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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 13(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NUMBER 0-19851
CASH CAN INCORPORATED
(Exact name of registrant as specified in Charter)
DELAWARE 75-2371682
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5020 Service Center Drive
San Antonio, Texas 78218
(Address of principal executive office)
Registrant's telephone number, including area code
(415) 564-4770
Securities registered pursuant to Section 12(g) of the Act:
(Title of each class) (Name of each exchange on which registered)
--------------------- ------------------
Common Stock $.0001 par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES NO X
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Indicated by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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 [ ]
Issuer's revenue for the fiscal year ended December 31, 1995 was $40,000.
As of December 29, 1995, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $3,565,226.
As of December 31, 1995, the Registrant had $8,446,356 shares of its common
stock ("Common Stock"), $.0001 par value issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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ITEM 1. BUSINESS
GENERAL
The Company was incorporated as Market Investments, Inc. under the laws
of the State of Delaware on March 18, 1991, with the purpose of merging with an
ongoing business and/or to acquire a company. Effective December 31, 1992,
Market Investments, Inc. exchanged 14,000,000 shares of previously unissued
common stock for all of the outstanding common stock of Cash Can, Inc., a
development-stage company. As part of the transaction, two holders of Market
Investments, Inc. common stock returned an aggregate of 9,905,000 shares to
Market Investments, Inc. For accounting purposes the acquisition has been
treated as a recapitalization of Cash Can, Inc., with Cash Can, Inc. as the
acquiror, and a subsequent issue of stock for cash (a reverse acquisition).
Since Market Investments, Inc. was a public "shell" with no operations, this
transaction has not been considered a business combination and, accordingly, no
pro forma financial statements have been presented. The occurrence of the first
financial activity of Cash Can, Inc., August 8, 1992 will be used as the
inception date for the purpose of reporting results of operations for the
Company. In April 1993, the Company changed its name to its present name Cash
Can Incorporated. The Company also holds a wholly owned subsidiary, Aluminum
Processing, Inc., which was formally known as Cash Can, Inc. which has been
completely inactive since December 31, 1992.
The Company is engaged in recycling and promotional marketing
activities on a local, regional, national and intends eventually to do so at the
international level. The Company's strategy is to bring quality products and
services to the marketplace to provide consumers, merchants, manufacturers, and
investors alike an opportunity to become involved in the recycling industry.
DESCRIPTION OF PRODUCT
The Cash Can automated aluminum redemption center (the "Cash Can"), a
patented device, is the Company's first product. Currently there are Cash Can
units operating in the states of Georgia, Texas, Minnesota, Missouri and
Florida, and the countries of Venezuela and Argentina. The Company retains a
contract manufacturer, Alcat Inc., based in El Campo, Texas, to produce units.
See " -- Manufacturing."
The Cash Can is a large cylinder approximately 14 feet tall and eight
feet in diameter, shaped and painted like a soft drink beverage can. The Company
charges an advertising fee for displaying graphic brand depiction on each unit.
The Cash Can accepts aluminum used beverage containers ("UBC's") from consumers,
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and returns cash based on the going exchange rate. The Cash Can may also be
programmed to dispense coupons, tokens and other promotional items.
The Cash Can's footprint (base) occupies ground area equivalent to one
parking space. Its base spreads its weight evenly to avoid improvements to be
made to the parking lot upon which it is placed.
At waist level, on the front of the machine there is a recessed
transaction panel which contains clear, visible instructions on how to operate
the Cash Can. At the top of the panel, a lighted electrical display ("LED")
board scrolls further information for use of the machine, as well as other
appropriate advertising messages. Below the instruction panel, there is a
recessed stainless steel basin in which a large bag of aluminum cans is placed.
When the first can is placed in the deposit slot, an optical sensor triggers the
machine into action. No buttons or switches need to be operated making for
simple operations without mechanical tripping devices to malfunction. The
stainless steel basin is drained with a removable grill for fast and easy
cleaning.
Management believes the machine is vandal and burglar resistant; the
exterior is fabricated from 3/16 inch plate steel, and the access door includes
a continuous hinge, a three point locking system, as well as a dead-bolt. The
interior workings of the Cash Can are comprised of standard conveyor systems,
motors, and blowers which are readily available nationwide. No special knowledge
of high-tech machinery is needed by an operator. The machine's sturdy
construction results in long-life and minimal on-going maintenance other than
regular cleaning.
The machine's size allows for a large storage compartment, which holds
30,000 UBC's or 1,100 pounds of aluminum, preventing the need for daily
servicing of the machine and thereby reducing service expenses. Furthermore, the
large internal size allows for easy access to all internal components, so
maintenance may be performed quickly. The overhead UBC storage compartment can
easily and quickly be unloaded through a simple gravity chute into a trailer or
other hauling device.
The Cash Can has the capability to be monitored through the computer
system via modem uplink. A servicer/operator can remotely monitor such functions
as the number of transactions since the last servicing, the number of cans in
storage, the amount of coins paid out, mechanical interruptions, average number
of transactions, total number of cans ever recycled and other reports. To access
the Cash Can computer system, an operator may utilize the system's host software
on an office personal computer ("PC") and can then review the performance of a
machine or to poll several units.
A typical recycling transaction involves a customer emptying a bag of
aluminum cans into the exterior UBC basin of the Cash Can. As the customer feeds
the first can into the deposit slot at the corner of the basin, the first can
trips an optic switch inside the deposit slot. The UBC stream is transported
through the system primarily by air after it leaves the initial conveyor which
sorts out steel or tin cans with a magnetic system. Weighted cans or other items
too heavy to be carried by the air stream are rejected. This includes metal cans
missed by the magnetic system and plastic or glass beverage containers. Light
weight trash, such as paper and leaves are removed by an air classification
process and dropped into an internal receptacle. The Cash Can operates quietly
and does not disturb neighboring businesses or residents.
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The machine processes approximately 120 cans per minute. After the
customer has completed depositing the last can, cash is dispensed based on a
posted per can basis into a coin bin. Additionally, the customer receives a
receipt which details the date and time of transaction, number of cans recycled,
amount paid for cans, and a thank you message. The receipt may also contain
several discount coupons which the customer may use for a various discounts on
purchased merchandise. The Company charges a fee to the advertising entity to
dispense coupons.
The Cash Can can also be programmed to dispense a voucher instead of
cash which can be redeemed inside the store where the machine is located for
credit on a purchase. This is the typical system in states which have enacted
bottle redemption legislation ("Bottle Bill States"). (Currently, there are nine
states that have "bottle bills": Connecticut, Delaware, Iowa, Maine,
Massachusetts, Michigan, New York, Oregon and Vermont. Additionally, California
has passed legislation that is similar to a bottle bill, and Florida has
implemented an advance disposal fee on containers that are recycled at a rate of
less than 50 percent.) Should the machine's coin dispenser run out of money or
jam, an I.O.U. receipt will be printed with instructions on who to call for a
refund or to report a service interruption.
The new management of the Company has developed a design for a second
generation reverse vending machine which is approximately eight feet by five
feet in dimensions as compared to the much larger size of its first generation
units. There will also be an approximately 14 feet by eight feet version, and
the new design calls for a machine that will be built primarily out of
fiberglass instead of metal and will come in two sections so that it is easier
to assemble and move. The Company is negotiating with Pacific Atlantic Group
("PAG") to finance the construction of a plant in Mexico to manufacture these
units. There can be no assurance that such negotiations will result in a final
contract or that such contract will be upon favorable terms to the Company.
As of February, 1996, the new management representing the Company is
also involved in negotiations with PAG to provide financing for the
construction of additional reverse vending machines ("RV"). The construction
would occur in Argentina where PAG would build and own a manufacturing plant and
would be in charge of selling the RV machines to local customers under an
arrangement whereby the Company would receive a royalty of approximately
$2,000-$3,000 per unit plus a to be negotiated percentage of advertising income
derived from advertising placed on the units. There can be no assurance that
these negotiations will result in a binding contract or that such contract will
be upon the terms described herein.
RESEARCH AND DEVELOPMENT
All mechanical functions of the Cash Can are controlled by a computer
system. All timing, printing functions, mechanical control switching and
sequencing, monitoring, sensing, and data base functions are regulated and
adjusted via the control computer. The Cash Can's on-site computer controller
can be accessed by a remote computer via modem uplink. This allows for central
monitoring and control of an extended system of Cash Cans. Constant polling of
installments by a central computer allows an operator to keep track of daily
performance and supplies management reporting functions. Should a machine
malfunction, approach capacity in its storage bin or empty its coin dispenser,
the on-site computer can alert a central off-site computer.
The Company intends to perform research and development ("R&D") work to
enhance the reporting, trouble shooting sensory, database, and graphics
capabilities of the controlling computer system. The performance reporting
upgrades will allow the operator to closely monitor functions, such as
electricity amperage usage to determine probable failure of any motor or power
driven mechanical part. The machine will be programmed to self trouble shoot and
call the operator's office to report malfunction or anticipated malfunctions,
coin dispensing problems or to report that the machine is full of UBC's and
should be emptied. Conversely, the information reported to the operator's office
can be used to schedule the most efficient service route of several machines on
a daily basis utilizing a linear programming technique.
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The Company also intends to focus future R&D efforts on revenue
producing enhancements including a database system with bar code reading
capabilities which will allow the Company to enter Bottle Bill States where a
per container handling fee is paid to redeemers upon redemption. The Company
also intends to evaluate several techniques to download and store graphic images
into the Cash Can computer. This will allow the machine to print coupons upon
demand and to display a video advertisement message to recyclers via monitor on
the face panel of the machine. The computer technology currently utilized in the
Cash Can is essentially an application of established and proven technology. The
Company intends to research the optimal methods of implementing such technology
in the future.
The Company spent approximately $71,000 on research and development in
the year ended December 31, 1994 and approximately $30,000 in the year ended
December 31, 1995. Customers have not and will not directly bear the expense for
research and development expenditures.
SALES AND MARKETING
The Company functions as a consumer marketing and automated aluminum
redemption center service company. As the marketer and distributor of the Cash
Can device, the Company promotes and sells the patented revending machine to
entrepreneurs seeking investment opportunities. The Company intends to effect
this plan on an "area development" basis. The Company intends to supply support
to its owner/operators, including up-front training, ongoing support in the form
of constant system monitoring, on-site maintenance services as required, and
aluminum brokering and purchasing. The Company will manage an ongoing
promotional campaign to raise consumer awareness of recycling and the machines
themselves. Additionally, the Company will actively pursue advertisers to use
the marketing capacity of the device, both the exterior facade, which functions
as a billboard, and the interior couponing apparatus.
SALES
Sales of the Cash Can device and service to qualified operators on an
area development basis is an essential part of the Company's strategy. It
provides several functions to the overall corporate development scheme:
Financing. With entrepreneurs/operators required to purchase the
machines. The Company does not have to raise significant capital to fund device
roll-out.
Qualified Operators. Management believes that area development
investments attract highly motivated people who tend to have some business sense
and a prime motivating factor resulting from their own capital being at risk in
the project.
Rapid Roll-out Ability. As a result of the above two points, Management
believes that it will be able to perform an effective roll-out in a relatively
short time frame.
Revenues. The Company will be entitled to a percentage of gross
revenues from aluminum sales and coupon revenues from operators. Depending upon
the arrangement, the Company will also gain revenues from the sale of other
services such as management contracts and advertising.
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An essential part of the area development process is targeting
purchasers who will enter into this arrangement with the Company. The Company
intends to sell the Cash Cans to the following types of operators.
Individual Operators. Management believes that there exists an
increasing pool of middle-management entrepreneurs who desire active investment
opportunities and can offer franchise support to the Company's sales effort. The
Cash Can concept is a relatively low labor-intensive opportunity for such
persons.
Area Development. Entering into area development agreements with
qualified operators will allow the Company to expand rapidly into targeted
markets. Area development involves entering into a territory agreement with an
individual or company which then seeks investors to participate in developing
that market or area. The operating person or company is allowed to saturate that
market with a suitable number of units, depending on demographics, under a
defined performance schedule.
Institutional Sponsors/Operators. Management believes that there exists
a contingent of government and corporate investors which should have an interest
for the Cash Can product. This includes beverage companies, grocery chains, and
local governmental agencies looking for a community-based recycling program.
MARKETING
The Company's marketing campaign is designed to build market awareness
of the Cash Can product, and thereby create a leverageable trademark and concept
support. Management intends to accomplish such awareness through a four-tiered
promotion campaign.
Product Sales Promotion. The Company will promote its product through
many appropriate trade journals and investor publications. In the future, the
Company may also resell or coop advertising to local owner/operators to promote
UBC volume with public awareness.
Consumer Awareness Promotion. Management believes that the Company's
success is dependent upon creating a public awareness of the function of the
Cash Can. Since recycling is a common practice, Cash Can must promote the
convenient locations and benefits of recycling at Cash Can units. The Company
anticipates interacting with a number of programs and civic groups which promote
and participate in recycling and environmental activities.
Merchant and Manufacturer Promotion. The Company intends to pursue
national and regional advertisers on behalf of the Company owner/operators. This
includes approaching soft drink manufacturers with potential sponsorship
opportunities as well as regional and national retail chains and national
product manufacturers. It will be the owner/operator's responsibility to obtain
local advertisers.
Location Procurement. Part of the Company's promotion campaign will
include marketing the benefits of the Cash Can device to potential prime
locations. This is important to gain access to key supermarket chains and other
potential installation points, including shopping malls and college campuses.
