<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission File Number 000-21551
Ocurest Laboratories, Inc.
--------------------------
(Exact name of small business issuer as specified in charter)
Florida 65-0259441
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(State or other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
185 East Indiantown Rd., Suite 206, Jupiter, FL 33477
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(Address of principal executive offices)
(561) 746-1394
--------------
(Issuer's telephone number, including area code)
4400 PGA Boulevard, Suite 300, Palm Beach Gardens, FL 33410 (Former
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name, former address and former fiscal year if changed since last
report)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
As of November 21, 1997 the issuer had outstanding 4,147,674 shares of common
stock, $0.008 par value.
Transitional Small Business Disclosure Format: YES [ ] NO [X ]
As previously reported, on October 14, 1997 John F. Carlson and Edmund G.
Vimond, Jr. were removed as the sole members of the then Board of Directors of
the small business issuer. On the same day, Messrs. Carlson and Vimond were
removed as the sole officers of the small business issuer. Messrs. Carlson and
Vimond have not participated with present management in the preparation of this
Quarterly Report on Form 10-QSB. The contents of this Quarterly Report are
primarily based upon books, records and other documents maintained by the small
business issuer's former management. As a result thereof and the relatively
short period of time that present management has been in office, present
management has not been able to confirm whether this Quarterly Report contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made herein, in the light of the
circumstances in which they were made, not misleading.
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
OCUREST LABORATORIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
09/30/97 09/30/96 12/31/96
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash $ 6,699 $ 405,880 $ 1,077,400
Accounts receivable-customers 58,779 132,467 164,954
Inventories 594,625 698,925 963,243
Prepaid expenses 142,000 84,000 63,256
----------- ----------- -----------
Total current assets 802,103 1,321,272 2,268,853
Property and Equipment, at cost, net 1,311,987 942,631 843,606
Other Assets
Patent and trademark licensing rights, net 101,875 120,775 118,900
Deposits 19,426 12,000 406,471
Deferred offering costs - 190,512 -
Organizational Costs - 4,000 -
----------- ----------- -----------
Total other assets 121,301 327,287 525,371
Total Assets $ 2,235,391 $ 2,591,190 $ 3,637,830
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 1,800,683 $ 1,637,335 $ 831,582
Accrued salaries and taxes 55,033 98,508 -
Accrued expenses 229,501 241,634 439,724
Accrued interest 25,225 142,791 -
Notes payable-trade 300,000 - 300,000
Notes payable-stockholders 30,000 1,715,130 30,000
Judgement payable-factor 852,800 - -
Advances payable factor - 260,000 988,520
Capital leases 6,069 - -
----------- ----------- -----------
Total current liabilities 3,299,311 4,095,398 2,589,826
Stockholders' Equity (Deficit)
Preferred stock - $.01 par value, 5,000,000 shares
authorized - none issued
Common stock, $.008 par value, 25,000,000 shares 33,181 15,322 24,981
authorized, 4,147,674 and 1,922,674 shares issued
and outstanding September 30, 1997 and September 30,
1996, respectively
Paid-in capital 9,300,960 5,065,152 8,934,160
Retained earnings (deficit) (10,398,062) (6,584,682) (7,911,137)
----------- ----------- -----------
Total stockholders' equity (deficit) (1,063,921) (1,504,208) 1,048,004
Total liabilities and stockholders' equity (deficit) $ 2,235,390 $ 2,591,190 $ 3,637,830
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement
2
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Ocurest Laboratories, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 157,306 $ 289,174 $ 1,161,506 $ 1,023,465
Cost of goods sold 133,024 195,007 738,279 638,586
----------- ----------- ----------- -----------
Gross profit 24,282 94,167 423,227 384,879
Selling and marketing expenses 533,053 224,332 1,747,094 863,384
General and administrative expens 233,443 312,605 881,591 797,253
Royalty expense 7,807 11,556 47,980 40,936
----------- ----------- ----------- -----------
Operating income (loss) (750,021) (454,326) (2,253,438) (1,316,694)
Interest expense (62,619) (121,415) (249,637) (269,497)
Interest income 999 0 16,150 0
----------- ----------- ----------- -----------
Net income (loss) before taxes (811,641) (575,741) (2,486,925) (1,586,191)
Provision for taxes - - - -
----------- ----------- ----------- -----------
Net income (loss) $ (811,641) $ (575,741) $(2,486,925) $(1,586,191)
=========== =========== =========== ===========
Net income (loss) per share $ (0.20) $ (0.30) $ (0.60) $ (0.82)
=========== =========== =========== ===========
