-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IjoF89rOiX6I1RTrKq9zZbhI1d5Y8c1Z2YaF3ttLVMUPBnWf7OzDgMQYoKRAdw2S wKLh7nahzGT7PLWtKZxrRg== 0000950144-98-002715.txt : 19980317 0000950144-98-002715.hdr.sgml : 19980317 ACCESSION NUMBER: 0000950144-98-002715 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19980313 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JET AVIATION TRADING INC CENTRAL INDEX KEY: 0001035119 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 522040613 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-40107 FILM NUMBER: 98565672 BUSINESS ADDRESS: STREET 1: 15675 NW 15TH AVE CITY: MIAMI STATE: FL ZIP: 33169 BUSINESS PHONE: 33169 MAIL ADDRESS: STREET 1: 15675 NW 15TH AVENUE CITY: MIAMI STATE: FL ZIP: 33169 SB-2/A 1 JET AVIATION TRADING, INC. SB-2/A REG. 333-40107 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1998 REGISTRATION NO. 333-40107 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- JET AVIATION TRADING, INC. (Name of small business issuer in its charter) FLORIDA 5008 52-2040613 (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
15675 NORTHWEST 15TH AVENUE MIAMI, FLORIDA 33169 (305) 624-6700 (Address and telephone number of principal executive offices and principal place of business) JOSEPH J. NELSON, PRESIDENT JET AVIATION TRADING, INC. 15675 NORTHWEST 15TH AVENUE, MIAMI, FLORIDA 33169 (305) 624-6700 (Name, address and telephone number of agent for service) With a copy to: SHAPO, FREEDMAN & BLOOM, P.A. 200 SOUTH BISCAYNE BLVD., SUITE 4750 MIAMI, FLORIDA 33131 ATTN: LEONARD H. BLOOM, ESQ. (305) 358-4440 APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after registration statement becomes effective. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -- [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -- [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box [ ] [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] CALCULATION OF REGISTRATION FEE
====================================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------------- Common Stock(1)................... 1,000,000 4.50 $4,500,000 $1,364(2) - ---------------------------------------------------------------------------------------------------------------------- Common Stock...................... 1,969,000 4.50 $8,860,500 $2,685(2) ======================================================================================================================
(1) Shares of Common Stock offered for sale upon exercise of outstanding Warrants. (2) This fee was previously paid with the initial filing on November 13, 1997. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE. ================================================================================ 2 JET AVIATION TRADING, INC. CROSS-REFERENCE SHEET SHOWING LOCATION OR CAPTION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2
ITEM REGISTRATION STATEMENT ITEM NUMBER AND HEADING LOCATION OR CAPTION IN PROSPECTUS - ---- ---------------------------------------------- --------------------------------- 1. Front of Registration Statement and Outside Front Cover Page of Prospectus............ Outside front cover of Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus................................ Inside front and outside back cover pages of Prospectus 3. Summary Information and Risk Factors........ Prospectus Summary; the Company; Risk Factors 4. Use of Proceeds............................. Use of Proceeds 5. Determination of Offering Price............. The Offering 6. Dilution.................................... Dilution 7. Selling Security Holders.................... Selling Security Holders 8. Plan of Distribution........................ Outside front cover page; Plan of Distribution 9. Legal Proceedings........................... Business 10. Directors, Executive Officers, Promoters and Control Persons........................... Management 11. Security Ownership of Certain Beneficial Owners and Management..................... Principal Stockholders 12. Description of Securities................... Description of Securities 13. Interest of Named Experts and Counsel....... Legal Matters; Experts 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities............................... Not Applicable 15. Organization Within Last Five Years......... Certain Transactions 16. Description of Business..................... The Company; Business 17. Management's Discussion and Analysis or Plan of Operation.............................. Management's Discussion and Analysis of Financial Conditions and Results of Operations 18. Description of Property..................... Business 19. Certain Relationships and Related Transactions.............................. Certain Transactions 20. Market for Common Equity and Related Stockholder Matters....................... Market Price of the Common Stock 21. Executive Compensation...................... Management 22. Financial Statements........................ Report of Independent Certified Public Accountants
i 3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED MARCH __ , 1998 PROSPECTUS JET AVIATION TRADING, INC. 1,000,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS UPON EXERCISE OF OUTSTANDING WARRANTS --------------------- 1,969,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS --------------------- This Prospectus relates to the resale of 1,000,000 shares of common stock, $.001 par value per share (the "Common Stock") following the exercise of outstanding Common Stock Purchase Warrants (the "Warrants") and the resale of 1,969,000 additional shares of Common Stock previously issued by the Company in certain private placement transactions, all of which are offered by the holders thereof identified as "Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS." Each Warrant entitles the holder to purchase at any time until June 30, 2002 one share of Common Stock upon payment of an exercise price of $4.50. See "DESCRIPTION OF SECURITIES." The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Security Holders, although it will receive proceeds from the exercise of the Warrants. Sales of shares of Common Stock may be made from time to time in transactions (which may include block transactions) by or for the account of the Selling Security Holders in the over-the-counter market or in negotiated transactions, or otherwise, at market prices prevailing at the time of sale or at negotiated prices. The Company has informed the Selling Security Holders that the anti-manipulative rules under the Securities Exchange Act of 1934, Regulation M, may apply to their sales in the market and has furnished each of the Selling Security Holders with a copy of these rules. The Company has also informed the Selling Security Holders of the need for delivery of copies of this Prospectus. See "SELLING SECURITY HOLDERS" and "PLAN OF DISTRIBUTION." --------------------- THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" AND "DILUTION." --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
============================================================================================================================ PRICE TO UNDERWRITING PROCEEDS TO THE PROCEEDS TO THE SELLING CLASS OF SECURITY SECURITY HOLDERS DISCOUNTS COMPANY(1) SECURITY HOLDERS - ---------------------------------------------------------------------------------------------------------------------------- Shares of Common Stock(2)....... N/A N/A $0 N/A - ---------------------------------------------------------------------------------------------------------------------------- Shares of Common Stock(4)....... -- N/A $0 $ (3) ============================================================================================================================
(1) Does not take into account the costs of this offering, including among others, printing, blue sky and professional fees, estimated at $100,000, which will be borne entirely by the Company; assumes all warrants are exercised. (2) Represents the anticipated sale by the Selling Security Holders of shares of Common Stock issuable upon exercise of the Warrants, at $ , the high bid price on . There can be no assurances, however, that the Selling Security Holders will be able to sell their shares of Common Stock at this price, or that a liquid market will exist for the Company's Common Stock. (3) Does not give effect to ordinary brokerage commissions or other costs of sale that will be borne solely by the Selling Security Holders. (4) Represents the anticipated sale by the Selling Security Holders at $ , the high bid price on . There can be no assurances, however, that the Selling Security Holders will be able to sell their shares of Common Stock at this price, or that a liquid market will exist for the Company's Common Stock. The Common Stock is traded in the over-the-counter market and is quoted on The OTC Bulletin Board under the symbol "JTAV". --------------------- The date of this Prospectus is , 1998 4 AVAILABLE INFORMATION The Company is not subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company will provide a report to stockholders, at least annually, which will include audited financial statements of the Company. The Company will provide, without charge, to each person who receives a Prospectus, upon the written or oral request of such person, a copy of any of the information that was incorporated by reference in the Prospectus (not including exhibits to the information that was incorporated by reference unless the exhibits are themselves specifically incorporated by reference). Requests should be directed to the Secretary, Jet Aviation Trading, Inc., 15675 Northwest 15th Avenue, Miami, Florida 33169 (Telephone No. 305-624-6700). 2 5 PROSPECTUS SUMMARY The following Summary is qualified in its entirety by the more detailed information and financial statements, including the Notes thereto, appearing elsewhere in this Prospectus. THE COMPANY The Company (formerly known as Schuylkill Acquisition Corp.) was formed pursuant to the laws of the State of Florida in May, 1997. It conducted no business. On July 28, 1997, the Company merged with Jet Aviation Trading, Inc., a Florida corporation ("Old Jet"), remained the surviving entity and changed its name to Jet Aviation Trading, Inc. Old Jet had commenced business on October 3, 1996. Unless the context otherwise requires, references to the "Company" throughout this Prospectus, including the Financial Statements contained herein, refer to the operations of Old Jet prior to July 28, 1997 and the Company thereafter. The Company specializes in the sale, lease, exchange and purchase of technical spares for fixed-wing commercial jet transport aircraft manufactured by Boeing, McDonnell Douglas, Airbus and Lockheed. Complimenting this core business, the Company provides its customers with inventory management services including new product distribution, technical purchasing, maintenance repair management, consignment marketing and purchase/leaseback of technical spares inventory. The Company also pursues opportunities involving the purchase, sale and lease of jet turbine engines, jet turbine aircraft and related aviation industry equipment. Industry estimates are that the annual worldwide market for aircraft spare parts is approximately $10.2 billion, of which approximately $1.6 billion reflects annual sales of aircraft spare parts in the redistribution market. These sales figures are expected to grow considerably in the near future, as continued cost pressures affect airlines, manufacturers and maintenance service providers. The emphasis upon cost containment in recent years has led to a marked increase in the average age of the worldwide airline fleet, as commercial airlines seek to prolong the depreciable life of their aircraft. The Company seeks to exploit these key market trends by positioning itself as a low cost participant in the redistribution market. In addition, the Company offers its customers a wide range of inventory management services, allowing them to reduce operational expenses. This service complements the recent trend of commercial airlines seeking to outsource certain activities in order to focus upon their core business of passenger and cargo air transportation. Finally the Company believes that with sufficient financial resources it can successfully exploit opportunities for bulk purchases of inventory and purchases of jet turbine engines and aircraft at favorable prices, thereby increasing profitability. (See "Business" and "Risk Factors"). From inception (October 3, 1996) though the fiscal year ended August 31, 1997, the Company generated net sales of $6,215,553. Of such revenues, approximately 57.3% were derived from sales to domestic customers and approximately 42.7% were derived from sales to international customers. Transactions involving technical spares accounted for 100% of net sales. For the first quarter ended November 30, 1997, the Company generated net sales at $2,452,322 and income at $227,589. The Company's operations are conducted from leased facilities at 15675 Northwest 15th Avenue, Miami, Florida 33169 where it maintains its executive offices. Its telephone number is (305) 624-6700. THE OFFERING Securities Being Offered: This Prospectus relates to the resale of 1,000,000 shares of common stock, $.001 par value per share (the "Common Stock") following the exercise of outstanding Common Stock Purchase Warrants (the "Warrants"), by the holders thereof, and to the resale of 1,969,000 additional shares of Common Stock previously issued by the Company in certain private placement transactions, all of which are being offered by the 3 6 holders thereof identified as "Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS." The shares of Common Stock offered by the Selling Security Holders may be offered for sale from time to time by the holders in regular brokerage transactions, either directly or through brokers or to dealers, in private sales or negotiated transactions, or otherwise, at prices related to then prevailing market prices. The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Security Holders. All expenses of the registration of such securities are, however, being borne by the Company. The Selling Security Holders, and not the Company, will pay or assume such brokerage commissions as may be incurred in the sale of their securities. The Common Stock is traded on The OTC Bulletin Board under the symbol "JTAV". On the high bid price was $ . Total number of shares of Common Stock outstanding.............. 2,996,500 Total number of shares of Common Stock offered by the Company pursuant to outstanding Warrants..... 1,000,000 Total number of shares of Common Stock outstanding upon exercise of the outstanding Warrants..... 3,996,500 Total number of shares of Common Stock being offered by Selling Security Holders (including shares issuable upon exercise of the Warrants)............ 2,969,000 Use of Proceeds: The net proceeds realized by the Company upon the exercise of the Warrants will be used to purchase jet turbine engines and additional inventory and to offset general working capital requirements of the Company. See "USE OF PROCEEDS." Inasmuch as the Company has received no firm commitments for the exercise of the Warrants, however, there can be no assurances as to the amount of the net proceeds to be realized by the Company. Except for any proceeds that may be realized upon exercise of the Warrants, the Company will not receive any of the proceeds from the sale of any of the shares of Common Stock by the Selling Security Holders. Risk Factors: The Common Stock offered hereby involves a high degree of risk and prospective investors should consider carefully the factors specified under "Risk Factors" before electing to invest. See "RISK FACTORS." Trading Symbol: Common Stock -- "JTAV" 4 7 SELECTED FINANCIAL INFORMATION Set forth below is the historical selected financial information with respect to the Company for the period from inception (October 3, 1996) until August 31, 1997 and the 11 months then ended, and for the 3 months ended November 30, 1997 and the period October 3, 1996 to November 30, 1996.
OCTOBER 3, 1996 THREE MONTHS OCTOBER 3, 1996 TO ENDED TO AUGUST 31, 1997 NOVEMBER 30, 1997 NOVEMBER 30, 1996 ---------------- ----------------- ----------------- INCOME STATEMENT INFORMATION Revenue............................................. $ 6,215,553 $2,452,322 $ 467,882 Net Income (Loss)................................... $(1,383,641) $ 128,480 $ (381,428) Net Income (Loss) per Share......................... $ (.83) $ .04 $ (0.32) Weighted Average Shares Outstanding................. 1,672,968 2,996,500 1,200,000 BALANCE SHEET INFORMATION (AT END OF PERIOD) Working Capital..................................... $ 3,246,086 $3,309,606 $ 108,081 Total Assets........................................ $ 4,561,330 $4,959,140 $ 744,375 Total Liabilities................................... $ 1,181,057 $1,448,387 $ 600,802 Stockholders' Equity................................ $ 3,380,273 $3,508,753 $ 143,572 Net Tangible Book Value Per Share................... $ 1.13 $ 1.17 $ .12
5 8 RISK FACTORS Prospective investors should consider carefully the following Risk Factors, together with the other information contained in this Prospectus, in evaluating an investment in the shares of Common Stock offered hereby. LIMITED OPERATING HISTORY The Company has a limited operating history upon which an evaluation of its performance and prospects can be made. The Company's prospects must be considered in light of the numerous risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new enterprise in industries characterized by intense competition. Although for the quarter ended November 30, 1997, the Company operated profitably, the Company intends to expand its operations, which will bring increased cash flow pressures. Accordingly, expansion of inventory and operations may have a negative impact on the profitability of the Company, at least in the near term. Further, there can be no assurance that the Company will be able to successfully expand its operations and continue profitability. See "FINANCIAL STATEMENTS" and "BUSINESS." NEED FOR ADDITIONAL FUNDING The exercise of all the Warrants will result in net proceeds to the Company of approximately $4,400,000. The Company believes that revenues from operations will be sufficient for the Company's operational needs for the next 12 months. The additional funds from the exercise of the Warrants will be used to expand the Company's business over time. There can be no assurance however, that additional funds will not be required for expansion purposes or that the Company will be able to secure such financing when required. See "BUSINESS" and "MANAGEMENT'S DISCUSSION." EFFECTS OF THE ECONOMY ON THE OPERATIONS OF THE COMPANY Since the Company's customers consist of airlines, maintenance and repair facilities that service airlines and other spare parts redistributors, the Company's business is impacted by the economic factors which affect the airline industry. When such factors adversely affect the airline industry, they tend to reduce the overall demand for aircraft spare parts and peripheral services, causing price reductions and increasing the credit risk associated with doing business with airlines and others. Additionally, factors such as the price of fuel affect the aircraft spare parts market, since older aircraft (into which aircraft spare parts are most often placed), which tend to be less fuel efficient, become less viable as the price of fuel increases. There can be no assurance that economic and other factors which might affect the airline industry will not have an adverse impact on the Company's results of operations. TRENDS IN THE MARKET Airline purchasing departments have been reducing the number of "approved" suppliers in order to reduce costs. During the last few years certain major airlines have reduced the number of "approved" suppliers from as many as fifty to as few as five. Although the Company presently is an approved supplier of fourteen airlines, no assurances can be given that the Company can maintain or expand this status. Further, the reduction in the supplier base for airlines contributed to a consolidation in the redistribution market which, the Company believes, will continue. Only redistributors with extensive inventories, experienced management, sufficient capital and the ability to adhere to the industry standards for traceability will, the Company believes, operate profitably. No assurances can be given that the Company can effectively compete in this changing marketplace. RISK REGARDING THE COMPANY'S INVENTORY The Company's inventory consists principally of new, overhauled, serviceable and repairable aircraft parts that are purchased from many sources. Before parts may be installed in an aircraft, they must meet certain standards of condition established by the Federal Aviation Administration ("FAA") and/or the 6 9 equivalent regulatory agencies in other countries. Specific regulations vary from country to country, although regulatory requirements in other countries generally coincide with FAA requirements. Parts owned or acquired by the Company may not meet applicable standards or standards may change in the future, causing parts which are already contained in the Company's inventory to be scrapped or modified. Aircraft manufacturers may also develop new parts to be used in lieu of parts already contained in the Company's inventory. In all such cases, to the extent that the Company has such parts in its inventory, their value may be reduced. See "BUSINESS -- Government Regulation and Traceability." RISKS REGARDING THE PURCHASE OF JET TURBINE ENGINES AND AIRCRAFT Although the Company has not, to date, purchased jet turbine engines or jet turbine aircraft for resale, it intends in the future, to engage in these activities. The purchase for resale of these items are subject to risks related to the volatility in the market place for engines and aircraft. These activities also involve a commitment of substantial capital, and if the engines or aircraft are purchased at too high a price for subsequent resale, substantial losses could be incurred. In addition, engines and aircraft may need repair work, which increases their cost and adversely affects profitability. GOVERNMENT REGULATION The aviation industry is highly regulated in the United States by the FAA and in other countries by similar agencies. While the Company's business is not regulated, the aircraft spare parts which it sells to its customers must be accompanied by documentation which enables the customer to comply with applicable regulatory requirements. There can be no assurance that new and more stringent government regulations will not be adopted in the future or that any such new regulations, if enacted, would not have an adverse impact on the Company. See "BUSINESS -- Government Regulation and Traceability." FLUCTUATIONS IN OPERATING RESULTS The Company's operating results are affected by many factors, including the timing of orders from customers, the timing of expenditures to purchase inventory in anticipation of future sales, the timing of bulk inventory purchases, the timing of purchases and financing requirements for jet engines or aircraft and the mix of available technical spare parts contained, at any time, in the Company's inventory. A large portion of the Company's operating expenses are relatively fixed. Since the Company typically does not obtain long-term purchase orders or commitments from its customers, it must anticipate the future volume of orders based upon the historic purchasing patterns of its customers and upon its discussions with its customers as to their future requirements. Cancellations, reductions or delays in orders by a customer or group of customers could have a material adverse effect on the Company's business, financial condition and results of operations. See "FINANCIAL STATEMENTS" and "MANAGEMENT'S DISCUSSION." RELIANCE ON CHIEF EXECUTIVE OFFICER The continued success of the Company is dependent to a significant degree upon the services of Joseph J. Nelson, its president and chief executive officer and upon the Company's ability to attract and retain qualified personnel experienced in the various phases of the Company's business. The Company has an employment agreement with Mr. Nelson which terminates on October 31, 1999. The Company anticipates obtaining term insurance for Mr. Nelson in an amount not to exceed $1,000,000. However, the ability of the Company to operate successfully could be jeopardized with the loss of Mr. Nelson's services. See "MANAGEMENT." COMPETITION There are numerous suppliers of aircraft spare parts in the aviation market worldwide and, through inventory listing services, customers have access to a broad array of suppliers. These include major aircraft manufacturers, airline and aircraft service companies, and aircraft spare parts redistributors. Many of the Company's competitors have substantially greater financial and other resources than the Company. There can 7 10 be no assurance that competitive pressures will not materially and adversely affect the Company's business, financial condition or results of operations. See "BUSINESS -- Competition." PRODUCT LIABILITY The Company's business exposes it to possible claims for personal injury or death which may result from a failure of aircraft spare parts sold by it. Although the Company believes that it has taken adequate precautions to assure the quality and traceability of the parts it sells, there can be no assurances that the Company will not be exposed to lawsuits and the possibility of damage awards. The Company does not carry product liability insurance and therefore any substantial judgment could have a material adverse affect on its financial condition. See "BUSINESS -- Product Liability and Legal Proceedings." POSSIBLE VOLATILITY OF STOCK PRICES As of , 1998, the Company had outstanding 2,996,500 shares of Common Stock, of which approximately are eligible for public trading. Taking into account the sale of shares held by Selling Security Holders and the exercise of the Warrants, assuming all of the Warrants are exercised, the Company will have 3,996,500 shares of Common Stock outstanding, approximately of which will be eligible for public trading. Although it is impossible to predict market influences and prospective values for securities, it is possible that, in and of itself, the substantial increase in the number of shares available for sale could have a depressive effect upon the market value of the Company's Common Stock. Furthermore, although the Company's Common Stock trades in the over-the-counter market, there can be no assurances that a regular trading market will develop, or, if developed, will continue, or that the prices of the Common Stock will exceed the exercise price paid by the holders of the Warrants. There has been a history of significant volatility in the market prices for shares of companies in a similar stage of development. Hence, there can be no assurances that holders who elect to exercise their Warrants will ultimately be able to sell the underlying shares of Common Stock at a profit, if at all. Because of the factors described above and elsewhere in this Prospectus, the market price of the Company's Common Stock following the date of this Prospectus may be highly volatile. POSSIBLE LIMITATIONS UPON TRADING ACTIVITIES; RESTRICTIONS IMPOSED UPON BROKER-DEALERS EFFECTING TRANSACTIONS IN CERTAIN SECURITIES Trading of the Company's securities may be subject to material limitations as a consequence of certain provisions of the Securities Exchange Act of 1934 (the "Exchange Act") which limit the activities of broker-dealers effecting transactions in "penny stocks." "Penny stocks" are defined as any equity securities other than a security that is registered on a national exchange; included for quotation in the NASDAQ system; or whose issuer has net tangible assets of more than $2,000,000 and has been in continuous operation for greater than three (3) years. Issuers who have been in operation less than three (3) years must have net tangible assets of at least $5,000,000. Rules promulgated by the Commission under Section 15(g) of the Exchange Act require