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MANUFACTURING
The Company has established a final assembly and manufacturing
operation in San Antonio, Texas. The 7,600 square foot plant has the capacity to
produce 25 - 30 Cash Can units per month. The Company has also contracted with
Alcat Inc., a manufacturing company in El Campo, Texas to produce units. PAG has
produced and will produce all the fiberglass units. The Company utilizes an
abundance of area vendors to produce sub-assemblies which are installed by the
Company into the Cash Cans. The Company also finishes and paints the unit
shells.
AVAILABILITY OF RAW MATERIALS
The component materials that are fabricated and assembled into the Cash
Can units are purchased from vendors. While several key components must be
fabricated to exact specifications for the Cash Can units to function properly,
the techniques utilized are not unique. This allows for ease of outsourcing and
soliciting competitive bids for these components. Principal suppliers of
components are: Imperial Tank Co., San Antonio, Texas; Ernest Plant Metal
Products, Seguin, Texas; Summers Electric Supply, San Antonio, Texas and Gladwin
Paint Co., San Antonio, Texas.. Given adequate lead times, the Company does not
expect any problems with availability of component materials in either the near
or long term.
The Company has been involved in discussions with PAG regarding
manufacturing and assembly of Cash Can units to meet anticipated future orders
for units. Management is exploring two options, expanding current manufacturing
and assembly capacity and/or contract manufacturing and assembly. The Company is
negotiating with PAG to finance the construction of a plant in Mexico to
manufacture these units. There can be no assurance that such negotiations will
result in a final contract or that such contract will be upon favorable terms to
the Company. The Company has no plans to abandon current manufacturing
capabilities and does not wish to rely solely on outside manufacturing vendors.
COMPETITION
All aspects of the recycling business are highly competitive. While the
Company believes that it is marketing an uncommon product in the recycling
business, the viability of the Company's business is subject to numerous
competitive factors which include, among other things, price, reliability, and
market acceptance.
The market for aluminum UBC's is strong and well defined. The success
of recycling aluminum UBC's is largely responsible for the popularity of the
aluminum beverage can as a low cost container for beverage bottlers. An
alternative to the traditional manned buy back center is the RV machine. The
RV machine provides increased marketing opportunities as well as labor savings.
RV machines have been in operation since the early 1980's. In addition
to aluminum cans, RV machines have been designed to accept plastic and glass
beverage containers. Envipco is the largest United States distributor with over
4,000 RV machines that recover aluminum, glass and plastic. Tomra primarily
markets RV machines in Europe where more than 30,000 machines are in operation.
The majority of the 7,700 RV machines in operation in the United States are
located in the ten Bottle Bill States where retailers are forced to buy back
beverage containers for deposits.
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CUSTOMERS
The Company has 2 customers worldwide. American Recycling, Inc.
accounted for all of the Company's sales during the year ended December 31,
1995.
PROPRIETARY MARKS
The Company has successfully acquired the assignment of the trademark
"Cash Can" from Recycle Technologies, Inc. of Billings, Montana. The Company was
granted trademark registration for its name "Cash Can Incorporated" and its logo
in January 1994.
PATENTS
The Company acquired an agreement for patent assignment in April 1993
from the original holder and inventor. United States Letters Patent No.
4,989,507 (hereinafter referred to as the "Cash Can Patent") was granted on
February 5, 1991 to Gadar Industries, Inc. of Forest Lake, Minnesota and was
assigned to Cash Can Incorporated by Gadar Industries. This assignment was
recorded in the U.S. Patent and Trademark Office in February of 1994.
GOVERNMENT REGULATIONS
The possibility of governmental regulations exist at the national,
state and local levels. Management believes that the national and state
regulations which will affect operations of the Company will focus on deposit or
bottle bill laws requiring deposits to be placed on the sale and redemption of
beverage containers. Congressional discussions have been held in the past 30
months regarding a national deposit law. Management believes the Company will
benefit considerably if such a law is enacted. At the local level, certain civic
zoning laws regarding recycling centers, RV machines and signage ordinances may
affect operations of the Company both negatively and positively.
Government regulations that affect the aluminum industry and/or the
business of operating a Cash Can may exist at the federal, state and municipal
levels, and vary from market to market.
Nine states currently have bottle bills that require beverage container
deposits. California has passed legislation similar to a bottle bill and Florida
has a one-cent advance disposal fee on individual cans, bottles, jars and
beverage containers made of materials which are recycled at a rate of less than
50 percent. Congressional discussions have been held in the past 30 months
regarding a national deposit law, as well as federally mandated recycling levels
that may be met by whatever means each state determines. Management believes
the Company would benefit from such federal action.
Each state has its own standard of weights and measures to insure
protection of consumers and business. Some states may require testing to insure
the Cash Can units are compensating consumers for counted cans in accordance
with state regulations. At the municipal level, zoning laws may restrict
placement of recycling centers and RV machines.
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EMPLOYEES
At December 31, 1995, the Company employed ten full time individuals.
Of that, seven were employed in management and administration and three were
employed as field and manufacturing personnel. The Company expects to hire
additional employees in order to accomplish its marketing strategy as needed.
None of the Company's employees are covered by collective bargaining agreements.
The Company believes the relations with its employees to be satisfactory.
ITEM 2. PROPERTIES
The Company's principal executive offices are located at 5020 Service
Center Drive, San Antonio, Texas 78218. The Company leases approximately 7,500
square feet of executive office space and warehouse space pursuant to a lease
which expired May 31, 1996. Annual rental payments were approximately $1,800 per
month plus certain escalations for occupancy expenses.
ITEM 3. LEGAL PROCEEDINGS
On March 12, 1996, a civil action was filed in the United States
District Court for the Southern District of Ohio, Eastern Division, Aries
Aluminum Corporations vs. Jon Jeffery King, et al., case number C2-96-0266. That
action was instituted by a stockholder of the Company and alleges violations of
the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 USC section
1961, et seq., against 44 persons and organizations.
The Company was named as a defendant in that action, but no damages
were sought from the Company. The Company was treated as a victim of actions
perpetrated by the other 44 defendants, and the only remedy sought against
Company was information and documents. The Company has made information and
documents available to the plaintiff in that action. On April 5, 1996, the
Company was dismissed as a party to that action.
The complaint alleges that Jon Jeffery King, who does not appear on the
Company's records as an officer, director or shareholder, controlled the Company
through relatives; a consultant to the Company, EDP Capital Group, Ltd., and
various other persons and entities. Relatives named in the complaint include (1)
Jon King's son, Michael J. King, a former President, Chief Executive Officer and
Chairman of the Company; (2) Jon King's stepson, Joseph J. King, a college
student, who is the sole owner of EDP Capital Group, Ltd.; (3) Jon King's sister
in law, Elizabeth W. Ward Moore, formerly the Corporate Secretary of the
Company; and (4) her husband, Eddie E. Moore, a former President and Chief
Executive Officer of the Company. Some of the many other persons named in that
complaint include Roger Lund, a major stockholder of the Company, former
Director and consultant (Jupiter Capital Corp.); and Herbert Carver, a former
director and Chief Financial Officer of the Company.
An area developer, i.e. former agent of the Company who has an
exclusive territorial concession from the Company in Florida and who is doing
business under the name Cash Can of Florida, has failed to purchase the minimum
number of units required in order to maintain his exclusivity. The Company
intends to terminate the agency relationship and anticipates the possibility of
litigation as a result.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded in the over-the-counter market and
is included in the Nasdaq Electronic Bulletin Board Market under the symbol
"CSHC". The following table sets forth for the quarters indicated the high and
low closing bid prices per share of Common Stock as reported by the Nasdaq
Electronic Bulletin Board. Prices represent inter-dealer quotations, without
adjustment for retail mark-ups, mark-downs, or commissions and may not
necessarily reflect actual transactions.
<TABLE>
<CAPTION>
1995 HIGH LOW
- ---- ---- ---
<S> <C> <C>
First Quarter $0-6/8 $0-4/8
Second Quarter $1-1/4 $1-1/4
Third Quarter $0-27/32 $0-19/32
Fourth Quarter $0-13/16 $0-31/64
1996
- ----
First Quarter $0-25/100 $0-21/100
</TABLE>
- -------------------------------
* Information prior to January 31, 1995 is not available.
The 8,446,365 shares of Common Stock outstanding as of December 31,
1995 were held by approximately 513 record holders, who management believes held
for in excess of 500 beneficial holders.
DIVIDEND POLICY
The Company has never paid any cash dividends on its capital stock and
does not anticipate paying any cash dividends in the foreseeable future.
Instead, the Company intends to retain any earnings to provide funds for use in
its business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL.
In February 1993 the Company entered into an exclusive license
agreement with Recycle Technologies, Inc. (RTI) of Billings, Montana, the patent
licensee of a device known as "Collector of Empty, Used Recyclable Beverage
Cans" covered by United States Patent No. 4,989,507 (the "Cash
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Can"). Under the terms of the agreement RTI granted the Company the exclusive
nontransferable right and license to market and sell the Cash Can device
throughout North America. However, the Company decided it would be better to own
the patent directly and manufacture the Cash Can units rather than pay royalties
through the license agreement. Accordingly, during 1993 the Company acquired the
patent for the manufacture of the Cash Can device from Gadar Industries, Inc. In
exchange for the patent, the Company issued 100,000 shares of common stock. The
preferred shares and the patent were recorded at the par value of the preferred
shares of $100, which approximates fair market value. The preferred stock is
redeemable by the Company at any time or may be converted by the holder into one
share of common stock for each two shares of preferred stock held; however,
redemption is mandatory at the end of seven years. Accretion of the redemption
value of the preferred shares of $1,000,000 is provided for on a straightline
basis over the seven year redemption period. Total accretion for 1993 is
$107,143 and for 1994 and 1995 $142,856 respectively. The Company also entered
into an agreement to purchase consulting services from Bill Rhoades, the
president of Gadar Industries, Inc. The terms of the agreement provide for
payments of $3,000 per month over a 24 month period and payments of $5,000 over
a subsequent 60 month period. Total payments $255,000 remaining at December
1995, are recorded as deferred expense and consulting fees payable. In
connection with the acquisition of the patent for production of Cash Can units,
the Company also canceled its license agreement with Recycle Technologies, Inc.
and acquired related trademarks and trade secrets from Recycle Technologies,
Inc. in exchange for 425,000 shares of common stock. These assets have been
valued at $200 and are recorded in intangible assets.
Deferred revenue at December 31, 1995 consisted of $0 in territory
deposits for the rights to operate a Cash Can aluminum redemption center(s) and
$200,000 in deposits on the purchase of individual Cash Can units compared to
the year ended December 31, 1994 deferred revenues of $40,000 for territory
deposits and $225,000 in deposits on the purchase of the individual units.
During year ended December 31, 1994, the Company restructured its sales program
to replace the franchise program which was the initial marketing focus of the
Company. The Company now utilizes an area development format which better serves
marketing and sales goals.
Cash Can recognizes sales upon placement of units in their respective
permanent location. The Company receives a deposit on orders upon execution of
an area development agreement. The revenue from deposits is recognized when the
unit is placed into service or delivered to a buyers designated site. It is held
as unearned revenue until such time. The Company also requires a deposit on each
Cash Can unit ordered at the time of execution of the area development
documents. These deposits are also held as unearned or deferred revenue until
being recognized at the placement into service of each respective unit. The
Company recognizes sales from inventory on a first in first out basis. General
and administrative cost are charged in the period which they occur.
RESULTS OF OPERATIONS.
From inception (August 8, 1992) until December 31, 1995, the Company
generated $1,303,180 in total revenues. Total revenue for the year ended
December 31, 1995 was $40,000 from the placement of one unit, with a gross
profit of ($30,810) and total net operating expenses of $1,176,306 with total
net loss from operations of $1,207,116. Significant expenses for the year ended
December 31, 1995 include non-cash transactions, consulting and professional
fees, and general and administrative expenses. Other
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significant transactions for the year ended December 31, 1995 include an
advertising credits impairment of $2,500,000 and a loss on investment resulting
from a exchange of common stock of $577,500. These accounts were expenses for
the period to write off the appropriate balance sheet account. These balances
are being held in reserve for possible collection and/or recovery of assets.
Total revenue for the year ended December 31, 1994 was $1,238,180 with a gross
profit of $508,373 and total net expenses of $1,499,670. Expenses, since
inception, were primarily comprised of consulting and professional fees as well
as employee salary expense. For the year ended December 31, 1995, the Company
has a net loss of $4,299,503 comprising a net loss per share of ($.70) on a
weighted average shares outstanding of 6,340,422. For the period of inception
through December 31, 1995, the Company has a net loss of $6,548,998 comprising a
net loss per share of ($1.59) on a weighted average of 4,368,526 shares
outstanding. This is net of preferred stock accretion of $142,356 for the years
ended December 31, 1994 and 1995 and $392,855 for the period since the Company's
inception through December 31, 1995.
During the year ended December 31, 1994, the Company placed 32 units
into operation which resulted in net revenue of $1,238,180, with a net loss for
the year ended December 31, 1994 of $937,199. During the year ended December 31,
1994, the Company was still developing the Cash Can System. The Company also
established a manufacturing and final assembly operation. Deferred revenue at
December 31, 1995 was $200,000 which represents deposit payments made on Cash
Can units. There are no assurances that these liabilities may be realized as
sales. During the year ended December 31, 1994, the Company restructured its
sales program to replace the initial franchise program. The Company now intends
to utilize either an area development sales format or enter into joint ventures
with selected operators.
The Company had an accounts receivable balance from EDP, a related
party, of $21,141 which is held in reserve until the likelihood of collection is
determined. Similarly, an accounts receivable trade balance of $88,480 and a
note receivable trade balance of $105,000 are being held in reserve pending the
determination of the likelihood of collection with the current assumption that
these accounts are not collectable therefore justifying a reduction in the
appropriate balance sheet account. Other balance sheet accounts which were
reduced include a $2,500,000 reduction in prepaid advertising expenses credits
and a reduction of investment in restricted common stock at cost. The Company's
management believes that it was deceived in the purchase of advertising credits
in exchange for stock and will attempt to recover their assets. The investment
in restricted common stock balance is being held in reserve until such time that
a valuation, if any, can be determined by reliable methods.
