necessary, to keep the
<PAGE>
registration statement effective until all such Registrable
Securities are sold.
ii. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection with such registration statement as may be necessary
to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration
statement.
iii. Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as they
may reasonably request.
iv. Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders (no more than 5 states).
v. In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement.
vi. Notify each Holder of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing.
vii. Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or over-the-counter
market on which similar securities issued by the Company
are then listed.
viii. Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP
number for all such Registrable Securities, in each case not later
than the effective date of such registration.
C. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to
<PAGE>
this paragraph 1 with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as
shall be required to effect the registration of such Holder's
Registrable Securities.
D. Expenses of Piggy-Back Registration. The Company shall
bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities
with respect to the registrations pursuant to subparagraph B for
each Holder including fees and disbursements of counsel for the
Company in its capacity as counsel to the selling Holders
hereunder; if Company counsel does not make itself available for
this purpose, the Company will pay the reasonable fees and
disbursements of one counsel for the selling Holders selected by
them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
E. Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's
capital stock, the Company shall not be required under subparagraph
B to include any of the Holders' securities in such underwriting
unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters).
H. Indemnification. In the event any Registrable Securities are
included in a registration statement under this paragraph 8:
i. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as
defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act
or the
1934 Act, against any losses, claims, damages, or liabilities aoint
or several) to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Company of the Act, the
1934 Act, any state securities law or any rule or regulation
<PAGE>
promulgated under the Act, or the 1934 Act or any state securities
law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, this the indemnity agreement shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Holder, underwriter or controlling person.
ii. To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its
directors, each of its offcers who has signed the registration
statement, each person, if any, who controls the Company within the
meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities aoint or several) to which any of
the foregoing persons may become subject, under the Act, or the
1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal
or other expenses reasonably incurred by any person intended to be
indemnified hereunder, in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, that this indemnity agreement shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under
this subdivision ii exceed the gross proceeds from the offering
received by such Holder.
iii. Promptly after receipt by an indemnified party
under this subparagraph E of notice of the commencement of any
action (including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this subparagraph E, deliver to the
<PAGE>
indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnifed party (together with all
other indemnifed parties which may be represented without conflict
by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to
the indemnified party under this subparagraph E, but the omission
so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this subparagraph E.
iv. If the indemnification provided for in this
subparagraph E is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such
indemnifed party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of
the indemnifed party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage,
or expense as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnifed
party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
v. The obligations of the Company and Holders under
this subparagraph E shall survive the completion of any offering of
Registrable Securities in a registration statement under this
paragraph 8, and otherwise.
<PAGE>
H. Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this
paragraph 8 may be assigned (but only with all related obligations)
by a Holder to a transferee or assignee of such securities
provided: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject
to the terms and conditions of this Agreement; and (c) such
assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
9. Notices. Notices pursuant to this Agreement shall be given
by first-class mail, postage prepaid, addressed to the registered
Holder of each Warrant at the address of such Holder appearing in
the records of the Company, if to the Holder, and to the Company's
principal executive office, if to the Company.
IN WITNESS WHEREOF, Eftek Corp. has caused this Warrant to be
signed by its duly authorized officers under its corporate seal, to
be dated June 12, 1996.
EFTEK CORP.
/s/Frank Whitmore
______________________________
By: Frank Whitmore, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary information
extracted from the Consolidated Statements of
Operations and Consolidated Balance Sheets of
EFTEK Corp. and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000846476
<NAME> EFTEK Corp.
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> 12-MOS
<CASH> 391
<SECURITIES> 0
<RECEIVABLES> 258,338
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 258,729
<PP&E> 25,332
<DEPRECIATION> (6,219)
<TOTAL-ASSETS> 331,732
<CURRENT-LIABILITIES> 74,799
<BONDS> 0
0
0
<COMMON> 11,861
<OTHER-SE> 245,318
<TOTAL-LIABILITY-AND-EQUITY> 331,732
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 12,347
<TOTAL-COSTS> 338,973
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (317,617)
<INCOME-TAX> 0
<INCOME-CONTINUING> (317,617)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (317,617)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