broker-dealers engaging in transactions in low-priced over-the-counter securities defined as "penny stocks," to first provide to their customers a series of disclosures and documents, including: (i) a standardized risk disclosure document identifying the risks inherent in investing in "penny stocks;" (ii) all compensation received by the broker-dealer in connection with the transaction; (iii) current quotation prices and other relevant market data; and (iv) monthly account statements reflecting the fair market value of the securities. In addition, these rules require a broker-dealer obtain financial and other information from a customer, determine that transactions in penny stocks are suitable for such customer and deliver a written statement to such customer setting forth the basis for such determination. The Company's Common Stock presently constitutes a "penny stock." Accordingly, trading activities for the Company's Common Stock will be made more difficult for broker-dealers than in the case of securities not 8 11 defined as "penny stock." This may have the result of depressing the market for the Company's securities and an investor may find it difficult to dispose of such securities. Further, under the Exchange Act, and the regulations thereunder, any person engaged in a distribution of the shares of Common Stock of the Company offered by this Prospectus may not simultaneously engage in market making activities with respect to the Common Stock of the Company during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, each Selling Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of Common Stock by the Selling Security Holders. ARBITRARY DETERMINATION OF EXERCISE PRICE The exercise prices of the Warrants do not bear any relationship to the assets, book value, operating results or net worth of the Company, and should not be considered to be an indication of the actual value of the Company. POSSIBLE STATE AND FEDERAL RESTRICTIONS ON EXERCISE OF WARRANTS Holders of Warrants will be able to sell the underlying Common Stock issuable upon exercise thereof only if a current registration statement relating to such underlying Common Stock is then in effect and on file with the Securities and Exchange Commission and only if such Common Stock is qualified for sale or exempt from qualification under the applicable state securities laws. The Warrants contain certain provisions requiring the Company to file for, and endeavor to secure, current and effective registration of the shares of Common Stock issuable upon exercise. Although the Company has undertaken to use its best efforts to maintain the effectiveness of this Prospectus covering the securities underlying the Warrants, there can be no assurances that the Company will be able to do so. The value of the Warrants may be greatly reduced if a current prospectus covering the securities issuable upon the exercise of Warrants is not kept effective or if such securities are not qualified or exempt from qualification in the states in which the holders of Warrants reside. See "DESCRIPTION OF SECURITIES." EFFECT OF OUTSTANDING WARRANTS As of , 1998, the Company had outstanding Warrants to purchase 1,000,000 shares of Common Stock upon exercise. To the extent that the shares underlying the Warrants enter the market, the price of the Common Stock in the market may be substantially reduced. Moreover, for the term of the Warrants issued by the Company, the holders thereof are given an opportunity to profit from a rise in the market price of the Company's Common Stock, with resulting dilution in the interest of the other stockholders. Further, the terms on which the Company may obtain additional financing during that period may be adversely affected by the existence of such Warrants. The holders of such Warrants may exercise them at a time when the Company might be able to obtain additional capital through a new offering of securities on terms more favorable than those provided by therein. The Company has undertaken to file this Prospectus with the Securities and Exchange Commission pursuant to certain registration rights enjoyed by holders of Warrants. The expense of registration of this Prospectus shall be borne by the Company, which expense may be significant. DIVIDENDS NOT LIKELY The Company does not intend to declare or pay cash dividends in the foreseeable future. Earnings, if any, are expected to be retained to finance and develop its business. See "DESCRIPTION OF SECURITIES." DILUTION The exercise price of the Warrants is $4.50 per share. Officers, directors, promoters and affiliated persons of the Company purchased their shares for cash and other consideration ranging from $.001 to $2.50. 9 12 USE OF PROCEEDS The Company will not realize any proceeds from the sale of shares of Common Stock by the Selling Security Holders. See "SELLING SECURITY HOLDERS." The net proceeds which may be realized by the Company upon the exercise of one-hundred (100%) percent of the Warrants will be approximately $4,400,000. Inasmuch as the Company has received no firm commitments for their exercise, there can be no assurance that any or a substantial portion of the Warrants will be exercised. Management cannot predict with any certainty the amount of proceeds, if any, which may be generated from the exercise of Warrants. The net proceeds, if any, which may be realized by the Company upon the exercise of the Warrants, will be utilized to continue the operations of the Company in accordance with the business strategy identified by management. See "BUSINESS." Based upon this strategy, assuming that net proceeds of $4,400,000 are realized by the Company upon the exercise of Warrants, management would reasonably expect to utilize such proceeds within a period of twenty-four (24) months, in the following relative proportions and order of priority:
Application of Funds % of Funds - -------------------- ---------- Purchase of jet turbine engines............................. 34% Purchase of additional spare parts inventory................ 25 General working capital..................................... 21 Employment of key personnel................................. 15 Improve facilities and purchase new equipment............... 5 --- 100% ===
In the event half of the $4,400,000 was received from the Warrant exercises, all of the aforementioned categories would be reduced pro rata. The Company contemplates purchasing jet turbine engines from unaffiliated parties such as Allied Signal Corp., Garuda Airlines, CFM International, Inc., and KLM Airlines. The Company anticipates purchasing additional spare parts inventory from unaffiliated parties such as Iberia Airlines, Alitalia Airlines and Garuda Airlines. The amounts actually expended for the purposes described above could vary significantly depending on, among other things, the Company's ability to obtain capital from other sources, the demand for the Company's services and the availability of inventory, jet engines and aircraft at attractive prices. MARKET PRICE OF THE COMMON STOCK As of the date of this Prospectus, the Company's Common Stock is traded in the over-the-counter market through The OTC Bulletin Board under the symbol "JTAV." From to the high and low bid prices of the Common Stock were and respectively. Records of the Company's stock transfer agent indicate that as of December 31, 1997, the Company had record holders of its Common Stock. The Company has not paid any cash dividends to date, and does not anticipate or contemplate paying cash dividends in the foreseeable future. It is the present intention of management to utilize all available funds for working capital of the Company. 10 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion should be read in conjunction with the Company's Financial Statements, including the notes thereto. This Prospectus contains certain forward-looking information which involves risks and uncertainties. The actual results could differ from the results anticipated herein. OVERVIEW The Company was incorporated in Florida on May 28, 1997 for the purpose of acquiring by merger the business and operations of Old Jet upon the completion of a stock offering by the Company. On July 28, 1997, the Company acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of the Company in a one for one stock exchange. The merger has been accounted for as a purchase. Old Jet was incorporated in the state of Florida on October 3, 1996 for the purpose of buying, selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. Effective July 28, 1997 the Company's name was changed from Schuylkill Acquisition Corp. to Jet Aviation Trading, Inc. The effect of the transaction was a reverse merger; accordingly, the historical financial statements presented are those of the accounting survivor, Old Jet, and the stockholders' equity of the merged company was recapitalized to reflect the capital structure of the surviving legal entity (the Company) and the retained earnings of Old Jet. The Company derives its revenues from selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. The Company has only a limited operating history upon which an evaluation of its operations and prospects can be based. Although the Company has since inception experienced increasing net sales, the Company may experience significant fluctuations in its gross margins and operating results in the future, both on an annual and a quarterly basis. These fluctuations may be caused by various factors, including general economic conditions, specific economic conditions in the commercial aviation industry, the availability and price of surplus aviation material, the size and timing of customer orders, returns by and allowances to customers and the cost of capital to the Company. RESULTS OF OPERATIONS Three Months Ended November 30, 1997 Compared to Two Months Ended November 30, 1996 The Company's net sales increased by $1.984 million, or 424% from the two months ended November 30, 1996 to the quarter ended November 30, 1997. During the quarter ended November 30, 1997, domestic sales increased from $467,882 to $2,017,262, and international sales increased from $0 to $435,060. The increase in net sales was due to the addition of new sales personnel, increased customer penetration, increased investment in, and availability of, inventory and the expansion of services offered to customers. Gross profit decreased from 24.4% to 24.0% and gross margins remained unchanged during these periods. Selling, general and administrative expenses decreased approximately $130,000 or 26.5% from $491,200 in the period ended November 30, 1996 to $360,816 in the period ended November 30, 1997. This decrease was related to start up activities in the 1996 period that were not ongoing, including non-cash compensation expense of $400,000 related to the issuance, at the difference between the fair market value of $2.50 per share and $.417 per share, of 192,000 shares of common stock to the president of the Company. As a result of the above factors, the Company generated income from operations of $128,480 in the period ended November 30, 1997, compared to a loss of $381,428 in the period ended November 30, 1996. From Inception through August 31, 1997 Net sales of $6,215,553 have been generated since inception on October 3, 1996 through August 31, 1997. The Company has been able to sustain an increase in monthly sales since inception through August 31, 11 14 1997, primarily due to the increased availability of cash resources to acquire inventory for resale. The Company generated foreign sales of $2,655,968 since inception through August 31, 1997 due to its marketing efforts and expansion of its product lines to its foreign customers. Gross margins of 25% as a percentage of sales resulted in gross profits of $1,530,689 since inception through August 31, 1997. Selling, general and administrative expenses, including non-cash compensation expenses of $1,501,600, totalled $2,881,660 and were 46% of sales. In management's opinion this unusually high expense, as a percentage of sales, was a result of expanding the Company's office and warehouse facilities along with its sales, administrative and warehouse personnel levels to efficiently address its increasing inventory and revenues as well as the charges to non-cash compensation expense. These charges related to the issuance of shares of common stock to the Company's president, and in payment of advisory fees, fees in connection with loans, and founders shares issued by Old Jet. Management does not anticipate that the unusually high expenses (as a percentage of sales) experienced from inception through August 31, 1997 will continue on a regular basis. Interest expense net of interest income of $16,470 resulted from borrowings to expand the Company's inventory levels, its operations as well as the financing of the expansion of the Company's office and warehouse facilities. Further increases in interest expense can be anticipated in the future as the Company continues to expand its inventory levels and facilities to support future growth. Net loss was $1,383,641, and net loss per share was $0.83 per share in the period from inception through August 31, 1997. Net loss per share is based upon the weighted average of the common shares outstanding (1,672,968) from inception through August 31, 1997. The losses for the period were due to noncash compensation charges of $1,501,600 resulting principally from the issuance of Common Stock to founding shareholders at less than fair market value. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital was $3,309,606 as of November 30, 1997 compared to $108,081 for the prior period. The principal reasons for the increase in working capital since inception were the increase in inventories and increase in cash resulting from private placements of equity securities and the conversion of debt to equity. During the quarter ended November 30, 1997 the Company collected approximately 98% of accounts receivables outstanding as of the end of its prior fiscal year. The Company's net cash provided by operating activities was $208,248 for the period ended November 30, 1997 as compared to $370,863 used for the prior period. Net cash used in investing activities was $23,714, and $500 for the period ended November 30, 1997 and the period ended November 30, 1996, respectively. Net cash used in investing activities for the period ended November 30, 1997 represented the acquisition of property and equipment and deposit with an aircraft parts manufacturer for purchase of aircraft parts. The net cash provided by financing activities for the period ended November 30, 1996 was $460,496 and resulted from the issuance of Common Stock. The net cash of $27,622 used by financing activities for the period ended November 30, 1997 was related to deferred offering costs. The Company is unaware of any factors that may adversely impact its ability to recover the carrying value of the DC-10-30 flight simulator other than the discontinued operation of the DC-10 aircraft. It is anticipated that this asset will be liquidated by the end of the third quarter of fiscal 1998. The Company believes that the cash flows expected to be generated by operations will meet its anticipated short term cash needs for working capital and the proceeds from the exercise of the Warrants will enable the Company to make future inventory expenditures, through the next 18 months. The Company does not have any commitments for material capital expenditures. 12 15 PLAN OF OPERATION Following the exercise of the Warrants in this offering, the Company intends to use a portion of the proceeds, as well as trade credit, to acquire turbine jet engines and expand its inventory of engine spare parts. The Company also anticipates hiring additional employees, particularly in the marketing area. Finally the Company seeks to establish a $1.5 million revolving credit facility for working capital and inventory purchases. The Company currently is discussing the terms and conditions of such a facility with banks, although no bank has yet offered the Company a commitment. 13 16 BUSINESS GENERAL The Company was formed pursuant to the laws of the State of Florida in May, 1997. It conducted no business. On July 28, 1997, the Company, then known as Schuylkill Acquisition Corp., merged with Jet Aviation Trading, Inc., a Florida corporation ("Old Jet"), remained the surviving entity and changed its name to Jet Aviation Trading, Inc. Old Jet had commenced business on October 3, 1996. Unless the context otherwise requires, references to the "Company" throughout this Prospectus, including the Financial Statements contained herein, refer to the operations of Old Jet prior to July 28, 1997 and the Company thereafter. The Company specializes in the sale, lease, exchange and purchase of technical spares for fixed-wing commercial jet transport aircraft manufactured by Boeing, McDonnell Douglas, Airbus and Lockheed. Complimenting this core business, the Company provides its customers with inventory management services including new product distribution, technical purchasing, maintenance repair management, consignment marketing and purchase/leaseback of technical spares inventory. The Company believes that with sufficient financial resources it can also pursue opportunities involving the purchase, sale and lease of jet turbine engines, jet turbine aircraft, and related aviation industry equipment. INDUSTRY OVERVIEW Industry estimates are that the annual worldwide market for aircraft spare parts is approximately $10.2 billion, of which approximately $1.6 billion reflects annual sales of aircraft spare parts in the redistribution market. The redistribution market is highly fragmented, with a limited number of large, well-capitalized companies selling a broad range of aircraft spare parts, and many smaller competitors servicing particular segments of the industry. The Company believes that significant trends affecting the market will increase its overall size and at the same time eliminate some market participants. These trends are: Growth in Market for Aircraft Spare Parts According to Boeing's 1996 Market Outlook (the "Boeing Report"), the worldwide fleet of commercial passenger airplanes is expected to double from 11,066 airplanes at the end of 1995 to 23,081 airplanes by 2015. The Boeing Report also projects that cargo jet aircraft will increase from 1,219 airplanes in 1995 to 2,260 airplanes by 2015. Seventy percent of the airplanes delivered to cargo operators are expected to be used aircraft which were converted from commercial passenger service. Further, the number of planes in service for more than 10 years is continuing to increase, and these older planes are the primary market for redistributors. Finally, cost considerations are forcing many airlines and repair and maintenance facilities to utilize aircraft spare parts sold by redistributors, instead of purchasing new parts for inventory. The Company believes that all of these factors will increase the demand for aircraft spare parts from the redistribution market. Increased Outsourcing of Inventory Management Function Airlines incur substantial expenditures in connection with fuel, labor and aircraft ownership. Further, during the last decade, airlines have come under increasing pressure to reduce the costs associated with providing air transportation services. Although several of the expenditures required to operate an airline are beyond the direct control of airline operators (e.g., the price of fuel and labor costs), obtaining replacement parts from the redistribution market and outsourcing inventory management functions are, the Company believes, areas in which airlines can allow these functions to be handled more inexpensively and efficiently. Increasing Emphasis on Traceability Due to concerns regarding unapproved aircraft spare parts, regulatory authorities have increased the level of documentation which must be maintained on aircraft spare parts. This requirement has, in turn, been extended by end-users to the vendors of the parts. The sophistication required to track the history of an 14 17 inventory consisting of thousands of aircraft spare parts is considerable and has required companies to invest significantly in information systems technology. Increased Consignment Certain of the Company's customers adjust inventory levels on a periodic basis by disposing of excess aircraft spare parts. Traditionally, larger airlines have used internal personnel to manage such dispositions. The Company believes that major airlines and other owners of aircraft spare parts, in order to concentrate on their core businesses and to more effectively redistribute their excess parts inventories, are increasingly entering into long-term consignment agreements with redistributors. By consigning inventories to a redistributor such as the Company, customers are able to distribute their aircraft spare parts to a larger number of prospective inventory buyers, allowing the customer to maximize the value of its inventory. Consignment also enables the Company to offer for sale significant parts inventory at minimal capital cost to the Company. Increased Leasing The Company believes that cost considerations will result in airlines' increased use of leasing with respect to spare parts and engines. This practice can prove beneficial to the Company, for it can obtain a steady income stream over a period of time from lease payments and upon termination of the lease, regain the part or engine for subsequent sale. In addition, leasing arrangements may afford the Company the ability to obtain additional financing. COMPANY STRATEGY The Company believes that it can become a low cost leader in the redistribution market, as well as for its ancillary inventory management services, by combining its managerial experience with increased capital and building upon its present operations. The essential elements of its business strategy are: Internal Growth The Company's strategy is to increase operating revenues and operating income through continued customer penetration in its existing markets and expansion into new markets. The Company intends to achieve this by continuing to increase the size and scope of its inventory and by continuing to expand its marketing efforts worldwide. The Company will also expand its inventory management, leasing and on-site consignment services to allow its customers to reduce their costs of operations by outsourcing some or all of their inventory management and supply functions and to take advantage of opportunities to maximize the value of their spare parts inventory. The Company seeks to establish and maintain close working relationships with its customers and to become their vendor of choice. Capitalize on Large Bulk Purchase Opportunities Although opportunities to purchase large inventories in bulk in the aircraft spare parts industry cannot be predicted, historically they become available on a regular basis. "Bulk" purchase opportunities arise when airlines, in order to reduce capital requirements, sell large amounts of inventory in a single transaction or when inventories of aircraft spare parts are sold in conjunction with bankruptcy proceedings, or when operators upgrade their fleet. In these situations the Company can obtain large inventories of aircraft spare parts at a lower cost than can ordinarily be obtained by purchasing on an individual basis. This results generally in higher gross margins on sales of such parts. Since inception, the Company has successfully completed six bulk inventory purchases in excess of $100,000. The Company believes that due to the experience of management, and as a result of additional capital, an increased number of larger bulk purchases can be effectuated. Initiate Purchase and Sale of Jet Turbine Engines and Aircraft The Company believes that with sufficient financial resources, it would be in a position to enter the market for the purchase and sale of jet turbine engines and aircraft. This market is extremely competitive and 15 18 capital intensive. However, the Company believes that it has the management expertise and industry contacts to make prudent purchases, the key to profitability in this market. Pursue Acquisitions of Complementary Businesses Another element of the Company's strategy involves acquisitions of other companies, assets or product lines that would complement or expand the Company's existing aircraft spare parts redistribution and inventory management services business. The Company believes that acquisitions will enable it to achieve economies of scale and expand the product and service line available to its customers. The Company is currently evaluating a number of acquisition opportunities. No commitments or binding agreements have been entered into to date and accordingly, no assurance can be given that any of the acquisitions currently being considered will be consummated. AIRCRAFT SPARE PARTS Aircraft spare parts can be categorized by their ongoing ability to be repaired and returned to service. The general categories are as follows: (i) rotable; (ii) repairable; and (iii) expendable. A rotable is a part which is removed periodically as dictated by an operator's maintenance procedures or on an "as needed" basis and is typically repaired or overhauled and re-used an indefinite number of times. An important subset of rotables is life limited parts. A life limited part has a designated number of allowable flight hours and/or cycles (one take-off and landing generally constitutes one cycle) after which it is rendered unusable. A repairable is similar to a rotable except that it can only be repaired a limited number of times before it must be discarded. An expendable is generally a part which is used and not thereafter repaired for further use. Aircraft spare parts conditions are classified within the industry as (i) factory new, (ii) new surplus, (iii) overhauled, (iv) serviceable, and (v) as removed. A factory new or new surplus part is one that has never been installed or used. Factory new parts are purchased from manufacturers or their authorized distributors. New surplus parts are purchased from excess stock of airlines, repair facilities or other redistributors. An overhauled part has been completely disassembled, inspected, repaired, reassembled and tested by a licensed repair facility. An aircraft spare part is classified serviceable if it is removed by the operator from an aircraft or engine while operating under an approved maintenance program and is functional and meets any manufacturer or time and cycle restrictions applicable to the part. A factory new, new surplus, overhauled or serviceable part designation indicates that the part can be immediately utilized on an aircraft. A part in "as-removed" condition requires functional testing, repair or overhaul by a licensed facility prior to being returned to service in an aircraft. OPERATIONS The Company's main business is the buying and selling of aircraft spare parts. The Company purchases spare parts from numerous unaffiliated sources, including airlines, original equipment manufacturers and other parts distributors. The Company has also pursued opportunities regarding the purchase and sale of related aviation industry equipment. In this regard, the Company acquired a DC-10-30 flight simulator and related support package and software. The Company also provides value-added inventory management services to its customers. The Company believes that inventory management services provide significant opportunities for expansion of the Company's business in the future. Finally, the Company intends to develop business as a redistributor of turbine jet engines and become involved in the purchase, sale and lease of jet turbine aircraft. Inventory Purchases and Sales The daily operations of the Company encompass inventory sales, brokering and exchanging aircraft spare parts. The Company advertises its available inventories held for sale or exchange on the Inventory Locator Service ("ILS"), the Airline Inventory Redistribution System ("AIRS") and BCOM electronic databases. Buyers of aircraft spare parts can access the ILS, AIRS and BCOM databases and determine the companies which have the desired inventory available. The Company estimates that twenty-five percent of