During substantially all of the year ended December 31, 1995, the
Company relied upon a contract manufacturer for the production, research and
development of Cash Can units. While the contractor held inventories to be sold
to the Company, the Company also held inventory levels comprised of assorted
components and applied overhead production expenses. It was determined that
these component inventory levels were substantially obsolete due to design
changes and that all remaining applied overhead held against inventory balances
be applied for the period ended December 31, 1995.
Also, during the year ended December 31, 1995 certain liability
accounts were reduced. This includes a reduction of accounts payable trade of
123,775 reflecting invoices that were from the years ended December 31, 1993 and
1994. Due to the recent financial condition of the Company, it was
12
<PAGE> 14
determined that it was unlikely that payment would be made and that it was also
unlikely that legal action would result to the Company from these vendors.
Another reduction was to accrued salaries payable to certain employees and
members of management. The reduction in accrued salaries payable totalled
$339,944.
LIQUIDITY AND CAPITAL RESOURCES.
During the majority of the year ended December 31, 1995, the Company
experienced severe cash flow difficulties. Many vendors, key personnel
management and other obligations of the Company went substantially unpaid during
this period. Subsequent to 1995 a new management team as well as a new board of
directors was installed. This new team is currently re-aligning the operating
systems and strategies of the Company.
LIQUIDITY
At December 31, 1995, several key components and account balances on
the Company's financial statements had been restructured to reflect the
conservative approach of the new management team. Any account viewed as doubtful
or stating a balance which may potentially be viewed as doubtful was held in
reserve. In those account balances listed in the financial statements of which
the expectation of performance or direct results of payment to the Company was
determined to be less than likely to occur, the appropriate account balance was
held in reserve and subsequently reduced as an asset, liability and/or equity
balance. While these account balances are minimally reflected in the financial
statements or with a zero balance, appropriate action will be taken by the
Company including possible litigation in an attempt to recover assets or other
consideration for the Company.
On February 26, 1996, the Board of Directors appointed a new president,
CEO and chairman to fill recent vacancies in those positions. Also at that
meeting, the Board of Directors adopted a resolution stating that all current
and past contracts of the Company, in particular, consulting contracts and
contracts exchanged for common stock, must be reviewed for content and
investigated for performance. Contracts from which receipt of due consideration
to the Company was lacking or absent were to be negated and common stock issued
in connection with any such contracts was to be recovered by the Company.
It is management's intention to restore the Company to normal operating
capacity in the near term. Management is taking appropriate steps to reduce
business and financial risk to the Company during the restructuring process.
While there can be no assurances that management can restore the Company to
normal operating capacity, management believes that business prospects are
strong and that key business alliances will be forged, allowing the Company to
emerge from this process, stronger than it has previously been.
The Company's continued existence is dependent upon its ability to
generate cash flow internally and through possible external sources by obtaining
debt and/or equity capital. While pursuing additional debt and equity funding,
the Company must continue to operate on a limited cash flow from intended and
related party sources.
The Company intends to cover short-term cash needs through sales and
license agreements, if any,
13
<PAGE> 15
of its product and possibly through private placement(s) of its securities.
The use of license, sales, marketing, and manufacturing agreements will
allow the Company to progress with its operating plan and mission statement with
a reduced level of business risk. The Company may also enter into joint venture
agreements and may benefit from the financial and/or technical strengths and
abilities of its contractual partners and associations. This will further allow
the Company to progress towards goals in a swifter fashion than would occur by
merely relying upon its own internal resources.
Net cash flows from financing activities totalled $606,510 for the year
ended December 31, 1995 compared to $832,425 for the year ended December 31,
1994 and $2,535,724 for the period from inception to December 31, 1995. The
Company secured proceeds from short term borrowing for the period of $50,000.
The Company also had cash sales of original issue Common Stock during 1993
totalling $44,327, $413,619 during the year ended December 31, 1994 and $305,512
during the year ended December 31, 1995.
In March 1993, the Board of Directors recognized a need to adjust the
capital structure of the Company to become more equitable to the public
shareholders. Certain major shareholders were asked to surrender for
cancellation a substantial percentage of their Common Stock, as consideration,
530,000 common stock shares underlying currently exercisable warrants,
exercisable at $0.25, were issued to the shareholders who surrendered their
stock. Therefore, 12,833,331 shares were surrendered and cancelled leaving,
immediately after the cancellation, 2,261,669 common stock shares issued and
outstanding.
On March 8, 1993, the Board of Directors authorized a 3 for 1 split of
the Company's Common Stock issued and outstanding. The Company believed this
action would improve the marketability of its Common Stock in the public market
and thus improve the Company's ability to obtain capital when necessary. As of
that date, the Company had 6,785,007 Common Stock shares issued and outstanding.
Other subsequent issuances of Common Stock shares on March 8, 1993 and April 12,
1993 resulted in 7,550,007 shares issued and outstanding on December 31, 1993.
On July 28, 1994, the Company's Board of Directors declared a 1 for 2
reverse stock split, effective August 1, 1994 under the advice of investment
bankers. Accordingly, the average number of shares outstanding, per share
amounts, and stock warrant data have been restated for all periods prior to the
stock splits. As of December 31, 1994, there were 5,468,539 common shares
outstanding. During the year ended December 31, 1994, the Company issued
1,113,536 shares of common stock for paid in capital credits of $7,061,845
consisting of $413,619 in cash, $85,000 in consulting services, reduction of
debt totalling $1,196,226, investments in unrelated party common stock of
$577,500, notes receivable of $2,289,500 and for prepaid television advertising
of $2,500,000. Also, the Company exercised 580,000 warrants underlying common
stock issued during the formation of the Company for $290,000 in notes
receivable.
As of December 31, 1995, the Company had 8,446,356 common stock shares
outstanding. An increase of 2,977,817 shares outstanding during the year. During
the year ended December 31, 1995, 90,000 shares were issued to eliminate $84,150
in outstanding notes and interest. Common Stock shares issued for consulting
services include 295,000 in exchange for $42,500 in services and related to an
S-8 registration, 544,000 shares
14
<PAGE> 16
were issued in exchange for $337,280 in consulting services. $305,512 in
operating capital was raised through the issuance of 685,437 common shares.
Additionally, 350,000 shares were issued to employees in exchange for past due
wages and salaries totalling $35,000 and 300,000 shares underlying warrants
exercised were issued.
The Company does not have any line of credit or other financing
arrangement with any financial institutions. Beyond December 31, 1995, without
additional sales, the Company expects that additional capital will be in the
form of debt or equity investment from shareholders or venture capital
investors. As such, the Company's sources of external financing are limited.
Historically, the Company has relied upon shareholders or venture capital
investors to fund business operations. Management believes that it will rely
upon these individuals or entities for future working capital. Failure to obtain
these additional working capital funds could adversely affect the Company's
liquidity in the foreseeable future. The Company has no long term commitments
for capital expenditures. The Company expects consultant and professional fees
to be a significant item of expense for the foreseeable future. As management
continues to gain expertise on the broad range of issues it must confront in
developing the business, consultant fees will be reduced to an occasional
expenditure. As of December 31, 1995, the Company had $200,000 in unearned
revenue from deposits for Cash Can sales. Recognition of revenue from these
deposits is contingent on the negotiation of agreements for suitable operating
sites and in some instances, securing suitable financing for purchasing
customers.
As of December 31, 1995, the Company had incurred judgments payable
totalling $65,000 in principal and $12,136 in interest payable plus attorneys
and filing fees to a shareholder. Jacko and Nancy Garrett on a note payable. The
note payable originally totalled $85,000 and was due June 18, 1995. Additionally
the Company is in default on $50,000 note payable to Presto Leasing due October
1, 1995 with interest payable of $1,250 during the year ended December 31, 1995.
Further, the Company has a judgment payable to a Vendor, Schmidt Electric
Company totalling $3,937 for services.
The Company's continued existence is dependent upon its ability to
generate cash flow internally and through external sources by obtaining debt and
equity capital. While pursuing additional debt and equity funding, the Company
must continue to operate on limited cash flow from internal and related party
sources.
INFLATION.
The Company does not believe that inflation will have a significant
effect upon the Company's operation.
OPERATING LOSS CARRY FORWARDS.
The Company had net operating loss carry forwards for the period of
inception to December 31, 1994 of $2,249,000 resulting in a deferred tax asset
of $765,000 for the same period. At December 31, 1995 the cumulative loss to
date for tax purposes is approximately $6,500,000 resulting in a deferred tax
asset available of $2,226,000.
15
<PAGE> 17
ITEM 7. FINANCIAL STATEMENTS
Contents
<TABLE>
<S> <C>
Independent Auditor's Report . . . . . . . . . . . . . . . . 17
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 18-19
Statement of Operations . . . . . . . . . . . . . . . . . . 20
Statement of Stockholders' Equity (Deficit) . . . . . . . . 21
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 22-24
Notes to Financial Statements . . . . . . . . . . . . . . . 25-36
</TABLE>
16
<PAGE> 18
[TURNER, STONE & COMPANY LETTERHEAD]
Independent Auditor's Report
The Board of Directors
Cash Can Incorporated
San Francisco, California
We have audited the accompanying balance sheets of Cash Can Incorporated (a
development stage company) as of December 31, 1995 and 1994, and the related
statements of operations, stockholders' equity and cash flows for the years
then ended and for the period August 8, 1992 (inception) through December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall 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 Cash Can Incorporated (a
development stage company) as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for the above referenced periods in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ TURNER, STONE & COMPANY, LLP
TURNER, STONE & COMPANY, LLP
Certified Public Accountants
August 9, 1996
17
<PAGE> 19
CASH CAN INCORPORATED
(A Development Stage Company)
Balance Sheets
December 31, 1995 and December 31, 1994
Assets
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Current assets:
Cash $ 4,757 $ 3,605
Accounts receivable, trade, net of $88,480 and $0
allowance, respectively 0 237,750
Advances to EDP, net of $21,141 and $0
allowance, respectively 0 82,760
Advances to employees 8,760 291
Inventory 0 157,903
Prepaid advertising cost (note 5) 0 750,000
Accrued interest receivable 0 1,575
Deposits 5,625 20,031
Deferred consulting (note 8) 36,000 36,000
---------- -----------
Total current assets 55,142 1,289,915
---------- -----------
Property and equipment, at cost, net of
$36,606 and $20,221 of accumulated
depreciation, respectively 25,732 42,117
---------- -----------
Other Assets:
Notes receivable, trade, net of $105,000 and $0
allowance, respectively (note 3) 0 90,000
Investment in restricted common stock,
at cost (note 4) 0 577,500
Organizational costs, net of accumulated
amortization of 3,075 and 2,050, respectively 2,052 3,077
Prepaid advertising cost (note 5) 0 1,750,000
Deferred consulting (note 8) 219,000 273,000
Security deposits 0 1,875
Intangible assets 300 300
---------- -----------
221,352 2,695,752
---------- -----------
$ 302,226 $4,027,784
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 20
CASH CAN INCORPORATED
(A Development Stage Company)
Balance Sheets
December 31, 1995 and December 31, 1994
Liabilities and Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Current liabilities:
Accounts payable, trade $ 74,419 $ 216,922
Advances from EDP (note 11) 0 16,515
Withholding taxes payable 3,484 31,303
Accrued interest payable 13,386 7,650
Accrued expenses 79,400 135,288
Accrued salaries payable 53,162 225,438
Notes payable, stockholder (note 11) 115,000 160,491
Consulting fees payable (note 8) 144,000 66,000
----------- -----------
Total current liabilities 482,851 859,607
----------- -----------
Consulting fees payable,
net of current portion (note 8) 195,000 264,000
----------- -----------
Commitments and contingencies - -
Deferred revenue (note 6) 200,000 265,000
----------- -----------
Preferred stock, redeemable, $.0001 par value 392,855 249,999
----------- -----------
1,000,000 shares authorized, 100,000 shares issued &
outstanding
Stockholders' equity (deficit):
Common shares
30,000,000 authorized; $ .0001 par value; 8,446,356 and
5,468,539 shares issued & outstanding, respectively 844 546
Paid in capital in excess of par 7,868,900 6,976,143
Notes receivable, common stock (note 3) (2,289,226) (2,338,016)
Deficit accumulated during development stage (6,548,998) (2,249,495)
----------- -----------
(968,480) 2,389,178
----------- -----------
$ 302,226 $4,027,784
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 21
CASH CAN INCORPORATED
(A Development Stage Company)
Statement of Operations
Years Ended December 31, 1995 and December 31, 1994
And Period August 8, 1992 (inception) Through December 31, 1995
<TABLE>
<CAPTION>
Inception
Through
1995 1994 Dec. 31, 1995
---------- ----------- -------------
<S> <C> <C> <C>
Sales $ 40,000 $1,238,180 $ 1,303,180
Cost of goods sold 70,810 729,807 821,686
------------ ----------- -----------
Gross profit (30,810) 508,373 481,494
------------ ----------- -----------
Operating Expenses:
Salaries, benefits, & P/R taxes 135,317 642,765 1,216,501
Rent 48,343 119,900 263,442
Consulting & professional fees 459,816 404,987 1,296,924
Selling & promotion 17,565 89,800 188,177
Depreciation 16,385 11,794 36,606
General & administrative 497,855 210,813 968,380
Amortization 1,025 1,025 39,075
------------ ----------- -----------
1,176,306 1,481,084 4,009,105