Shares outstanding 4,147,674 1,922,674 4,147,674 1,922,674
</TABLE>
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OCUREST LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows (used in) from operating activities
Net loss $(2,486,925) $(1,586,191)
Adjustments to reconcile net loss to net cash
used in operating activities:
Professional services paid with stock 375,000 18,750
Accrued salaries paid with stock - 8,140
Interest expense paid with stock - 53,425
Depreciation & amortization 144,104 99,030
(Increase) decrease in assets:
Accounts receivable 106,175 (67,327)
Inventories 368,618 (162,115)
Prepaid expenses (78,744) (14,327)
Increase (decrease) in liabilities:
Accounts payable 998,325 (251,778)
Accrued expenses (159,189) 118,905
Other liabilities (129,650) -
----------- -----------
Net cash (used in) operating activities (862,286)* (1,783,488)
Cash flows from investing activities
Purchase of property and equipment (532,624) (294,395)
Deposits on fixed assets 324,209 (185,513)
----------- -----------
Net cash (used in) investing activities (208,415)* (479,908)
Cash flows from financing activities
Proceeds from issuance of common stock, net - 1,745,708
Proceeds from new borrowings - 921,960
Principal repayments on indebtedness - -
(Increase) decrease in deferred offering costs - -
----------- -----------
Net cash from financing activities - 2,667,668
----------- -----------
Net increase (decrease) in cash (1,070,701) 404,272
Cash at beginning of period 1,077,400 1,607
----------- -----------
Cash at end of period $ 6,699 $ 405,879
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 224,413 $ 108,807
=========== ===========
Noncash transactions:
Conversion of notes payable to common stock $ - $ 642,058
=========== ===========
</TABLE>
4
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OCUREST LABORATORIES, INC.
STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- -------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,122,674 $24,981 $8,934,160 $(7,911,137) $ 1,048,004
Issuance of stock for cash upon
exercised warrants 25,000 200 (200) - -
Issuance of stock in lieu of cash 1,000,000 8,000 367,000 375,000
for professional services
Net loss for nine months ended - - - (2,486,295) (2,486,295)
September 30, 1997
--------- ------- ---------- ------------ -----------
Balance at September 30, 1997 4,147,674 $33,181 $9,300,960 $(10,397,432) $(1,063,291)
(Unaudited)
</TABLE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
1. Significant Accounting Policies
The quarterly consolidated financial statements herein have prepared by Ocurest
Laboratories, Inc., a Florida corporation, (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
and in accordance with the requirements of Regulation S-B. Certain information
and footnote disclosures which would be included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Although the
Company's management believes the disclosures are adequate to make the
information not misleading, it is suggested that these quarterly financial
statements be read in conjunction with the Company's audited annual consolidated
financial statements and footnotes thereto contained in its definitive
prospectus dated November 12, 1996 (Commission File No. 333-10323), with respect
to its initial public offering of securities (the "IPO") and its Form 10KSB for
December 31, 1996.
The accompanying unaudited interim financial statements include all adjustments
(consisting only of those of a normal recurring nature) necessary for a fair
presentation of the results of the interim period.
2. Advances Payable - Factor
During 1995, the Company entered into an agreement with a factor for the
financing of accounts receivable and inventory. The Company's agreement with the
factor terminated in July 1997. The total amounts financed by the factor
amounted to $852,800 and $988,520 as of September 30, 1997 and December 31,
1996, respectively.
5
<PAGE> 6
Item 2. Management's Discussion and Analysis or Plan of Operation
Unless otherwise indicated, all dollar amounts included in this section have
been rounded to the nearest thousand dollars and the related dollar and
percentage fluctuations are calculated based on such rounding.
Overview
Ocurest Laboratories, Inc. was organized in 1991 to commercialize new consumer
products in the health and personal care industry. For the period from inception
through December 31, 1993 the Company was in the development stage and
accumulated a deficit of $572,379 attributed to developing manufacturing and
marketing plans and paying the cost of professional services. The Company sells
ophthalmic drug solutions in an ophthalmic drug delivery system in the
non-prescription eye drop market. The Company believes that a similar delivery
system has not been and is not currently being marketed by any other entity. The
delivery system is protected by a United States patent and trademark. The
products sold in the delivery system are marketed as Ocurest Sterile Eyedrops in
two over the counter formulations.