its daily sales activity results from an ILS, AIRS or BCOM inquiry. All major airlines and repair agencies subscribe to one 16 19 or more of these databases and accordingly, the Company maintains continual on-line direct access with them. ILS, AIRS and BCOM do not, however, list price information relating to particular parts. The ability to properly evaluate and price spare parts derives from management experience in the industry. The Company currently has over 35,000 line items in stock. The Company monitors market availability, pricing and historical data on a continuous basis. The Company sells new, overhauled and serviceable replacement parts from its inventory and by buying them at the request of its customers against a specific order; usually purchasing the parts for its own account and selling them to its customers. For the period ended August 31, 1997, inventory sales accounted for 100% of revenues. Inventory Management Services The Company provides a number of inventory management services to its customers. These services assist airlines in downsizing their inventory management operations, thus enabling them to utilize their capital more efficiently and reduce costs. Through the offering of various services, the Company believes it can provide an inventory management program geared to any particular customer's requirements. Consignment By consigning inventories to a redistributor such as the Company, customers are able to distribute their aircraft spare parts to a larger number of prospective inventory buyers, allowing the customer to maximize the value of its inventory. Consignment also enables the Company to offer for sale significant parts inventory at minimal capital cost. The Company currently maintains or manages or has consignment agreements in place and its revenues from consignment arrangements have accounted for approximately 5% of net sales for the period ended August 31, 1997. The Company anticipates that revenues from consignments will increase as a percentage of total revenues in the future. Purchasing Services The Company provides services whereby it purchases spare parts for smaller and start-up airlines. These arrangements allow the Company's customers to take advantage of the Company's greater purchasing power and repair management services. SALES AND MARKETING; CUSTOMERS The Company utilizes six inside and outside salespersons and a network of independent representatives in its sales and marketing efforts. The Company's President directs the Company's sales force. The Company's sales force is responsible for obtaining new customers and maintaining relationships with existing customers. The majority of the Company's day-to-day sales are accomplished through the Company's inside sales force. The Company provides sales and delivery services seven days a week, 24 hours a day. This service is critical to provide support to airline customers which, at any time, may have an aircraft grounded in need of a particular part. The Company's South Florida location, with easy access to Miami International Airport and Fort Lauderdale International Airport, assists the Company in providing reliable and timely delivery of purchased products. The Company has over 140 customers, which include commercial passenger airlines, air cargo carriers, maintenance and repair facilities, original equipment manufacturers and other aircraft parts redistribution companies. During the eleven month period ended August 31, 1997, the Company's top 10 customers accounted for approximately 75% of net sales, and one customer has accounted for more than 20% of net sales. MANAGEMENT INFORMATION SYSTEM The Company has implemented the first phase of upgrading its management information systems by acquiring computer hardware and software. The Company's data system is being developed to incorporate state-of-the-art records imaging, archiving, inventory and asset management analysis, financial recordation 17 20 and other support systems. The Company believes that upon full implementation of its data management system, such system will be more than adequate to manage the requirements of the Company in accordance with its forecasted growth. COMPETITION The aircraft spare parts redistribution market is highly fragmented. Competition in the redistribution market is generally based on price, availability of product and quality, including traceability. The Company's major competitors include AAR Corp., Aero Controls Corp., Solair, Inc., The Memphis Group and Aviation Sales Company. There is also substantial competition, both domestically and overseas, from smaller, independent dealers who generally participate in niche markets. Several of the Company's competitors have greater financial and other resources than the Company. The jet turbine engine and jet turbine aircraft market is currently dominated by various financial institutions, such as GE Capital, CIT Group, and International Lease Finance Corp. as well as the major competitors from the spare parts redistribution market. The market also includes many smaller entities who engage in transactions on a sporadic basis. GOVERNMENT REGULATION AND TRACEABILITY The FAA regulates the manufacture, repair and operation of all aircraft and aircraft parts operated in the United States. Its regulations are designed to insure that all aircraft and aviation equipment are continuously maintained in proper condition to ensure safe operation of the aircraft. Similar rules apply in other countries. All aircraft must be maintained under a continuous condition monitoring program and must periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for the various types of aircraft and equipment are prescribed by regulatory authorities and can be performed only by certified technicians at certified repair facilities. Certification and conformance is required before installation of a part on an aircraft. Presently, whenever necessary with respect to a particular part, the Company utilizes FAA and/or Joint Aviation Authority certified repair stations to repair and certify parts to ensure worldwide marketability. The operations of the Company may in the future be subject to new and more stringent regulatory requirements. In that regard, the Company closely monitors the FAA and industry trade groups in an attempt to understand how possible future regulations might impact the Company. See "RISK FACTORS -- Market Trend" and "Government Regulation." An important factor in the aircraft spare parts redistribution market relates to the documentation or traceability that is supplied with an aircraft spare part. The Company requires all of its suppliers to provide adequate documentation as required by the industry and the regulatory agencies. The Company is designing its data management system to image, capture, manage and communicate this documentation. EMPLOYEES As of December 31, 1997, the Company employed 20 persons. None of the Company's employees are covered by collective bargaining agreements. The Company believes that its relations with its employees are good. PROPERTIES The Company's executive offices and warehouse facilities are located in Miami, Florida. These facilities comprise a total of approximately 17,600P square feet. The premises are subject to a lease dated January 1, 1997 and subsequently amended on November 1, 1997, which expires on December 31, 2000, at an annual rental of $79,614 plus pass-throughs of (i) utilities, (2) increases in real estate taxes, (3) assessments, (4) increases in insurance and (5) the Company's share of assessments imposed by the industrial park's association. Rent is subject to a cost of living increase adjustment. The Company has two additional one year options to renew. These facilities are adequate for the Company's present needs. 18 21 PRODUCT LIABILITY AND LEGAL PROCEEDINGS The Company's business exposes it to possible claims for personal injury or death which may result from a failure of aircraft spare parts sold by it. The Company takes what it believes are adequate precautions to ensure the quality and traceability of the aircraft parts which it sells. The Company has a director of quality control whose responsibilities include visual inspections of parts and documentation and supervision of the Company's licensed airframe and powerplant inspectors and inventory control personnel. The Company's President, with approximately 20 years of experience in the industry, also works with the director of quality control. Parts that require maintenance are submitted to FAA certified facilities for overhaul and certification as required. The Company also ensures that all parts received or shipped are accompanied by proper documentation. The director of quality control also supervises the Company's document traceability program. The Company does not carry product liability insurance. See "RISK FACTORS -- Product Liability." The Company is not involved in any litigation. 19 22 MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND PROMOTERS The present members of the Board of Directors, all executive officers, their ages and positions with the Company are set forth below:
NAMES AGE POSITION - ----- ---- -------- Joseph J. Nelson...................... 48 President and Chief Executive Officer, Director Michael J. Cirillo.................... 49 Director Theodore H. Gregor.................... 46 Director Joseph F. Janusz...................... 46 Vice President -- Finance Chief Financial Officer
Joseph J. Nelson has been President and Chief Executive Officer of the Company since October, 1996. Prior thereto, he was Senior Vice-President of The AGES Group, L.P. ("AGES"), responsible for the operations of four divisions with revenues of approximately $100 million, and held other positions with AGES since October, 1990. Prior thereto, Mr. Nelson was with Ryder Corporation attaining the position of Vice President of Sales. Mr. Nelson holds a B.S degree from DePaul University and an M.B.A. in Finance from Farleigh Dickinson University. Michael J. Cirillo has been a director of the Company since June, 1997. He is President of The D.A.R. Group, Inc. an investment banking firm and President of CBM Consultants, Inc., a marketing and consulting firm. From 1987 through 1995 Mr. Cirillo was an officer and director of Flex Resources, Inc., a temporary and permanent employment firm. Mr. Cirillo holds a B.S. degree from Farleigh Dickinson University. Theodore H. Gregor has been a director of the Company since October, 1997. Since 1987, he has been the President of Aero Kool Corporation, a privately held company engaged in business as an FAA approved repair facility. Mr. Gregor holds a B.S. degree in Mechanical Engineering from the University of Miami. Joseph F. Janusz has been Vice President of Finance and Chief Financial Officer of the Company since June 1, 1997. Prior thereto he was a practicing certified public accountant. From September, 1993 through March, 1996, he was the Chief Financial and Operations Officer of Homeshield Industries, Inc. a privately held manufacturing company. From January, 1987 through June, 1990, Mr. Janusz was the Chief Financial Officer of RMJ Associates, Inc., a holding company involved in the office supply, furniture and printing businesses. Mr. Janusz holds a B.S. degree in Accounting from the University of Florida. He is a member of the American Institute of CPAs, the Florida Institute of CPAs and is a licensed real estate broker in Florida. Allen Beni, who may be deemed to have been an organizer of the Company, was the President of Florida West Airlines, Inc., which filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Florida in September 1994. The officers of the Company are elected by the Board of Directors to serve until their successors are elected and qualified. The directors of the Company are elected at the annual meeting of the stockholders. The Company's Certificate of Incorporation and Bylaws provide for the indemnification of, and advancement of expenses to, directors and officers of the Company. The Company has also entered into agreements to provide indemnification for its directors and executive officers. COMMITTEES The Board of Directors intends to establish an Audit Committee within the next fiscal year. The Audit Committee will recommend the independent accountants appointed by the Board of Directors to audit the financial statements of the Company, which includes an inspection of the books and accounts of the Company, and will review with such accountants the scope of their audit and their report thereon, including any questions 20 23 and recommendations that may arise relating to such audit and report of the Company's internal accounting and auditing procedures. DIRECTOR COMPENSATION The Company intends to pay directors of the Company who are not employed by the Company a fee at the rate of $500 for each meeting of the Board of Directors attended and $500 for each committee meeting attended. In addition, all directors will receive on an annual basis stock option grants under the Stock Option Plan for serving on the Board. Options to purchase 5,000 shares of Common Stock will be automatically granted to each director on December 31 of each year, starting December 31, 1997, at an option exercise price equal to the closing bid or sales price of the Common Stock on such date. Additionally, directors appointed to the Board in the future will be granted options to purchase 10,000 shares of Common Stock at an option exercise price equal to the closing bid or sales price of the Common Stock on the date of their appointment to the Board. EXECUTIVE COMPENSATION The following table reflects compensation paid or accrued by the Company during the year ended August 31, 1997 to the Company's Chief Executive Officer.
NAME YEAR SALARY - ---- ---- -------- Joseph J. Nelson............................................ 1997 $135,385(1)
- --------------- (1) Represents compensation from November 1, 1996 to August 31, 1997. EMPLOYMENT AGREEMENTS The Company and its President and Chief Executive Officer entered into an employment agreement effective November 1, 1996. This Agreement is for a period of three (3) years, terminating on October 31, 1999. The Agreement provides for an annual base salary of $160,000 and a year-end cash bonus of 3% of the pre-tax net income of the Company, as defined therein. STOCK OPTION PLAN On September 1, 1997, the Board of Directors adopted a Stock Option Plan (the "Plan"). This Plan provides for the grant of Incentive Stock Options, Non-qualified Stock Options and Stock Appreciation Rights to employees selected by the Board of Directors, or Compensation Committee. The Plan also sets forth applicable rules and regulations for stock options granted to non-employee directors. To date, 124,500 options have been granted under the Plan, including 60,000 to Mr. Nelson and 30,000 to Mr. Janusz. The Plan is subject to stockholder approval and will be submitted to the stockholders at the Company's annual meeting in 1998. PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the beneficial ownership of the Common Stock of the Company as of December 31, 1997 (a) by each of the Company's directors, (b) all executive officers and directors as a group, and (c) all persons known by the Company to own beneficially more than 5% of the Company's Common Stock.
NAME SHARES PERCENT - ---- --------- ------- Joseph J. Nelson(1)(2)...................................... 272,000 8.9% Michael J. Cirillo(1)(3).................................... 1,150,000 29.1
21 24
NAME SHARES PERCENT - ---- --------- ------- Argaman, Inc.(4)............................................ 600,000 20.0 M.S.A. Trust Company Ltd., Co. #51-138681-5 of 3 Daniel Frisch Street 64731 Tel Aviv, Israel Silvertown International Corp.(5)........................... 279,800 9.3 Israel Galili No. 6 Tel Aviv, Israel 69377 Fersam International Ltd.(6)................................ 280,000 9.3 PA Verkuyllaan 51-55 (Acht.) 11-71 EB Badhoevedorp, The Netherlands Joseph Laura................................................ 233,600 7.8 105 Mountainside View Morgantown, NJ 07751 All officers and directors as a group(4 persons)(2)(3)(7)... 1,452,000 36.0%
- --------------- (1) The addresses for Mr. Nelson and Mr. Cirillo are c/o Jet Aviation Trading, Inc., 15675 N.W. 15 Avenue, Miami, FL 33169. (2) Includes 60,000 shares subject to stock options presently exercisable; does not include 20,000 shares subject to stock options which become exercisable in October, 1998. (3) Includes Warrants to purchase 950,000 shares of Common Stock owned by the D.A.R. Group, Inc. of which Mr. Cirillo is the President. (4) An Isle of St. Kitts, Nevis corporation; its sole officer and director by power of attorney, is Michael Shaham. Mr. Shaham has the sole voting and dispositive power for this company's shares by power of attorney. (5) A Panamanian corporation; its President/director is Mario Fonseco; its Secretary/director is Zvi Moshe; these individuals are also the principal shareholders. (6) A Netherlands corporation; its President is Hans Hel Sloth; its Secretary is Samantha El Masry; its directors and principal shareholders are Nazie El Masry and Patricia El Masry. (7) Includes 30,000 shares subject to stock options granted to Joseph F. Janusz; does not include 10,000 shares subject to stock options which become exercisable in October, 1998. CERTAIN TRANSACTIONS Effective October 1, 1996, the Company sold 600,000 shares of its Common Stock to Jet Avionics Systems, Inc. ("Jet Avionics") in consideration of a promissory note in the principal amount of $175,000, payable on demand, together with accrued interest at the applicable federal rate. The Company also entered into a Consignment Agreement with Jet Avionics, whereby the Company agreed to sell certain inventory of technical spares for the benefit of the Company and Jet Avionics. The Consignment Agreement was for a period of one year and provided for the delivery of inventory by Jet Avionics to the Company and the storage by the Company, on a segregated basis, of such inventory. Title to such inventory remained with Jet Avionics until sale to a third party, at which time title passed to the Company and then to the third party. The Company insured the inventory. The Consignment Agreement provided that the Company retained 25% of the selling price for the inventory and remitted the balance of 75% to Jet Avionics. Jet Avionics certified that each item of inventory covered by the Agreement was maintained by an FAA approved source and was properly documented. Pursuant to such Consignment Agreement, the Company sold to third parties certain of the consignment inventory for approximately $452,000 and owed Jet Avionics $303,000 after giving effect to a $36,000 payment. On August 29, 1997, the Company and Jet Avionics entered into a Consignment Cancellation and Purchase Agreement whereby (i) Jet Avionics cancelled the debt of $303,000 and (ii) the 22 25 Company purchased the remaining consignment inventory with a value of approximately $336,000 from Jet Avionics all in exchange for 230,000 shares of the Company's Common Stock, $4,000 in cash, and the cancellation of $175,000 of indebtedness of Jet Avionics to the Company. The President and sole shareholder of Jet Avionics is Sharon Taoz, the daughter of Allen Beni. Ms. Taoz was employed by the Company, as an account executive, from October 3, 1996 through August 31, 1997 and was paid $37,000. From October 3, 1996 through October 2, 1997, Mr. Beni served in a non-executive capacity as Vice President of Special Projects pursuant to an employment agreement. Mr. Beni's activities involved sales promotion and the pursuit of inventory purchase opportunities. During this period of time, Mr. Beni was paid $88,615 for services rendered. On October 2, 1997, Mr. Beni and the Company terminated the aforementioned employment agreement and entered into a one (1) year Consulting Agreement. This Consulting Agreement provides for a monthly retainer of $4,000 and a commission of 15% which may be earned based upon sales or purchases introduced by Mr. Beni to the Company. Mr. Beni also owns an equity interest in the lessor of the Company's facilities. See "MANAGEMENT -- Directors, Executive Officers and Promoters." On October 3, 1996, the Company sold 80,000 shares of its Common Stock to IP Services, Inc. ("IP") for $24,510. IP is an affiliate of Howard M. Appel. During 1996 FAC Enterprises, Inc. ("FAC), an affiliate of Mr. Appel, loaned the Company an aggregate of $325,000. During the year, the Company repaid $125,000. The balance ($200,000) was repaid on August 29, 1997 through the issuance of 100,000 shares of Common Stock. FAC was also issued 7,500 shares for advisory services rendered. Mr. Appel may be deemed to have been an organizer of the Company. On November 1, 1996, the Company sold 192,000 shares of its Common Stock to Joseph J. Nelson in consideration of a promissory note in the principal amount of $80,000 payable on demand, together with accrued interest at the applicable federal rate. On November 14, 1996, the Company entered into a contract with Fersam International Ltd. ("Fersam") for the purchase of a one-half interest in a CAE Electronics Ltd. Sigma 3-six (6) axis DC-10 simulator (the "DC-10 simulator"). In consideration for the purchase of this interest, the Company paid $125,000 in cash and issued 40,000 shares of Common Stock valued at $100,000. On March 28, 1997, the Company entered into another contract with Fersam for the purchase of one (1) Novoview 2000 Visual Support System, Simulator Spares Parts Package and Maintenance Training Data Package to be used in connection with the DC-10 simulator. In consideration of and as payment for the purchase of these assets, the Company issued 200,000 shares of Common Stock valued at $500,000. On March 27, 1997, Silvertown International Corp. ("Silvertown") loaned the Company $120,000. This loan was evidenced by a promissory note payable to Silvertown, due on June 27, 1997, together with interest at 6% per annum. In consideration for this unsecured loan, the Company issued to Silvertown 4,800 shares of Common Stock. This note was extended for an additional three (3) months. On May 12, 1997, Silvertown loaned the Company $250,000. This loan was evidenced by a promissory note payable to Silvertown, due on or about July 27, 1997, together with interest at 6% per annum. In consideration for this unsecured loan, the Company issued to Silvertown 10,000 shares of Common Stock. On August 29, 1997, the Company satisfied the principal amounts of these promissory notes through the issuance of 185,000 shares of Common Stock to Silvertown. On May 23, 1997, Joseph Laura loaned $500,000 to the Company. This loan was evidenced by a promissory note payable to Mr. Laura, due on the earlier of May 31, 1998 or the Company obtaining equity financing in excess of $1,000,000, together with interest at 12% per annum. The Company satisfied the principal amount of this note through the issuance of 250,000 shares of Common Stock to Mr. Laura on August 29, 1997. On May 30, 1997, The D.A.R. Group, Inc., an affiliate of Michael J. Cirillo, a director of the Company, was issued 200,000 shares of Common Stock of the Company, for $200. On June 1, 1997, The D.A.R. Group, Inc., was issued warrants to purchase 950,000 shares of Common Stock for a fee in connection with advice concerning the formation, capitalization and structure of Schuylkill Acquisition Corp. See "DESCRIPTION OF SECURITIES." 23 26 DESCRIPTION OF SECURITIES COMMON STOCK The Company is authorized to issue 30,000,000 shares of Common Stock, $.001 par value per share, of which 2,996,500 shares are outstanding. An additional 1,000,000 shares of Common Stock are reserved for issuance upon the exercise of the Warrants and an additional 750,000 shares are reserved for issuance pursuant to the Company's Stock Option Plan. Holders of Common Stock have equal rights to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor. Holders of Common Stock have one vote for each share held of record and do not have cumulative voting rights. Holders of Common Stock are entitled upon liquidation of the Company to share ratably in the net assets available for distribution, subject to the rights, if any, of holders of any preferred stock then outstanding. Shares of Common Stock are not redeemable and have no pre-emptive or similar rights. All outstanding shares of Common Stock are fully paid and non-assessable. PREFERRED STOCK Within the limits and restrictions contained in the Certificate of Incorporation, the Board of Directors has the authority, without further action by the stockholders, to issue up to 3,000,000 shares of Preferred Stock, $.10 par value per share (the "Preferred Stock"), in one or more series, and to fix, as to any such series, the dividend rate, redemption prices, preferences on liquidation or dissolution, sinking fund terms, if any, conversion rights, voting rights, and any other preferences or special rights and qualifications. Shares of Preferred Stock issued by the Board of Directors could be utilized, under certain circumstances, to make an attempt to gain control of the Company more difficult or time consuming. For example, shares of Preferred Stock could be issued with certain rights which might have the effect of diluting the percentage of Common Stock owned by a significant stockholder or issued to purchasers who might side with management in opposing a takeover bid which the Board of Directors determines is not in the best interests of the Company and its stockholders. This provision may be viewed as having possible anti-takeover effects. A takeover transaction frequently affords stockholders the opportunity to sell their shares at a premium over current market prices. The Board of Directors has not authorized any series of Preferred Stock, and there are no agreements, understandings or plans for the issuance of any Preferred Stock. OUTSTANDING WARRANTS The Warrants were issued in June 1, 1997 in connection with the organization of the Company. Each Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $4.50 until June 30, 2002. The Warrants are redeemable by the Company at $.05 upon the occurrence of both of the following events: (a) the listing of the Company's shares of common stock on a securities exchange and (b) the Company's common stock trading in excess of $5.25 per share for a ten day period. The Warrants provide for adjustment of the exercise price and for a change in the number of shares issuable upon exercise to protect holders against dilution in the event of a stock dividend, stock split, combination or reclassification of the Common Stock. The Warrants may be exercised upon surrender of the Warrant Certificate on or prior to the expiration date (or earlier redemption date) of such Warrant at the offices of the Company's transfer agent, with the form of "Election to Purchase" completed and executed as indicated, accompanied by payment of the full exercise price (by certified or bank check, payable to the order of the Company) for the number of shares with respect to which the Warrant is being exercised. Shares issued upon exercise of Warrants and paid for in accordance with the terms of the Warrants will be fully paid and nonassessable. The costs of filing the registration statement will be borne entirely by the Company. The Warrants do not confer upon the holder thereof any voting or other rights of a stockholder. 24 27 TRANSFER AGENT StockTrans, Inc., 7 East Lancaster Avenue, Ardmore, Pennsylvania 19003, serves as transfer agent for the Common Stock. SELLING SECURITY HOLDERS The selling security holders identified in the following table ("Selling Security Holders") are offering for sale an aggregate of 1,000,000 shares of Common Stock issuable upon exercise of the Warrants, as well as 1,969,000 shares of Common Stock previously issued by the Company in certain private placement transactions. The following table sets forth the number of Shares being held of record or beneficially (to the extent known by the Company) by such Selling Security Holders and provides (by footnote reference) any material relationship between the Company and such Selling Security Holder, all of which is based upon information currently available to the Company.