------------ ----------- -----------
(Loss) from operations (1,207,116) (972,711) (3,527,611)
Other income (expenses):
Interest income 0 50,365 141,499
Advertising income 0 3,733 4,007
Advertising credits impairment (note 5) (2,500,000) 0 (2,500,000)
Loss on investment (note 4) (577,500) 0 (577,500)
Interest expense (14,887) (18,586) (52,259)
------------ ----------- -----------
Net loss $(4,299,503) $ (937,199) $(6,548,998)
============ =========== ===========
Net loss per share ($0.70) ($0.17) ($1.59)
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 22
CASH CAN INCORPORATED
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
For Period From August 8, 1992 (Inception) to December 31, 1995
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Common stock Paid in Paid in Capital Development
Shares Amount Capital Notes Receivable Stage
------------ -------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT AUG. 8, 1992 (INCEPTION)
Recapitalization of Cash Can Inc. 21,000,000 $ 2,100 $ 117,900 $ $
Merger of Cash Can Inc. & Market
Investments Inc. at Dec. 31, 1992 16,500,000 1,650 (1,523)
Cancellation of shares (14,857,500) 1,486 1,486
Net Loss (216,769)
------------ ------- ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1992 22,642,500 2,264 117,863 216,769
Cancellation of shares (19,249,996) (1,925) 1,925
Stock exchanged for services 67,500 7 19
Stock exchanged for intangible assets 275,000 28 172
Issuance of stock for cash 40,000 4 43,996
Accretion: redeemable preferred stock (107,143)
Net Loss (1,095,527)
------------ ------- ---------- ----------- -----------
Balance, December 31, 1993 3,775,004 378 56,932 1,312,296
Issuance of stock for cash, other assets,
services and repayment of debt 1,113,535 10 6,772,125 (2,338,016)
Warrants exercised 580,000 58 289,942
Accretion: redeemable preferred stock (127,983)
Net Loss (937,199)
------------ ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1994 5,468,539 546 6,976,143 (2,338,016) (2,249,495)
Issuance of stock for cash, services
and repayment of debt 2,877,817 288 985,623 48,790
Warrants exercised 100,000 10 49,990
Accretion: redeemable preferred stock (142,856)
Net Loss (4,299,503)
------------ ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1995 8,446,356 $ 844 $7,868,900 $(2,289,226) $(6,548,998)
============ ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 23
CASH CAN INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
Years ended December 31, 1995 and December 31, 1994
And Period August 8, 1992 (inception) Through December 31, 1995
<TABLE>
<CAPTION>
Inception
Through
1995 1994 Dec. 31, 1995
---------- ---------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $(4,299,503) $ (937,199) $ (6,548,998)
---------- ---------- ----------------
Adjustments to reconcile net loss to
Net cash used in operating activities:
Depreciation and amortization 17,410 12,819 39,681
Bad debt provision 214,621 0 214,621
Write off of prepaid advertising 2,500,000 8,682 2,500,000
Write off of common stock investment 577,500 0 577,500
Consulting fees exchanged for common stock 414,780 0 414,780
(Increase) decrease in accounts receivable, trade 93,770 (237,750) (143,980)
(Increase) decrease in inventory 34,128 387,386 (123,775)
(Increase) decrease in accrued interest receivable 50,365 (50,365) 0
(Increase) decrease in deposits 16,281 17,465 (5,625)
(Increase) decrease in deferred expenses 54,000 36,000 (255,000)
(Increase) decrease in notes receivable, trade (15,000) (90,000) (105,000)
Increase (decrease) in accounts payable, trade (18,728) 80,910 198,194
Increase (decrease) in withholding taxes payable (27,819) 18,243 3,484
Increase (decrease) in interest payable 14,886 18,577 45,290
Increase (decrease) in accrued expenses (46,888) 340,810 313,838
Increase (decrease) in accrued salaries payable (137,276) 0 (137,276)
Increase (decrease) in consulting fees payable 0 70,000 415,000
Increase (decrease) in deferred income (9,500) (475,500) 255,500
---------- ---------- ----------------
Total adjustments 3,732,530 137,277 4,207,232
---------- ---------- ----------------
Net cash used for operating activities (566,973) (799,922) (2,341,766)
---------- ---------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 24
CASH CAN INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
Years ended December 31, 1995 and December 31, 1994
And Period August 8, 1992 (inception) Through December 31, 1995
<TABLE>
<CAPTION>
Inception
Through
1995 1994 Dec. 31, 1995
---------- ---------- ----------------
<S> <C> <C> <C>
Cash flows from investing activities:
Purchase of property & equipment 0 (10,713) (62,338)
Organizational cost 0 0 (5,127)
Advances to EDP (29,916) (44,768) (112,676)
Acquisition of intangible assets 0 0 (300)
Repayments of advances for employees (8,469) 6,392 (8,760)
---------- ---------- ----------------
Net cash used by investing activities (38,385) (49,089) (189,201)
---------- ---------- ----------------
Proceeds from financing activities:
Proceeds from notes payable 50,000 85,000 466,930
Repayments of notes payable (20,491) (1,213) (21,704)
Reedeemable convertable preferred stock
exchanged from assets 100
Issuance of common stock 501,981 413,619 1,079,727
Advances from EDP 75,020 335,019 1,010,671
---------- ---------- ----------------
Net Cash provided by financing activities 606,510 832,425 2,535,724
---------- ---------- ----------------
Net Increase (decrease) in cash 1,152 (16,586) 4,757
Cash at beginning of period 3,605 20,191 0
---------- ---------- ----------------
Cash at end of period $ 4,757 $ 3,605 $ 4,757
========== ========== ================
Supplemental disclosure of cash flow information:
Income tax paid $ - $ - $ -
Interest paid $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 25
CASH CAN INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
Years ended December 31, 1995 and December 31, 1994
And Period August 8, 1992 (inception) Through December 31, 1995
<TABLE>
<CAPTION>
Inception
Through
1995 1994 Dec. 31, 1995
---------- ---------- ----------------
<S> <C> <C> <C>
Supplemental disclosure of non-cash investing
and financing activities:
Issuance of common stock in exchange for repayment
of notes payable and accrued interest, including
$290,000 upon the exercise of warrants $ 86,000 $ 2,776,530 $ 2,862,530
Issuance of common stock for notes receivable 0 2,289,226 2,289,226
Issuance of common stock in exchange for repayment
of advances from EDP 0 920,360 920,360
Issuance of common stock in exchange for consulting
services 414,780 85,000 499,780
Issuance of common stock for investment in common
stock of ACI 0 577,500 577,500
Accretion of redeemable preferred stock 142,856 127,983 392,855
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 26
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
The Company, a development stage company, was incorporated as Market
Investments, Inc. under the laws of the State of Delaware on March 18, 1991,
with the purpose of merging with an ongoing business and/or acquiring a
company. On December 31, 1992, Market Investments, Inc. exchanged 21,000,000
shares of previously unissued common stock for all of the outstanding common
stock of Cash Can, Inc., a development stage company. As part of the
transaction, two holders of Market Investments, Inc. common stock returned an
aggregate of 14,857,500 shares to Market Investments, Inc. For accounting
purposes the transaction has been accounted for as a reverse acquisition.
Since Market Investments, Inc. was a public "shell" with no operations the
transaction has not been considered a business combination and accordingly no
pro forma financial statements have been presented. In April 1993, the Company
changed its name to "Cash Can Incorporated"(CCI).
The Company is engaged in recycling and marketing activities on a
local, regional, and national level. The Company's first product is the Cash
Can automated aluminum redemption center (hereinafter referred to as a "Cash
Can"). Placed in locations convenient to the consumer, this attractive,
patented machine accepts aluminum beverage cans and returns cash to the
consumer on a per-can basis. It is a high-volume, large-capacity system which
is computer-controlled and operates 24 hours a day, seven days a week.
The Company's continued existence is dependent upon its ability to
resolve its liquidity problems, principally by obtaining additional debt
financing and equity capital. While pursuing additional debt and equity
funding, the Company must continue to operate on limited cash flow from
internal sources. The Company has experienced recurring losses from operations
although significant operating overhead reductions were made in the latter part
of 1994 and again in 1995.
The Company plans to aggressively market its product and cover short
term cash needs through sales and private placements of Company stock. Longer
term cash needs will be met through a proposed public offering expected to
occur in September 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
25
<PAGE> 27
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Cash flows
For purposes of the statement of cash flows, cash includes all short
term, highly liquid investments with a maturity of three months or less.
Inventory
The Company values inventory at the lower of cost (first-in,
first-out) or market. Inventory consists of parts and partially completed Cash
Can units which are currently the only manufactured product of the Company.
During 1993, the Company acquired the patent for production of such units and
began manufacturing operations until mid 1995 when the manufacturing of the
units was sub-contracted out. Inventory at December 31, 1994 represents raw
materials of $55,986 and work in process of $101,917. During 1995, the Company
charged to expense $161,942 of obsolete and unsalable inventory items, $123,775
of which related to old and disputed accounts payable, vendors (Note 11). At
December 31, 1995, the Company did not have any inventory.
Organizational costs
Organization costs are being amortized on a straight-line basis over
five years beginning in 1993.
Property and equipment
Property and equipment are stated at cost. The cost of maintenance
and repairs is charged to operations when incurred. The Company provides
depreciation using the straight-line method over expected useful lives ranging
from 5 to 7 years. Leasehold improvements are amortized using the
straight-line method over the life of the lease.
Redeemable preferred stock
Accretions of the redemption value of nonparticipating redeemable
convertible preferred stock are provided on the interest method in amounts
sufficient to equal the mandatory redemption value at the redemption date. The
stock is classified on the balance sheet apart from stockholder's equity due to
the stock's redeemable feature (Note 8).
Consulting services
During the year ended December 31, 1995, the Company issued 1,189,000
common stock shares in exchange for consulting services valued at $414,780.
The Company is determining the validity of these consulting contracts and may
cancel the shares issued and/or take other action, including litigation, if the
required consulting services have not occurred.
26
<PAGE> 28
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
3. NOTES RECEIVABLE
During 1994, the Company sold five hundred thousand shares of
restricted stock to EDP and its management and customers (Note 11) for $6.00
per share. Approximately one million dollars of the proceeds was applied to
reduce debt with the balance paid with short term notes due within one year,
with interest at 7.75% per annum and secured by the securities purchased. In
addition, outstanding warrants representing 580,000 common stock shares were
exercised by EDP and its management and customers for notes receivable totaling
$290,000. At December 31, 1995 and 1994 the Company has recorded these notes
receivable, along with accrued interest of $139,109 (fully reserved) and
$48,790, respectively, as a reduction of stockholders' equity. The Company has
made demand for payment on EDP, its management and customers and intends to
fully pursue collection of these notes receivable.
During 1995, the collectibility of the notes receivable became
uncertain, however they were not reserved because they are reflected as a
reduction to stockholders' equity, the non collection of which would not affect
other financial statement categories (Note 15).
4. INVESTMENT IN COMMON STOCK
During 1994, the Company exchanged a total of 150,000 shares of its
common stock for 150,000 common shares of American Capital Investor Corporation
(ACI) of Newport Beach, California. The shares were exchanged at a fair market
value of $3.85 per share which is based upon ACI's book value at September 30,
1994. This investment, which represents 4% of ACI outstanding shares, is
accounted for by the cost method. The fair value of this financial instrument
at December 31, 1994 approximated its cost.
During 1995, the realization of this investment became questionable
and prior management of the Company attempted to cancel the transaction and
return the shares in exchange for the return of its shares from ACI. The
Company is now seeking the return of the ACI shares and the recovery of its
investment. Accordingly, the Company adjusted the carrying value of its
investment to $0, management's estimate of the net realizable fair value of
this financial instrument at December 31, 1995.
5. ADVERTISING COSTS
During 1994, the Company purchased $2,500,000 of television
advertising on the American Independent Network (AIN) in exchange for a note
payable due in November 1996, with interest at 9.0% and secured by AIN credits.
AIN credits are redeemable for blocks of television air time based on
prevailing market rates. On December 28, 1994, the note payable, which had
been factored by the holder to an unrelated party, was exchanged for 250,000
common stock shares of the Company.
27
<PAGE> 29
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Pursuant to Statement of Position 93-7, the Company will expense
advertising costs as incurred. As of December 31, 1995 and 1994, no
advertising expenses have been incurred.
During 1995 the Company was not able to confirm these credits. In 1996
it was determined that the Company had been deceived when purchasing the
credits. Presently, an investigation is being performed concerning the validity
of the credits. Accordingly, the carrying value of the credits has been charged
against income.
6. DEFERRED REVENUES
Deferred revenues at December 31, 1995 and 1994, consists of $0 and
$40,000, respectively, in franchise deposits for the rights to operate a Cash
Can aluminum redemption center and $200,000 and $225,000, respectively, in
deposits on the purchase of individual Cash Can units.
Revenue from these orders will be recorded at the time of delivery of
product to the purchasers. While these purchase orders represents the
purchasers' intent, and the Company expects the purchasers to purchase each
order, due to the possibility of unforeseen events that may impair the ability
of a purchaser or the Company to complete the order, all or none of the revenue
represented by these orders may be realized by the Company.
In June 1996, the purchaser notified the Company to refund $200,000 of
deposits because the Company did not deliver their order.
7. EMPLOYEE BENEFIT PLANS
The Company established a defined contribution profit sharing and
salary reduction plan during 1993. Pursuant to the provisions of Internal
Revenue Code Section 401(k), the plan prototype has received a favorable
determination letter from the Internal Revenue Service. Employees are 100%
vested in all personal salary reduction contributions and related earnings.