In late 1994, the Company began limited marketing of its two OTC formulations
and in 1995 expanded its marketing efforts to 10 southern states. In early 1996
the Company began the process of marketing its products nationally and in
November of 1996 completed an initial public offering raising approximately
$3,800,000.
Net Sales
For the three months ended September 30, 1997 and 1996 the Company had net
losses of ($811,641) and ($575,741) on net sales of $157,306 and $289,174
respectively. The decrease in sales (46%) for the three month period ended 1997
versus 1996 reflects the decline in customer reorders due in large part to the
fact that there was no advertising of the Company's products. The Company does
not intend to begin advertising its products again until the Company obtains
additional financing.
Cost of Goods Sold
Cost of goods were 84% of net sales for the three month period of 1997 as
compared to the 67% cost of goods for the same period in 1996. This increase was
due to additional write-off of obsolete finished goods inventories and returns
of outdated product by the Company's customers.
Selling and Marketing Expenses
Selling and marketing expenses were $533,000 for the three month period ended
September 30, 1997 as compared with $224,000 for the same period in 1996.
$375,000 of the 1997 expense was incurred when previous management entered into
an international marketing agreement with a London based firm which called in
part for the issuance of 1,000,000 Units of the Company's securities that were
then trading on the NASDAQ Small Cap Market. In addition, the agreement called
for cash compensation to be paid as services were performed.
General and Administrative Expenses
General and administrative expenses declined $79,000 (25%) for the three month
period ended September 30, 1997 as compared with the same period in 1996. This
decline was due primarily to reduced outside service expenses.
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Interest Expense
Interest expense was $63,000 in the three month period ended September 1997 as
compared to $121,000 for the same period in 1996. The Company's arrangements
with the factor terminated in July 1996. The Company has been unsuccessful in
obtaining another factor. The Company has also been unsuccessful in negotiating
with other lenders. See "Liquidity and Capital Resources."
Liquidity and Capital Resources
On September 30, 1997 the Company had a working capital deficit of ($ 2,497,000)
and a negative net worth of ($ 1,063,921). Unless the Company can obtain
substantial capital, the Company will be unable to satisfy its indebtedness or
conduct any business operations. The Company has not received any commitments
from others for capital and there can be no assurance that any capital can be
obtained by the Company on terms not unfavorable to the Company, if at all.
Income Taxes
The Company's net operating losses for income tax purposes are subject to
certain restrictions on their utilization. The Company has experienced in 1995
and 1996 changes in ownership under Internal Revenue Service regulations that
will limit the amount of net operating losses that can be utilized in any given
year. If the Company's future pre-tax profits in any given year exceed such
limitation, cash payments of such income tax liabilities will have to be made.
Forward-Looking Statements
The foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations contain various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
v21E of the Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events, including without
limitation the following: the expected growth of the Company's sales to a level
to enable the Company to achieve profitably by the last quarter of 1997; the
Company's ability to secure additional credit facilities in the U.S., if
necessary for the Company to do so; and the sufficiency of the Company's cash
provided by operating, investing and financing activities for the Company's
future liquidity and capital resource needs.
The Company cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward-looking statements, including without limitation the following: general
economic conditions; the demand for the Company's products; the size and timing
of future orders; management's decisions to commence or discontinue product
lines or marketing programs; The Company's ability to introduce new products on
a cost effective and timely basis; the maintenance of present and the
availability of future strategic alliances; the introduction of new products and
the enhancement of products by the company's competitors; changes in the level
of operating expenses; and the present and future level of competition in the
industry. Results actually achieved thus may differ materially from expected
results included in these statements.
7
<PAGE> 8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
An action was brought against the small business issuer by JMR Funding, Inc.
("JMRF") on July 10, 1997 in the Fifteenth Judicial Circuit in and for Palm
Beach County, Florida. JMRF contended that the small business issuer breached
the terms of a factoring agreement between JMRF and the small business issuer.
JMRF sought relief with respect to inventory and accounts receivable and
machinery and equipment collateralizing a loan payable to JMRF. On July 31, 1997
the parties entered into a Stipulation of Settlement which was subsequently
breached by the small business issuer. A final judgement against the small
business issuer was entered on September 4, 1997. Pursuant to the final
judgement and consistent with the factoring agreement between the parties, JMRF
is the owner of all of the finished goods inventory and accounts receivable and
the machinery and equipment was the subject of a foreclosure sale.