NUMBER OF SHARES OF COMMON NUMBER OF NUMBER OF STOCK SHARES OF SHARES OF PERCENTAGE TO BE SOLD COMMON PERCENTAGE COMMON STOCK BEFORE IN STOCK AFTER NAME BEFORE OFFERING(1) OFFERING(1) OFFERING(1) AFTER OFFERING OFFERING(1) - ---- ------------------- ------------ ------------ --------------- ----------- The D.A.R. Group, Inc.(2)(3)..... 950,000 24.7 % 950,000 -- --% Argaman, Inc..................... 600,000 15.2 300,000 300,000 7.6 Leonard H. Bloom................. 10,000 * 10,000 -- -- Amaury Borges(4)................. 20,000 * 10,000 10,000 * Clifton Capital Corp............. 128,000 3.21 128,000 -- -- Michael J. Cirillo(2)............ 200,000 5.07 200,000 -- -- Dallas Investments, Ltd.(5)...... 125,000 3.17 125,000 -- -- Discretionary Investment Trust dtd 7/7/93..................... 70,000 1.77 70,000 -- -- Brian Due........................ 20,000 * 10,000 10,000 * Elanken Family Trust............. 41,400 1.05 41,400 -- -- Fersam International Ltd.(2)..... 280,000 7.0 260,000 20,000 * Godwin Finance Ltd............... 100,000 2.5 100,000 -- -- I.P. Services, Inc.(2)........... 70,000 1.77 70,000 -- -- Jet Avionics Systems, Inc.(2).... 80,400 2.01 40,000 40,400 1.01 KAB Investments, Inc............. 70,000 1.77 50,000 20,000 * Joseph Laura(2).................. 233,600 5.82 233,600 -- -- Joseph Nelson(6)................. 212,000 5.37 100,000 112,000 2.84 Zvi Moshe(2)(7).................. 20,000 * 10,000 10,000 * Yoram Moussaieff................. 40,000 1.0 20,000 20,000 * Mustang Electronics Affiliated Defined Benefits Pension Plan........................... 20,000 * 10,000 10,000 * Bill Seidel...................... 10,000 * 5,000 5,00 * Joseph Shalhon................... 20,000 * 10,000 10,000 * Bella Shrem...................... 12,000 * 6,000 6,000 * Silvertown International Corp.(2)....................... 279,800 7.1 140,000 139,800 3.5 SPH Equities, Inc................ 60,000 1.52 60,000 -- -- Janet & Robert Weinstein......... 20,000 * 10,000 10,000 *
- --------------- * Less than 1% (1) Including 1,000,000 shares issued upon exercise of all the Warrants. (2) See "Certain Transactions". (3) Shares to be issued upon exercise of Warrants. (4) Mr. Borges is employed as the Senior Account Executive of the Company. (5) Includes 50,000 shares to be issued upon exercise of Warrants. (6) Mr. Nelson is the President of the Company. (7) Mr. Moshe is the President of Silvertown International Corp. 25 28 Certain of the Selling Security Holders have agreed not to sell their remaining shares of Common Stock for a period of one year from the effective date of the registration statement. PLAN OF DISTRIBUTION EXERCISE OF WARRANTS The Company is registering for resale shares of Common Stock issuable upon exercise of Warrants that were previously issued to the holders thereof. The Warrants are exercisable by tendering to the Company the appropriate exercise price along with the Warrant Certificate (with the "Election to Purchase" addendum properly filled out). Upon exercise, the Company will issue such fully paid and non-assessable shares of Common Stock as are specified on the Certificate so tendered and deliver to the holder thereof such additional securities as are required by the terms thereof. Payment of the exercise price shall be made in cash or by certified check or bank draft made payable to the order of the Company. The Warrants may be subject to redemption by the Company. See "DESCRIPTION OF SECURITIES." SELLING SECURITY HOLDERS The Selling Security Holders are offering shares of Common Stock for their own account and not for the account of the Company. The Company will not receive any proceeds from the sale of the shares of Common Stock by the Selling Security Holders. Each Selling Security Holder will, prior to any sales, agree (a) not to effect any offers or sales of the Common Stock in any manner other than as specified in this Prospectus, (b) to inform the Company of any sale of Common Stock at least one business day prior to such sale and (c) not to purchase or induce others to purchase Common Stock in violation of Regulation M under the Exchange Act. The shares of Common Stock may be sold from time to time to purchasers directly by any of the Selling Security Holders acting as principals for their own accounts in one or more transactions in the over-the-counter market or in negotiated transactions at market prices prevailing at the time of sale or at prices otherwise negotiated. Alternatively, the shares of Common Stock may be offered from time to time through agents, brokers, dealers or underwriters designated from time to time, and such agents, brokers, dealers or underwriters may receive compensation in the form of commissions or concessions from the Selling Security Holders or the purchasers of the Common Stock. Under the Exchange Act, and the regulations thereunder, any person engaged in a distribution of the shares of Common Stock of the Company offered by this Prospectus may not simultaneously engage in market making activities with respect to the Common Stock of the Company during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, each Selling Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of Common Stock by the Selling Security Holder. There are possible limitations upon trading activities and restrictions upon broker-dealers effecting transactions in certain securities which may also materially affect the value of, and an investor's ability to dispose of, the Company's securities. See "RISK FACTORS." The Company will use its best efforts to file, during any period in which offers or sales are being made, one or more post-effective amendments to the Registration Statement, of which this Prospectus is a part, to describe any material information with respect to the plan of distribution not previously disclosed in this Prospectus or any material change to such information in this Prospectus. 26 29 LEGAL MATTERS The validity of the Common Stock offered hereby will passed upon for the Company by Shapo, Freedman & Bloom, P.A., 200 South Biscayne Boulevard, Suite 4750, Miami, Florida 33131. Leonard H. Bloom, a shareholder of the firm, owns 10,000 shares of Common Stock of the Company. EXPERTS The financial statements of the Company for the fiscal year ended August 31, 1997 included in this Prospectus have been audited by Sweeney, Gates & Co., certified public accountants, and are included herein in reliance upon the authority of said firm as experts on accounting and auditing. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission, a Registration Statement on Form SB-2 with respect to the Common Stock being registered hereby. This Prospectus does not contain all the information contained in such Registration Statement, as permitted by the Rules and Regulations of the Securities and Exchange Commission. The Registration Statement, including exhibits thereto, may be inspected without charge and copies of all or any part thereof may be obtained from the Commission's principal office in Washington, D.C. at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices at 75 Park Place, 14th Floor, New York, New York 10007 and at Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained upon written request addressed to the Commission, Public Reference Section 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. For further information with respect to the Company, the Common Stock being registered hereby and the contents of any contract or document referred to herein, reference is made to the Registration Statement and the exhibits filed as a part thereof. 27 30 INDEX TO FINANCIAL STATEMENTS
PAGE ---- Independent Auditors' Report................................ F-2 Balance Sheet, August 31, 1997.............................. F-3 Statement of Income, October 3, 1996 (Date of Inception) to August 31, 1997........................................... F-4 Statement of Changes in Stockholders' Equity................ F-5 Statement of Cash Flows..................................... F-6 Notes to Financial Statements............................... F-7 Balance Sheet, November 30, 1997 (Unaudited)................ F-15 Statement of Income Three Months ended November 30, 1997 and October 3, 1996 (date of inception) to November 30, 1996 (Unaudited)... F-16 Statement of Cash Flows Three Months ended November 30, 1997 and October 3, 1996 (date of inception) to November 30, 1996 (Unaudited)... F-17 Note to Financial Statements................................ F-18
F-1 31 INDEPENDENT AUDITORS' REPORT Stockholders and Board of Directors Jet Aviation Trading, Inc. We have audited the accompanying balance sheet of Jet Aviation Trading, Inc. as of August 31, 1997, and the related statements of income, stockholders' equity, and cash flows for the period from October 3, 1996 (Date of Inception) through August 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jet Aviation Trading, Inc. as of August 31, 1997, and the results of its operations and cash flows for the period from October 3, 1996 (Date of Inception) through August 31, 1997, in conformity with generally accepted accounting principles. Sweeney, Gates & Co. Fort Lauderdale, Florida October 9, 1997, except as to Note 12 which is as of October 29, 1997 F-2 32 JET AVIATION TRADING, INC. BALANCE SHEET AUGUST 31, 1997 ASSETS Current assets: Cash...................................................... $ 341,660 Accounts receivable, less $93,000 allowance for doubtful accounts............................................... 1,764,119 Inventory................................................. 1,532,333 DC-10 flight simulator held for resale (Note 3)........... 734,421 Deferred tax asset........................................ 23,000 Prepaid expenses and other current assets................. 29,610 ---------- Total current assets.............................. 4,425,143 ---------- Property and equipment, less accumulated depreciation of $8,293.................................................... 88,437 Deferred offering costs..................................... 22,750 Deposit-Boeing.............................................. 25,000 ---------- $4,561,330 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 977,706 Accrued expenses.......................................... 144,540 Accrued interest.......................................... 19,611 Income taxes payable...................................... 37,200 ---------- Total current liabilities......................... 1,179,057 ---------- Deferred tax liability...................................... 2,000 ---------- Stockholders' equity: Preferred stock, par value $.10 per share, 3,000,000 shares authorized, and no shares issued and outstanding............................................ -- Common stock, par value $.001 per share; 30,000,000 shares authorized, and 2,996,500 shares issued and outstanding............................................ 2,997 Additional paid-in capital................................ 4,840,917 Accumulated Deficit....................................... (1,383,641) ---------- 3,460,273 Less: Stockholders' notes receivable (Note 8)............... (80,000) ---------- Total stockholder's equity........................ 3,380,273 ---------- $4,561,330 ==========
The accompanying notes are an integral part of these financial statements. F-3 33 JET AVIATION TRADING, INC. STATEMENT OF OPERATIONS OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997 Sales, net of returns and allowances........................ $ 6,215,553 Cost of sales............................................... 4,684,864 ----------- Gross profit.............................................. 1,530,689 ----------- Selling, general and administrative expenses................ 2,881,660 ----------- Operating Loss.............................................. (1,350,971) ----------- Other income (expense): Interest income........................................... $ 21,867 Interest expense.......................................... (38,337) (16,470) -------- ----------- Loss before income taxes.................................... (1,367,441) Income tax expense: Current................................................... 37,200 Deferred.................................................. (21,000) 16,200 -------- ----------- Net Loss.......................................... $(1,383,641) =========== Net Loss per share................................ $ (.83) =========== Weighted average number of common shares outstanding........ 1,672,968 ===========
The accompanying notes are an integral part of these financial statements. F-4 34 JET AVIATION TRADING, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997
COMMON STOCK ADDITIONAL STOCKHOLDER'S ------------------ PAID-IN ACCUMULATED NOTE SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL --------- ------ ---------- ----------- ------------- ---------- Issuance of common stock to founding stockholders...... 1,200,000 $1,200 $ 778,800 $ -- $(255,000) $ 525,000 Issuance of common stock in connection with the purchase of equipment and aircraft parts............. 10,000 10 24,990 -- -- 25,000 Issuance of common stock in connection with private placement.................. 312,000 312 745,997 -- -- 746,309 Issuance of common stock in connection with purchase of DC-10 Simulator held for resale..................... 240,000 240 599,760 -- -- 600,000 Issuance of common stock in connection with debt....... 14,800 15 36,985 -- -- 37,000 Issuance of common stock to founders of Schuylkill Acquisition Corp........... 400,000 400 999,600 -- -- 1,000,000 Issuance of common stock in a private offering by Schuylkill Acquisition Corp. ..................... 47,200 47 95,856 -- -- 95,903 Issuance of 1,000,000 warrants................... -- -- 50,000 -- -- 50,000 Accumulated deficit of Schuylkill Acquisition Corp. adjusted due to merger..................... -- -- (35,298) -- -- (35,298) Conversion of $370,000 of notes payable to common stock...................... 185,000 185 369,815 -- -- 370,000 Conversion of $200,000 stockholder loan to common stock and payment of $15,000 advisory fee in common stock............... 107,500 108 214,892 -- -- 215,000 Conversion of $500,000 note payable to common stock.... 250,000 250 499,750 -- -- 500,000 Issuance of common stock for the payment of amounts due to a stockholder and for the purchase of remaining consigned inventory........ 230,000 230 459,770 -- 175,000 635,000 Net Loss..................... -- -- -- (1,383,641) -- (1,383,641) --------- ------ ---------- ----------- --------- ---------- Balance, August 31, 1997..... 2,996,500 $2,997 $4,840,917 $(1,383,641) $ (80,000) $3,380,273 ========= ====== ========== =========== ========= ==========
The accompanying notes are an integral part of these financial statements. F-5 35 JET AVIATION TRADING, INC. STATEMENT OF CASH FLOWS OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997 Cash flows from operating activities: Net (loss)................................................ $(1,383,641) Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 8,293 Allowance for doubtful accounts........................ 93,000 Noncash compensation expense related to sale of founders shares....................................... 400,000 Noncash compensation expense related to sale of Schuylkill Acquisition founders shares................ 999,600 Noncash compensation expense related to warrants....... 50,000 Noncash compensation relating to an advisory fee....... 15,000 Noncash compensation relating to loan origination fee................................................... 37,000 Deferred tax asset, net of deferred tax liability...... (21,000) Change in assets and liabilities: Decrease (increase) in: Accounts receivable.................................. (1,857,119) Inventory (Note 6)................................... (872,333) Cash paid in connection with purchase of DC-10 flight simulator........................................... (134,421) Prepaid expenses and other current assets............ (29,610) Increase (decrease) in: Accounts payable..................................... 977,706 Accrued expenses..................................... 144,541 Accured interest..................................... 19,611 Income tax payable................................... 37,200 ----------- Total adjustments................................. (132,532) ----------- Net cash used for operating activities...................... (1,516,173) ----------- Cash flows from investing activities: Deposit--Boeing........................................... (25,000) Purchase of property and equipment........................ (96,730) ----------- Net cash used for investing activities............ (121,730) ----------- Cash flows from financing activities: Deferred offering costs................................... (22,750) Proceeds from stockholder loans, subsequently converted to common stock........................................... 1,195,000 Payments on stockholder loans............................. (125,000) Proceeds from issuance of securities...................... 932,313 ----------- Net cash provided by financing activities......... 1,979,563 ----------- Cash, ending................................................ $ 341,660 =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW: Interest paid............................................. $ 24,103 ----------- Income taxes paid......................................... $ -- ===========
The accompanying notes are an integral part of these financial statements. F-6 36 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION Organization and History -- Schuylkill Acquisition Corp. ("the Company" or "SAC") was incorporated in Florida on May 28, 1997, for the purpose of acquiring by merger the business and operations of Jet Aviation Trading, Inc. ("Old Jet") upon the completion of a stock offering by the Company. On July 28, 1997, the Company acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of the Company in a one for one stock exchange. Old Jet was incorporated in the state of Florida on October 3, 1996 for the purpose of buying, selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. Effective July 28, 1997, the Company's name was changed from Schuylkill Acquisition Corp. to Jet Aviation Trading, Inc. Merger and Recapitalization -- The merger was completed on July 28, 1997, whereby SAC acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of SAC in a one for one stock exchange. The merger has been accounted for as a purchase. The effect of the transaction was a reverse merger, whereas SAC changed its name to Jet Aviation Trading, Inc. and Old Jet became the acquiring entity and accounting survivor. Accordingly, the historical financial statements presented are those of the accounting survivor, Old Jet, and the stockholders' equity of the merged Company was recapitalized to reflect the capital structure of the surviving legal entity and the accumulated deficit of Old Jet at the time of merger. Nature of Business and Credit Policies -- The Company buys, sells, leases and exchanges spare parts for fixed-wing commercial jet transport aircraft. The Company's customers are primarily commercial passenger and cargo operators, original equipment manufacturers and Federal Aviation Administration and Joint Aviation Authority repair stations throughout the world. The Company performs ongoing credit evaluations of its customers' financial condition and extends credit to its customers based upon its evaluations. If creditworthiness is questionable, parts are shipped COD. The allowance for doubtful accounts is based upon the expected collection of accounts receivable. Cash Equivalents -- The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Revenue and Cost Recognition -- The Company recognizes revenue when parts are shipped to the customer. Amounts paid in advance are recorded as deferred income and recognized in the period in which the parts are shipped. The Company recognizes revenue and the related cost of consigned inventory when the parts are shipped to the customer. Inventories -- Inventory is stated at the lower of cost or market. Cost of aircraft parts is determined on a specific identification basis. When parts are purchased in lots, the individual parts are expensed at a predetermined percentage of the sales price until the cost of the lot is recovered. Costs to repair, inspect and/or modify the parts are charged to the specific part when incurred. Inventories held by the Company on consignment from others are not included in the inventory in the accompanying financial statements. Deferred Offering Costs -- Amounts paid or accrued for costs related to the anticipated public offering will be recorded as a reduction of the proceeds when the offering is completed. If the offering is not completed, the costs will be expensed. Income Taxes -- The Company accounts for income taxes on an asset and liability approach for financial accounting. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. F-7 37 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Net Income Per Share -- Net income per common share is computed by dividing net income by the weighted average number of shares outstanding during the period. Warrants issued during the period are not considered dilutive, and therefore, are not included in the computation of net income per share. In February 1997, the Financial Accounting Standards Board issued SFAS 128, "Earnings Per Share". The adoption of SFAS 128 did not have an effect on the computation of earnings per share because the effective date is December 15, 1997, and earlier application is not permitted. Recoverability of Long Lived Assets -- The Company has adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company is not aware of any events or circumstances which indicate the existence of an impairment which would be material to the Company's financial statements. Financial Instruments -- The carrying amount of cash, accounts receivable, accounts payable and accrued expenses approximates fair value as of August 31, 1997. The carrying value of the stockholder's note receivable at August 31, 1997, approximates fair value. Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates based on management's knowledge and experience. Accordingly, actual results could differ from those estimates. 2. RELATED PARTY TRANSACTIONS CONSIGNMENT AGREEMENT WITH RELATED PARTY The Company entered into a Consignment Agreement (the "Agreement") with a related party, Jet Avionics Systems, Inc. ("Avionics"), effective October 3, 1996, wherein the Company agreed to sell certain consignment inventory of technical spare parts belonging to Avionics and pay Avionics 75% of the sales price collected for the inventory sold. The sales price is the gross sales price less any costs involved if any item of inventory is required to be overhauled, certified or modified in order to be sold. Total consideration to be paid for the inventory under the Agreement was $675,000. Pursuant to such Agreement, the Company sold approximately $452,000 of parts during the year to third parties and Avionics was due $339,000 of this amount. During the year, the Company paid Avionics $36,000 of the amount due. On August 29, 1997, the Company and Avionics entered into a Consignment Cancellation and Purchase Agreement whereby the Company purchased the remaining inventory not sold with a value of approximately $336,000 from Avionics and thereafter paid the balance of $639,000 in exchange for 230,000 shares of the Company's common stock valued at $2.00 per share, the cancellation of $175,000 of indebtedness of Avionics due the Company, and $4,000 in cash. The president and sole stockholder of Avionics was employed by the Company from October 3, 1996 through October 2, 1997. The president and sole stockholder is the daughter of an employee of the Company who served in a non-executive capacity as Vice President of Special Projects. F-8 38 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OFFICE AND WAREHOUSE FACILITY The Company leases its office and warehouse facility from a company partially owned by a stockholder of the Company under a four year lease expiring December 31, 2000 with two one year options to renew. The monthly rental is $4,609 plus applicable sales tax and pass through of expenses. Rent expense was $29,435 for the period ended August 31, 1997. At August 31, 1997, the Company was obligated under this operating lease arrangement as follows:
YEARS ENDING AUGUST 31, AMOUNT - ----------------------- -------- 1998........................................................ $ 55,308 1999........................................................ 55,308 2000........................................................ 55,308 2001........................................................ 18,436 -------- $184,360 ========