Through December 31, 1994, the Company had made no contributions to the plan
and the plan was terminated in October 1995.
The Company also established a nonqualifying employee benefit plan to
purchase life and disability insurance for certain officers and key employees.
For the years ended December 31, 1995 and 1994, Company contributions included
in benefits expense totaled $0 and $2,100, respectively.
28
<PAGE> 30
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
8. LICENSE AGREEMENT AND PATENT ACQUISITION
In February 1993 the Company entered into an exclusive license
agreement with Recycle Technologies, Inc. (RTI) of Billings, Montana, the
patent licensee of the device know as "Collector of Empty, Used Recyclable
Beverage Cans" covered by United States Patent No. 4,989,507. Under the terms
of the agreement, RTI granted the Company the exclusive, nontransferable right
and license to market and sell the Cash Can device throughout North America.
However, the Company decided it would be better to own the patent directly and
manufacture the Cash Can units rather than pay royalties through the license
agreement. Accordingly, during 1993 the Company acquired the patent for the
manufacture of the Cash Can device from Gadar Industries, Inc. In exchange for
the patent, the Company issued 100,000 shares of its non-participating,
mandatory redeemable, convertible preferred stock and 125,000 of its
unregistered common stock shares. The preferred shares and the patent were
recorded at $100, the par value of the preferred shares, which approximates
fair market value. The stock is redeemable by the Company at any time or may
be converted by the holder into 1 share of common stock for each 2 shares of
preferred held; however, redemption is mandatory at the end of seven years.
Accretion of the redemption value of the preferred shares of $1,000,000 is
provided for on the interest method over the seven year redemption period. For
the years ended December 31, 1995 and 1994, accretion of the redemption value
totaled $142,856 and $127,983, respectively.
The Company also entered into an agreement to purchase consulting
services from Bill Rhoades, the president of Gadar Industries, Inc. The terms
of the agreement provide for payments of $3,000 per month over a 24 month
period and payments of $5,000 over the subsequent 60 month period. At December
31, 1995 and 1994, $255,000 and $309,000, respectively, of the remaining
payments are recorded as deferred consulting fees although the Company is
investigating the validity of this agreement.
In connection with the acquisition of the patent for production of
Cash Can units, the Company also canceled its license agreement with Recycle
Technologies, Inc. and acquired related trademark and trade secrets from
Recycle Technologies, Inc. in exchange for 425,000 shares of common stock.
These assets have been valued at $200 and are recorded as intangible assets.
9. LOSS PER SHARE AND STOCK SPLIT
Loss per share amounts are based on the weighted average number of
common stock shares and common stock equivalents outstanding (6,340,422,
4,183,694 and 4,368,526 for the years ended December 31, 1995 and 1994 and from
inception through December 31, 1995, respectively). For loss per share
purposes, the net loss was increased by the accretion on redeemable preferred
stock (Note 2). No effect has been given to the assumed exercise of stock
warrants and fully diluted earnings per share amounts are not presented because
the effects would be antidilutive.
29
<PAGE> 31
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
On March 8, 1993, the Company's Board of Directors effected a 3 for 1
stock split and on August 1, 1994 the Company's Board of Directors effected a 2
for 1 reverse stock split. The weighted average number of shares outstanding,
per share amounts, common stock share and stock warrant data have been
retroactively restated for all periods presented.
10. COMMITMENTS AND CONTINGENCIES
Leases
The Company conducts its operations from facilities in San Antonio,
Texas and it leases various equipment under noncancellable operating leases,
which expire through May 1996. For the years ended December 31, 1995 and 1994
and for the period August 8, 1992 (inception) through December 31, 1995, rent
expense under these leases totaled $48,343, $67,895 and $211,437, respectively.
Minimum future rental payments required under the above operating
leases are as follows.
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ------
<S> <C>
1996 $ 11,250
1997 -
1998 -
--------
$ 11,250
========
</TABLE>
Vendors and former officers/employees
At December 31, 1995, the Company made adjustments to its general
accounts reducing accounts payable, trade by $123,775, representing old and/or
disputed amounts. The Company also made adjustments to its general accounts
reducing accrued salaries payable by $339,944, representing accrued salaries
not properly authorized by the board of directors.
No claims have been made for these amounts but it is uncertain what
claims might arise in the future, if any, and therefore the amount of these
adjustments the Company ultimately might be required to pay. The accompanying
financial statements do not contain any reserve for this contingency.
30
<PAGE> 32
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Litigation
The Company is the plaintiff in a lawsuit with a competitor involving
patent infringement. The competitor has filed a counter claim seeking $58,900
in relief. Although the Company expects to prevail in this case, it is not
possible to estimate the outcome. No accrual for any possible loss has been
reflected in the accompanying financial statements.
Guaranty
The Company guaranteed an equipment lease payable to a company, which
provided lease financing for units sold by the Company. At May 31, 1996 and
December 31, 1995, the Company was obligated to make good on a lease guarantee
of $30,622 and $0, respectively.
11. RELATED PARTY TRANSACTIONS
EDP Capital Group, Ltd. (EDP)
EDP Capital Group, Ltd. (EDP) is a related party by virtue of the
relationships of the former management of the Company and EDP, and the fact that
EDP purported to act as the Company's "investment banker" and "financial
advisor" from December 1992 through February 1996.
The general manager of EDP throughout that period was Jon J. King,
whose son Michael served as President, Chief Executive Officer and Chairman of
the Company from December 1992 through February 1996. During that same period
the Company's corporate secretary, Elizabeth W. Moore, the sister-in-law of
Jon J. King, was Vice President, Secretary, Director and a stockholder of EDP.
Joseph King, another son of Jon J. King, was an Officer, Director and a
stockholder of EDP. Eddie Moore, who served as President and Chief Executive
Officer of the Company during part of 1995 and 1996, is married to Elizabeth W.
Moore.
Agreements for EDP to act as investment banker and financial advisor
of the Company were executed on December 8 and 20, 1992, respectively, and were
rescinded effective May 1, 1993. During that period a total of $114,000 was
paid by the Company to EDP for such services. After the termination of these
agreements EDP continued to act as a consultant to the Company and was paid
fees of approximately $80,000.
Also during this period, EDP caused one of its affiliates,
Entertainment Development Partners, Inc. (EDPI), to sub-lease office space to
the Company for which the Company paid $73,622 of rental payments.
31
<PAGE> 33
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Also during this period, EDP and various of its affiliates acted as
escrows to sell to the public shares of the Company's common stock owned by
others, principally entities having indicated places of business outside of the
United States (offshore entities). None of the proceeds from the sale of those
shares, an amount currently unknown, inured to the benefit of the Company.
While EDP acted as consultant to the Company, it engaged in
transactions with the Company, some of which involved loans and payments for
services and was involved in most of the Company's transactions. EDP and its
management also arranged to hire persons and firms who purportedly acted as
"consultants" to the Company. Consideration paid to such consultants includes
amounts paid in cash and warrants and shares of the Company's common stock. Some
of such shares and warrants were the subject of registration statements filed on
Form S-8 by the Company with the Securities and Exchange Commission during 1995.
In addition, restrictions relating to the sale and other disposition of the
Company's common stock issued to consultants and affiliates were removed with
the assistance of EDP and members of prior management.
The Company is currently reviewing each of the consulting agreements
to determine whether the Company received adequate consideration and to
determine whether those agreements were properly authorized.
The Company is also undertaking a review of the past transactions with
EDP to determine if any impropriety existed.
During 1994, EDP and Michael King executed promissory notes to the
Company in the amounts of $165,000 and $82,500, respectively. These amounts
are past due and the Company has made demands for payment for these notes
receivable.
During 1994, EDP arranged for various offshore entities, believed to
be related to EDP and its affiliates, to purchase common stock shares of the
Company. Payment was in the form of promissory notes with principal amounts
totaling $4,264,226. The notes are past due and demand for payment has been
made by the Company, which will continue to pursue collection of these notes.
During the years ended December 31, 1995 and 1994, EDP made various
non-interest bearing expenditures to the Company totaling $75,020 and $336,243,
respectively for investment banking services, cash advances, and expense
reimbursements. During 1994 these advances were reduced by $920,360 in
exchange for five hundred thousand shares of restricted stock (Note 2). EDP is
owned by a family member of the Company's chairman. As of December 31, 1995
and 1994 the balance of advances payable, EDP totaled $91,535 and $16,515,
respectively.
As of December 31 1995 and 1994 the Company also had non-interest
bearing advances receivable from EDP of $112,676 and $82,760, respectively.
32
<PAGE> 34
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
At December 31, 1995, the collectibility of the advances receivable
became uncertain. The Company offset the $112,676 advances receivable by the
$91,535 advances payable and reserved for doubtful collection the remaining
$21,141 receivable balance although the Company intends to pursue collection of
these advances, including litigation if necessary.
Stockholders
During 1994 and 1993, the Company acquired additional working capital
by issuing notes payable to various stockholders. These notes generally were
due within six months, unsecured and with interest at 8.0% to 10.0%. During 1995
and 1994, $75,000 and $255,000, respectively of these notes, plus $9,150 and
$21,530, respectively of accrued interest, were repaid through the issuance of
common stock.
The remaining notes payable are in default with interest presently
accruing at 10.0% to 18.0% and one creditor has obtained a judgement for the
principal balance, accrued interest and attorney fees totaling $87,163.
At December 31, 1995 and 1994, accrued interest payable on these notes
totaled $13,386 and $7,650, respectively.
12. INCOME TAXES
The Company uses the accrual method of accounting for tax and
financial reporting purposes. At December 31, 1995, the Company had net
operating loss carryforwards for financial and tax reporting purposes of
approximately $6,500,000. These carryforwards expire between the years 2006
and 2010 and are further subject to the provisions of Internal Revenue Code
Section 382.
Pursuant to Statement of Financial Accounting Standards No. 109, the
Company has recognized a deferred tax asset in the amount of $2,226,000 which
has been offset by a valuation allowance in the same amount, as follows:
<TABLE>
<CAPTION>
Inception
Year Ended Year Ended through
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995
------------- ------------- -------------
<S> <C> <C> <C>
Beginning balance $ 765,000 $ 446,000 $ -
Increase during period 1,461,000 319,000 2,226,000
---------- --------- ----------
Ending balance $2,226,000 $ 765,000 $2,226,000
========== ========= ==========
</TABLE>
33
<PAGE> 35
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
13. STOCK WARRANTS
In March 1993, the Board of Directors recognized a need to adjust the
capital structure of the Company to become more equitable to the public
shareholders. Certain major shareholders were asked to surrender for
cancellation a total of 19,249,996 shares of their common stock to facilitate
the subject adjustment and as consideration, an aggregate of 265,000 common
stock warrants were issued to the shareholders who surrendered their stock.
The warrants issued entitle the shareholders to acquire one share of common
stock for one warrant plus $0.25. The 19,249,996 shares were surrendered and
canceled leaving, immediately after the cancellation, 3,392,504 common stock
shares issued and outstanding. The Company is investigating if adequate
consideration was given for the issuance of the warrants and may cancel them if
such is the case.
The following is a schedule of the activity relating to the Company's
stock warrants:
<TABLE>
<CAPTION>
Inception
through
1995 1994 Dec. 31, 1995
---- ---- -------------
<S> <C> <C> <C>
Warrants outstanding at
beginning of year 425,000 595,000 -
Warrants issued during year:
Officers and directors - 50,000 230,000
EDP (Note 11) - - 150,000
Others 1,427,500 360,000 2,052,500
Warrants exercised during year:
Officers and directors - (180,000) (180,000)
EDP - (150,000) (150,000)
Others (300,000) (250,000) (550,000)
Warrants expired during year (85,000) - (85,000)
--------- -------- ---------
Warrants outstanding at end
of year 1,467,500 425,000 1,467,500
========= ======== =========
</TABLE>
The warrants expire between November 1996 and August 1998 and are
exercisable at prices from $.20 to $8.00 per warrant.
14. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of its cash, accounts
receivable, trade, notes receivable, notes payable, stockholders and investment
in restricted common stock (Note 4).
34
<PAGE> 36
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Cash
The Company maintains its cash in bank and other deposit accounts
which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and dose not believe it is subject to
any credit risks involving its cash.
Accounts receivable, trade
The Company extends credit, secured by the Cash Can units, to its
customers, most of whom are located in Texas. During 1995, the collectibility
of the accounts receivable, trade became uncertain and management fully
reserved for doubtful collection the receivables, carrying them at their net
realizable amounts.
Notes receivable
Notes receivable are past due and in default, bear interest at 7.75%
per annum and are secured by the Cash Can unit or common stock. The Company
believes the fair value of these financial instruments are zero.
Notes payable
Management believes the carrying value of their notes payable
represents the fair value of these financial instruments because their terms,
now in default, are similar to those in the lending market for comparable loans
with comparable risks.
15. SUBSEQUENT EVENTS
Change in officers and directors
On February 27, 1996, Michael King resigned as Chairman, Eddie Moore
resigned as President and Chief Executive Officer and Arthur E. Juhl of San
Francisco, California was appointed as Chairman, President and Chief Executive
Officer. On March 20, 1996, Eugene Fry and Robert Phillips resigned as
directors of the Company, and were replaced by Alan Khoo and Thomas Malanca.
In April, 1996, an option to purchase preferred stock shares of the
Company was issued to Coast Pacific, Inc. of San Francisco, California, at a
per share price equal to 60% of the trading price of the Company's common
stock. In May, 1996, the Company issued 6,200,000 shares of its common stock
for $324,000 cash.
35
<PAGE> 37
CASH CAN INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Notes receivable
During 1996, the Company discovered that an additional $1,975,000 of
notes receivable were issued in exchange for common stock in 1994 (Note 3) but
the common stock was not issued. The Company will issue the common stock when
the notes are paid. Accordingly, the Company has reserved this amount because
of the uncertainty of the notes being collected.