On August 6, 1997, a Judgement by Confession of $321,000 was entered against the
Company by Carrafiello-Diehl & Associates, Inc. in an action then pending in the
Supreme Court of the State of New York, County of Westchester.
In August 1997 an action was brought against the Company by EVACO, Inc. in the
Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida.
The Plaintiff alleged that it rendered printing and distribution services to the
Company for which there remains unpaid $104,000 plus interest. The Plaintiff is
seeking a judgement against the Company for such amounts and a reasonable
attorney's fee.
Item 2. - Changes in Securities and Use of Proceeds
(a), (b) Not applicable
(c ) On July 12 1997 the small business issuer sold 1,000,000 units
(the "Units") to Focus on 4, Ltd. ("Focus"). Each of the Units consists
of one share of common stock and a Class A Redeemable Common Stock
Purchase Warrant. Each such Warrant entitles the registered holder
thereof to purchase on share of the small business issuer's common
stock for $4.80 per share, subject to adjustments in certain
circumstances, until November 12, 1999. No principal underwriters were
involved. The Units were sold pursuant to a Sales Representative
Agreement pursuant to which Focus agreed to develop and implement a
marketing program and plan for sales for the small business issuer
initially in England and thereafter in the remainder of Europe and the
Middle East. Focus also agreed to perform certain other funstions in
connection with the foregoing. In consideration of Focus' promises, the
small business issuer issued the Units to Focus and further agreed to
pay Focus commissions of 2% and 5%, as the case may be, of net paid
invoices received from customers or distributors introduced to the
small business issuer by Focus. The Sales Representative Agreement
continues for a term of six years. Pursuant to the Sales Representative
Agreement, the small business issuer agreed to file a registration
statement with the Securities and Exchange Commission not later than
August 10, 1997 which, upon the effectiveness thereof, would permit
Focus to publicly offer and sell the Units in the United States. The
small business issuer has not prepared or filed such registration
statement.
The small business issuer claimed exemption from the registration
requirements of the Securities Act of 1933 pursuant to the provisions
of Section 4(2) thereof inasmuch as the offer and sale of the Units to
Focus did not involve a public offering.
8
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Item 3. Defaults on Senior Securities
The small business issuer borrowed $524,000 from JMRF which was represented by a
promissory note bearing annual interest at 24% and which matured on June 28,
1997. The small business issuer defaulted on its obligation to repay such
promissory note and litigation ensued. The promissory note was secured by the
small business issuer's machinery and equipment. Reference is made to the
response to Item 1 hereof.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 Sales Representative Agreement as of July 12, 1997
between the small business issuer and Focus on 4,
Ltd.
27 Financial Data Schedule (for SEC use only).
(b) Non-applicable
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Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Ocurest Laboratories, Inc.
Date: November 25, 1997 By: /s/ Larry M. Reid
---------------------------------------------------
Larry M. Reid, Principal Executive & Financial Officer
10
<PAGE> 1
EXHIBIT 10
SALES REPRESENTATIVE AGREEMENT
This Sales Representative Agreement (the "Agreement") entered into as
of July 12, 1997 by and between Ocurest Laboratories, Inc. of 4400 PGA
Boulevard, Palm Beach Gardens, Florida 33410 (the "Company") and Focus on 4,
Ltd., 4 Forty Lane, Wembly, Middlesex, HA99EB of London, England (the "Sales
Representative")
In consideration of the mutual promises and covenants contained below,
the parties agree as follows:
1. Services to be rendered. The Sales Representative shall perform
the following marketing and sales services to the best of its abilities
including, without limitation:
(A) Developing and implementing a marketing program and plan for sales
of the Company's eye care and other products for the consumer market
initially in England and thereafter throughout Europe and the Middle
East.
(B) Exercising responsibility for all sales resulting directly or
indirectly from the Sales Representative's introduction to, or other
initiation of business relationships with retail chains and other
distribution organizations, including all after-sales recordkeeping,
order processing and administration, and collection of payments on
these accounts.
(C) The Sales Representative shall sell, pursuant to the terms of this
Agreement, only to those customers for which the Sales Representative
has received the Company's prior written approval. Company approval
shall be conclusively evidenced by the signature of the Company's
authorized representative on the "Sales Representative Customer
Approval Form" which names the proposed customer.