3. PURCHASE OF DC-10 FLIGHT SIMULATOR AND SUPPORT PACKAGE On November 1, 1996, the Company entered into an agreement with a company domiciled in the Netherlands (the "seller" or the "Netherlands Company") to purchase one half (50%) ownership in a DC 10-30 six axis flight simulator and all associated equipment required to operate the flight simulator. The agreement calls for the seller and the Company to equally participate in all revenues generated from the sale, lease or disassembly of the hardware of the flight simulator. The Company paid the seller $125,000 in cash and issued 40,000 shares of the Company's common stock valued at $2.50 per share for the flight simulator The Company intends to sell the flight simulator as a complete package. On March 28, 1997, the Company entered into a second agreement with the seller to purchase one Novoview 2000 Visual System, one package of simulator parts, one maintenance training/procedure manual and one data support package used to support the DC 10-30 flight simulator. The price of the items purchased was $500,000 and the Company paid for the items by issuing 200,000 shares of its common stock at $2.50 per share. The Company will receive 100% of the revenues generated from the sale of these items. The interest in the simulator, related items and freight costs are reflected in the accompanying balance sheet as DC-10 flight simulator totaling $734,421. This Netherlands Company is also a purchaser and supplier of spare parts from and to the Company. During the year ended August 31, 1997, the Netherlands Company purchased spare parts totaling $82,775 from the Company, and sold $183,331 of spare parts to the Company in addition to the DC 10-30 flight simulator. At August 31, 1997, the Company was owed $1,375 by the Netherlands Company and the Company owed the Netherlands Company $47,750. Additionally, the Netherlands Company held $22,400 of the Company's inventory in their warehouse at August 31, 1997. 4. RISKS REGARDING THE COMPANY'S INVENTORY The Company's inventory consists principally of new, overhauled, serviceable and repairable aircraft parts that are purchased from many sources. Before parts may be installed in an aircraft, they must meet certain standards of condition established by the Federal Aviation Administration ("FAA") and/or the equivalent regulatory agencies in other countries. Specific regulations vary from country to country, although regulatory requirements in other countries generally coincide with FAA requirements. Parts owned or acquired by the Company may not meet applicable standards or standards may change in the future, causing parts, which are already contained in the Company's inventory to be scrapped or modified. Aircraft manufacturers may also develop new parts to be used in lieu of parts already contained in the Company's inventory. In all such cases, to the extent that the Company has such parts in its inventory, their value may be reduced. F-9 39 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 5. CONSIGNMENT INVENTORY By consigning inventories to a redistributor such as the Company, customers are able to distribute their aircraft spare parts to a large number of prospective inventory buyers, allowing the customer to maximize the value of its inventory. Consignment also enables the Company to offer for sale significant parts inventory at minimal capital cost. The Company currently maintains or manages or has consignment agreement in place and its revenues from consignment arrangement have accounted for approximately 5% of net sales for the period ended August 31, 1997. 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at August 31, 1997: Furniture and fixtures...................................... $28,715 Computer equipment.......................................... 27,068 Leasehold improvements...................................... 30,443 Software.................................................... 10,504 ------- 96,730 Less: Accumulated depreciation.............................. (8,293) ------- $88,437 =======
Property and equipment is depreciated on a straight-line basis with useful lives ranging from 5 to 7 years. Depreciation expense for the period was $8,293. 7. CAPITAL STOCK PREFERRED STOCK Within the limits and restrictions contained in the Certificate of Incorporation, the Board of Directors has the authority, without further action by the stockholders, to issue up to 3,000,000 shares of Preferred Stock, $.10 par value per share, in one or more series, and to fix, as to any such series, the dividend rate, redemption prices, preferences on liquidation or dissolution, sinking fund terms, if any, conversion rights, voting rights, and any other preferences or special rights and qualifications. COMMON STOCK Founders' shares totaling 400,000 common shares were issued on May 28, 1997, to four entities for par value of $.001. Net proceeds from the issuance of founders' shares was $400. Compensation expenses was charged for the difference between the fair market value per share of $2.50 and $.001 per share paid or a total charge of $999,600. During 1997, the Company sold 47,200 shares of common stock for $2.50 per share resulting in total proceeds of $118,000. Deferred offering costs of $22,098 have been reflected as a reduction of the proceeds of the private placement offering. On July 17, 1997, the Company issued 1,776,800 shares of common stock to acquire 100% of the outstanding common stock of Jet Aviation in a 1 for 1 stock exchange. WARRANTS On June 1, 1997, 1,000,000 warrants were issued in connection with the organization of Schuylkill Acquisition Corp. to related parties for an advisory fee. The Company has reserved 1,000,000 shares of its common stock for exercise of the warrants. Each warrant entitles the holder to purchase one share of common F-10 40 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) stock at an exercise price of $4.50 until June 30, 2002. The warrants are redeemable by the Company at $.05 upon the occurrence of both of the following events: (a) the listing of the Company's shares of common stock on a securities exchange, and (b) the Company's common stock is trading in excess of $5.25 per share for a ten day period. The Company has adopted SFAS No. 123, Accounting for Stock-Based Compensation, for non-employee stock compensation. Accordingly, the warrants referred to above have been valued at $.05 per warrant and expensed. CONVERSION OF DEBT During October and November, 1996, an affiliate of a stockholder loaned the Company $325,000. The loans were payable on demand and did not bear a stated interest rate. During the year $125,000 was repaid. On August 29, 1997, the Company converted $200,000 of the loan to 100,000 shares of common stock at $2.00 per share. On March 27 and May 12, 1997, the Company borrowed $370,000 from a stockholder and entered into two short term notes payable, bearing interest at 6% per annum. One of the notes was extended on June 19, 1997, and interest was increased to 10% per annum. On August 29, 1997, the Company and stockholder converted the notes payable to 185,000 shares of common stock at $2.00 per share and the Company paid the interest accrued on the short term notes payable through that date. On May 23, 1997, prior to the merger, Schuylkill Acquisition Corp. borrowed $500,000 from a stockholder, evidence by a promissory note bearing interest at 12%. On August 29, 1997, the promissory note was converted to 250,000 shares of common stock at $2.00 per share, and the Company paid the accrued interest through that date. COMMON STOCK TRANSACTIONS OF JET AVIATION TRADING, INC. (OLD JET) PRIOR TO MERGER On October 3, 1996, Old Jet sold 408,000 founders' shares of common stock for total proceeds of $125,000. Effective October 1, 1996, Old Jet issued 600,000 shares of the Old Jet's common stock for a $175,000 note bearing interest of 6% to Avionics. Further, effective November 1, 1996, Old Jet issued 192,000 shares of common stock to its President for a $80,000 note bearing interest of 6%. See Note 2 and Note 8. Compensation expenses was charged for the difference between the fair market value of $2.50 per share and $.417 per share or a total charge of $400,000. See Note 2 and Note 8. On October 22, 1996, Old Jet issued 10,000 shares valued at $2.50 per share in partial payment of the purchase of equipment and aircraft parts totaling $50,000. On January 22, 1997, Old Jet issued 40,000 shares of Old Jet's common stock in partial payment for the purchase of a DC-10 flight simulator. See Note 3. Also, on January 22, 1997, and June 2, 1997, Old Jet issued 312,000 shares of common stock in private placement transactions. Net proceeds from the private placement totaled $746,309, after giving effect to $33,691 in offering costs. On March 31, 1997, Old Jet issued 200,000 shares of common stock valued at $2.50 per share in connection with the purchase of a DC-10 flight simulator support package. See Note 3. On April 4, 1997, and May 12, 1997, Old Jet issued a total of 14,800 shares valued at $2.50 per share, for a total of $37,000, to a stockholder as additional incentive for providing stockholder loans. The expense has been recorded as debt issue costs. F-11 41 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 8. STOCKHOLDERS' NOTES RECEIVABLE Stockholders' notes receivable relate to the issuance of Old Jet's common stock as follows: - Effective October 1, 1996, Old Jet issued 600,000 shares of common stock to Avionics for a $175,000 note bearing interest at 6%. The note was canceled in partial payment of the amounts due under the Consignment Cancellation and Purchase Agreement. See Note 2. - On November 1, 1996, Old Jet issued 192,000 shares of common stock to its president for an $80,000 note bearing interest at 6%. Should the president earn bonuses per his employment contract, one half of the bonuses in excess of $25,000 earned annually, may be applied to the outstanding note balance. The note is due on demand and is unsecured. 9. INCOME TAXES The income tax provision was comprised of the following at August 31, 1997: Current: Federal................................................... $ 30,500 State..................................................... 6,700 Deferred: Federal................................................... (16,700) State..................................................... (4,300) -------- Income tax provision........................................ $ 16,200 ========
A reconciliation between the statutory rate and the effective rate is as follows for the year ended August 31, 1997: Federal statutory tax rate.................................. 34.0% State statutory rate, net of federal benefit................ 3.6 Permanent difference and other.............................. 12.8 ---- Effective tax rate.......................................... 50.4% ====
Significant components of the Company's deferred tax assets and liabilities, computed using currently enacted tax rates, are as follows at August 31, 1997: Current items: Assets: Allowances for doubtful accounts which are currently nondeductible......................................... $23,000 ------- Net current deferred tax assets............................. $23,000 ======= Long-term items: Property and equipment principally due to the use of accelerated depreciation for tax purposes.............. $(2,000) ------- Net long-term deferred tax liabilities...................... $(2,000) =======
10. COMMITMENTS AND CONTINGENCIES EMPLOYMENT AGREEMENT Effective November 1, 1996, Old Jet entered into an employment contract with its president for a three year period and the agreement automatically extends on a month to month basis thereafter. Base compensation F-12 42 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) is $160,000 per year, plus 3% of the pretax net income of the Company. The agreement also calls for one half of the bonus in excess of $25,000 earned annually by the president to be applied to reduce the outstanding balance of the president's obligation under his promissory note given to Old Jet for his stock. See Note 6. Effective October 3, 1996, Old Jet entered into an employment contract with an individual who is an affiliate of Avionics as an employee for a three year period. Base compensation is $120,000 per year, plus a bonus determined by the Board of Directors. On October 2, 1997, the Company and the employee mutually agreed to the termination of said employment agreement dated October 3, 1996. The Company and individual have entered into a Consulting Agreement on October 3, 1997, for a twelve month period ending October 2, 1998. Base compensation is $4,000 per month, plus a commission of 15% of the collected purchase price of sales, and 15% of the purchase price of material for resale which the individual introduces to the Company. 11. SALES TO MAJOR CUSTOMERS The Company sells, leases and exchanges spare parts for fixed-wing commercial jet transport aircraft to foreign and domestic customers. The information with respect to revenue, by geographic area, is presented in the table below for the period from October 3, 1997 (inception) through August 31, 1997. United States............................................... $3,559,585 Africa and Middle East...................................... 36,119 Europe...................................................... 938,896 Latin America............................................... 25,140 Asia........................................................ 1,655,813 ---------- Total............................................. $6,215,553 ==========
One Asian customer accounted for 20% of the Company's sales in fiscal 1997. 12. SUPPLEMENTAL NON-CASH FLOW INFORMATION Effective October 3, 1996, Old Jet issued 192,000 shares of common stock to its President for a $80,000 note bearing interest of 6%. Compensation expenses was charged for the difference between the fair market value of $2.50 per share and $.417 per share or a total charge of $400,000. During the year the Company purchased equipment and aircraft parts with a value of $50,000 by issuing 10,000 shares of common stock at $2.50 per share and paying the remainder in cash. As part of the purchase of the DC-10 flight simulator and support package for $734,421, the Company issued 240,000 shares of common stock at $2.50 per share and paid the remainder in cash. As part of its cost of borrowing money during the year the Company issued 14,800 shares of common stock valued at $2.50 per share to a stockholder of the Company. On August 29, 1997, the Company issued 230,000 shares of common stock valued at $2.00 per share, canceled a $175,000 note due to the Company by Avionics and paid $4,000 in cash in satisfaction of a $303,000 debt due Avionics and the purchase of the remaining consigned inventory valued at $336,000. Schuylkill Acquisition Corp. (prior to merging with Old Jet) issued founders' shares totaling 400,000 on May 28, 1997 to four entities for par value of $.001. Net proceeds from the issuance of founders' shares was $400. Compensation expenses was charged for the difference between the fair market value of $2.50 per share and $.001 per share paid or a total charge of $999,600. F-13 43 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) On August 29, 1997, the Company converted four notes payable totaling $1,070,000 by issuing 535,000 shares of common stock at a value of $2.00 per share. On August 29, 1997, the Company paid $15,000 as an advisory fee to a related party by issuing 7,500 shares of common stock at a value of $2.00 per share. 13. CONCENTRATION OF CREDIT RISK INVOLVING CASH During the year, the Company maintained cash balances in excess of the Federally insured limits. The Company maintained the balances in four banks, one of which is a major money center bank. Three of the banks are Federally insured. A fourth bank, Israel Discount Bank Limited is a major international bank and operates in the United States under the Edge Act, but is not Federally insured. At August 31, 1997, the Company had balances under $100,000 in the three Federally insured banks, but maintained a balance of $264,550 in Israel Discount Bank Limited. However, the Company does not believe a significant risk existed in having the balance with Israel Discount Bank Limited. 14. SUBSEQUENT EVENTS On October 29, 1997, the Board of Directors adopted a Stock Option Plan (the "Plan") effective September 1, 1997. This Plan provides for the grant to employees selected by the Board of Directors, or Compensation Committee, of incentive stock options, non-qualified stock options and stock appreciation rights in the aggregate not exceeding 750,000 shares. The Plan also sets forth applicable rules and regulations for stock options granted to non-employee directors. The Board of Directors authorized the issuance of 74,500 stock options. The Plan is subject to stockholder approval and will be submitted to the stockholders at the Company's annual meeting in 1998. F-14 44 JET AVIATION TRADING, INC. BALANCE SHEET (UNAUDITED) NOVEMBER 30, 1997 ASSETS Current assets: Cash...................................................... $ 498,572 Accounts receivable, less allowance for doubtful accounts of $103,000............................................ 1,927,333 Inventory................................................. 1,546,380 DC-10 flight simulator held for resale.................... 734,421 Deferred tax asset........................................ 26,000 Prepaid expenses and other current assets................. 25,287 ---------- Total current assets.............................. 4,757,993 ---------- Property and equipment, less accumulated depreciation of $8,293.................................................... 108,394 Deferred offering costs..................................... 50,372 Other assets................................................ 42,381 ---------- $4,959,140 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $1,160,036 Accrued expenses.......................................... 165,151 Income taxes payable...................................... 123,200 ---------- Total current liabilities......................... 1,448,387 ---------- Deferred tax liability...................................... 2,000 ---------- Stockholders' equity: Preferred stock, par value $.10 per share, 3,000,000 shares authorized, and no shares issued and outstanding............................................ -- Common stock, par value $.001 per share; 30,000,000 shares authorized, and 2,996,500 shares issued and outstanding............................................ 2,997 Additional paid-in capital................................ 4,840,917 Accumulated deficit....................................... (1,255,161) ---------- 3,588,753 Less: Stockholder's notes receivable........................ (80,000) ---------- Total stockholders' equity........................ 3,508,753 ---------- $4,959,140 ==========
The accompanying notes are an integral part of these financial statements. F-15 45 JET AVIATION TRADING, INC. STATEMENT OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 1997 AND OCTOBER 3, 1996 (DATE OF INCEPTION) TO NOVEMBER 30, 1996
1997 1996 ---------- ---------- Sales, net of returns and allowances........................ $2,452,322 $ 467,882 Cost of sales............................................... 1,863,917 353,510 ---------- ---------- Gross profit.............................................. 588,405 114,372 ---------- ---------- Selling, general and administrative expenses................ 360,816 491,200 ---------- ---------- Operating income (loss)..................................... 227,589 (376,828) ---------- ---------- Other income (expense): Interest expense.......................................... (16,109) -- ---------- ---------- Income (loss) before income taxes........................... 211,480 (376,828) Income tax expense: Income tax expense-current................................ 86,000 4,600 Income tax expense-deferred............................... (3,000) -- ---------- ---------- 83,000 4,600 ---------- ---------- Net Income (loss)........................................... $ 128,480 $ (381,428) ========== ========== Net Income (loss) per share................................. $ 0.04 $ (0.32) ========== ========== Weighted average number of common shares outstanding........ 2,996,500 1,200,000 ========== ==========
The accompanying notes are an integral part of these financial statements. F-16 46 JET AVIATION TRADING, INC. STATEMENT OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 1997 AND OCTOBER 3, 1996 (DATE OF INCEPTION) TO NOVEMBER 30, 1996
1997 1996 --------- --------- Cash flows from operating activities: Net income (loss)......................................... $ 128,480 $(381,428) Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 3,757 8 Allowance for doubtful accounts........................ 10,000 1,000 Noncash compensation expenses related to sale of founders shares....................................... 400,000 Deferred tax asset, net of deferred tax liability...... (3,000) -- Change in assets and liabilities: Decrease (increase) in: Accounts receivable.................................. (173,214) (447,094) Inventory............................................ (14,047) (168,657) Prepaid expenses and other current assets............ 4,323 (5,000) Other assets......................................... (17,381) (25,000) Increase (decrease) in: Accounts payable..................................... 182,330 225,510 Accrued expenses..................................... 1,000 25,198 Income tax payable................................... 86,000 4,600 --------- --------- Total adjustments........................................... 79,768 10,565 --------- --------- Net cash (used) provided by operating activities............ 208,248 (370,863) --------- --------- Cash flows from investing activities: Purchase of property and equipment........................ (23,714) (500) --------- --------- Net cash (used) for investing activities.......... (23,714) (500) --------- --------- Cash flows from financing activities: Deferred offering costs................................... (27,622) (10,000) Advances from related Company............................. 45,496 Shareholder loan payable.................................. 300,000 Proceeds from sale of securities.......................... 125,000 --------- --------- Net cash (used) provided by financing activities...................................... (27,622) 460,496 --------- --------- Increase in cash............................................ 156,912 89,133 --------- --------- Cash, beginning of period................................... 341,660 -- --------- --------- Cash, ending................................................ $ 498,572 $ 89,133 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW: Interest paid.......................................... $ 24,103 $ -- ========= ========= Income taxes paid...................................... $ -- $ -- ========= =========
The accompanying notes are an integral part of these financial statements. F-17 47 JET AVIATION TRADING, INC. NOTE TO FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The financial information included herein is unaudited; however such information reflects all adjustments (consisting solely of normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of results for the interim period. The results of operations for the three months ended November 30, 1997 are not necessarily indicative of the results to be expected for the full year. F-18 48 ====================================================== NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF THE COMPANY OR THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 The Company........................... 3 The Offering.......................... 3 Selected Financial Information........ 5 Risk Factors.......................... 6 Dilution.............................. 9 Use of Proceeds....................... 10 Market Price of the Common Stock...... 10 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 11 Business.............................. 14 Management............................ 20 Principal Stockholders................ 21 Certain Transactions.................. 22 Description of Securities............. 24 Selling Security Holders.............. 25 Plan of Distribution.................. 26 Legal Matters......................... 27 Experts............................... 27 Additional Information................ 27 Financial Statements.................. F-1
--------------------- UNTIL , 1998 (90 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. ====================================================== ====================================================== 1,000,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS UPON EXERCISE OF OUTSTANDING WARRANTS --------------------- 1,969,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS JET AVIATION TRADING, INC. ----------------- PROSPECTUS ----------------- , 1998 ====================================================== 49 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Pursuant to Section 607.0850 of the Florida Business Corporation Act, the Company has the power to indemnify directors, officers, employees or agents. The Company's Articles of Incorporation [and Bylaws provide for indemnification of directors and officers. In addition, the Company's executive officers and directors have entered into agreements with the Company which also indemnifies them for certain acts and omissions. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance of the securities being registered are as follows: SEC Registration Fee........................................ $ 4,049 Printing Expenses........................................... 20,000 Accounting Fees and Expenses................................ 15,000 Legal Fees and Expenses..................................... 30,000 Blue Sky Fees and Expenses.................................. 10,000 Transfer Agent and Registrar Fees and Expenses.............. 5,000 Miscellaneous............................................... 16,000 -------- Total............................................. $100,049 ========
- --------------- All amounts, except the SEC registration fee, are estimated. ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. The following table sets forth the Company's sales of unregistered securities.