Other matters
In March, 1996, the Company, EDP and some former officers, directors,
consultants, affiliates and offshore entities were named as defendants in an
action brought by a stockholder in the United States District Court for the
Southern District of Ohio. No damages were sought from the Company and the
Company was later dismissed as a defendant.
In 1996, the Company made demand for payment from EDP, Michael King
and various offshore entities for the $4,264,226 principal of notes payable to
the Company. To date, no responses have been received.
36
<PAGE> 38
ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Price Waterhouse was dismissed by the Company on May 16, 1994. During
the period of time that Price Waterhouse was engaged as the Company's certifying
accountant, no audit was performed and no opinion on the financial statements or
financial condition of the Company was rendered.
The dismissal of Price Waterhouse was approved by the Company's Board
of Directors. Price Waterhouse was engaged in response to management's belief
that a planned application for listing the Company's Common Stock on the
American Stock Exchange would be enhanced by engaging a large national
accounting firm. The Company no longer plans to be listed on the American Stock
Exchange, and management believes an audit by a local firm will be more
economical.
On May 16, 1994 the Company re-engaged the firm of Carneiro, Chumney &
Co., L.C., 40 N.E. Loop 410, Suite 200, San Antonio, Texas, to be its new
principal accountant to audit the Company's financial statements. Carneiro,
Chumney & Co., L.C. was the Company's certifying accountant of record for the
Company's December 31, 1992 fiscal year end report.
The Company solicited three bids for an annual audit at the end of 1994
and on February 28, 1995 The Company accepted the bid submitted by Turner and
Company, P.C., 12700 Park Central Dr., Suite 1610, Dallas, Texas, 75251 and
accepted the resignation of Carneiro, Chumney & Co., L.C.
There are no disagreements with the former accountants on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
37
<PAGE> 39
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of December 31,
1995 are as follows(1):
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ---- --- ------
<S> <C> <C>
Michael J. King 30 Chairman
Eddie Moore 44 President and Chief Executive Officer
Robert A. Phillips 36 Executive Vice President, Chief Financial Officer and
Director
John W. Pittman 33 Vice President - Franchise Sales and Financing
Eugene L. Fry 36 Vice President - Installation and Service and Director
</TABLE>
- -----------------------
(1) Eddie E. Moore submitted his resignation as President and CEO of the
Company by letter dated February 9, 1996,. Michael J. King stated on
February 21, 1996 that he submitted his resignation as Chairman of the
Board of Directors effective February 23, 1996. At a Special Meeting of
the Company's Board of Directors held on February 26, 1996, the
remaining directors, Robert A. Phillips and Eugene L. Fry, accepted the
resignations of Eddie E. Moore and Michael J. King and appointed Arthur
E. Juhl to fill the vacancy on the Board of Directors by appointing him
Chairman of the Board and also appointing him President and Chief
Executive Officer. The Board of Directors granted Arthur E. Juhl the
autonomous power to, among other things, appoint replacement Board
members to fill any vacancies resulting from resignations.
On March 19, 1996, in separate letters, Eugene L. Fry and Robert A.
Phillips resigned as Directors. On March 20, 1996, the Board of
Directors accepted the resignations of Eugene L. Fry and Robert A.
Phillips as Directors and appointed Alan Khoo and Thomas R. Malanca as
to fill the vacancies created by the resignations.
In early 1996 the former Board of Directors and management resigned and
a new Board of Directors and management was installed. The new Board of
Directors consists of Allen Khoo, Thomas R. Malanca and Arthur E. Juhl.
Mr. Juhl is the President and sole officer of the Company. He is
performing the functions of President and Chief Financial Officer. The
term of his employment which is based upon an oral contract is $150,000
per year for two years plus one million shares of common stock of the
Company issuable as follows: 500,000 shares when the Company files the
March 31, 1996 10-Q and the December 31, 1995 10-K with the Securities
and Exchange Commission and the balance of 500,000 shares when the
Company reports a profit for its fiscal year. Tony Oei also has
received 500,000 shares for acting as a consultant.
38
<PAGE> 40
Keith Webb was brought in as President for brief period of time and
subsequently resigned. Jerry Burns, a consultant to the Company,
invested $17,000 for 100,000 shares.
MICHAEL J. KING has served as president, chief executive officer or
director since January 1993 until February 1995. From March 1992 until December
1992, Mr. King served as an independent executive officer of Entertainment
Development Partners based in San Antonio, Texas. From April 1989 until February
1990, Mr. King was the managing director of Adams, Hamilton, Ward & Company
based in San Antonio, Texas. From October 1986 until April 1989, Mr. King served
as president and chief executive officer of Control Technology, Inc. based in
San Antonio, Texas.
EDDIE E. MOORE became president and chief executive officer in February
of 1995. Prior to promotion, he was vice president of manufacturing for the
Company. Mr. Moore has gained extensive experience as a moderator and an
operations manager during his five-year tenure as an engineering liaison between
the United States Air Force and Boeing Aircraft Company. He was formally trained
as an electronics engineer and spent a total of 11 years in the field
supervising, training, and trouble-shooting with Boeing and Cessna Aircraft
Companies.
ROBERT A. PHILLIPS has served as executive vice president and chief
financial officer since February 1994. Prior to assuming the current position he
served as the Company's analysis. He has been a financial services
representative for Allmerica Financial and holds an M.B.A. from Texas A&M
University in financial management. Prior to his studies, he was president of
Gulfstream Graphics and a partner of C.E.S., a Corpus Christi, Texas based
construction company.
JOHN W. PITTMAN has served as vice president - franchise sales and
financing since January 1993. From November 1991 until January 1993, Mr. Pittman
was finance director, regional finance consultant with the Singer Group and
Metro Mitsubishi. From November 1988 until October 1991, Mr. Pittman was finance
director, general manager trainee of Bensen Nissan in San Antonio, Texas. From
June 1986 until February 1988, Mr. Pittman was a loan officer with Groos Bank,
San Antonio, Texas.
EUGENE L. FRY has served as vice president - franchise development and
engineering since inception. Since February 1990, Mr. Fry has been president of
Entertainment Development Partners, San Antonio, Texas. From August 1985 until
February 1990, Mr. Fry was president and chief executive officer of Compu-CAD
Services, Inc., San Antonio, Texas.
Directors of the Company are elected at its annual meeting of
shareholders and serve until their successors take office or until their death,
resignation or removal.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than 10% stockholders
are required by SEC regulation to furnish the Company with copies of all
Section 16(a)
39
<PAGE> 41
forms they file.
The Company's executive officers or directors have not filed reports
required by Section 16(a). Management is unable to locate Messrs. King, Moore,
Pittman, and Fry, and is thus not able to file such reports on their behalf.
40
<PAGE> 42
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information with respect to the chief
executive officer of the Company for the year ended December 31, 1993, 1994 and
1995:
Summary Compensation Table(1)
<TABLE>
<CAPTION>
===========================================================================================================================
Name and Principal Position Annual Compensation Long Term Compensation All Other
---------------------------------------------------------------- Compensation
Year Salary Bonus Other SAR's Restricted LTIP ($)
Shares Payouts
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MICHAEL J. KING, President, 1995 $68,314
Chief Executive Officer and ------------------------------------------------------------------------------------------
Chairman of the Board of 1994 $68,314 (1)
Directors ------------------------------------------------------------------------------------------
1993 $68,314
===========================================================================================================================
</TABLE>
(1) Michael J. King was awarded 165,000 common stock shares underlying currently
exercisable warrants exercisable at $0.50.
During 1993, Louis J. Fox conducted consulting services to the Company
in exchange for 10,000 shares of restricted Common Stock. The nature of his
services was as a business advisor and to negotiate with civic organizations
regarding zoning issues surrounding placement of Cash Can units. Mr. Fox was the
President and Chief Operating Officer from February 1994 until November 1994 and
a Director until March 1995, with an annual salary of $120,000 per annum. He was
awarded a signing bonus of 50,000 warrants to purchase an aggregate of 50,000
common shares at a per share exercise price of $8.00 per share.
WARRANTS
The following table shows, as to all executive officers and directors,
certain information concerning all outstanding individual ownerships and grants
of warrants as of December 31, 1994.
<TABLE>
<CAPTION>
Warrants Exercise Expiration
Owned Price Date
-------- ----- ----
<S> <C> <C> <C>
Louis J. Fox 50,000 $8.00 04/97
Other Warrants Outstanding:(1) 1,467,500 $0.20 - $8.00 12/95 - 05/97
</TABLE>
- ------------------
(1) Other warrants outstanding are not held by officers or directors.
No compensation is paid to any director in such capacity other than
reimbursement of out-of-pocket expenses to attend Board and Committee meetings.
The Company has not established a stock option plan or any long-term
incentive plans.
41
<PAGE> 43
The Company has established a compensation committee.
42
<PAGE> 44
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of December 31, 1995 by (i) each
person known by the Company to be the beneficial owner of more than five percent
of the Common Stock, (ii) each director of the Company owning Common Stock,
(iii) each executive officer of the Company owning Common Stock and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS (1) NUMBER OF SHARES PERCENT OF TOTAL(2)
- -------------------- BENEFICIALLY OWNED(2)
------------------
<S> <C> <C>
Michael J. King* 165,000 1.95%
Louis J. Fox(3)* 60,000 +
John Pittman* 68,076 +
Winasco Limited(4)* 298,412 3.53%
K.A.L. Investments, Ltd(5)* 300,000 3.55%
Eddie Moore 85,000 1.00%
Elizabeth Moore 60,000 +
Eugene Frye 60,000 +
John Pittman 60,000 +
Robert Phillips 60,000 +
All directors and officers as a group (three persons)* 293,076 3.47%
</TABLE>
- ---------------
* This information is derived from previously reported stockholder information.
The Company may at some future date contest the validity of the issuance of some
of these shares. This statement does not constitute an admission as to the
validity of the shares.
+ Represents less than 1% of the outstanding shares.
(1) Unless otherwise indicated, the business address of each individual is the
same as the address of the Company's principal executive offices located at 5020
Service Center Drive, San Antonio, Texas 78218.
(2) In calculating percentage ownership, all shares of Common Stock which the
named stockholder has the right to acquire upon exercise of stock options
exercisable within 60 days of December 31, 1995 are deemed to be outstanding for
the purpose of computing the percentage of Common Stock owned by such
stockholder, but are not deemed to be outstanding for the purpose of computing
the percentage of Common Stock owned by another stockholder. Percentages may be
rounded.
(3) Mr. Fox was awarded 50,000 warrants as a signing bonus in February 1993,
these options were immediately exercisable.
(4) Winasco Limited can be reached at P.O. Box 35, Douglas, Isle of Man, Great
Britain .
(5) K. A. L. Investments, Ltd. can be reached at 4628 So. Mt. Springs Ct., Salt
Lake City, Utah.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993 the Company received investment banking services worth
$64,000 from EDP Capital Group, Ltd. ("EDP"). EDP is owned by Joseph J. King,
the brother of Michael J. King, Chief Executive Officer of the Company. $16,000
of the fees were paid during 1993 and $48,000 was accrued on the consulting
agreement which was terminated in May 1993. EDP provided development stage
funding to the Company and, as of December 31, 1993, the payable balance due to
EDP totaled $600,632 with the majority of this balance representing direct loans
which are due on a demand basis. During 1994, the Company secured an additional
$335,019 in cash advances which were converted into a reduction of debt in
exchange for Common Stock. 500,000 shares of stock were exchanged for reduction
of debt of $1,000,775 and notes payable of $1,999,225. The Company holds the
stock certificates until the notes are satisfied. An accounts payable balance
from EDP to the Company of $82,760 is due at year end 1994. See Note 11 of the
Financial Statements and notes thereto.
43
<PAGE> 45
The Company subleased office space during 1994 from Entertainment
Development Partners, a venture capital firm which assisted the Company during
early development. The president of Entertainment Development Partners is Eugene
L. Fry.
As of December 31, 1995, a net Balance Due from EDP to Cash Can was
$21,141. The Company holds this receivable as a loss reserve as it is doubtful
that full collection may occur. There were limited transactions between Cash Can
and EDP during 1995.
44
<PAGE> 46
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits to this Registration Statement are filed
herewith:
<TABLE>
<CAPTION>
Exhibit Number Exhibits
<S> <C>
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
4.1 Form of Certificate evidencing shares of Common Stock(1)
10.1 Franchise Offering Circular(1)
10.2 Franchise Agreement(1)
10.3 Multi Unit Franchise Agreements(1)
10.4 Office Lease Agreement San Antonio, Texas(1)
10.5 Assembly Plant Lease Agreement San Antonio, Texas(1)
10.6 Trademark Registration(1)
10.7 Patent #4,989,507(1)
10.8 Patent #4,989,507 Assignment from Gadar Industries to
Cash Can Incorporated(1)
10.9 Application for United States Letter Patent(1)
10.10 Assignment of Letter Patent Application from Gene Fry to Cash
Can Incorporated(1)
10.11(a) Note dated September 19, 1994, by and between the Registrant and
Saturn Holdings, Inc.
10.11(b) Note dated September 19, 1994, by and between the Registrant and
Monarch Sales Corporation
10.11(c) Note dated September 19, 1994, by and between the Regbistrant and Tyne
Properties Limited
10.11(d) Note dated September 19, 1994, by and between the Registrant and EDP
Capital Group, Ltd.
10.11(e) Note dated September 19, 1994, by and between the Registrant and EDP
Capital Group, Ltd.