2. Independent contractor status. The Sales Representative expressly
acknowledges that it will be acting as an independent contractor and not as an
employee, for all purposes, including payment of United States or United Kingdom
Social Security withholding tax and all other Federal, state and local taxes.
3. Performance of Sales Representative. The Sales Representative will
use its best efforts to render its services to be provided hereunder in
accordance with applicable professional standards.
4. Commissions and other payments. The Sales Representative's
compensation under this Agreement is limited to: (A) The delivery concurrently
with the execution of this Agreement of 1,000,000 Units (the "Units"), each
consisting of One Share of Common Stock and One Class A Redeemable Common Stock
Purchase Warrant. The Units are identical to those sold by the Company in its
initial public offering on November 12, 1996, and (B) Two Per Cent (2%) of
aggregate net paid invoices up to $9,999,999 and five (5%) percent in excess of
ten million ($10,000,000) Dollars received from customers introduced to the
Company by the Sales Representative or a distributor introduced to the Company
by the Sales Representative provided that any fees payable by the Company to any
distributor introduced by the Sales Representative shall be deducted from the
commission payable to the Sales Representative. For purposes of this Agreement a
"net" paid invoice" shall equal the gross amount of a paid invoice, less
allowances and returns. Commissions shall be paid to the Sales Representative by
the twentieth (20th) day of the month immediately following the month in which
payment on invoices is received. Payment of commissions to the Sales
Representative shall be accompanied by a statement of Commissions. The Company
shall have the absolute right, in its discretion to refuse to accept any orders
procured through the Sales Representative and to refuse to ship the goods
described therein or to make any allowances or
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<PAGE> 2
adjustments to orders and accept any returns of any shipments. The Company shall
notify the Sales Representative in writing of such refusals, allowances or
adjustments.
(5) Investment Representations. The Sales Representative
represents and warrants to the Company with respect to its receipt of the Units
as follows:
(A) It is a resident of the United Kingdom.
(B) It can bear the economic risk of this investment and can afford a
complete loss thereof.
(C) It has sufficient knowledge and experience in business and financial
matters to evaluate the risks of the investment and to make an informed
investment decision with respect thereto.
(D) It has had the opportunity to ask questions of, and to receive answers
from, the Company and its representatives, with respect to the Company.
It acknowledges receipt of a copy of the Company's prospectus dated
November 12, 1996, the Company's 10-KSB report for the year ended
December 31, 1996 and the Company's 10-QSB report for the period ended
March 31, 1997.
(E) The Sales Representative is aware that the purchase or ownership of the
Units is a speculative investment involving a high degree of risk and
that there is no guarantee that the undersigned will realize any gain
from this investment and that the Sales Representative could lose the
total amount of the Sales Representative's investment.
(F) The Sales Representative understands that the Units have not been
registered under the Securities Act of 1933, as the amendment (the
"Act"), nor pursuant to the provisions of the securities or other laws
of any other applicable jurisdictions. The Sales Representative
understands that the Units are being sold and/or transferred in
reliance upon the exemption for private offerings contained in Section
4(2) of the Act. The Sales Representative is fully aware that the Units
to be acquired or owned by the Sales Representative are acquired or
owned in reliance upon such exemptions based upon the Sales
Representative's representations, warranties and agreements. The Sales
Representative is fully aware that the Sales Representative must bear
the economic risk of the Sales Representative's investment herein for
the period of time which is required by the Act because the offering
has not been registered under the Act and that the Sales
Representative's investment in the Units cannot be offered or sold
unless the subject securities are subsequently registered under the Act
or an exemption from such registration is available. The undersigned
understands that no federal or state agency has passed upon or made any
recommendation or endorsement of the Units.
(G) The Sales Representative is making the investment or becoming an owner
of the Units for the Sales Representative's own account and not for the
account of others and for investment purposes only and not with a view
to or for the transfer, assignment, resale or distribution thereof, in
whole or in part. The Sales Representative has no present plans to
enter into any such contract, undertaking, agreement or arrangement.