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - ------------------- --------- --------- ------------------------ 600,000 ............... 10/1/96 Jet Avionics Systems, Inc.(1) $175,000(note) 128,000 ............... 10/3/96 Clifton Capital Corp.(1) $ 39,216 80,000 ............... 10/3/96 IP Services, Inc.(1) $ 24,510 70,000 ............... 10/3/96 Discretionary Investment Trust(1) $ 21,446 70,000 ............... 10/3/96 K.A.B. Investments(1) $ 21,446 60,000 ............... 10/3/96 S.P.H. Equities(1) $ 18,382 192,000 ............... 11/1/96 Joseph Nelson(1) $ 80,000(note) ===================================================================================================== 10,000 ............... 12/31/96 Bill Seidel(2) inventory of spare parts ===================================================================================================== 20,000 ............... 1/22/97 Joseph J. Nelson(3) $ 50,000 20,000 ............... 2/7/97 Brian Due(3) $ 50,000 20,000 ............... 2/7/97 Amaury Borges(3) $ 50,000 80,000 ............... 2/7/97 Silvertown International Corp.(3) $200,000 20,000 ............... 2/7/97 Zvi Moshe(3) $ 50,000 20,000 ............... 2/7/97 Fersam International Ltd.(3) $ 50,000 20,000 ............... 2/7/97 Janet & Robert Weinstein(3) $ 50,000 12,000 ............... 3/6/97 Bella Shrem(3) $ 30,000 20,000 ............... 3/6/97 Joseph Shalhon(3) $ 50,000 20,000 ............... 2/27/97 Mustang Electronics, Inc. Affiliated Defined Benefits Pension Plan(3) $ 50,000 =====================================================================================================
II-1 50
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - ------------------- --------- --------- ------------------------ 40,000 ............... 3/17/97 Yoram Moussaieff(3) $100,000 ===================================================================================================== 40,000 ............... 3/14/97 Fersam International Ltd.(2) inventory consisting of interest in DC-10-30 flight simulator 200,000 ............... 3/28/97 Fersam International Ltd.(2) inventory consisting of computer software and training manuals ===================================================================================================== 200,000 ............... 5/30/97 The D.A.R. Group, Inc.(1) $ 200 75,000 ............... 5/30/97 Dallas Investments, Ltd.(1) $ 75 100,000 ............... 5/30/97 Godwin Finance Ltd.(1) $ 100 25,000 ............... 5/30/97 Joseph Laura(1) $ 25 ===================================================================================================== 20,000 ............... 6/2/97 Fersam International Ltd.(2) $ 50,000 14,800 ............... 6/2/97 Silvertown International Corp.(2) fee associated with loan ===================================================================================================== 400 ............... 6/26/97 Adler, Bruce/Dorothy(4) $ 1,000 400 ............... 6/28/97 Aiello, Alfonso(4) $ 1,000 400 ............... 7/2/97 Aldorasi, Michael/Tina(4) $ 1,000 400 ............... 6/28/97 Askin, Joseph(4) $ 1,000 200 ............... 7/1/97 Baerga, Carol(4) $ 500 400 ............... 7/2/97 Balletto, Robert(4) $ 1,000 400 ............... 6/28/97 Blumer, Jeffrey I.(4) $ 1,000 400 ............... 6/25/97 Brigante, Gennaro(4) $ 1,000 400 ............... 7/2/97 Burke, Michael B.(4) $ 1,000 500 ............... 6/26/97 Cappucci, Edward Vincent(4) $ 1,250 500 ............... 6/26/97 Cappucci, Marianne Joy(4) $ 1,250 400 ............... 7/1/97 Carlson, Robin(4) $ 1,000 400 ............... 6/28/97 Casazza, James T.(4) $ 1,000 500 ............... 7/1/97 Costa, Joanne(4) $ 1,250 400 ............... 7/1/97 Coyle, Tom(4) $ 1,000 400 ............... 7/1/97 Coyle, Robert(4) $ 1,000 1,000 ............... 6/25/97 Cucchiari-Palmieri, Annette(4) $ 2,500 400 ............... 7/2/97 Cuzzocrea, Joseph(4) $ 1,000 400 ............... 6/27/97 Daly, Bill(4) $ 1,000 400 ............... 6/26/97 Damiano, John A.(4) $ 1,000 400 ............... 7/2/97 D'Amica, Palmina(4) $ 1,000 400 ............... 6/28/97 Delicious Desserts, Inc.(4) $ 1,000 400 ............... 7/1/97 DeMartino, Jerome(4) $ 1,000 400 ............... 6/30/97 DeVito, Donato J.(4) $ 1,000 1,000 ............... 6/25/97 DiCarlo, Rosemary(4) $ 2,500 400 ............... 7/2/97 Dini, Constance(4) $ 1,000 400 ............... 7/1/97 Fallon, Robert & Ann(4) $ 1,000
II-2 51
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - ------------------- --------- --------- ------------------------ 100 ............... 7/1/97 Finn, Robert(4) $ 250 400 ............... 7/2/97 Fogliano, Christine(4) $ 1,000 400 ............... 6/27/97 Fogliano, Frank(4) $ 1,000 400 ............... 6/27/97 Fogliano, Daniel F.(4) $ 1,000 400 ............... 6/28/97 Fogliano, Jr., Nicholas(4) $ 1,000 400 ............... 6/28/97 Furci, Joseph N.(4) $ 1,000 400 ............... 6/28/97 Fusco, Joseph(4) $ 1,000 400 ............... 6/28/97 Fusco, Joseph & Rose(4) $ 1,000 400 ............... 6/28/97 Fusco, Rose A.(4) $ 1,000 400 ............... 6/28/97 Genovese, Carmine(4) $ 1,000 400 ............... 6/28/97 Genovese, Carmela(4) $ 1,000 400 ............... 6/27/97 Giammarino, Thomas & June(4) $ 1,000 400 ............... 6/28/97 I-Yell-O-Foods(4) $ 1,000 400 ............... 7/1/97 Gil, Michele R.(4) $ 1,000 800 ............... 6/25/97 Greco, Gary(4) $ 2,000 1,000 ............... 6/25/97 Gullery, Judith(4) $ 2,500 400 ............... 6/27/97 Hanlon, Theresa(4) $ 1,000 400 ............... 7/2/97 Hinz, Brian(4) $ 1,000 400 ............... 7/2/97 Honan, Brian(4) $ 1,000 400 ............... 7/2/97 Ianiello, Christopher(4) $ 1,000 400 ............... 7/2/97 Ianiello, Michael J.(4) $ 1,000 400 ............... 7/2/97 Johnsen, Bendik C.(4) $ 1,000 400 ............... 7/2/97 Johnsen, Joan(4) $ 1,000 400 ............... 7/2/97 Johnsen, Kelly(4) $ 1,000 400 ............... 7/2/97 Johnsen, Maureen(4) $ 1,000 400 ............... 7/2/97 Johnsen, Robert(4) $ 1,000 400 ............... 7/2/97 Johnsen, Robert & Joan(4) $ 1,000 400 ............... 7/2/97 Johnsen Jr., Robert E.(4) $ 1,000 400 ............... 7/1/97 Kilgannon, Thomas(4) $ 1,000 400 ............... 6/28/97 Marino, Paul(4) $ 1,000 400 ............... 7/1/97 Mayr, Laura(4) $ 1,000 400 ............... 7/1/97 McNee, Donald & Julie(4) $ 1,000 500 ............... 7/1/97 Millington, Cheryl A.(4) $ 1,250 400 ............... 7/2/97 Modafferi, James S.(4) $ 1,000 300 ............... 7/1/97 Montalto, Dorothy M.(4) $ 750 300 ............... 7/1/97 Morisano, Maria(4) $ 750 400 ............... 6/25/97 Paolino, Frank(4) $ 1,000 800 ............... 6/30/97 Paolino, Linda(4) $ 2,000 1,200 ............... 6/25/97 Paolini, Stephen A.(4) $ 3,000 300 ............... 7/1/97 Parisi, Dawn(4) $ 750 500 ............... 7/1/97 Parisi, Lucille(4) $ 1,250 300 ............... 7/1/97 Parisi, Neil(4) $ 750 200 ............... 7/1/97 Parisi, Vincent(4) $ 500 300 ............... 7/1/97 Parisi c/f, Vincent & Parisi, Vincent Anthony(4) $ 750 500 ............... 7/1/97 Parisi, Vincent(4) $ 1,250 300 ............... 7/1/97 Parisi c/f, Dawn & Danielle(4) $ 750 200 ............... 7/1/97 Parisi c/f, Neil & Anniello(4) $ 500 300 ............... 7/1/97 Parisi c/f, Dawn & Parisi Jr., Vincent(4) $ 750 500 ............... 7/1/97 Petillo, Dolores(4) $ 1,250
II-3 52
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - ------------------- --------- --------- ------------------------ 500 ............... 7/1/97 Petillo c/f, Dolores & Costa, Joseph A.(4) $ 1,250 400 ............... 7/2/97 Picciano, Georgene(4) $ 1,000 400 ............... 7/2/97 Puccio, Jr., David & Puccio, Kathleen(4) $ 1,000 4,000 ............... 7/1/97 R.P. Capital Growth, L.P.(4) $ 10,000 400 ............... 7/2/97 Raffelo, Carrie(4) $ 1,000 400 ............... 7/1/97 Ramdharie, Tagewattie(4) $ 1,000 200 ............... 7/1/97 Ravanos, Lisbeth(4) $ 500 400 ............... 6/25/97 Ricciotti, James M.(4) $ 1,000 400 ............... 6/28/97 Santo, William R.(4) $ 1,000 400 ............... 6/26/97 Santo, Jr., Frank J.(4) $ 1,000 600 ............... 6/26/97 Santore, Gina M.(4) $ 1,500 400 ............... 6/28/97 Sblendorio, Dominick & Sblendorio, Sarah(4) $ 1,000 400 ............... 6/28/97 Sblendorio, Dominick(4) $ 1,000 400 ............... 7/2/97 Sole, Linda(4) $ 1,000 400 ............... 7/2/97 Strommen, Cindy(4) $ 1,000 200 ............... 7/1/97 Tomasino c/f, Domineck & Tomasino, Christie(4) $ 500 1,000 ............... 6/25/97 Vaccaro, Christopher(4) $ 2,500 1,000 ............... 6/25/97 Vaccaro, Catherine(4) $ 2,500 1,000 ............... 6/25/97 Vaccaro, Elicia(4) $ 2,500 1,000 ............... 6/25/97 Vaccaro, Thomas(4) $ 2,500 400 ............... 6/26/97 Winkler, John(4) $ 1,000 100,000 ............... 8/29/97 FAC Enterprises, Inc.(4) $200,000 7,500 ............... 8/29/97 FAC Enterprises, Inc.(4) fee associated with financial advice 150,000 ............... 8/29/97 Jet Avionics Systems, Inc.(4) $300,000 ===================================================================================================== 80,000 ............... 8/29/97 Jet Avionics Systems, Inc.(2) inventory consisting of spare parts 250,000 ............... 8/29/97 Joseph Laura(2) $500,000 185,000 ............... 8/29/97 Silvertown International Corp.(2) $370,000 NUMBER OF WARRANTS - ------------------------- 950,000 ............... 6/1/97 The D.A.R. Group services 50,000 ............... 6/1/97 Dallas Investment Group services
The shares to be issued through exercise of the Warrants (1,000,000) will be issued in reliance upon Section 4(2). - --------------- (1) Founder's shares (2) Sold in reliance upon Section 4(2) of the Act (3) Sold in reliance upon Rule 506/Regulation D and/or 4(2). All investors were either "accredited" or sophisticated. The Company represents that all investors had access to information about the Company. (4) Sold in reliance upon Rule 504/Regulation D No Commissions or other remuneration was paid in connection with the above described sales of Common Stock. II-4 53 ITEM 27. EXHIBITS. 2.1 -- Agreement and Plan of Reorganization dated July 15, 1997* 2.2 -- Articles of Merger* 3.1 -- Articles of Incorporation* 3.2 -- Amendment to Articles of Incorporation* 3.3 -- Amended -- By-Laws* 4.1 -- Form of Warrant* 5.1 -- Opinion of Shapo, Freedman & Bloom, P.A.** 10.1 -- Employment Agreement with Joseph J. Nelson* 10.2 -- Business Lease* 10.3 -- Consignment Agreement with Jet Avionics Systems, Inc.* 10.4 -- Consignment, Cancellation and Purchase Agreement with Jet Avionics Systems, Inc.* 10.5 -- Stock Option Plan* 10.6 -- Form of Indemnity Agreement with directors and officers.* 10.7 -- Promissory Note dated March 27, 1997 for $120,000 payable to Silvertown International Corp.** 10.8 -- Promissory Note dated May 12, 1997 for $250,000 payable to Silvertown International Corp.** 10.9 -- Promissory Note dated May 23, 1997 for $500,000 payable to Joseph Laura** 10.10 -- Agreement dated November 1, 1996 between Fersam International Ltd. and the Company** 10.11 -- Agreement dated March 28, 1997 between Fersam International Ltd. and the Company** 10.12 -- Employment Agreement dated as of October 3, 1996 with Allen Beni** 10.13 -- Consulting Agreement dated October 3, 1997 with Allen Beni** 10.14 -- Form Lock Up Agreement** 23.1 -- Consent of Shapo, Freedman & Bloom, P.A. (included in Exhibit 5.1)** 23.2 -- Consent of Sweeney, Gates & Co., independent certified public accountants, contained in Part II of the registration statement.**
- --------------- * previously filed ** filed herewith II-5 54 ITEM 28. UNDERTAKING. The undersigned registrant hereby undertakes that it will: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b), if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) Include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling person of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling persons of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-6 55 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 1 to Registration Statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on the 13th day of March, 1998. JET AVIATION TRADING, INC. By: JOSEPH J. NELSON ------------------------------------ Joseph J. Nelson President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacity and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- JOSEPH J. NELSON President and Chief Executive March 13, 1998 - ----------------------------------------------------- Officer, Director Joseph J. Nelson JOSEPH F. JANUSZ Vice President and Chief March 13, 1998 - ----------------------------------------------------- Financial Officer Joseph F. Janusz MICHAEL J. CIRILLO Director March 13, 1998 - ----------------------------------------------------- Michael J. Cirillo THEODORE H. GREGOR Director March 13, 1998 - ----------------------------------------------------- Theodore H. Gregor
II-7 EX-5.1 2 OPINION OF SHAPO, FREEDMAN & BLOOM, P.A. 1 Exhibit 5.1 SHAPO, FREEDMAN & BLOOM, P.A. COUNSELLORS AT LAW FIRST UNION FINANCIAL CENTER SUITE 4750 200 SOUTH BISCAYNE BOULEVARD MIAMI, FLORIDA 33131 ----------------- FACSIMILE NO. MARITZA GONZALEZ (305)358-4440 (305) 358-0521 March 11, 1998 Jet Aviation Trading, Inc. 15675 N.W. 15 Avenue Miami, Florida 33169 Re: Jet Aviation Trading, Inc. (the "Company") Registration Statement on Form SB-2 (the "Registration Statement") Covering the Proposed Offering of an Aggregate of 2,969,000 Shares of Common Stock, $.001 Par Value by Certain Selling Security Holders Gentlemen: We have acted as counsel for the Company in connection with the preparation of the Registration Statement relating to the proposed offering of the Common Stock by certain selling security holders. As such, we are familiar with the Registration Statement relating to the offering and the preliminary prospectus included therein (the "Prospectus"). We have examined a copy of the Certificate of Incorporation (as amended) and By-Laws of the Company (as amended) and such other documents and corporate records as we deem necessary or appropriate for the purpose of this opinion. On the basis of the foregoing, we are of the opinion that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Florida and has authorized and issued capital stock as set forth in the Prospectus. (ii) All of the Common Stock to be sold by the Selling Security Holders in the offering have been duly and validly authorized and are either fully paid and nonassessable, or when issued pursuant to the exercise of the Warrants, will be fully paid and nonassessable. 2 SHAPO, FREEDMAN & BLOOM, P.A. COUNSELLORS AT LAW Jet Aviation Trading, Inc. March 11, 1998 Page Two - -------------------------- The undersigned consents to being named in the above referenced Registration Statement as counsel for the Company and in the Prospectus as acting for such Company as to legal matters in connection with the sale of the Common Stock covered by the Registration Statement and further consents to the filing of this opinion as an exhibit to the Registration Statement. SHAPO, FREEDMAN & BLOOM, P..A. By: /s/ Leonard H. Bloom ---------------------------- LEONARD H. BLOOM EX-10.7 3 PROMISSORY NOTE DATED 03/27/97 1 EXHIBIT 10.7 PROMISSORY NOTE U.S.$120,000 MIAMI, FLORIDA, March 27, 1997 FOR VALUE RECEIVED, the undersigned (jointly and severally, if more than one) promises to pay to the order of SILVERTOWN INTERNATIONAL CORP., a corporation organized the laws of the country of Panama, the principal sum of One Hundred Twenty Thousand U.S. Dollars ($120,000), together with interest thereon from date, at the rate of 6% (PERCENT) per annum until maturity on the balance from time to time remaining unpaid. Said principal and interest shall be payable in lawful money of the United States of America at Miami, Florida, or at such place as may hereafter be designated by written notice from the holder of the maker hereof, on the date(s) and in the amounts specified below: Principal together with accrued interest are due and payable on or before Three (3) Months from the date hereof. The undersigned has the option to extend the payment term on this note for an additional three (3) months. Such option may be exercised by providing written notice to the holder hereof by the undersigned no later than five (5) days before the due date hereof. If the undersigned chooses to extend the payment term, then this note will bear interest at 10% (PERCENT) per annum until maturity on the balance then remaining unpaid. All payments shall apply first to accrued interest, and the remainder, if any, to reduction of principal. If any installment of principal is not paid when due, or upon any default in the performance of any of the covenants or agreements of this note, or of any instrument now or hereafter evidencing or securing this note or the obligation represented hereby, the whole indebtedness (including principal and interest) remaining unpaid, shall, at the option of the holder, become immediately due, payable and collectible, and while in default, this note and deferred interest shall bear interest at the rate of 12% (PERCENT) per annum. Each maker and endorser severally waives demand, protest and notice of maturity, non-payment or protest and all requirements necessary to hold each of them liable as makers and endorsers. Each maker and endorser further agrees, jointly and severally, to pay all costs of collection, including reasonable attorney fees in case the principal of this note or any payment on the principal or any interest thereon is not paid at the respective maturity thereof, or in case it becomes necessary to protect the security hereof, whether suit be brought or not. JET AVIATION TRADING, INC. Payable at Miami, Florida, USA By: /s/ Joseph J. Nelson (Seal) ---------------------- --------------------------- Joseph J. Nelson, President ---------------------- or such other place as shall be designated by the holder of this note in writing. EX-10.8 4 PROMISSORY NOTE DATED 05/12/97 1 EXHIBIT 10.8 PROMISSORY NOTE U.S. $250,000 Miami, Florida May 12th, 1997 FOR VALUE RECEIVED, the undersigned (jointly and severally, if more than one) promises to pay to the order of SILVERTOWN INTERNATIONAL CORP., a corporation organized the laws of the country of Panama, the principal sum of Two Hundred Fifty Thousand U.S. Dollars ($250,000.00), together with interest thereon from date, at the rate of 6% (PERCENT) per annum until maturity on the balance from time to time remaining unpaid. Said principal and interest shall be payable in lawful money of the United States of America at Miami, Florida, or at such place as may hereafter be designated by written notice from the holder to the maker hereof, on the date(s) and in the amounts specified below: Principal together with accrued interest are due and payable on or before two and one half (2 1/2) months from the date hereof. The undersigned has the option to extend the payment term on this note for an additional two and one half (2 1/2) months. Such option may be exercised by providing written notice to the holder hereof by the undersigned no later than five (5) days before the due date hereof. If the undersigned chooses to extend the payment term, then this note will bear interest at 6% (PERCENT) per annum until maturity on the balance then remaining unpaid. All payments shall apply first to accrued interest, and the remainder, if any, to reduction of principal. If any installment of principal is not paid when due, or upon any default in the performance of any of the convenants or agreements of this note, or of any instrument now or hereafter evidencing or securing this note or the obligation represented hereby, the whole indebtedness (including principal and interest) remaining unpaid, shall, at the option of the holder, become immediately due, payable and collectible, and while in default, this note and deferred interest shall bear interest at the rate of 12% (PERCENT) per annum. Each maker and endorser severally waives demand, protest and notice of maturity, non-payment or protest and all requirements necessary to hold each of them liable as makers and endorsers. Each maker and endorser further agrees, jointly and severally, to pay all costs of collection, including reasonable attorney fees in case the principal of this note or any payment on the principal or any interest thereon is not paid at the respective maturity thereof, or in case it becomes necessary to protect the security hereof, whether suit be brought or not. JET AVIATION TRADING, INC. Payable at Miami, Florida, U.S.A. By: /s/ Joseph J. Nelson, ----------------------- --------------------------------- Joseph J. Nelson, President - ---------------------------------- or such other place as shall be designated by the holder of this note in writing. EX-10.9 5 PROMISSORY NOTE DATED 05/23/97 1 EXHIBIT 10.9 PROMISSORY NOTE AMOUNT: $500,000 DATE: May 23, 1997 FOR VALUE RECEIVED, SCHUYLKILL ACQUISITION CORP., a Florida corporation, whose principal place of business is 30 Broad Street, 43rd Floor, New York, NY 10004, ("Maker") hereby promises to pay to the order of JOSEPH LAURA, an individual residing at 105 Mountainside View, Morgantown, NJ 07751 ("Payee") the principal sum of FIVE HUNDRED THOUSAND ($500,000) DOLLARS. Payment in full of all principal and interest at the rate of Twelve (12%) Percent per annum, shall be made on the earlier of: 1. May 31, 1998; or 2. The Maker obtaining equity financing in excess of $1,000,000. , in lawful money of the United States, at the principal address of Payee, or such other place as the holder of this Note may designate. Maker shall have the privilege without premium or penalty, at any time and from time to time, of prepaying this Note in whole or in part. No partial prepayment shall postpone or interrupt the payment of the remaining principal balance, all of which shall continue to be due and payable at the time and the manner set forth above. Maker agrees that a default shall occur hereunder in the event that payment is not made upon demand and such default continues for a period of ten (10) days from the date of demand therefor. After the expiration of such ten (10) day period interest shall accrue on the unpaid balance due hereunder at a rate of two (2%) percent in excess of the interest rate stated above, together with attorneys fees for collection and payment of the same, which sums may be enforced and recovered by the entry of judgment on this. Maker (and all endorsers, sureties and guarantors) waives presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note; liability hereunder shall be unconditional and shall not be affected in any manner by an indulgence, extension of time, renewal, waiver or modification granted or consented to 2 by Payee. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by law at any time to be affixed to this Note or any security documents executed in conjunction herewith, and if any taxes be imposed with respect to debts secured by and any such security documents or with respect to notes evidencing debts so secured Maker agrees to pay or to reimburse Payee upon demand the amount of such taxes. The words "Payee" and "Maker" whenever occurring herein shall be deemed and construed to include their respective successors and assigns of Payee and Maker. This instrument shall be construed according to and governed by the laws of the State of Florida. IN WITNESS WHEREOF, Maker has duly executed this Promissory Note under seal the day and year first above mentioned. WITNESS: SCHUYLKILL ACQUISITION CORP. BY: /s/ Michael Cirillo - ------------------------------ ----------------------------- MICHAEL CIRILLO President EX-10.10 6 AGREEMENT DATED 11/01/96 1 EXHIBIT 10.10 SIMULATOR PURCHASE AGREEMENT (JOINT VENTURE) BY AND BETWEEN JET AVIATION TRADING, INC. (BUYER) AND FERSAM INTERNATIONAL LTD. (SELLER) (VENDOR) 2 INDEX ARTICLE 1. SCOPE OF AGREEMENT ARTICLE 2. DEFINITION OF PURCHASE ARTICLE 3. OWNERSHIP ARTICLE 4. INSURANCE ARTICLE 5. PURCHASE PRICE ARTICLE 6. MUTUAL UNDERSTANDING ARTICLE 7. GUARANTEE ARTICLE 8. TERM 3 This agreement ("Agreement") is entered into this 1st day of November 1996 by and between JET AVIATION TRADING, INC. ("BUYER") having its principal place of business at: 1170 N.W. 163rd. Drive, Miami, Florida 33169, USA and FERSAM INTERNATIONAL LIMITED ("SELLER") having its principal place of business at: PA VERKUYLLAAN (ACHTER), 51-55 (FERSAMLAAN, 1171 EB BADHOEVEDORP, THE NETHERLANDS. ARTICLE 1. SCOPE OF AGREEMENT Seller is the owner of one (1) DC10-30 flight simulator manufactured by CAE Electronics LTD; and which is more fully described in Exhibit "A". Seller wishes to sell one-half (50%) ownership of this simulator to the buyer. ARTICLE 2: DEFINITION OF PURCHASED MATERIAL One (1) DC10-30 six axis flight simulator ("Material") manufactured by CAE Electronics to include all attaching hardware, computer system, computer software, visual system, canopy axis mechanism and all equipment required to operate the simulator. ARTICLE 3. OWNERSHIP Seller warrants that Seller currently and forever in the future will maintain title of the Material free and clear of any liens or encumbrances. Both Seller and Buyer are restricted from encumbering or restricting free and clear title. Upon 4 signature of this agreement, Seller will convey one-half (50%) ownership of the Material to Buyer. Buyer and Seller will equally participate in all revenues generated from the sale, lease or disassembly of the Material. Buyer and Seller will equally participate in all expenses incurred relative to the Material's storage, transport, sale and/or maintenance. ARTICLE 4. INSURANCE Seller agrees to maintain adequate casualty, loss and transport insurance during the term of this agreement. ARTICLE 5. PURCHASE PRICE Seller agrees to sell to Buyer one-half (50%) interest in this Material for the sum of Two Hundred Twenty-Five Thousand dollars ($225,000.00). Seller agrees to accept payment of this sum from the Buyer in the form of U.S. currency and equity. It is agreed between the Buyer and Seller that the sum of U.S. currency and equity to be conveyed to the Seller by the Buyer is defined as follows: A) U.S. Currency: $125,000.00 payable in increments of $50,000.00 at contract signing and $75,000.00 payable within 45 days thereafter. B) Equity: $100,000.00 payable in the form of equity in the Buyers newly formed company, JET AVIATION TRADING, INC. Such equity will be the equivalent number of common stock 5 shares as valued at the initial offering price. The initial offering per share price is estimated at +/- $2.50. ARTICLE 6. MUTUAL UNDERSTANDING It is mutually agreed between the Buyer and the Seller that each party will endeavor to market, promote and sell the material with the sole intent to achieve the highest possible financial rate of return. Both parties of this agreement will agree by mutual consent, such issues as sale price, terms and conditions of each potential revenue producing transaction. ARTICLE 7. GUARANTEE Should the Seller at any time after April 30, 1997 desire to "convert" the equity portion of this transaction as described in ARTICLE 5 to U.S. currency, the Buyer hereby guarantees to purchase one hundred percent (100%) of the common stock shares originally issued to the Seller for the named value of $100,000.00. Such amount will be paid to Seller within thirty (30) days after such notice is provided to Buyer. ARTICLE 8. TERM This agreement will remain in effect until the Material is fully divested either by sale or other mutually agreed upon events. 6 The foregoing accurately represents the general terms, condition and synergy of the herein described transactions. IN WITNESS WHEREOF, the parties hereto have agreed as of the date first shown above. FOR: JET AVIATION TRADING, INC. -------------------------- BY: /s/ JOSEPH J. NELSON -------------------- NAME: JOSEPH J. NELSON ---------------- TITLE: PRESIDENT --------- DATE: NOVEMBER 14, 1996 ----------------- FOR: FERSAM INTERNATIONAL, LTD. -------------------------- BY: /s/ NAZIE EL MASRY ------------------ NAME: NAZIE EL MASRY -------------- TITLE: PRESIDENT --------- DATE: NOVEMBER 14, 1996 ----------------- EX-10.11 7 AGREEMENT DATED DATED 03/28/97 1 EXHIBIT 10.11 [JET AVIATION TRADING, INC. LOGO] ================================================================================ PURCHASE AGREEMENT BY AND BETWEEN JET AVIATION TRADING, INC. (BUYER) AND FERSAM INTERNATIONAL LTD. (SELLER) ================================================================================ 2 INDEX ARTICLE 1 SCOPE OF AGREEMENT ARTICLE 2 DEFINITION OF PURCHASE ARTICLE 3 OWNERSHIP ARTICLE 4 PURCHASE PRICE ARTICLE 5 DELIVERY ARTICLE 6 PAYMENT 3 This agreement ("Agreement") is entered into this 28th day of March 1997 by and between JET AVIATION TRADING, INC. ("BUYER"), having it principal place of business at 15675 N. W. 15th Avenue, Miami, Florida 33.169, USA and FERSAM INTERNATIONAL LIMITED ("SELLER"), having its principal place of business at PA Verkuyliaan (Achter), 51-56 (Fersamlaan, 1171 EB Badhoevedorp, The Netherlands. ARTICLE I - SCOPE OF AGREEMENT SELLER is the owner of one (1) Novoview 2000 Visual Support System, Simulator Spares Parts Package and Maintenance Training Data Package to be used in support of a CAE Electronics Ltd. Sigma 3 six (6) axis full flight simulator. ARTICLE 2 - DEFINITION OF PURCHASED MATERIAL One (1) Novoview 200 Visual System manufactured by Rediffusion Simulation Ltd., one (1) package of simulator spare parts, one (1) maintenance training manual/procedure and one (1) data support package hereinafter referred to as "Material". ARTICLE 3 - OWNERSHIP SELLER warrants that SELLER currently maintains title of the Material free and clear of any liens or encumbrances. Upon signature of this Agreement, SELLER will convey ownership of the Material to BUYER. ARTICLE 4 - PURCHASE PRICE SELLER agrees to sell to BUYER this Material for the sum of Five Hundred Thousand Dollars ($500.000.00). SELLER agrees to accept payment of this sum from the BUYER in the form of equity in Jet Aviation Trading, Inc. It is agreed between the BUYER and SELLER that the sum of equity to be conveyed to the SELLER by the BUYER is defined as follows: A) 200,000 unrestricted common stock shares in BUYERS company, Jet Aviation Trading, Inc., valued at $2.50 per share. ARTICLE 5 - DELIVERY SELLER agrees to deliver to BUYER all Material FOB customs cleared BUYERS facility. 4 ARTICLE 6 - PAYMENT BUYER will make payment to SELLER as prescribed in Article 4, herein, upon full and compete receipt of all Material by BUYER. The foregoing accurately represents the general terms and conditions of the herein described transaction. IN WITNESS WHEREOF, the parties hereto have agreed as of the date first shown above. FOR: JET AVIATION TRADING, INC. BY: /s/ JOSEPH J. NELSON -------------------------- NAME: JOSEPH J. NELSON ---------------- TITLE: PRESIDENT & C.E.O ----------------- DATE: MARCH 28TH, 1997 ---------------- FOR: FERSAM INTERNATIONAL, LTD. BY: /s/ NAZIE EL MASRY ------------------------- NAME: NAZIE EL MASRY -------------- TITLE: PRESIDENT --------- DATE: MARCH 28TH, 1997 ---------------- EX-10.12 8 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.12 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into this _____ day of ________, 1996, and effective as of October 3, 1996 by and between ALLEN BENI,whose address is ______________________________. Florida, ("Employee"), and JET AVIATION TRADING, INC., a Florida Employer, whose address is 1170 N.W. 163rd Drive, Miami, FL 33169 (hereinafter called "JET, Employer or Employer"). WITNESSETH: WHEREAS, JET is in the business of buying and selling aircraft, engines ant parts and related products and materials (the "Business of Employer"); and WHEREAS, Employee will be employed as Vice-President and Director of Special Projects, of JET ant whose duties will include responsibilities that the President may assign and other functions; and WHEREAS, JET does business, purchases inventory and has customers throughout the world; and WHEREAS, this Agreement sets forth in writing the understanding of the parties agreed to between themselves to provide for the employment of Employee upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the above and foregoing premises and the employment of the Employee during the term hereof, the parties agree as follows: 1. Recitals. The above-mentioned recitals are true and correct and are incorporated herein and by reference made a part of this Agreement. 2. Revocation of Prior Agreements: The parties do hereby cancel and revoke all prior agreements and understandings whether oral or written, relating to the subject matter of this Agreement. 1 2 3. Term of Employment. Subject to the provisions hereof, the Employer hereby employs Employee for the period commencing as of October 3, 1996 and continuing until October 2, 1999, (the "Term") or unless sooner terminated as provided herein. Each 12 month period of employment hereunder, commencing October 3, 1996, shall be called an "Employment Year." In the event the Employee is still employed at the end of the Term, then this Agreement shall automatically extend from month-to month thereafter on all of these terms and conditions except that paragraph 11(b) and 12(b)(ii) shall not apply. 4. Employment Duties. Employee shall serve the Employer as and in the specific capacity of Vice-President and Director of Special Projects of the Employer. Employee shall be responsible for such duties as may reasonably be required by the President or Board of Directors of JET (the "Board"). Employee covenants and agrees to devote his full time and energies, and his best efforts and business judgments exclusively to the business of the Employer and to perform such duties to the best of his ability and to observe all reasonable policies, rules and regulations as determined and imposed by the Employer for operation of the Employer's business. The Employee shall report to the President, who shall direct, control and supervise the duties to be performed. 5. Vacation. Employee shall be entitled to two (2) weeks of vacation time during each year of his employment, one week of which shall accrue every six (6) months. Such vacation shall be with full pay and other benefits provided hereunder. Vacation may be taken prior to accrual, but salary paid for any such vacation not accrued will be returned by Employee at termination. The time of vacation shall be selected in such manner as not to conflict with the Employer's operations, and Employee's employment duties; however, Employer shall not unreasonably constrain Employee's time of vacation. Employee shall give Employer reasonable notice of his intended vacations. Up to one week of vacation may be rolled-over to the following year if allotted vacation time was not used in the previous year. In no event may Employee take more than two weeks of vacation in a row. If allotted or rolled-over vacation is not fully used prior to termination, Employee shall be compensated for such unused vacation. 6. Sick Leave. As determined by the Employer, the Employee shall be entitled to a reasonable number of days of sick leave with full pay during each calendar year. 7. Confidential Information. All records of the Employer which include, but are not limited to, advertising, sales, other materials or articles of information, including without limitation, data processing reports, computer software and/or media containing Employer's confidential information, customer lists, supplier lists, purchasing information, customer sales analysis and patterns, invoices, price lists or information, samples, or any other materials or data of any kind furnished to Employee by the Employer, acquired by Employee while employed by the Employer, or developed by Employee on behalf of the Employer or at the Employer's direction or for the Employer's use or otherwise in 2 3 connection with Employee's employment hereunder, are and shall remain the sole and confidential property of the Employer. Employee acknowledges that such information is proprietary trade secrets of Employer. All or any such materials and records shall hereinafter be known as "Confidential Information." If the Employer requests the return of such Confidential Information at any time during, at, or after the termination of Employee's employment hereunder, Employee shall immediately deliver the same and all copies or excerpts thereof to Employer. 8. Covenants During Employment. While employed by the Employer, Employee agrees that he will not, without the written consent of the Board: (a) Unless authorized to do so by the Board, make, draw, accept or endorse my contract, lease, promissory note, or other instrument requiring the payment of money by the Employer nor shall he use any money belonging to the Employer or pledge its credit except in the usual and regular course of business and exclusively on account, or for the benefit of the Employer, (b) Release or discharge any debtor of the Employer without receiving the full amount thereof; (c) Make any statement or perform any act intended to advance an interest of any existing or prospective competitor of the Employer in any way that will or may reasonably be thought to injure an interest of the Employer in its relationships and dealings with existing or potential customers or solicit or encourage any other employee of the Employer to do any act that is intended to be disloyal to the Employer or inconsistent with the Employer's best interest or in violation of any provision of this Agreement; (d) Compete in any manner directly or indirectly with the business of the Employer or in any field connected with aviation, aircraft, aircraft parts, avionics or the like. 9. Nondisclosure. The Employee shall not, at any time during the term of this Employment Agreement or at any time thereafter, except as may be authorized by JET in writing disclose or make use of, directly or indirectly, JET's customer list or supplier list or any other Confidential Information for his own benefit, for the benefit of others engaged in the same business as JET or for others who Employee believes or should reasonably believe might or could enter into JET's business. Employee acknowledges the material adverse impact to Employer due to any breach by Employee of these provisions, no matter how small, and that any such breach shall cause him to forfeit any unpaid amounts set forth in Paragraph 11(b)(ii) below. 10. Deleted. 3 4 11. Compensation. (a) Basic Compensation In each year of Employee's Term of Employment: Employee shall receive as basic compensation ("Basic Compensation") for all services rendered by the Employee hereunder, an annual salary during each Employment Year, or prorated for a partial Employment Year of $120,000, payable in accordance with the customary payroll practices of Employer, but in no event less frequently than semi-monthly. At the end of each Employment Year, Employee and Employer shall negotiate in good faith any increase in Basic Compensation as may be appropriate for the next Employment Year. (b) Bonuses: In addition to the amounts paid to Consultant pursuant to (a) above, if Consultant is still engaged by Employer on September 30, 1997, and at the end of each fiscal year thereafter, Consultant may be entitled to such cash bonus as shall be determined by the Board of Directors of the Employer. (c) Health Insurance and Benefits: During the Term, Employer shall pay for Employee's health insurance coverage under the Employer's group health insurance plan in effect for the employees of the Employer and such other benefits as are commensurate with executives in Employee's position. (d) Deductions from Compensation: Any amounts payable to Employee hereunder shall be subject to reduction and withholding for Social Security, withholding taxes, and any other such taxes or deductions as may from time to time be required to be withheld by Employer pursuant to applicable governmental authority. 12. Termination. (a) General: This Agreement shall terminate upon the Employee's termination of employment, but the terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof, and the representations and warranties made herein, shall survive the termination of this Employment Agreement for any reason. Employee's employment hereunder shall be terminated upon the happening of any of the following events: (1) the death of the Employee; 4 5 (2) the permanent disability of the Employee, as more fully discussed in Article 13 hereof; (3) upon the expiration of the Term of this Employment Agreement according to its terms; (4) for "cause"; for those purposes, "cause" shall include: (i) the conviction of Employee of a crime involving moral turpitude; (ii) an act of dishonesty either involving Employee's employment or harmful to Employer or other employees, including fraud, misappropriation, embezzlement or the like; (iii) the misfeasance, malfeasance or non-feasance of Employee in carrying out the duties of Employee's employment with Employer, not cured within thirty (30) days prior notice. (b) Payments Upon Termination: i. Death or Disability. Upon termination of Employee's employment hereunder at the end of the Term or because of the death or permanent disability of Employee, Employee or in the event of his death or his mental incapacity his personal representative, shall be paid his Basic Compensation hereunder, prorated through the date of termination. In addition if termination of this Agreement is due to the death of the Employee, his estate shall be entitled to the payment of the Employee's Basic Compensation for sixty (60) days after the date of Employee's death. ii. Termination For Cause or Voluntary Leaving. Upon termination of Employee's employment hereunder for cause or voluntary leaving, as compensation for services rendered during the term of this Agreement to the date of termination, Employee shall be paid his Basic Compensation hereunder prorated through the date of termination, and no other amounts hereunder. Any amounts which have been prepaid will be returned by Employee or his personal representative. iii. Dismissal. Upon termination of Employee's employment hereunder, for reasons not for cause, death, permanent disability, his voluntary leaving or the expiration of the Term hereof, such reasons to include, without limitation, the dismissal of the Employee by Employer for reasons not for cause, or the dissolution of the Employer, Employee shall be entitled to receive his Basic Compensation accrued to date. 5 6 13. Disability. (a) In the event that Employee incurs a disability of either a physical or mental character which, in the opinion of a physician selected by the Employer, which physician shall be approved by Employee (which approval shall not be unreasonably withheld), renders him disabled from performing the usual and customary duties to be rendered hereunder or heretofore rendered by Employee, ho shall receive his full Basic Compensation for the first ninety (90) days or any part thereof of continuous disability. (b) No disability shall be deemed to exist until after Employee shall be unable to perform his duties for thirty (30) consecutive days; but after such disability continues for thirty (30) consecutive days, then the same shall be deemed to have existed from the first day of such disability. (c) If the Employee does not recover and resume his duties within ninety days from the date he is deemed to have become disabled, Employee may, unless the physician selected in paragraph 11(a) above certifies that Employee is again capable of performing his usual and customary duties with or without reasonable accommodation, at the election of the Board of Directors, be deemed to have become permanently disabled at the beginning of such disability. (d)(i) If Employee shall have been disabled and shall have returned to work after the end of such disability, any recurrence of the same disability commencing within one hundred eighty (180) days of the termination of the prior period of disability shall be deemed to be a continuation of the prior disability, and the periods of all such disabilities shall be added together to determine the rights of the parties hereunder. (ii) If Employee shall have been disabled and shall have returned to work after the end of such disability, any new and unrelated disability occurring thereafter shall be treated as if the previous and unrelated disability had not occurred. (e) Services During Disability: During the period that Employee shall be entitled to receive payments under this Article, and to the extent that he is physically and mentally able to do so, he shall furnish information and assistance to the Employer and comply with the provisions hereof; and, in addition, upon reasonable request in writing on behalf of the President he shall make himself available to the Employer to undertake reasonable assignments consistent with the dignity, importance and scope of his prior position and his physical and mental health. 14. Reformation. If elements of the agreements set forth in the above paragraphs would otherwise be determined to be invalid or unenforceable by a court of competent jurisdiction, the parties intend and agree that such court shall exercise its discretion in reforming the elements of this 6 7 Agreement to the end that Employer and Employee shall be subject to an employment agreement, a nondisclosure covenant and related covenants as close as possible to the terms in the paragraphs above and which are enforceable by Employer or Employee. 15. Essence. Employee agrees that the covenants and agreements contained herein are the essence of this Agreement and that such covenants and agreements are reasonable and necessary to protect and preserve the interests and properties of Employer and Employee; that irreparable loss and damage will be suffered by Employer should Employee breach any of such covenants and agreements; that each of such covenants and agreements is separate, distinct and severable, not only from the other of such covenants and agreements but also from the other and remaining provisions of this agreement; that the enforceability of any such covenant or agreement shall not affect the validity or enforceability of any other such covenants or agreements or provisions of this Agreement and that the covenants and agreement shall be fully enforceable irrespective of how long Employee has been in the employment of Employer. 16. Remedies. (a) Employee agrees and understands that Employer has acted in reliance on the provisions of this Agreement in employing Employee and would not continue to employ Employee if Employee did not execute this Agreement. (b) In the event that Employee shall breach any or all of the covenants and agreements set forth in paragraph 9 subsequent to the termination of his employment, Employee agrees that the running of the period of restrictions set forth in paragraphs 9 shall be tolled during the continuation(s) of any such breach or breaches by the Employee and the running of the period of such restrictions shall commence or commence again only upon compliance by the Employee with the terms of the applicable paragraphs breached. (c) Employee agrees that in the event he shall breach any of the above covenants and agreements, damage to Employer shall be presumed in any legal action by Employer against Employee for damages. Employer shall be entitled to collect actual damages caused by Employee's breach of any of the covenants and agreements. In addition to the above remedy and other remedies available to it, Employer shall be entitled to both permanent and temporary injunctions, without the posting of a bond and without the need to prove irreparable harm, to prevent a breach or contemplated breach by Employee of any of the above covenants or agreements. 