10.11(f) Note dated September 19, 1994, by and between the Registrant and Summit
Export Corporation
10.11(g) Note dated September 19, 1994, by and between the Registrant and Winasco Limited
10.11(h) Note dated September 19, 1994, by and between the Registrant and Winasco Limited
10.11(i) Note dated September 19, 1994, by and between the Registrant and Transtech Supply
Corporation
10.11(j) Note dated September 19, 1994, by and between the Registrant and Transtech Supply
Corporation
10.11(k) Note dated September 19, 1994, by and between the Registrant and Fairgreen, Inc.
10.11(l) Note dated September 19, 1994, by and between the Registrant and Fairgreen,
</TABLE>
45
<PAGE> 47
<TABLE>
<S> <C>
Inc.
10.11(m) Note dated September 19, 1994, by and between the Registrant and Norton Resources
Limited
10.11(n) Note dated September 19, 1994, by and between the Registrant and Glenmore
Investment Ltd.
10.11(o) Note dated September 19, 1994, by and between the Registrant and Arcadia
Corporation
10.11(p) Note dated September 19, 1994, by and between the Registrant and Monarch
Sales Corporation
10.11(q) Note dated September 19, 1994, by and between the Registrant and Octagon Research
Limited
10.11(r) Note dated September 19, 1994, by and between the Registrant ant Atlas Electronics
Limited
10.11(s) Note dated September 19, 1994, by and between the Registrant ant Atlas Electronics
Limited
10.11(t) Note dated September 19, 1994, by and between the Registrant and Summit Export
Corporation
10.11(u) Note dated September 19, 1994, by and between the Registrant and Target Marketing
Associates Limited
10.11(v) Note dated September 19, 1994, by and between the Registrant and Union Trade &
Commerce Limited
10.11(w) Note dated September 19, 1994, by and between the Registrant and H.D. Carver
10.11(x) Note dated September 19, 1994, by and between the Registrant and Michael J. King
10.11(y) Note dated September 19, 1994, by and between the Registrant and Tyne Properties
10.12 Consulting Agreement by and between the Registrant and William M. Rhoades dated
March 23, 1993
10.13 Patent Purchase Agreement by and between the Registrant and Gadar Industries, Inc.
dated March 23, 1993
21.1 Subsidiary Certificate of Incorporation Aluminum Processing, Inc.(1)
27 Financial Data schedule
</TABLE>
- ---------------
(1) Incorporated by reference to the Company's 10-KSB for the year ended
December 31,1993, Commission File No. 0-19851; same exhibit number.
(b) REPORTS ON FORM 8-K
No Current Reports on Form 8-K were filed by the Registrant during the
fourth quarter of 1995.
46
<PAGE> 48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Cash Can Incorporated
Date: August 12, 1996 By /s/ Arthur E. Juhl
--------------- -------------------------------------------------
Arthur E. Juhl, President/Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons in the capacities and on
the dates indicated.
/s/ Arthur E. Juhl (Principal Executive Officer) August 20, 1996
- ----------------------
Arthur E. Juhl,
President, Chief Executive Officer, Chairman
/s/ Robert A. Phillips Chief Financial Officer August 12, 1996
- ---------------------- (former)
/s/ Alan Khoo Director August 20, 1996
- ----------------------
Alan Khoo
/s/ Thomas R. Malanca Director August 20, 1996
- ----------------------
Thomas R. Malanca
47
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Saturn Holdings, Inc., P.O. Box 556, Charleston, Nevis West Indies
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Three Hundred and Four Thousand Two Hundred Twenty Five
Dollars and seventy-seven cents ($304,225.77)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 80,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this Note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
SATURN HOLDINGS, INC.
BY:
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Monarch Sales Corporation, Level 43 Grosvenor Place, 225 George Street,
Sydney, New South Wales, 2000
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty Nine Thousand Dollars ($89,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of
protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
MONARCH SALES CORPORATION
BY:
----------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
----------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Tyne Properties Limited, P.O. Box 362, Road Town, Tortola, British
Virgin Islands
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7 3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments securing
or collateral to it shall become immediately due at the election of Payee.
Maker and each surety, endorser, and guarantor waive all demands for payment,
presentations for payment, notices of intention to accelerate maturity, notices
of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
TYNE PROPERTIES LIMITED
BY: [SIG]
------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY:
------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: EDP Capital Group, Ltd., 5828 Broadway, #325, San Antonio, Bexar,
Texas 78209
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Seventy-Five Thousand Dollars ($75,000)
Interest Rate: Seven and three quarter percent (7 3/4%)
Security for Payment: This Note is secured by 150,000 post split, common
shares of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (24 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
EDP CAPITAL GROUP, LTD.
BY: /s/ E. A. Ward
-----------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
-----------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: EDP Capital Group, LTD., 5928 Broadway, #325, San Antonio, Texas 78209
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Ninety Thousand Dollars ($90,000)
Interest Rate: Seven and three quarter percent (7 3/4%).
Security for Payment: This Note is secured by 15,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
EDP CAPITAL GROUP, LTD.
BY: E. D. Moore
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Summit Export Corporation, Les Cascade Building, 5th Floor, Edith
Cavell Street, Port Louis, The Republic of Mauritius
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty Nine Thousand Dollars ($89,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this Note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law, any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the content requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
SUMMIT EXPORT CORPORATION
BY: [Illigible]
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Winasco Limited, P.O. Box 35, Douglas, Isle of Man, Great Britain
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Thirty-Seven Thousand Dollars ($137,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 34,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
WINASCO LIMITED
BY:
-----------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
-----------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Winasco Limited, P.O. Box 35, Douglas, Isle of Man, Great Britain
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twenty-Five Thousand Dollars ($25,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 50,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place of payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
WINASCO LIMITED
BY:
------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Transtech Supply Corporation, 24 Raffles Place, 26-05 Clifford Centre
0104, SINGAPORE
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Ninety-One Thousand Dollars ($91,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of
protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
TRANSTECH SUPPLY CORPORATION
BY: /s/
----------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
----------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Transtech Supply Corporation, 24 Raffles Place, 26-05 Clifford Centre
0104, Singapore
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7 3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, notices of intention to accelerate maturity, notices of acceleration of
maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
TRANSTECH SUPPLY CORPORATION
BY: [SIG]
------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY:
------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Fairgreen, Inc.
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
FAIRGREEN, INC.
BY: [Illigible]
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY:
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Fairgreen, Inc., P.O. Box F40643, Freeport, Bahamas.
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty Nine Thousand Dollars ($89,000)
Interest Rate: Seven and three quarter percent (7 3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
FAIRGREEN, INC.
BY: [SIG]
-----------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
-----------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Norton Resources Limited, 18th Floor, Hutchison House, 10 Harcourt
Road, Hong Kong.
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Fifty Three Thousand Dollars ($153,000).
Interest Rate: Seven and three quarter percent (7-3/4%).
Security for Payment: This Note is secured by 38,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of
protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credit on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
NORTON RESOURCES LIMITED
BY: /s/ (SIG)
----------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
----------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Glenmore Investment Ltd., P.O. Box 281, London WC1B 3NW, United Kingdom
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Fifty Three Thousand Dollars ($153,000)
Interest Rate: Seven and three quarter percent (7 3/4%)
Security for Payment: This Note is secured by 38,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, notices of intention to accelerate maturity, notices of acceleration of
maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
GLENMORE INVESTMENT LTD.
BY: [SIG]
------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: /s/ ROBERT A. PHILLIPS
------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Arcadia Corporation, P.O. Box 30862 SMB, Georgetown, Cayman Islands
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Thirteen Thousand Dollars ($113,000)
Interest Rate: Seven and three quarter percent (7 3/4%).
Security for Payment: This Note is secured by 28,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that his Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
ARCADIA CORPORATION
BY: [SIG]
------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Monarch Sales Corporation, Level 43 Grosvenor Place, 225 George Street,
Syndey, New South Wales, 2000.
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this Note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
MONARCH SALES CORPORATION
BY: [Illigible]
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY:
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Octagon Research Limited, Spalentorweg 20, P.O. Box 109, CH-4009 Basel
Switzerland
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Ninety Thousand Dollars ($190,000).
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 50,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
OCTAGON RESEARCH LIMITED
BY:
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Atlas Electronics Limited, Rua Das Murcas No. 68. 9000 Funchai,
MADERIA
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty Nine Thousand Dollars ($89,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate maturity,
notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged to
or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited an the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
ATLAS ELECTRONICS LIMITED
BY:
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Atlas Electronics Limited, Rua Das Murcas No. 68, 9000 Funchal,
MADERIA
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this Note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
ATLAS ELECTRONICS LIMITED
BY:______________________________
Accepted by Payee:
CASH CAN INCORPORATED
BY:______________________________
ROBERT A PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Summit Export Corporation, Les Cascades Building, 5th Floor, Edith
Cavell Street, Port Louis The Republic of Mauritius
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Twelve Thousand Five Hundred Dollars ($12,500)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 25,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and
unpaid interest shall be due and payable on or before twelve months (12 months)
after the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this Note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
SUMMIT EXPORT CORPORATION
BY:______________________________
Accepted by Payee:
CASH CAN INCORPORATED
BY______________________________
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Target Marketing Associates Limited, Companies House, Tower Street,
Ramsey Isle of Man
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Thirteen Thousand Dollars ($113,000).
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 28,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the term of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law; any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
TARGET MARKETING ASSOCIATES LIMITED
BY: [SIG]
------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Union Trade & Commerce Limited, 72 New Bond Street, London W1Y 9DD
England
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: One Hundred Twenty Thousand ($120,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 30,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonsurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration required, or permitted prepayment, any such
excess shall be cancelled automatically as of the acceleration or prepayment
or, if already paid, credited on the debt or, if the principal of the debt has
been paid, refunded. This provision overrides other provisions in this and all
other instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
UNION TRADE & COMMERCE LIMITED
BY: [SIG]
------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: H. D. Carver, 19326 Boca Del Mar, San Antonio, Bexar, Texas 78258
Place For Payment: 1100 NE Loop 410, Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Seventy-Five Hundred Dollars ($7,500)
Interest Rate: Seven and three quarter percent (7-3/4)
Security for Payment: This Note is secured by 15,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged to
or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonsurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration required, or permitted prepayment, any such
excess shall be cancelled automatically as of the acceleration or prepayment
or, if already paid, credited on the debt or, if the principal of the debt has
been paid, refunded. This provision overrides other provisions in this and all
other instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
H.D. CARVER
BY: [Sig]
--------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
---------------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
PAGE 2 OF 2
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Michael J. King, 14610 Cadillac Drive, San Antonio, Bexar, Texas 78248
Place For Payment: 1100 NE Loop 410, Suite 900 San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty-Two Thousand Five Hundred Dollars ($82,500)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 165,000 post split, common shares
of stock.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (24 months) after
the date of this Note.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity, protests and notices of
protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights and
remedies hereunder may be assigned, transferred, hypothecated, or pledged to or
for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum amount
of nonsurious interest that may be contracted for, taken, reserved, charged, or
received under law, any interest in excess of that maximum amount shall be
credited on the principal of the debt or, if that has been paid, refunded. On
any acceleration required, or permitted prepayment, any such excess shall be
cancelled automatically as of the acceleration or prepayment or, if already
paid, credited on the debt or, if the principal of the debt has been paid,
refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
MICHAEL J. KING
BY: [Sig]
-----------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
-----------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
NOTE
Date: September 19, 1994
Maker: Tyne Properties, P.O. Box 362, Road Town Tortola, British Virgin Islands
Place For Payment: 1100 NE Loop 410 Suite 900, San Antonio Bexar, Texas 78209
Payee: Cash Can Incorporated
Principal Amount: Eighty Nine Thousand Dollars ($89,000)
Interest Rate: Seven and three quarter percent (7-3/4%)
Security for Payment: This Note is secured by 24,000 units, stock/warrants.
Terms of Payment (principal and interest): Principal and all accrued and unpaid
interest shall be due and payable on or before twelve months (12 months) after
the date of this Note
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any obligation
in any instrument securing the collateral to it, the unpaid principal balance
and earned interest on this note and all obligations in all instruments
securing or collateral to it shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentations for payment, notices of intention to accelerate maturity,
notices of acceleration of maturity, protests and notices of protest.
If this note is given to an attorney for collection, or if suit is brought for
collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees which shall be 10% of all amounts due
unless either party pleads otherwise.
Payee agrees to deliver to Maker ten (10) days prior written notice of any
proposed assignment, transfer, hypothecation or pledge of the Note, it being
understood that this Note, the collateral securing this Note, and the rights
and remedies hereunder may be assigned, transferred, hypothecated, or pledged
to or for the account of any respective successors and assigns. Further, all
payments hereunder shall be made to the account of Payee unless the notice
described above Maker to make future payments to the subsequent holder hereof.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonsurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration required, or permitted prepayment, any such
excess shall be cancelled automatically as of the acceleration or prepayment
or, if already paid, credited on the debt or, if the principal of the debt has
been paid, refunded. This provision overrides other provisions in this and all
other instruments concerning the debt.
<PAGE> 2
When the context requires, singular nouns and pronouns include the plural. The
terms Maker and Payee also include their respective heirs, personal
representatives, and assigns.
Executed by Maker:
TYNE PROPERTIES
BY: [Sig]
------------------------------
Accepted by Payee:
CASH CAN INCORPORATED
BY: ROBERT A. PHILLIPS
-----------------------------
ROBERT A. PHILLIPS
EXECUTIVE VICE PRESIDENT
<PAGE> 1
EXHIBIT 10.12
CONSULTING AGREEMENT
This Agreement is made as of March 23, 1993, by and between William M.