The Sales Representative understands that the statutory basis on which
the Units are being sold or transferred would not be available if the
Sales Representative's present intention were to hold the Units for a
fixed period or until the occurrence of a certain event. The Sales
Representative realizes that, in the view of the SEC, a purchase now
with a present intent to resell by reason of a foreseeable specific
contemplated liquidation, or settlement of any loan of the Sales
Representative, and for which such Units may be pledged as security or
as donations to religious or charitable institutions for the purpose of
securing a deduction on an income tax return, would, in fact represent
a purchase with an intent inconsistent
<PAGE> 3
with the Sales Representative's representations to the Company, and
the SEC would then regard such sale as a sale for which the exemption
from registration is not available. The Sales Representative will not
pledge, transfer or assign the Units.
(H) The Sales Representative acknowledges that the certificates for the
Units which the Sales Representative will receive will contain a legend
substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOTBEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PUPOSES ONLY AND NOT WITH THE VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, MADE SUBJUECT
TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPINION OF COUNSEL FOR THE COMPANY IS RECEIVED THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
The Sales Representative further acknowledges that any necessary stop
transfer orders will be placed upon the certificates for the Units in
accordance with the Act. The Sales Representative further acknowledges
that the Company is under no obligation to aid the Sales Representative
in obtaining any exemption from registration requirements.
The Company shall promptly register at its expense, the Units being
delivered hereunder to the Sales Representative under the Securities
Act of 1933, as amended, (the "Act") and use its best efforts to have
such Registration Statement declared effective as promptly as is
reasonably practicable after the filing. The Registration Statement
shall be filed with the Securities and Exchange Commission not later
than August 10, 1997. The Sales Representative shall furnish the
Company with all relevant information concerning the proposed method of
sale or other disposition of Units and such other information as may be
reasonably required by the Company properly to prepare and file such
Registration Statement in accordance with applicable provisions of the
Act and the rules and regulations promulgated thereunder. The Company
shall use its best efforts to have the Units listed for trading on
NASDAQ concurrently with the effectiveness of said Registration
Statement or as promptly thereafter as is reasonably practicable.
6. Warranty against prior existing restrictions. The Sales
Representative represents and warrants to the Company that it is not a party to
any agreement containing a non-competition clause or other restriction with
respect to: (A) the services which it is required to perform hereunder; or (B)
the use or disclosure or any information directly or indirectly related to the
Company's business, or to the services it is required to render pursuant hereto.
7. Prohibition against assignment. The Sales Representative agrees, for
itself and on behalf of it's successors, and any person or persons claiming
under him by virtue hereof, that this Agreement and the rights, interests, and
benefits hereunder cannot be assigned, transferred, pledged, or hypothecated in
any way and shall be null and void and shall relieve the Company of any and all
obligations or liability hereunder.
8. Termination of agreement. This Agreement shall continue for a term
of 5 years and may be terminated thereafter at any time by the Company upon the
giving of two (2) weeks' written notice unless extended by mutual written
consent of both parties.
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9. Rights upon termination. Upon the expiration or termination of this
Agreement for any reason, whether with or without cause, the Sales
Representative shall be entitled only to accrued commissions on those contracts
already signed and accepted by the Company prior to the effective data thereof.
Such accrued commissions shall be paid to the Sales Representative within thirty
(30) days of the Company's receipt of the applicable invoice amounts.
10. Modification and waiver. No waiver or modification of this
Agreement shall be valid unless it is in writing and signed by the Company and
the Sales Representative.
11. Binding effect. This Agreement shall be binding upon, and inure to
the benefit of, the Company and its successors, assigns heirs, legal
representatives, executors, and administrators.
12. Governing Law. This Agreement shall be subject to, and governed by,
the laws of the State of Florida.
13. Headings. The headings in this Agreement are inserted for
convenience only and shall not be considered in interpreting the provisions
hereof.
14. Notice. All notices shall be given in writing and sent by
registered or certified mail, return receipt requested, or by a recognized
international overnight courier, and shall be addressed to:
in the case of the Company
Edmund G. Vimond, Jr.
Ocurest Laboratories, Inc.
4400 PGA Boulevard
Palm Beach Gardens, Florida 33410
in the case of the Sales Representative-
Focus 4, Ltd.
4 Forty Lane
Wembly, Middlesex
London, England HA99EB
15. Counterparts. This Agreement may be executed by facsimile and in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
on July 12, 1997.
Sales Representative: Company:
Focus on 4, Ltd. Ocurest Laboratories, Inc.
By: ___________________ By: ____________________
Mohammad Hanif John F. Carlson
President Executive Vice President
4
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