7 8 18. Miscellaneous (a) Binding Agreement; All the terms, covenants, representations, warranties and conditions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors, heirs at law, legatees, distributees, executors, administrators and other legal representatives. (b) Waiver: No term or condition of this Agreement shall be deemed to have been waived nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition for the future or as to any act other than that specifically waived. (d) Severability: If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held to be invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. (e) Notices: All notices, request, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, given by prepaid telegraph or mailed first class, postage prepaid, registered or certified mail, return receipt requested, to Employer or Employee at their respective addresses set forth in this Agreement or to any other address of which notice of the change is given to the parties hereto. (f) Governing Law. The construction, interpretation, validity and performance of this Employment Agreement shall be governed by the laws of the State of Florida. The parties agree that venue for any action shall be in Dade County, Florida (g) Entire Agreement. This instrument contains the entire agreement between the parties hereto with respect to the subject matter hereof and no prior or collateral promises or conditions in connection with or with respect to the subject matter hereof not incorporated herein shall be binding upon the parties hereto. (h) Modification. No modification, extension, renewal, rescission, termination or waiver of any of the provisions contained herein or any future representation, promise or condition in connection with the subject matter hereof, shall be binding upon any of the parties unless made in writing and duly executed by the parties or their authorized representative. 8 9 (i) Headings. The section end and headings contained in this Employment Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this document. (j) Attorney's Fees and Expenses. Employer and Employee agree that, if either party has to employ an attorney to enforce this Agreement, the non-prevailing party shall pay reasonable costs, expenses, attorney's fees and paralegal fees through and including any appeals, settlement or negotiations required to enforce this Employment Agreement incurred by the prevailing party. (k) Material Inducement. Employer and Employee agree and understand that both parties hereto have acted in reliance on this Employment Agreement in executing this Agreement and the covenants contained heroin are a material inducement for both parties hereto to do so. (1) Survival. The terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof and the representations and warranties made herein shall survive the termination of this Agreement or Employee's employment hereunder for any reason. IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and its seal to be affixed hereunto by its officers hereunto duly authorized, and Employee has signed this Agreement all as of the day and year first above written. EMPLOYER -------- Attest: JET AVIATION TRADING, INC. By: By: ---------------------------- ----------------------------------- its Secretary Title: -------------------------------- (Corporate Seal) Witnesses: - ------------------------------- -------------------------------------- ALLEN BENI - ------------------------------- 9 EX-10.13 9 CONSULTING AGREEMENT 1 EXHIBIT 10.13 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT made the 3rd day of October 1997, between JET AVIATION TRADING, INC., a Florida corporation, with offices at 15675 N.W. 15th Avenue, Miami, FL 33169, (hereinafter referred to as the "Corporation") and ALLEN BENI, whose address is ________________________ (hereinafter referred to as "Consultant"). WITNESSETH: WHEREAS, the Corporation is desirous of engaging the services of the Consultant in the capacity hereinafter stated, and the Consultant is desirous of serving the Corporation in such capacity for the period and on the terms and conditions as set forth herein; and WHEREAS, the services of the Consultant are unique, extraordinary and not readily replaceable due to his particular expertise and knowledge; NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, the parties hereto do hereby agree as follows: 1. SERVICES AND DUTIES (a) The Corporation hereby engages the Consultant to provide the services set forth below (the "Consulting Services") to the Corporation and its customers and the Consultant accepts such engagement and agrees to provide to the Corporation the rendition of the Consulting Services, faithfully and to the best of his ability. The Consultant shall render advice to the Corporation regarding purchasing and selling opportunities and techniques and his insight into customers and their needs and buying habits. Consultant shall further render such other services as may be requested of him by the President of the Corporation from time to time. 2 2. TERM OF ENGAGEMENT (1) The term of the Consultant's engagement hereunder shall become effective on October 3, 1997, and shall end on October 2, 1998. Each twelve month period of the engagement commencing October 3, 1997, shall be called an "Engagement Year". The engagement may be renewed upon similar terms by the mutual agreement of the parties. 3. ConfiDENTIAL INFORMATION. All records of the Corporation which include, but are not limited to, advertising, sales, other materials or articles of information, including without limitation, data processing reports, computer software and/or media containing Corporation's confidential information, customer lists, supplier lists, purchasing information, customer sales analysis and patterns, invoices, price lists or information, samples, or any other materials or data of any kind furnished to Consultant by the Corporation, acquired by Consultant while engaged by the Corporation, or developed by Consultant on behalf of the Corporation or at the Corporation's direction or for the Corporation's use or otherwise in connection with Consultant's engagement hereunder, are and shall remain the sole and confidential property of the Corporation. Consultant acknowledges that such information is proprietary trade secrets of Corporation. All or any such materials and records shall hereinafter be known as "Confidential Information." If the Corporation requests the return of such Confidential Information at any time during, at, or after the termination of Consultant's engagement hereunder, Consultant shall immediately deliver the same and all copies or excerpts thereof to Corporation. 4. COVENANTS DURING ENGAGEMENT. While engaged by the Corporation, Consultant agrees that he will not, without the written consent of the Board: (a) Unless authorized to do so by the Board, make, draw, accept or endorse any contract, lease, promissory note, or other instrument requiring the payment of money by the 2 3 Corporation nor shall he use any money belonging to the Corporation or pledge its credit except in the usual and regular course of business and exclusively on account, or for the benefit of the Corporation; (b) Release or discharge any debtor of the Corporation without receiving the full amount thereof; (c) Make any statement or perform any act intended to advance an interest of any existing or prospective competitor of the Corporation in any way that will or may reasonably be thought to injure an interest of the Corporation in its relationships and dealings with existing or potential customers or solicit or encourage any other Consultant of the Corporation to do any act that is intended to be disloyal to the Corporation or inconsistent with the Corporation's best interest or in violation of any provision of this Agreement; (d) Compete in any manner directly or indirectly with the business of the Corporation or in any field connected with aviation, aircraft parts, avionics or the like. 5. NONDISCLOSURE. The Consultant shall not, at any time during the term of this Employment Agreement or at any time thereafter, except as may be authorized by the Corporation in writing disclose or make use of, directly or indirectly, the Corporation's customer list or supplier list or any other Confidential Information for his own benefit, for the benefit of others engaged in the same business as the Corporation or for others who Consultant believes or should reasonably believe might or could enter into the Corporation's business. Consultant acknowledges the material adverse impact to Corporation due to any breach by Consultant of these provisions, no matter how small, and that any such breach shall cause him to forfeit any unpaid amounts set forth in Paragraph 6 below. 3 4 6. COMPENSATION. (a) Basic Compensation In each year of Consultant's Term of Engagement: Consultant shall receive as basic compensation ("Basic Compensation") for all services rendered by the Consultant hereunder, a monthly payment of $4,000. (b) Commission: In addition to the amounts paid to Consultant pursuant to (a) above, Consultant shall be paid a commission equal to 15% of the collected purchase price of sales made as a direct result of Consultant's efforts and a commission of 15% of the purchase price of purchases of material for resale made by Corporation located or negotiated by Consultant on Corporation's behalf. Such commission shall be payable, in the case of sales, thirty days after the Corporation has collected the purchase price due from its customers, and in the case of purchased materials, thirty days after closure of the purchase, delivery and receipt of all required material certification records. (c) Deductions from Compensation: Any amounts payable to Consultant hereunder shall be subject to reduction and withholding for Social Security, withholding taxes, and any other such taxes or deductions as may from time to time be required to be withheld by Corporation pursuant to applicable governmental authority. 7. Termination. (a) General: This Agreement shall terminate upon the termination of Consultant's engagement, but the terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof, and the representations and warranties made herein, shall survive the termination of this Consulting Agreement for any reason. Consultant's engagement hereunder shall be terminated upon the happening of any of the following events: 4 5 (1) the death of the Consultant; (2) the permanent disability of the Consultant, as more fully discussed in Article 8 hereof; (3) upon the expiration of the Term of this Consulting Agreement according to its terms; (4) for "cause"; for these purposes, "cause" shall include: (i) the conviction of Consultant a crime involving moral turpitude; (ii) an act of dishonesty either involving Consultant's engagement or harmful to Corporation or other consultants or employees of Corporation, including fraud, misappropriation, embezzlement or the like; (iii) the misfeasance, malfeasance or non-feasance of Consultant in carrying out the duties of Consultant's engagement with Corporation, not cured within thirty (30) days written notice. (b) Payments Upon Termination: i. Death or Disability. Upon termination of Consultant's engagement hereunder at the end of the Tenn or because of the death or permanent disability of Consultant, Consultant or in the event of his death or his mental incapacity his personal representative, shall be paid his Basic Compensation hereunder, prorated through the date of termination as well as any earned commission. In addition if termination of this Agreement is due to the death of the Consultant, his estate shall be entitled to the payment 5 6 of the Consultant's Basic Compensation for sixty (60) days after the date of Consultant's death. ii. Termination For Cause or Voluntary Leaving. Upon termination of Consultant's engagement hereunder for cause or voluntary leaving, as compensation for services rendered during the term of this Agreement to the date of termination, Consultant shall be paid his Basic Compensation hereunder prorated through the date of termination and any earned commissions and no other amounts hereunder. Any amounts which have been prepaid will be returned by Consultant or his personal representative. iii. Cancellation of Engagement. Upon termination of Consultant's engagement hereunder, for reasons not for cause, death, permanent disability, his voluntary leaving or the expiration of the Term hereof, such reasons to include, without limitation, the cancellation of consultant engagement by the Corporation for reasons not for cause, or the dissolution of the Corporation, Consultant shall be entitled to receive his Basic Compensation accrued to date and any commission earned. 8. DISABILITY. (a) In the event that Consultant incurs a disability of either a physical or mental character which, in the opinion of a physician selected by the Corporation, which physician shall be approved by Consultant (which approval shall not be unreasonably withheld), renders him disabled from performing the usual and customary duties to be rendered hereunder or heretofore rendered by Consultant, he shall receive his full Basic Compensation for the first ninety (90) days or any part thereof of continuous disability. (b) No disability shall be deemed to exist until after Consultant shall be unable to perform his duties for thirty (30) consecutive days, but after such disability 6 7 continues for thirty (30) consecutive days, then the same shall be deemed to have existed from the first day of such disability. (c) If the Consultant does not recover and resume his duties within ninety days from the date he is deemed to have become disabled, Consultant may, unless the physician selected in paragraph 8(a) above certifies that Consultant is again capable of performing his usual and customary duties with or without reasonable accommodation, at the election of the Board of Directors, be deemed to have become permanently disabled at the beginning of such disability. (d)(i) If Consultant shall have been disabled and shall have returned to his engagement after the end of such disability, any recurrence of the same disability commencing within one hundred eighty (180) days of the termination of the prior period of disability shall be deemed to be a continuation of the prior disability, and the periods of all such disabilities shall be added together to determine the rights of the parties hereunder. (ii) If Consultant shall have been disabled and shall have returned to his engagement after the end of such disability, any new and unrelated disability occurring thereafter shall be treated as if the previous and unrelated disability had not occurred. (e) Services During Disability: During the period that Consultant shall be entitled to receive payments under this Article, and to the extent that he is physically and mentally able to do so, he shall furnish information and assistance to the Corporation and comply with the provisions hereof; and, in addition, upon reasonable request in writing on behalf of the President he shall make himself available to the Corporation to undertake reasonable assignments consistent with the dignity, importance and scope of his prior engagement and his physical and mental health. 7 8 9. Reformation. If elements of the agreements set forth in the above paragraphs would otherwise be determined to be invalid or unenforceable by a court of competent jurisdiction, the parties intend and agree that such court shall exercise its discretion in reforming the elements of this Agreement to the end that Corporation and Consultant shall be subject to a consulting agreement, a covenant not to compete, a nondisclosure covenant and related covenants as close as possible to the terms in the paragraphs above and which are enforceable by Corporation or Consultant. 10. Essence. Consultant agrees that the covenant and agreements contained herein are the essence of this Agreement and that such covenants and agreements are reasonable and necessary to protect and preserve the interests and properties of Corporation and Consultant; that irreparable loss and damage will be suffered by Corporation should Consultant breach any of such covenants and agreements; that each of such covenants and agreements is separate, distinct and severable, not only from the other of such covenants and agreements but also from the other and remaining provisions of this agreement; that the enforceability of any such covenant or agreement shall not affect the validity or enforceability of any other such covenants or agreements or provisions of this Agreement and that the covenants and agreement shall be fully enforceable irrespective of how long Consultant has been engaged by the Corporation. 11. Remedies. (a) Consultant agrees and understands that Corporation has acted in reliance on the provisions of this Agreement in engaging Consultant and would not continue to engage Consultant if Consultant did not execute this Agreement. (b) Consultant agrees that in the event he shall breach any of the above covenants and agreements, damage to Corporation shall be presumed in any legal action by 8 9 Corporation against Consultant for damages. Corporation shall be entitled to collect actual damages caused by Consultant's breach of any of the covenants and agreements. In addition to the above remedy and other remedies available to it, Corporation shall be entitled to both permanent and temporary injunctions, without the posting of a bond and without the need to prove irreparable harm, to prevent a breach or contemplated breach by Consultant of any of the above covenants or agreements. Consultant hereby waives any claims he might make that any competition by Consultant with Corporation in derogation of this agreement: 1) would be justified in any manner and 2) would not cause irreparable harm to Corporation or that the restrictions on competition hereunder would be an improper restraint of trade. Consultant acknowledges that he is fully capable of earning a living upon termination of his engagement with Corporation, without competing in any manner with the business of Corporation. 12. Miscellaneous. (a) Binding A agreement: All the forms, covenants, representations, warranties and conditions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors, heirs at law, legatees, distributees, executors, administrators and other legal representatives. (b) Waiver: No term or condition of this Agreement shall be deemed to have been waived nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific tenn or condition for the future or as to any act other than that specifically waived. 9 10 (d) Severability: If, for any reason, any provision of this Agreement held invalid, such invalidity shall not affect any other provision of this Agreement not held to be invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. (e) Notices: All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, given by prepaid telegraph or mailed first class, postage prepaid, registered or certified mail, return receipt requested, to Corporation or Consultant at their respective addresses set forth in this Agreement or to any other address of which notice of the change is given to the parties hereto. (f) Governing Law. The construction, interpretation, validity and performance of this Engagement Agreement shall be governed by the laws of the State of Florida. The parties agree that venue for any action shall be in Dade County, Florida (g) Entire Agreement. This instrument contains the entire agreement between the parties hereto with respect to the subject matter hereof and no prior or collateral promises or conditions in connection with or with respect to the subject matter hereof not incorporated herein shall be binding upon the parties hereto. (h) Modification. No modification, extension, renewal, rescission, termination or waiver of any of the provisions contained herein or any future representation, promise or condition in connection with the subject matter hereof, shall be binding upon any of the parties unless made in writing and duly executed by the parties or their authorized representative. 10 11 (i) Headings. The section and paragraph headings contained in this Consulting Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this document. (j) Attorney's Fees and Expenses. Corporation and Consultant agree that, if either party has to employ an attorney to enforce this Agreement, the non-prevailing party shall pay reasonable costs, expenses, attorney's fees and paralegal fees through and including any appeals, settlement or negotiations required to enforce this Consulting Agreement incurred by the prevailing party. (k) Material Inducement. Corporation and Consultant agree and understand that both parties hereto have acted in reliance on this Consulting Agreement in executing this Agreement and the covenants contained herein are a material inducement for both parties hereto to do so. (l) Survival. The terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof and the representations and warranties made herein shall survive the termination of this Agreement or Consultant's engagement hereunder for any reason. [SIGNATURE BLOCKS ON FOLLOWING PAGE] 11 12 IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed and its seal to be affixed hereunto by its officers hereunto duly authorized, and Consultant has signed this Agreement all as of the day and year first above written. Corporation ----------- Attest: JET AVIATION TRADING, INC. By: /s/ By: /s/ --------------------------------- --------------------------------- its Secretary Title: President & CEO ------------------------------ (Corporate Seal) Witnesses: /s/ Cynthia S. Taylor /s/ Allen Beni --------------------------------- ------------------------------------ Allen Beni --------------------------------- 12 EX-10.14 10 FORM LOCK UP AGREEMENT 1 Exhibit 10.14 The D.A.R. Group Jet Aviation Trading, Inc. 30 Broad Street, 43rd Floor 15657 N.W. 15th Avenue New York, NY 10005 Miami, FL 33169 Gentlemen: The undersigned has dispositive power with respect to the number of shares of common stock, par value $.001 per share (the "Common Stock"), of Jet Aviation Trading, Inc., a Florida corporation (the "Company"), listed below (the "Shares"). The undersigned understands that the Company has filed a Registration Statement with the Securities and Exchange Commission whereby a total of 2,969,000 shares of the Company's common stock will be registered for sale (the "Offering Shares"). Included in the Offering Shares are 1,000,000 shares of Common Stock issuable upon the exercise of the Company's $4.50 Common Stock Purchase Warrants (the "Warrants"). The undersigned understands that the Company proposes to enter into an agreement with The D.A.R. Group, ("DAR"), with respect to the exercise of the Warrants. Under the terms of the agreement, it is a condition to DAR's obligation thereunder that the undersigned agree to certain restrictions on the disposition of the Offering Shares. The undersigned recognizes the benefits to both the Company and the undersigned that are expected to result from the exercise of the Warrants. In consideration of such benefits the undersigned agrees, for the benefit of the Company and DAR, not to offer, sell, contract to sell or otherwise dispose of any of the Offering Shares or other securities convertible into Common Stock for one year after the effective date of the Company's registration statement, except through bona fide gifts or private sales to persons who agree in writing with DAR to be bound by this restriction, without DAR's prior written consent. This agreement shall be binding upon the undersigned and their heirs, executors, administrators, successors and assigns of the undersigned. Very truly yours, ______________________________ Signature Shares as to which the Undersigned has dispositive power Print Name: Dated: ________________________ If Shares are held by an entity: Name of Entity: Title of Signer: EX-23.2 11 CONSENT OF SWEENEY, GATES & CO. 1 Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the use in this Registration Statement on Form SB-2 of our report dated October 9, 1997, related to the financial statements of Jet Aviation Trading, Inc. and to the reference to our firm under the caption "Experts" in the prospectus. Sweeney, Gates & Co. Fort Lauderdale, Florida March 12, 1998 -----END PRIVACY-ENHANCED MESSAGE-----