Rhoades whose present address is 5765 214th North, Forest Lake, Minnesota 55025
(herein called "RHOADES"), and CASH CAN, INC. whose present address is 1100
North East Loop 410, Suite 900, San Antonio, Texas 78209.
BACKGROUND
CASH CAN is engaged in the development and commercialization of a
collector for empty, used recyclable beverage cans (herein called "THE
PROJECT"), and has acquired and will hereafter acquire inventions and
confidential information relating to THE PROJECT.
RHOADES has been hired for or assigned to duties which will include
work on or related to THE PROJECT.
RHOADES: (a) will obtain access to confidential information about THE
PROJECT; (b) is expected, in consideration of his or her employment, to utilize
the confidential information for the benefit of CASH CAN; and (c) may make
inventions and improvements in or relating to THE PROJECT or the business of
CASH CAN.
AGREEMENT
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto (intending to be legally bound) have
agreed as follows:
ARTICLE I
DEFINITION OF TERMS
The following capitalized terms, when used in this agreement, have the
following meanings:
1.1 "CONFIDENTIAL INFORMATION" means information not generally
known about the business of CASH CAN including information relating to new
products, research, development, unpublished financial data, business systems,
computer programs, marketing, customer lists and customer needs or
requirements. Although the term "CONFIDENTIAL INFORMATION" includes trade
secrets, it also includes all other information which would not qualify as
trade secret but which is not generally known to CASH CAN's competitors. All
information disclosed to RHOADES, or to which is marked by CASH CAN as being
CONFIDENTIAL INFORMATION, shall be treated to be CONFIDENTIAL INFORMATION.
1.2 "INVENTIONS" means all discoveries, improvements, and ideas
(whether or not protected by patents, trademark registrations, or copyrights).
1.3 "PATENT PURCHASE AGREEMENT" means that agreement between CASH
CAN and Gadar Industries, Inc. of Forest Lake Minnesota, for the transfer of
U.S. Patent No. 4,989,507, entered into on March 23, 1993.
<PAGE> 2
ARTICLE II
COMPENSATION AND DURATION
2.1 For consulting services to be rendered, CASH CAN agrees to pay
to RHOADES Three Thousand Dollars ($3,000.00) per month for a period of
twenty-four (24) months, and Five Thousand Dollars ($5,000.00) per month for
the next following sixty months (60).
2.2 The payments shall continue until either of the following
occurs:
(a) Gadar Industries, Inc. converts any of its preferred stock in
CASH CAN as received pursuant to the PATENT PURCHASE AGREEMENT
at which time the payments shall be reduced by a percentage
equal to the prorated percentage of stock converted.
(b) CASH CAN redeems the preferred stock issued to Gadar Industries,
Inc., pursuant to the PATENT PURCHASE AGREEMENT or its
redemption value of Ten Dollars ($10.00) per share.
2.3 All travel expenses, pre-approved by CASH CAN, incurred by
RHOADES related to this CONSULTING AGREEMENT including those relating to public
relations shall be reimbursed by CASH CAN.
ARTICLE III
FUTURE INVENTIONS AND PATENTS
3.1 Except as set forth in Paragraph 3.2 hereof, RHOADES agrees to
promptly and fully inform CASH CAN or its designee, in writing, of all
INVENTIONS which RHOADES (whether alone or acting with others) may conceive or
first reduce to practice during the period of his relationship with CASH
CAN, or any time after termination of his employment if the INVENTION is based
upon CONFIDENTIAL INFORMATION.
3.2 Pursuant to Minnesota Statute 181.78, RHOADES shall retain
ownership of any inventions made by him which meet all of the following tests:
(a) for which no equipment, supplies, facilities or trade secret
information of CASH CAN was used;
(b) was developed by RHOADES entirely on his own time;
(c) does not relate directly to the business of CASH CAN or to CASH
CAN's actual or demonstrably anticipated research or
development; and
(d) did not result from any work performed by RHOADES for CASH CAN.
3.3 RHOADES agrees to give prompt written notice to CASH CAN of the
filing by him of any patent or copyright or trademark application filed during
their relationship. Such notice shall be accompanied by a copy of the
application.
<PAGE> 3
ARTICLE IV
GOVERNING LAW AND ARBITRATION
4.1 This Agreement is made in the state of Minnesota and shall be
governed by the laws of the State of Minnesota.
4.2 All disputes arising out of or relating to this agreement or its
subject matter or its enforcement (including any issues of fraud and
enforceability), which disputes are solely between CASH CAN and RHOADES, shall
be settled by arbitration to be held in Saint Paul, Minnesota, in accordance
with the then existing Commercial Rules of the American Arbitration Association.
Pre-hearing discovery shall be permitted in accordance with the then-existing
Federal Rules of Civil Procedure. The award of all or a majority of the
arbitrators may be entered in any court having jurisdiction (including any state
or Federal Court of Minnesota). Either party may, at its election, seek and
obtain appropriate injunctions and other court orders by judicial proceedings to
prevent the transfer or destruction of documents or other property or to
otherwise preserve its rights or any property pending arbitration.
ARTICLE V
GENERAL PROVISIONS
5.1 This agreement shall inure to the benefit of and be binding upon
the parties, their heirs, successors and assigns.
5.2 This agreement along with the Patent Purchase Agreement
constitutes the entire understanding between the parties hereto with respect to
the consulting agreement relating to THE PROJECT between RHOADES and CASH
CAN. Breach of the Patent Purchase Agreement shall constitute a marked breach
of this Consulting Agreement. This agreement can be amended or modified only by
a written instrument executed by both parties hereto.
CASH CAN, INC. WILLIAM M. RHOADES
/s/ MICHAEL J. KING /s/ WILLIAM M. RHOADES
- --------------------------- ------------------------------
Michael J. King William M. Rhoades
<PAGE> 1
EXHIBIT 10.13
PATENT PURCHASE AGREEMENT
This agreement, entered into as of the 23rd day of March, 1993, by and
between Cash Can, Inc., a Texas Corporation having its principal place of
business at 1100 NE Loop 410, Suite 900, San Antonio, Texas 78209 (herein
called "CASH CAN") and Gadar Industries, Inc., a Minnesota Corporation having
its principal place of business at Forest Lake, Minnesota (herein called
"GADAR").
WITNESSETH:
-----------
WHEREAS GADAR owns the RHOADES PATENT (herein defined);
WHEREAS CASH CAN is in the business of recyling metallic containers;
WHEREAS CASH CAN and GADAR wish to join together for the purposes of
financially exploiting the RHOADES PATENT,
NOW THEREFORE, in consideration of the covenants herein contained, the
parties hereto, intending to being legally bound, agree as follows:
ARTICLE I
Definitions
-----------
Whenever they are used in this agreement, the following capitalized
terms shall have the meanings defined in this article.
1.1 "RHOADES PATENT" means United States Letters Patent No.
4,989,507, entitled "Collector for Empty Used Recyclable Beverage Cans".
ARTICLE II
Purchase of RHOADES PATENT
--------------------------
2.1 GADAR, warranting that it has the right to do so, hereby sells
to CASH CAN all right, title and interest in and to the RHOADES PATENT and
shall promptly prepare, execute
1
<PAGE> 2
and forward to CASH CAN a simple assignment in a form suitable for recording in
the U.S. Patent Office.
ARTICLE III
Use of the RHOADES PATENT
3.1 CASH CAN agrees to promote the design, construction or operation
of devices which are the subject of the RHOADES PATENT.
ARTICLE IV
Purchase Price
4.1 The purchase price for the RHOADES PATENT shall be as follows.
CASH CAN will pay to GADAR or to its designee (a) the sum of One Million
Dollars ($1,000,000) for the assignment of the RHOADES PATENT. Payment shall
be made by the issuance of One Hundred Thousand (100,000) shares of CASH CAN,
Inc., Class A convertible preferred stock, Ten Dollars ($10.00) per share
redemption value, seven year term, convertible 2 for 1 to common stock and (b)
One Hundred Twenty-five Thousand (125,000) shares of CASH CAN common stock.
ARTICLE V
Purchase Price
5.1 GADAR makes no warranty and gives no assurance that the
exploitation of the RHOADES PATENT will be free from patent infringement in the
U.S. or elsewhere. GADAR assumes no liability for such patent infringement.
5.2 In the event that the RHOADES PATENT is infringed, CASH CAN shall
have the sole right to initiate action by negotiations or litigation to abate
or eliminate the infringement.
5.3 CASH CAN shall make the necessary payments to maintain the RHOADES
PATENT in force. These payments are to be made by the following anniversaries
of the grant of the RHOADES PATENT: 3-1/2, 7-1/2, and 11-1/2 years.
2
<PAGE> 3
ARTICLE VI
Notice
6.1 Any notice to be given by either party to the other may be served
in person or by telegram or by first class letter sent to last known address or
place of business of the other party, and notice shall operate and be deemed to
have been given at the expiration of two (2) business days from the date of the
telegram or three (3) business dates from the date the letter is deposited in
the U.S. Postal Service unless actual receipt at an earlier date is
established, and proof that (a) the telegram was sent or (b) the letter was
properly addressed and deposited shall be sufficient evidence of service.
Until further advised, all notices shall be sent as follows:
William M. Rhoades Michael J. King
President President
GADAR INDUSTRIES, INC. CASH CAN, INC.
5765-214th Street N. 1100 N.E. Loop 410, Suite 900
Forest Lake, Minnesota 55025 San Antonio, Texas 78209
ARTICLE VII
Arbitration
7.1 All disputes arising out of or relating to this agreement or its
formation (including all issues of fraud or the like) shall be settled by
arbitration to be held in St. Paul, Minnesota pursuant to then existing rules of
the American Arbitration Association. Judgment upon the award of all or a
majority of the arbitrators shall be binding upon the parties hereto and may be
entered in any court having jurisdiction thereof.
ARTICLE VIII
Duration and Termination
8.1 Unless sooner terminated as herein provided, this agreement shall
continue until the expiration of the RHOADES PATENT. Thereafter, neither party
shall be under any further obligations with regard to the other.
3
<PAGE> 4
8.2 If any payment by CASH CAN shall be in arrears and remain unpaid
for a period of ninety (90) days or if either party is in substantial breach of
violation of any of its other duties, covenants or undertakings and has not
remedied the same within two (2) months after notice thereof is given by the
party not in breach or violation or if either party shall go into liquidation,
whether voluntary or compulsory or suffer the appointment of a receiver of its
assets or any substantial part thereof, this agreement can be terminated by
written notice addressed to the party failing to make payment, in breach, in
liquidation or in receivership.
8.3 Termination of this agreement by either party shall not in any
way effect or impair any licenses already granted by CASH CAN. If the
termination is by GADAR because of breach by CASH CAN, CASH CAN shall not
thereafter grant any further licenses and shall promptly assign the RHOADES
PATENT back to GADAR.
8.4 CASH CAN shall have the right to terminate this agreement without
cause at any time upon two (2) months written notice to GADAR.
8.5 GADAR shall have the right to terminate this agreement without
cause at any time after three (3) years from the date hereof if (a) CASH CAN
INC. or any majority shareholder enters voluntary or involuntary bankruptcy;
(b) CASH CAN, INC. fails to redeem each of the One Hundred Thousand (100,000)
shares of Class A convertible preferred stock (that GADAR or its designee did
not previously convert to common stock) on or before March 3, 1999, (c) CASH
CAN fails to make the necessary maintenance payment identified in paragraph 5.3
by the 3-1/2, 7-1/2 or 11-1/2 anniversary of the grant of RHOADES PATENT or (d)
this agreement is adjudicated or otherwise determined or alleged by CASH CAN,
INC. successors or assigns nor legally binding upon CASH CAN, Inc., its
successors or assigns.
4
<PAGE> 5
ARTICLE IX
GENERAL PROVISIONS
9.1 This agreement is made in the State of Minnesota and
constitutes, along with the Consulting Agreement dated March 23, 1993 between
William M. Rhoades and CASH CAN, Inc., the entire understanding between the
parties hereto with respect to the RHOADES PATENT hereinafter granted and
replaces all other purchase or license or technical assistance agreements
concerning the RHOADES PATENT which may have previously existed between the
parties hereto or their representatives, whether written or oral. Breach of
the Consulting Agreement shall constitute a marked breach of this Patent
Purchase Agreement. This agreement can be amended or modified only by a
written instrument executed by both parties hereto.
9.2 This agreement shall enure to the benefit of CASH CAN and
GADAR, their heirs, successors and assign, including the resulting of any
merger, consolidation or reorganization. Prompt notice of any assignment or
transfer of this agreement shall be given to the other party. In no event
shall CASH CAN be required to make payment to more than one person or
organization designated by GADAR.
9.3 If, at any time during the life of this agreement, any
government or agency thereof (including the government of the United States and
its courts) shall directly or indirectly disapprove of this agreement or any
provisions hereof, GADAR and CASH CAN shall attempt to revise this agreement in
a mutually satisfactory manner, and in a manner acceptable to such government
or consistent with any judicial degree. In the event that a mutually
satisfactory solution is not arrived at, CASH CAN and GADAR shall each have the
absolute right to terminate this agreement immediately by giving written notice
to the other party. If so terminated, CASH CAN shall reassign the RHOADES
PATENT to GADAR or its designee.
5
<PAGE> 6
although CASH CAN may continue to sell any devices or equipment which it may
then be manufacturing or for which it may have made substantial preparations to
manufacture, all free of any obligation to GADAR.
In witness whereof, the parties hereto have caused this agreement to be
signed in duplicate.
[SIG] Michael J. King, President
- -------------------------------- --------------------------------
Witness for CASH CAN, INC.
[SIG] William M. Rhoades, President
- -------------------------------- --------------------------------
Witness for GADAR INDUSTRIES
6
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392,855
0
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